Rising energy prices have had a disproportionate impact on the less well-off. Data published by DECC shows that lower income households have cut back more on gas and electricity use than homes with more prosperous occupants. Despite rising bills, electricity consumed by the wealthiest homes hasn’t fallen since 2005 but the poorest households have cut their use by 13%. Gas usage has gone down a quarter in homes in the bottom half of the income distribution, much more than the more prosperous households.
Gas and electricity consumption are gently falling in UK homes. The amount of gas used depends on winter temperatures but the overall trend is clearly downwards. Some of this fall is driven by better insulation and new condensing boilers but rising prices have also forced UK homes into setting thermostats lower. The average (‘mean’) electricity use was 4,600 kWh in 2005 and 4,200 in 2011, the latest year for which figures are available. This is an average reduction of 9%. Gas savings were more substantial, with the average falling from 18,600 kWh to 14,100 in the same period, a cut of 24%. Even the cold year of 2010 didn’t interrupt the average fall.
Closer examination shows the impact of lower incomes on the change in energy use. Gas consumption – used for hot water, some cooking and heating in about 80% of UK homes – fell by 27% in the poorest households, almost twice the figure for the very richest.
Some of the difference may arise from the targeting of insulation efforts on the old and those in receipt of benefits. But this is nowhere near enough to explain the difference: about 10% of UK households had cavity wall insulation installed on a government programme between 2005 and 2011 and this might have saved – at best – 25% of the gas bill. Even this entire effect was focussed on the bottom half of the income distribution (which it wasn’t) it wouldn’t explain more than a small fraction of the difference between rich and poor. The plain fact is that rising prices caused poorer households to run their homes at lower temperatures.
The pattern is the same with electricity. The bottom half of the income distribution made major savings and the wealthy made fewer cuts. In fact, the very richest homes made no reduction at all, compared to an average of 9% across all households.
Perhaps this is what we should have expected. Energy is a large component of household expenditure in poorer homes. To the rich, it is almost unseen. I think we should all be troubled by the apparent impact on winter temperatures in the less prosperous half of UK society. And why the wealthy seem so uninterested in energy saving.