The UK government’s decision to scrap Winter Fuel Payments could hit low-income pensioners in England particularly hard, according to research from the University of Cambridge. But the study also highlights that the inefficiency of homes and the difficulties pensioners face in downsizing may have an even more damaging effect this winter.
The researchers are especially concerned about pensioners with annual incomes of £11,300 to £15,000 for individuals and £17,300 to £22,000 for couples. Drawing on data from nearly 12,000 households, they examined how income, home energy efficiency, size, and tenure status influenced energy spending.
Energy issues
The study found that for each £1 increase in income, heating expenditure rose by just one-tenth of a penny. Improving a home’s energy efficiency, however, had a much larger impact: a single point increase in the SAP12 energy rating (the government’s energy performance measure) cut heating costs for households in energy poverty by £21.59 per year.
Home size was also a factor. For households in energy poverty, each additional square meter raised annual heating costs by £5.04. This was higher than for wealthier households, where the increase was £4.18, and even low-income households outside of energy poverty, where it was £2.99.
“When low-income households receive more income, they tend to spend a little more on heating. But many have to spread extra money across other essential needs, like food,” the authors note.
Forced into hardship
The researchers warn that cutting Winter Fuel Payments could force pensioners to reduce both heating and other basics, creating serious risks for vulnerable people living in cold homes.
The study shows that energy efficiency is the most important factor in heating costs. “The best way to warm up the homes of people in energy poverty is to improve the energy performance of their properties,” the authors suggest, recommending that homes be brought up to a SAP12 rating of at least 72.
Each point increase in energy efficiency could save around £20 in heating costs per year, and raising the average SAP12 rating from 59.48 (for households in energy poverty) to 71.45 (for low-income households outside energy poverty) could save around £240 annually.
Financial support
However, these savings wouldn’t cover the cost of retrofitting homes for better energy performance. The authors argue that financial support would be necessary, but could be offset by broader social benefits such as fewer days off work, longer lifespans, and less strain on the NHS.
While retrofitting may not improve household finances as directly as the Winter Fuel Payment, it would have a lasting impact on reducing cold, unhealthy living conditions, the study argues. Retrofitting also aligns with the broader goal of reducing carbon emissions.
The research points to the difficulty older, low-income households face in downsizing as a key driver of energy poverty. These households typically live in larger homes than they need, with average floor areas 7.3% bigger than those of low-income households not in energy poverty.
Surprisingly, the study found that one-person households tend to spend less on energy than larger households, even within energy-poor groups, suggesting they may be more strategic about managing energy consumption.
The authors propose several policy options, such as expanding Pension Credit eligibility or introducing a temporary Winter Fuel Payment application for those just above the Pension Credit threshold. They also highlight the importance of addressing energy poverty among families with children and young adults, who may face even greater challenges than pensioners in the housing market.
