Why is the United Kingdom fuel poor?

Abstract

Tackling fuel poverty and decarbonising heating are two of the biggest challenges before the UK economy. Using Structural Equation Modelling (SEM) this research evaluates the main causes of fuel poverty within the UK, drawing parameters from various definitions and it assesses the immediate impacts of fuel poverty. A series of fuel poverty determinants have been drawn from the literature to develop a SEM model, using fuel poverty as a latent construct. Fuel Poverty has then been divided further into three latent factors, Household, Macroeconomic factors and Renewable energy. A time series data of 13 years (2010–2022) has been collated from a variety of published databases to arrive at the most significant indicators of the latent constructs. The paper also evaluates if the decarbonisation target can be achieved along with reducing the fuel poverty by including the indicators of renewable energy. A robust interrogation has been done of the most recent policy measures and its relevance based on the results obtained by the longitudinal data analysis. The research presents strong evidence that there has been limited investments in housing efficiency and green energy projects, there is an immediate need to control inflation and household incomes. Additionally, policies related to the dependence on oil and gas as primary energy source, winter fuel payments and gas and electricity disconnections need attention