end fuel poverty news

Response to the Green Deal and Energy Company Obligation consultation

 

Summary of EFPC response

• Fuel poverty in Britain at 6.7 million households is at its highest level for 10 years. The EFPC had therefore expected the Government to put forward proposals commensurate with the scale of the problem and its legal obligation to end fuel poverty, as far as reasonably practical, by 2016.
• In 2010/11 over £1bn was spent on improving the energy efficiency standards of low income households’ homes in England (£345m on Warm Front, £600m on the priority group element of CERT and £110m on CESP).
• The consultation proposes approximately £325m is spent on Affordable Warmth energy efficiency measures for low income households (across the whole of Great Britain). It also suggests an unspecified proportion of the Carbon Saving (CS) element will go to low income consumers in social housing. The proposals therefore represent a severe reduction in resources for fuel poverty, despite previous Government assurances that the ECO would represent an increase[1].
• ECO will not adequately address the policy objectives the Government expects of it, namely to tackle fuel poverty, kick-start the solid wall insulation industry and underpin Green Deal finance. In particular, it is nowhere near sufficient to meet the Government’s moral and legal obligation to eliminate fuel poverty.
• The ECO must exclusively target the vulnerable and those on low incomes. 1.9m fuel poor households live in solid wall housing, thus offering plenty of opportunities to encourage the growth of the solid wall insulation industry and save carbon. However, even with an exclusive focus on low income homes, ECO will still not provide sufficient resources to effectively tackle fuel poverty.
• The Government must make additional resources available to install energy efficiency measures in the homes of vulnerable and low income households.  This can be done by recycling the proceeds it will receive after 2013 from Emission Trading Scheme (ETS) auctions and the Carbon Floor Price, thus allowing it to effectively eliminate fuel poverty.
• The proposed design of Affordable Warmth is in many ways inferior to Warm Front. Unlike Warm Front, it is even less likely to provide whole house solutions and is unlikely to help rural and off-gas homes
• The carbon saving element of ECO should focus on low income households and the social housing sector.

The expanded energy efficiency programme we propose would consist of the following elements

• It will build upon ECO and Green Deal finance
• Focus on measures, people and areas ECO and Green Deal Finance are unlikely to reach
• Funded through the recycling of proceeds from ETS auctions and the Carbon Floor Price
• Aim to improve homes to the same standard as homes built today (Energy Performance Certificate Band B), where practical (and EPC Band C at the minimum) to make them effectively fuel poverty proof.
• Should include delivery by local authorities and social housing providers through an area-based approach

 

EFPC response to specific questions

 

Our response focuses on the fuel poverty questions in the consultation. 

 

Q10: What innovative ways can the government use to encourage uptake of a package of measures and could our existing proposals support this.

 

EFPC considers local authorities, working with local partners, should play a leading role in deciding how ECO resources are spent in their area. This would enable resources to be spent in accordance with local needs and is consistent with localism principles.

 

The consultation suggests that the proposals will encourage energy companies to leverage funds to match ECO. Prior to 2011/12, local authorities could provide joint funding to assist private households and tenants with housing needs from their Private Sector Renewal budgets. This programme was cut in its entirety in 2011/12. However, we consider part of the proceeds from ETS/CFP recycling could be used in a similar way.

 

Q14: We propose that any measure should be allowed under the Affordable Warmth obligation, provided it allows eligible households to heat homes more affordably.  If you disagree, or feel there are risks to this approach, please explain and set out any restrictions you believe should be put in place.

 

EFPC agrees that any measure which allows households to heat their homes more affordably should be included under the Affordable Warmth obligation. However, we are concerned that the proposal to only require suppliers to install one major measure represents a backward step from Warm Front. Affordable Warmth should aim to install whole house improvements that bring homes up to a target minimum energy efficiency standard of EPC Band C at least. In the case of hard to treat homes, this is likely to require additional funds (to ECO) to pay for the more expensive measures necessary.

 

Environmental health intervention in housing is driven by the elimination of health hazards. Research conducted by the Building Research Establishment for the Chartered Institute of Environmental Health[2] shows that the percentage of all dwellings with a SAP rating less than 35, or having a Category 1 excess cold hazard is 12.3%, increasing to 16.9% for dwellings in the private rented sector. To eliminate such hazards would require these dwellings to be improved to a SAP rating of at least 50 – the equivalent of an EPC Band D rating.  

 

Q15: Do you have any suggestions for whether and how we should score, boiler repairs  under the Affordable Warmth obligation, such that where repairs are more cost-effective than replacement systems, without significant impact on efficiency, these can be promoted?

 

EFPC considers boiler repairs should only be considered in the case of efficient boilers that have broken down. If the non-functioning boiler does not meet current standards, a replacement boiler should be installed.

 

Q31: Do you agree that eligibility for Affordable Warmth measures should be restricted to households who are in receipt of the benefits and tax credits similar to the CERT Super Priority Group and who are in private housing tenures?

 

Within the context of the very limited resources made available through ECO, EFPC accepts that CERT Super Priority Group in private housing represents an appropriate target group.

 

EFPC also considers the carbon element of ECO should be restricted to low income consumers, including most social housing tenants. We consider social housing providers are best placed to deliver large volumes of solid wall insulation, achieve economies of scale and bring down costs. The use of area-based approaches would allow low income households in private sector housing close to social housing to also benefit, for example those in mixed tenure blocks. Targeting the CS element of ECO in this way would represent a more cost effective method of meeting carbon targets than providing one-off expensive subsidies to better off households through ‘pepper pot’ delivery.

 

However, EFPC is concerned that there will be many low income households who will not receive help through Affordable Warm or the CS element of ECO. We do not consider Green Deal Finance appropriate for these households. It is therefore essential further funds are identified to help such households. The additional financial resources we propose could be used to improve the homes of a much wider range of low income households, with public funding used to increase eligibility.

 

Q32: We propose seeking a voluntary agreement with ECO obligated companies as to how they commit to following up referrals.  Do you have any suggestions as to what this commitment should consist of?

 

EFPC considers ECO obligated companies should give an undertaking to install measures in the homes of all eligible clients referred to them, assuming referral agencies have already established eligibility. Companies should agree to install all cost effective measures in the homes of households referred to them, as is already the case in the Scottish Energy Assistance Package and the Welsh NEST scheme. If the companies do not agree to give this commitment, the Government should put in place a system of mandated referrals.

 

EFPC would like to see a comprehensive referral system, led by local trusted agencies, put in place. These would encourage take-up by low income households through take-up campaigns, area-based systematic contact and links with other advice providers.

 

Q33: Do you have any evidence or views to put forward on whether the benefits of ECO as a whole, or of the carbon saving obligation within it, are or are not likely to be distributed equitably to all income groups?  If so do you think regulatory intervention is necessary to ensure a more equitable pattern of delivery and, in particular, do you have any comments on the likely effectiveness of setting a ‘distributional safeguard’ as a means of achieving this?

 

EFPC considers the whole of the CS element of ECO should go to low income consumers and social housing tenants. The distributional safeguard should therefore address specific sub-groups within this, for example those in rural areas, off-grid consumers and private sector households.

 

Q58: The division of the overall ECO between energy companies could be based on share of customer accounts, or sales volume. Do you have a preference as to which metric should be preferred, taking into account possible impacts on distributional equity? Please provide evidence for your views.

 

EFPC favours the recovery of ECO on the basis of consumption, rather than number of customer accounts. The former approach is more progressive, given that consumption broadly increases with income. We support the proposals put forward by the Fuel Poverty Advisory Group for reforming the method by which suppliers recover ECO charges. However, EFPC considers specific measures must be taken to protect the small proportion of low income, high energy users to ensure that the reform does not adversely affect this minority of vulnerable households.

 

Q63: In addition to the specific questions asked throughout this consultation document, do you have any other comments on any aspect of our proposals?

 

EFPC considers the proposals are neither adequate for tackling fuel poverty or meeting carbon targets. We note the considerable reduction in Government estimates of the number of households likely to receive measures, from the 14million homes originally stated to the 3.6m homes referred to in the Impact Assessment. We also note that the Government only expects ECO to reduce fuel poverty by 350,000 to 550,000 by 2022 – less than a tenth of the current level of fuel poverty.

 

EFPC therefore considers it essential that the Government sets up a complementary funding mechanism that provides additional resources for meeting its statutory fuel poverty and carbon targets. We consider the forthcoming proceeds from the auction of permits under the European Emission Trading Scheme and the Carbon Floor Price provides a potential source of funds for this.

 

Estimates suggest ETS/CFP will add around £50 pa by 2020 to the average consumer electricity bill, leading to even further fuel poverty. It is therefore essential that compensatory measures are taken to address this. An ambitious national energy efficiency programme would represent a long term, sustainable and cost effective solution to reducing fuel poverty and carbon. It would also help stimulate the economy and provide much needed jobs to many low income households.

 

It is disappointing that the consultation makes little reference to the specific new legal requirements to be introduced under the Energy Act 2011 regarding energy efficiency in the private rented sector, despite the disproportionate number of vulnerable low income households in energy inefficient homes in this sector.

 

The Government is introducing the new powers for local authorities to enforce minimum energy efficiency standards in the private rented sector 6 years after the launch of the Green Deal and ECO and 2 years after the statutory date for eliminating fuel poverty.  EPFC considers these powers should be introduced in 2016, rather than 2018 as proposed by the Government.

 

Ending fuel poverty requires more than just the right financial mechanisms – the ECO and our proposed national energy efficiency programme must sit within a broader ‘road map’ for ending fuel poverty.

 

 

No child should be left in the cold by rising fuel bills

"I worry I can’t put the heating on like everybody else can," says Ness, mum to Joe, five, and Wesley, six. "Some weeks we can’t top up the electric, only the gas. The house gets cold."

 

This winter, hundreds of thousands of children like Joe and Wesley could be left in the cold because of rising energy costs.

 

No child should have to wear hats, scarves and gloves in their homes to keep warm.

 

No child should have their health put at risk because their families simply can’t afford basics like heating.

 

It’s time for the big energy companies to do their bit.

 

Help beat fuel poverty. Sign Save the Children’s petition now.

 

They are calling for:

• energy providers to give the poorest families with children under five in the UK the Warm Home Discount (a payment of £120 a year). Families with young children who are on low incomes should get this as a priority.
• energy providers to make sure the poorest families get the cheaper tariffs. It’s not right that poorer families often pay more for their energy because they can’t get the best deals.
• the government to recognise that boosting the incomes of the poorest families is still crucial to its anti-poverty strategy.
• the government to do more too, helping families insulate their homes and make them more energy efficient, reducing bills so they can afford to keep warm.

Read more about Save the Children’s calls in their fuel poverty briefing

 

 

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NEA’s Warm Homes Campaign calls on MPs to help local groups identify those at risk of fuel poverty, as new report highlights suffering is not restricted to elderly

National Energy Action’s (NEA’s) Warm Homes Campaign, which is supported by energy company E.ON, is a national initiative that aims to highlight the issue of fuel poverty among decision-makers and members of the public that may be struggling to heat their homes affordably.

 

To mark the launch of the campaign, a new report - ‘The Many Faces of Fuel Poverty’ - has been published which states that approximately 6.6 million UK households are in fuel poverty and more than 50 per cent are under the age of 65. The report focuses on four real people, and shows that the effects of fuel poverty are wide-ranging, impacting on educational attainment, physical and mental health, and emotional well-being.

 

As well as highlighting the groups impacted by living in cold homes, NEA has also worked with E.ON to produce an easy to use document that will help identify the best solutions for constituents who are worried about keeping warm and paying their home energy bills.  MPs will be invited to lend their support by taking part in constituency activities and/or media work, and NEA members and other organizations are encouraged to get involved by arranging related activities in their local area.

 

The campaign will run from 24^th November to the 9^th December.  For details on the Warm Homes Campaign and MPs’ activities around the country, visit the NEA website using the link above.

 

 

EFPC response to the interim report of the Hills Fuel Poverty Review

The End Fuel Poverty Coalition (EFPC) welcomes the recognition in the Hills review that fuel poverty is a distinct problem, rather than a facet of poverty in general.  The recent Marmot Review Team report[1] presented evidence on how cold homes lead to multiple health problems.  Cold homes and fuel poverty contribute to excess winter deaths, respiratory health problems and mental health problems as well as an increased likelihood of poor educational attainment among children. 

 

We welcome the review’s conclusion that the objective within the Warm Homes and Energy Conservation Act 2000 is still robust.  The Act defined a person in fuel poverty as one who is ‘living on a lower income in a home which cannot be kept warm at a reasonable cost’.  It is exactly these people who need assistance from fuel poverty schemes.

 

We consider the existing definition of fuel poverty[2] usefully combines income, energy requirements and energy costs, as well as assessing households’ ‘need to spend’ rather than ‘actual expenditure’.  Furthermore, the 10 per cent threshold provides a useful indication of households who struggle to afford their fuel bills.  However, we recognise that the definition adopted in the UK Fuel Poverty Strategy leads to a number of difficulties. These include:

 

• Changes in fuel prices have a disproportionate effect on the apparent number of households in fuel poverty, as highlighted by the interim report
• It does not distinguish households with ‘reasonable incomes’ but living in large inefficient homes from those with much lower incomes living in small inefficient homes. Arguably, the former have a much greater opportunity to improve their circumstances.
• It is difficult to track the impact of energy efficiency schemes on low-income households’ fuel costs.
• The treatment of housing costs and household size in the calculation of income does not adequately reflect the actual resources households have to spend on fuel.

 

We therefore welcome the proposals to remove housing costs from income and to adjust income measurement to take account of household size.  We consider an After Housing Costs measure of income better reflects the money households have available to spend on fuel.  In addition we believe the proposed ‘fuel poverty gap’ represents a valuable supplementary indicator of fuel poverty.  It assesses the extent to which individual households are affected by fuel poverty and the depth of fuel poverty experienced by all fuel-poor households.

 

We broadly accept the proposal to set an income threshold based on the DWP definition of poverty (60 per cent of median income after housing costs and adjusted for household size and composition). We accept the rationale for removing fuel costs from income.

 

We welcome the report’s recognition that certain groups are particularly vulnerable to fuel poverty due to for example old age, a pre-existing health condition or disability. We note that these ‘vulnerabilities’ are not easy to capture within a fuel poverty definition. However, we hope the final report will make clear recommendations for the effective targeting of fuel poverty policies on these groups.

 

We are concerned about the proposal to define ‘reasonable fuel costs’ as those below the median.  The relatively high median fuel costs in England would still be unaffordable to many low-income households.  We therefore consider this does not adequately describe the ‘fuel poor population’ and potentially could have some perverse effects on policies to eliminate fuel poverty and reduce carbon emissions. For example:

• It will exclude some low-income households who live in comparatively energy efficient homes but are still struggling to pay their fuel bills, such as people with high energy

needs due to old age or pre-existing health conditions.  While the potential for energy efficiency improvements may be limited, these households still require income and fuel price measures, as they would have under the existing definition.

• It will also exclude some low-income households for whom the median fuel bill cost still represents an unaffordable amount. This is because the poor condition of the English housing stock creates a relatively high median.  Such households, currently struggling to afford their fuel costs, would benefit from energy efficiency measures. 
• It will potentially put the Government’s fuel poverty and carbon targets in conflict with each other.  This is because policies to improve the efficiency (and therefore reduce the carbon emissions) of higher income households will have the effect of lowering the national median fuel bill, and therefore increase the probability of low-income households being classed as ‘fuel poor’. 
• It will make it much more difficult to eliminate fuel poverty through improving energy efficiency standards. While theoretically possible to focus extensive energy efficiency activity exclusively on certain low-income households, in reality a constantly shifting median fuel expenditure threshold will make eradication almost unachievable.
• In contrast, it will make it possible to eliminate fuel poverty through extensive income measures (while recognising this also represents a major challenge). Since the Government has a statutory duty to eradicate fuel poverty, the proposed indicator appears to favour tackling fuel poverty through income measures rather than energy efficiency measures. While income measures are important, this should not be at the expense of under-valuing the contribution of energy efficiency measures.

 

We firmly believe that the proposed definition should be consistent with the target to eradicate fuel poverty by 2016[3] , as set out in the Warm Homes and Energy Conservation Act.  A definition that appears to make fuel poverty elimination extremely difficult is likely to lead to policy inertia.

We also consider the definition should recognise the central role of energy efficiency in providing a sustainable and long-term solution to fuel poverty, while also recognising the importance of income and fuel price measures.

 

The EFPC considers an alternative approach to setting the energy costs threshold is one based on relating the total fuel requirement of a home to the fuel requirements of the most energy efficient homes.  This would root the definition in a meaningful view about the level of energy efficiency that is desirable and reasonable for someone on a low income.  This relative measure would have the benefit that as overall standards in the housing stock improve, the threshold for a reasonable standard of energy efficiency would also be raised.  In addition, this threshold would create a definition of fuel poverty that makes its eradication feasible, given sufficient political will and resources.

In conclusion, the EFPC would urge the review team to re-visit its definition of ‘reasonable fuel costs’. We consider our alternative approach has considerable merit. We would welcome the opportunity to discuss and develop a more precise methodology for defining our approach.

As fears rise over affording energy bills, new campaign launches to ‘plug the debt’

Consumer Focus and Citizens Advice are launching a new drive to help people understand what to do and what their rights are if they fall behind on their energy bills. The organisations are launching the awareness campaign as they are concerned that the number of people in debt to their energy firm and needing help is likely to rise this winter as people struggle to afford higher energy prices. The ‘Plug the Debt’ campaign is also supported by the Department of Energy and Climate Change, Ofgem, Energy UK, Which? and Age UK. 

 

Following energy price increases of around 7% last winter and other rising costs, the number of people with new energy debts increased by over a quarter for electricity and a fifth for gas, in spring 2011. ¹ These figures, which are the most recent available, show that in Britain over 850,000 electricity customers and over 700,000 gas customers are in debt to their energy supplier. 

 

Consumer Focus and Citizens Advice believe that average energy price increases of 14% this autumn could push even more vulnerable households over the edge into debt.² Last year 100,000 people came to Citizens Advice for help with fuel debt and this year, in October alone, over 12,500 people sought online advice on cutting their fuel bills from the Citizens Advice website. 

 

Concerns are also being raised by the organisations as findings from new Consumer Focus research³ show that:

• Over half of people in Britain are worried about being able to afford their energy bills this winter. The figure is even higher among families and older people living on low incomes, with almost two thirds concerned.
• One in six people plan to only heat half, or fewer, of the rooms in their house this winter.
• One in 20 people will only be heating one or two rooms, rising to one in 10 of those in the poorest social group.

Worryingly only just over half of people (55%) trust their supplier to help them if they get into debt.⁴ Fewer than half of people (49%) are aware their energy firm has to take their circumstances and ability to pay into consideration when arranging repayments of outstanding bills and almost one in five (19%) believe their supplier could name any amount and they would have to pay it. 

 

The organisations want to reassure consumers that suppliers have to, and will want to, help them if they get into trouble with their bills and urge people to contact their supplier before debts start to grow.

 

Mike O’Connor, Chief Executive of Consumer Focus, said:

‘A toxic cocktail of higher energy prices, rising bills for other essentials and falling incomes could push more people into debt with their energy company this winter. 

 

‘We want people to know that help is out there. Your supplier has to help you if you have problems affording your bills and there are discounts and grants available to help you lower your costs. We’d urge people to get in touch with their energy firm as soon as they think they might have problems before debts start to spiral. You can also get in touch with Citizens Advice or the Home Heat Helpline to find out how you can cut your bills.’

Consumer Focus and Citizens Advice are making people aware of the following five top tips if they fall behind with their bills:

 

1. Always contact your energy firm as soon as you realise you might have trouble with paying.  Debts will build-up and be harder to pay off the longer you leave them. Your supplier has a responsibility to help you if you have problems paying your bill.
2. Tell your energy supplier what you can afford to pay – they have to take this into account in agreeing repayments of the money you owe.
3.  Ask your energy company, your local Citizens Advice Bureau or call the Home Heat Helpline 0800 33 66 99 to find out about other free energy help available.  For example you could qualify for a discount off your bill or free insulation to help your home stop leaking heat and cut your bills. 
4. Even if you are in debt you may still be able to switch to a cheaper deal with your current supplier, especially if you pay by cash, cheque or pre-payment meter. If you pay by pre-payment meter and have less than £200 of debt you can also switch to a cheaper deal with another supplier.
5. Financial help is available which could make it easier to afford your bills – check you are receiving all of the benefits and tax credits you are entitled to by getting in touch with your local Citizens Advice Bureau or visiting www.adviceguide.org.uk.  

 

Anyone who wants to find out more about getting help or advice through the ‘Plug the Debt’ campaign should visit www.consumerfocus.org.uk/plugthedebt or contact their local Citizens Advice Bureau.