APPENDIX 8
Memorandum submitted by the Fuel Poverty
Advisory
FUEL POVERTY
ADVISORY GROUP
(FPAG)
1. This is the response to the consultation
from the Fuel Poverty Advisory Group. The Group consists of representatives
of external organisations and was set up by the Government to
provide advice on the practical measures needed to meet the Government's
Statutory Targets of eradicating fuel poverty in England. The
Group was established broadly at the same time as the Statutory
Targets were put in place. A wide range of organisations is represented
on the Group—from energy companies to fuel poverty NGOs
and broader consumer and housing groups and experts. The Group
is appointed by Defra and DTI Ministers. The Membership and terms
of reference of the Group are set out in Appendix 1.
FPAG RELEVANT EXPERIENCE
2. Fuel poverty is a cross departmental
issue and the Group's experience might therefore be of interest
to the Committee. In addition there have now been Statutory Targets
on fuel poverty for six years and there have also been PSA targets
on fuel poverty. Again the impact of these targets will be relevant
for the Climate Change targets.
CROSS DEPARTMENTAL
RESPONSIBILITIES
3. The Government has a statutory duty to
end fuel poverty. The exact targets differ between the different
administrations, but in England the duty is to end fuel poverty
for vulnerable households and non-vulnerable households living
in social housing, as far as reasonably practical, by 2010 and
to do the same for all households by 2016.
4. Fuel poverty arises as a result of a
combination of poor energy efficiency, low incomes and prices.
It is thus a multifaceted problem and the eradication of fuel
poverty requires a range of policies spanning several departments.
Defra with its energy efficiency responsibilities and DTI, with
its role in energy prices and as a sponsoring department for the
energy companies, are the lead departments on fuel poverty. Treasury
clearly plays a key role—both directly through its decisions
on funding, but also less directly through its very significant
impact on decisions relating, for example, to energy policy and
the role of markets. Communities and Local Government and the
Department for Work and Pensions are also extremely important
and the Department of Health also has a role.
5. However, responsibility is not confined
to Government Departments. The influence of Ofgem and of Local
Authorities is also potentially very significant. Appendix 2 sets
out current FPAG policy recommendations for each of the key departments
and this highlights the range of responsibilities across Departments.
6. The Government has, over the years, very
significantly increased the resources available to combat fuel
poverty and it has made progress on a number of fuel poverty policies.
But the experience of cross departmental working (including working
with agencies like Ofgem) on the whole has not been good and this
has been one of the major hindrances to more achievements on fuel
poverty. Specifically:
— CLG with its housing responsibilities
is very important. Individual officials have been helpful, but
it has been hard to secure adequate engagement or resources.
— Ofgem and hence DTI have been
engaged, but Ofgem has signally failed in particular to act on
the widening differential between direct debit and other prices,
especially prepayment prices, and hence on the prices paid by
low income customers, and it has in general failed adequately
to protect the interests of low income customers in the context
of price increases.
— More generally the question
of the "poor paying more" for energy is in itself a
cross Government issue involving the Treasury, DTI/Ofgem and DWP
and this question has not yet even been considered inter-departmentally.
— Some local authorities have
been exceptionally proactive and successful on fuel poverty, but
many others have done very little; in particular because fuel
poverty, like climate change, has not been part of their performance
measurement.
— On the positive side the Department
for Work and Pensions is now much more engaged and plays a co-operative
proactive role.
— Whilst the division between
Defra and DTI is a little untidy, the Departments now appear to
work well together on fuel poverty and there are advantages as
well as disadvantages of having two lead departments.
— There appears to have been more
recognition recently of the need for efficient inter-departmental
co-operation. There are signs of progress in the Energy White
Paper published this week, but this has yet to yield concrete
results especially for CLG, Ofgem and Local Authorities.
7. It seems to us to be inevitable that
responsibility is spread across departments for fuel poverty (although
it may not need to be quite as diffused). The key challenge is
thus to engage across Government and to secure the right policies
across Departments. In order to make progress it seems to FPAG
that the Government should prepare a Fuel Poverty Business Plan
setting out the challenges, the policies required and clearly
assigning responsibility for specific policies to individual departments
or agencies. Then clearly implementation would need to be monitored.
8. FPAG does appear to have played a significant
role in raising awareness of fuel poverty issues in the Departments
that do not have lead responsibility and it has had some impact
on their policies. An external committee can thus play a helpful
role in securing some cross departmental actions, but as is clear
additional mechanisms are also needed.
EXPERIENCE OF
THE FUEL
POVERTY TARGETS
9. Our views on the impact of the statutory
fuel poverty targets are as follows:
— The statutory target has made
a difference—there have been more resources for fuel poverty
and more helpful measures than would have been the case in the
absence of a target. The target has helped to provide focus and
drive.
— However, the 2010 statutory
target now looks extremely difficult to achieve and the shortfall
could be considerable. Admittedly the circumstances have been
difficult as a result of rising energy prices—but this still
raises issues about the best way of securing effective targets
as there will always be difficult circumstances on the road to
tough targets. It is not clear what the sanctions for failing
to meet the targets are. It seems therefore likely that the targets
and arrangements put in place will prove to have been insufficient
to secure achievement of the targets.
— Some Government departments,
other than the lead departments, have been helpful especially
in recent months, but in broad terms the existence of a statutory
target has made a small, but not a major, difference to the actions
of key department and of agencies like Ofgem. The issue of binding
other departments and agencies across Government into the Climate
Change targets will thus be an extremely important one.
10. In summary the statutory target and
the associated arrangements have been helpful and have unquestionably
resulted in more progress than would have been made in their absence,
but it is likely—sadly—that they will not be anything
like adequate to secure the objective.
11. Similarly both Defra and DTI have quantified
fuel poverty PSA targets "to eliminate fuel poverty in vulnerable
households in England by 2010 in line with the Government's fuel
poverty strategy objective". This has been very helpful,
but as noted above, not enough. Other departments have targets
with some bearing on fuel poverty, but not direct fuel poverty
targets.
12. So a Fuel Poverty Business Plan with
clear division of responsibility seems the best way of making
progress and engagement across Government.
13. Finally, FPAG would be very happy to
provide further information and to give oral evidence.
May 2007
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