Chapter 10 - Energy poverty research: A perspective from the poverty side

Abstract

Researchers widely agree that there are three main determinants of domestic energy poverty: low income, energy-inefficiency; and high fuel prices. Some add a fourth: specific household characteristics. Almost all studies of energy poverty in high-income countries mention the first of these, but none asks how it could be mitigated or eradicated. Instead it is treated as a fact of life that is simply there. In this chapter I ask what might happen if the incomes of the poorest UK households were increased through progressive taxation, to levels that gave householders the means to decide for themselves how to meet their energy needs. I map three scenarios, where all household incomes are increased to £200, £260 and £300 per week respectively, corresponding to different opinions as to how much a household needs, on average, to meet basic needs, including domestic energy. This would require increases in the marginal tax rate (currently 45%) for the highest-earning 10%, of 1.5%, 2.7% and 4.3% respectively. This would keep the rate well below its levels of 60% and 75% under the Thatcher government. Based on recent studies of greenhouse gas emissions associated with excessive wealth, I then estimate the reduction in consumption-based CO2 emissions likely to result from these tax increases on the highest incomes. I find the UK's emissions would reduce by about 23 times the amount that emissions are likely to increase due to the greater spending power of poorer households. Hence, addressing the low-income determinant of UK energy poverty by progressive income redistribution would neither distort tax rates unreasonably, nor increase global CO2 emissions.