Policy Design Challenges for Energy Poverty Following Price Hikes in the UK

While developed countries have more advanced energy systems, there is still substantial household-level inequality and persistent energy poverty. Using the UK Understanding Society household survey, we assess waves on either side of energy-price hikes which followed the onset of heightened geopolitical conflict in 2022. Using Locally Weighted Scatterplot Smoothing, we find that distributions of energy expenditure and problems paying bills (including electricity, gas, water, telephone, and other bills) are similar across income, but with a shift up in both outcomes for the 2022-23 wave. This exacerbates policy design challenges for persistent energy poverty problems, motivating specific distributional research. We find that problems paying bills are most pronounced for the bottom income quintile, while energy expenditure rises most from the fourth to the highest quintile. In addition to targeted support for the lowest income quintile, policy changes can be informed by our linear probability and multinomial logit regressions. We find differences in energy outcomes across asset values, such as households with lower vehicle values being less likely to consistently avoid bill-paying problems, justifying consideration of assets for policy eligibility. We also show evidence of fuel switching and energy investments having potential to lower energy bills, and this provides some support for subsidies for upfront costs of energy assets. Further educational assistance could also be useful, as prior problems paying bills are linked to higher current energy expenditure and persistent bill-paying problems.