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Communities and Local Government Committee
Inquiry and Call for Evidence on Existing Housing Stock and Climate Change
Comments from National Energy Action
1. Introduction
1.1 National Energy Action (NEA) works to ensure that low-income and other disadvantaged households can afford to heat their homes to the standard required for health and comfort. NEA shares this objective with Government which is committed under the provisions of the Warm Homes and Energy Conservation Act 2000 to eliminating fuel poverty, as far as is reasonably practicable, for all households in England by 2016. The UK Fuel Poverty Strategy further commits Government to ending fuel poverty for vulnerable households in England by 2010. These targets are supported by the key policy objective identified in the 2003 Energy White Paper[1] to ensure that all homes are adequately and affordably heated.
1.2 The UK Fuel Poverty Strategy recognises three key elements in providing affordable warmth:
· Efficient and economic
heating systems and effective thermal insulation · Manageable energy costs · The level of household incomes for those who are economically inactive or otherwise financially disadvantaged
1.3 Until 2004, sufficient progress had been made in all three of these areas to reduce the incidence of fuel poverty in England from 4.3 million households in 1996 to 1.2 million households in 2004. However, between 2004-2007 domestic energy prices reached unprecedented heights and much of the good work in tackling fuel poverty was reversed. The 2007 Energy White Paper[2] showed that there are currently some 2.5 million fuel-poor households in England and that, even on the most optimistic assumptions about future energy price movements, the Government cannot achieve its 2016 fuel poverty target (Table 1).
Table 1: Historic and Projected Numbers of Households in Fuel Poverty in England, 1996-2016 based on a number of possible price scenarios
2. Housing as a key issue in fuel poverty
2.1 The Government has done much to improve the financial circumstances of disadvantaged households. Pension Credit, the national minimum wage and a range of Tax Credits have all helped address the financial aspect of the fuel poverty formula, supplemented by specific measures such as the Winter Fuel Payment to all older households. With regard to energy prices, the Government has done little more than exhort energy consumers to switch supplier where lower tariffs are available; to rely on competition to ensure lower prices; and to encourage energy suppliers to protect the interests of their vulnerable customers as part of their Corporate Social Responsibility ethos.
2.2 It is in the area of housing standards that the Government has the greatest powers and, potentially, the greatest involvement. Consequently NEA welcomes this consultation and the opportunity to ensure that any consideration of energy efficiency standards in the existing housing stock recognises that social imperatives and equity are not subsidiary to environmental concerns. However, despite this priority, NEA sees the improvement of the existing housing stock as crucial for both social and environmental reasons and sees improved heating and insulation standards as the key factor in meeting both objectives.
3. NEA's response to the specific issues raised by the Committee
3.1 NEA's comments on issues follow the sequence in which they are raised by the Committee and address all areas with the exception of those relating to housing of special architectural or historical interest. 4. The significance of existing housing compared to new build and the different levels of performance each display
4.1 Energy conservation standards were first incorporated within the Building Regulations in 1965 at a rudimentary level and made more rigorous via 1976 revisions following the oil crisis of 1973. Since then, successive changes have made regulations more demanding. The 2006 changes were intended to bring about a significant improvement over any previous standards and have now themselves been superseded by the aspiration that all new dwellings should be carbon neutral by 2016. However, fuel poverty is not an issue generally associated with new housing and this is demonstrated in the linkage between age of dwelling and incidence of fuel poverty. Fuel-poor households are much less likely to occupy properties built since the advent of mandatory Building Regulations.
5. Since 60% of the housing stock predates the introduction of basic thermal requirements under the Building Regulations and 75% predates the marginally more rigorous standards introduced in 1976 it would be expected that the oldest housing should contain the greatest proportion of fuel-poor households. However some of the older property is occupied by comparatively affluent households and income is a major factor in fuel poverty. Nevertheless there is a strong link between poor heating and insulation standards and fuel poverty.
6. The Government has indicated that SAP 65 represents a standard of heating and insulation that minimises the risk of fuel poverty and the table above provides strong supportive evidence. The Government's key fuel poverty programme, Warm Front, requires that properties benefiting from the scheme be improved to SAP 65 wherever feasible. Clearly, poorly heated and insulated dwellings create both social and environmental problems.
7. The respective roles of residents, homeowners, landlords, local government, central government and the energy industry in promoting and delivering greater energy efficiency
7.1 Lack of a coherent structure and objective has been a historic failing in domestic energy efficiency programmes in the United Kingdom. In particular, Warm Front and the Energy Efficiency Commitment have provided substantial financial resources over a number of years but, instead of being complementary, these programmes have often simply duplicated work and have frequently competed for the same client group.
7.2 The Pre-Budget Report in December 2006 announced funding of £7.5 million towards development of area-based initiatives to: 'improve the co-ordination between, and effectiveness of, Warm Front and the Energy Efficiency Commitment. This will fund projects using an area-based approach to identify households and provide the right coordinated set of advice and measures for them.'
7.3 The area-based approach presents an opportunity to involve all of the agencies and parties listed above in a coherent and structured domestic energy efficiency programme. Social landlords are delivering energy efficient improvements through the Thermal Comfort element of the Decent Homes Standard; private sector landlords have been offered tax allowances to improve insulation standards in their properties (they also face sanctions under the Housing Health and Safety Rating System if tenants are at risk from poorly heated and insulated housing); local authorities have social and environmental responsibilities to residents; energy suppliers have been set energy saving targets which incorporate specific levels of assistance for vulnerable households; the Government has statutory targets for fuel poverty and CO2 emission reductions; and a warm and healthy living environment which can be achieved at an affordable cost is a minimum entitlement for all households.
7.4 Clearly there is a potential role for all elements of the community in improving residential energy efficiency. What is now required is a combination of advice, guidance, financial support, incentives and (where appropriate) penalties to ensure full stakeholder involvement in an area-based energy efficiency programme that can operate effectively on a community-wide basis and co-opt all relevant parties to participate.
8. Energy Performance Certificates
8.1 It is beginning to look as if the 'teething problems' associated with Energy Performance Certificates may easing and that the infrastructure for full implementation may soon be in place. Regardless of how contentious Home Information Packs (HIPs) may be, implementation of the Energy Performance Certificate system is mandated by EU Directive and is not subject to political pressure. However, in order for the certificates to have any practical value they should be supplemented by a number of supportive measures including:
· Referral of prospective purchasers and tenants to sources of advice and practical assistance through the national network of Energy Efficiency Advice Agencies · Creation
of a central record of Energy Performance Certificate data. This would assist
across a number of Government policy objectives including progress towards Home
Energy Conservation Act targets and identification of those homes where the
condition of the property represents a Category 1 Hazard to the occupant(s)
under the Housing Health and Safety Rating System · Information for private landlords on what constitutes an acceptable level of energy efficiency - as a minimum, compliance with the Decent Homes Standard and, preferably, a target SAP rating. Landlords should also be apprised of Government initiatives such as the Landlords Energy Saving Allowance and also be made aware of their wider responsibilities[4] to tenants wishing to apply for Warm Front or Energy Efficiency Commitment grants.
9. Government efforts to reduce carbon emissions from existing housing stock whether in private or public ownership and other related programmes including Decent Homes
9.1 As indicated above, NEA believes that the need to discuss the effects of a range of initiatives to improve domestic energy efficiency illustrates a major problem with energy policy; there are too many programmes in existence to optimise the use of finite resources. The Climate Change Programme 2000 suggests that the Energy Efficiency Commitment will save 1.6 MtC to 2010 whilst Warm Front will save 0.4 MtC. Decent Homes is intended to address fuel poverty and environmental issues but addresses this enormous challenge in such an anaemic manner that it represents another wasted opportunity.
9.2 Warm Front has evolved over the years from a programme offering basic insulation measures to one that can deliver affordable warmth for many of the scheme's beneficiaries. However, there are a number of problems with the current programme including:
· The
inadequacy of the maximum grant (£2,700 in most cases) which is increasingly
unable to fund a package of heating and insulation measures resulting in the
need for a client contribution or, in the worst cases, the work not proceeding · The
programme can offer only minimal assistance to those households who cannot
benefit from the best available range of cost-effective measures (gas central
heating, cavity wall insulation and loft insulation) because their homes are
off the mains gas network and/or the property is of solid wall construction and
cannot be insulated under current Warm Front regulations · Concerns that the current annual level of Warm Front expenditure of around £350 million is under threat because of budgetary constraints within Defra
9.3 The Energy Efficiency Commitment (EEC) has considerable scope as a fuel poverty programme and this is only equitable since the money for the programme is partly provided by fuel-poor and other low-income households. However, in further prioritising the programme's CO2 emission objectives (evident in the programme's future title Carbon Emission Reduction Target) there is concern that the social potential of EEC will be diminished. Defra proposes reducing the energy savings to be achieved within the Priority Group[5] from 50% to 40%.
9.4 The Decent Homes Standard (DHS) is the most problematic. The minimal heating and insulation standards required for compliance with the Thermal Comfort criteria mean that it is possible for a property to be deemed to have efficient heating and effective insulation whilst representing a threat to the health and well-being of the occupants. The Housing Health and Safety Rating System indicates that where a property has an energy efficiency rating of SAP 35 or below this can serve as a proxy for a Category 1 Health Hazard. NEA's analysis of the English House Condition Survey 2003 suggested that around 1 million homes passed on Thermal Comfort whilst being rated below SAP 35. BRE research[6] suggests that many local authorities have voluntarily exceeded the inadequate DHS in attempting affordable warmth for their tenants but the standard should be made much more rigorous and universal.
9.5 Whilst area-based initiatives (see 7.2) are seen primarily as part of the fuel poverty infrastructure, they may also serve as a model of how to implement energy efficiency improvements across the whole of the existing housing stock. The model provides the opportunity to develop a programme to deliver energy efficiency improvements to all properties that can derive cost-effective benefit from practical energy efficiency improvements to heating systems and building fabric, and the opportunity to influence consumer behaviour through advice and information. An area-based initiative can engage with entire communities in offering energy saving measures the cost of which can range from no-cost assistance to low-income and other vulnerable households through some level of householder contribution based on ability to pay.
10. The technologies available to reduce emissions and the Government's role in facilitating relevant further technological development.
10.1 Since the inquiry is not concerned with domestic appliance use, NEA's comment in this area will be limited to innovative approaches to heating systems and thermal insulation. In the case of properties without cavity walls the most likely viable solution will be insulation of the external solid wall. In the past this has been prohibitively expensive but there are indications that future costs may be manageable. In its discussion of the future form of the Carbon Emissions Reduction Target April 2008 to March 2011[7], Defra suggest that the cost per household for solid wall insulation should be between £3,128 and £3,483. The cost of the works will be met mainly by energy suppliers with a significant contribution from able-to-pay householders and landlords. Priority Group customers[8] will make a token contribution towards the cost of the work.
10.2 A key additional factor identified in the UK Fuel Poverty Strategy from the outset has been the problem of households living in properties off the mains gas network and, consequently unable to benefit from the most efficient and economic heating source. Such households have been reliant on electricity, bottled gas, coal or oil for heating provision with the attendant disadvantage of high carbon emissions and/or high economic costs. Clearly, one priority must be to ensure maximum household access to mains gas supply where this is economically feasible. 10.3 NEA has been involved in testing a number of micro-generation technologies to assess their potential suitability for inclusion in domestic energy efficiency grant programmes. Financial support for many of these technologies is currently available to a limited number of social landlords and more affluent homeowners through the Low Carbon Buildings Programme operated by the Energy Saving Trust and the Building Research Establishment on behalf of the Department for Business, Enterprise and Regulatory Reform. 10.4 NEA pilot projects have examined the technical and economic feasibility of incorporating a number of micro-generation solutions within fuel poverty programmes. Projects have installed and monitored performance of: · air-source heat pumps · biomass · solar thermal hot water · micro-wind turbines · solar photovoltaic panels 10.5 Early findings have been generally positive, particularly in the case of air-source heat pumps which NEA has recommended should be added to the existing menu of Warm Front measures. NEA also recommends that this technology be included in the range of technologies supported by the Low Carbon Buildings Programme. In contrast with solid fuel or electric heating a typical household could reduce its carbon footprint attributable to space and water heating by 60-70%. Other technologies show promise but it is premature to endorse these as cost-effective responses to individual cases of fuel poverty. However NEA welcomes the implicit support in CERT deliberations for other renewable technologies such as wood-burning stoves, biomass boilers, photovoltaic panels and solar water heating. 10.6 It must not be forgotten, however, that millions of households still occupy properties where conventional energy efficiency measures have not been installed. There remains much to be done in terms of effective loft and wall insulation and the provision of efficient and economic heating systems. 11. The costs associated with reducing carbon emissions from existing housing, who should meet these costs and particularly, in respect of low-income households, interaction between carbon emission reductions and the Government's ambitions to reduce poverty. 11.1 Clearly it is the Government's intention that the brunt of the cost of energy efficiency improvements to the housing stock should be borne through a combination of energy supplier CERT funding, able-to-pay householder contributions and part-funding from landlords. In the case of CERT Priority Group households most of the improvement works will incur minimal cost to the householder. 11.2 Regardless of how CERT funding is depicted it represents a levy on all domestic energy customers and, given that it takes no account of ability to pay, is to some extent regressive. NEA has put the case for major Government policy objectives to be funded through the Exchequer by direct taxation as the most fiscally equitable solution but recognises the Government's antipathy to this approach. One crucial aspect of CERT's predecessor programmes has been recognition of the need for additional support for low-income and other vulnerable households; this has been reflected in the need to ensure that 50% of the energy savings were to be achieved in properties occupied by Priority Group households. NEA is strongly opposed to current proposals for CERT that will see the emission reduction share within the Priority Group reduced to 40%. 11.3 NEA is also adamant that additional resources for CERT must not be seen by Government as an opportunity to reduce its own funding support for fuel poverty programmes. Warm Front is the main source of grant-aid enabling vulnerable private-sector households to improve heating and insulation standards in their dwellings. It is crucial that Government commitment be reinforced to at least maintain support at the current annual funding level of £350 million when funding arrangements are set out in the forthcoming Comprehensive Spending Review. 11.4 Whilst the Committee's query refers to interaction between carbon emission reductions and the Government's ambitions to reduce poverty, NEA takes this issue to relate to fuel poverty given that the Warm Homes and Energy Conservation Act commits the Government to eliminate fuel poverty for vulnerable households by 2010 and for all households by 2016. Unquestionably there can be tensions between social and environmental objectives where, for example, green taxation is mooted for environmental reasons despite a potential negative impact on low-income households. However, in the case of energy efficiency improvements to existing housing, social and environmental policies can be completely harmonious. NEA maintains that improved heating and insulation standards are the most rational and sustainable approach to the provision of affordable warmth and, clearly, this approach is also designed to optimise environmental benefit. 11.5 However, within the wider issue of general poverty, it should also be noted that a number of additional benefits accrue from policies to address inadequate heating and insulation standards in domestic properties. In addition to the physical and psychological health improvements resulting from affordable warmth there are other benefits to households, and to the wider community, through higher disposable income which can be spent on local goods and services; through the creation of job opportunities within the energy efficiency industry; and through reduced pressure on health and social welfare services. Summary of Key Points and Recommendations · The poor energy efficiency standards of the UK housing
stock present challenges to both environmental and social welfare objectives.
The incidence of fuel poverty has more than doubled between 2004 and 2007
posing a serious threat to the Government's statutory duty to eradicate fuel
poverty by 2016. Improved heating and insulation standards represent the
optimum means of achieving both environmental and social policy targets
relating to the domestic sector. Government funding has provided initial
support for around 50 area-based initiatives to improve domestic energy
efficiency on a comprehensive basis at
a local level. This approach will enable disparate sources of energy efficiency
funding, such as Warm Front and the Energy Efficiency Commitment, to deliver
benefits to all households within a community on a structured and coherent
basis. Given the acknowledged effectiveness of this approach, the model can and
should be replicated across all communities in England. · The Department for Communities and Local Government
suggests that where a dwelling attains an energy efficiency rating of SAP 65 or
higher there will be minimal risk of fuel poverty. Currently, only 20% of the
housing stock in England meets this standard and, clearly, those properties
with the lowest energy efficiency ratings perform worst both in providing
affordable warmth and in minimising CO2 emissions. SAP 65 is
currently a target within the Warm Front programme and represents an acceptable
benchmark for energy efficiency refurbishment. NEA has suggested that the
number of properties improved to SAP 65 be adopted by local authorities in
England as an indicator in determining progress on fuel poverty reduction
required by the new Local Government Performance Framework. · The Department for Communities and Local Government
has also indicated that where a property has an energy rating below SAP 35 this
can serve as a proxy for a Category1 Cold Health Hazard under the Housing
Health and Safety Rating System and should trigger enforcement action by local
authorities. However for this position to serve any practical purpose local
authorities must be encouraged and resourced to identify such properties and to
require remedial action. · Energy Performance Certificates have a potentially
important role in meeting environmental and fuel poverty objectives. In the
case of more affluent households, advice and information on cost-effective
improvements may be sufficient to stimulate energy efficiency investment. With
regard to low-income tenants and owner-occupiers there is a need for advice and
guidance and for financial support. Energy Performance Certificates will be important
in identifying the least energy efficient properties and in prioritising
assistance to occupants; however the practical value of the certificates can
only be maximised where the findings of the energy report are accessible to
local authorities. · In 2001, NEA's reaction to publication of the proposed
Thermal Comfort element of the Decent Homes Standard in 2001 was one of severe
disappointment. As the Government's key policy to address fuel poverty and
improve energy efficiency in social housing the Thermal Comfort criteria were
deemed inadequate in terms of both heating and insulation standards. This view
of the inadequacy of the standard was effectively endorsed in research by the
Building Research Establishment which indicated that social landlords were
carrying out energy efficiency improvement works to a considerably higher
standard than required by the Decent Homes Standard. However, targets for the
Decent Homes Standard now apply to vulnerable private sector households and
there is no indication that the DCLG has any intention of making the standard
more rigorous. This is despite the fact that as many as 1 million properties
that comply with the Thermal Comfort element have an energy efficiency rating
of SAP 35 or below. · The effectiveness of the Warm Front programme is
currently vulnerable to a number of factors. These include the inadequacy of
the maximum grant to fund the measures required for affordable warmth and the
potential threat to the Warm Front budget given the likelihood of competing
priorities for Defra in the forthcoming Comprehensive Spending Review. · The majority of the housing stock is amenable to
cost-effective heating and insulation improvements but a large proportion of
fuel-poor households occupy hard to treat properties where innovative solutions
in terms of heating and/or insulation technologies are required. At present,
energy efficiency grants programmes cannot properly address these
circumstances. · Considerable financial resources are available for domestic energy efficiency programmes in England. However this funding must be utilised in a more coherent and cost-effective manner to obtain the maximum social and environmental benefits from investment. It is also recognised that potential tensions between environmental and social concerns can be entirely reconciled in the shape of domestic energy efficiency. [1] Our energy future - creating a low carbon economy, DTI, 2003 [2] Meeting the Energy Challenge, DTI, May 2007 [3] The Standard Assessment Procedure (SAP) measures the energy efficiency characteristics of a dwelling using a scale of 1-100, the higher the score the higher the standard. [4] Landlord permission must be received prior to works being carried out. However where landlords refuse permission this may trigger a Housing Health and Safety Rating inspection. [5] The EEC Priority Group comprises households in receipt of a means-tested or disability-related benefit. It differs from Warm Front in that it applies across all tenures and the means-tested eligibility criteria are not restricted to older householders or families with children. [6] Implementing Decent Homes in the Social Sector, DCLG, 2007 [7] Carbon Emissions Reduction Target April 2008 to March 2011, Defra, May 2007 [8] Priority Group customers are those in receipt of a means-tested or disability-related benefit |