Memorandum submitted by Help the Aged
(EEFP 33)
INTRODUCTION
The Committee has posed ten questions, and if
the answer to the first was "no", there would be little
need to answer the others. Sadly, as fuel poverty escalates, there
is a need for Defra and other Government Departments to review
their approaches with urgency and vigour, but the current approach—described
in the Home Energy Saving Programme outlined on 11 September—displays
neither of those qualities. It prescribes a little more of what
is available already, and in some instances (for example in the
funding of Warm Front), a little less.
One can argue that fuel poverty is an inexact
construct, based on modelling and founded on data not originally
devised to measure that outcome. Its current definition was rather
arbitrarily established in the 1990s when 5% of average incomes
was spent on domestic energy, so 10% was deemed to indicate fuel
poverty. But like the Excess Winter Deaths figures, also a rather
dubious statistic, a picture can be built over time which sheds
light on social and economic trends, and there can be few who
would challenge the view that rising energy prices have overwhelmed
the Government's programmes to raise the incomes of the poorest
and to improve the levels of domestic energy efficiency to the
point where people on low incomes can afford to live with an adequate
level of warmth and comfort.
The strategies which the Committee is exploring
in the nine detailed questions are all worth pursuing, since there
is no magic bullet to address both fuel poverty today as well
as the essential reductions in domestic energy consumption which
are part of the climate change programme. There are action points
not just for Defra, but for other Government Departments and for
local government too. And since we have so many households in
fuel poverty—perhaps 5m across the UK today—and by
definition nearly all will be on low incomes, the majority of
the actions will need to be supported by some measure of public
expenditure.
If there is a silver lining, we face another
inexact science. How do we measure improvements in public health:
prolonging the utility of our housing stock, facilitating more
social engagement from our citizens, saving energy imports at
high global prices| promoting happiness? These benefits would
all seem to accrue from a comprehensive policy to address fuel
poverty, but are hard to account for in traditional "invest
to save" terminology.
1. The "slippage" on the target
to eradicate fuel poverty amongst vulnerable households
1.1 This language is Orwellian: the numbers
of households in England in fuel poverty have probably doubled
in the seven years since the Government accepted the targets in
the 2000 legislation and published its Fuel Poverty Strategy.
1.2 Of the three strands it sought to follow
two, bearing down on energy prices and improving the incomes of
low-income households, are both largely outside Defra's control.
The third, reducing domestic energy inefficiency andspear-headed
by the Warm Front programme, is owned by Defra and has effectively
been cut. Its grant maxima has remained unchanged, leaving 20%
of its clients (who are on means-tested benefits) improbably asked
to contribute top-ups: its design does not allow for reaching
the "hard-to-treat" (who might be helped by heat pumps
or solid wall insulation): its administration looks cumbersome
and expensive to the outside observer. The scheme can rightly
claim success for what it has achieved over the years, but times
have changed and it needs to work harder and in a number of new
directions, yet there is no indication that it will be given the
authority, flexibility and funding to do so. And the Government
infuriatingly obfuscates about the funding decisions by announcing
them over three year periods. As Help the Aged understands it,
the 2007-08 budget was £350 million, reduced by the CSR07
to £270 million for 2008-09, "restored" by the
addition of £50 million on 11 September, but due to fall
to £295 million in 2009-10 and to £270 million in 2010-11.
1.3 The Government makes much of the role
of CERT, and the enhanced role if Parliament agrees the proposals
tabled on 11 September. CERT, of course, is paid for by gas and
electricity users (at a flat rate), and whilst the new proposals
include the welcome concept of more area-based activities, the
mainstream programme is very scattered and unfocussed. Nor is
it well targeted on the fuel poor with cavity filling a large
part while 48% of the fuel poor have solid walls, and heating
replacement a smaller part while a key need for the fuel poor.
2. The effectiveness of energy efficiency
measures
2.1 Given the sharp hike in energy prices,
it has to be asked whether the domestic energy efficiency programmes
are working fast enough or hard enough to meet their objectives.
2.2 On the latter point, it is regrettable
that both Warm Front and CERT interventions can leave households
with housing still rated substantially below SAP 65. In the context
of the climate change objectives, even SAP 65 is probably too
low to allow the energy reductions which are going to be needed.
It seems we are running some rather second order schemes, and
accepting that we will have to go back and do the job again to
a higher standard at some future date. Even during the glory years
of fuel poverty reduction (the years to 2004), only 20% of the
reduction could be attributed to energy efficiency measures.
2.3 As to speed, the existing programmes
have been totally overwhelmed by the numbers of households now
thrust into fuel poverty, many of whom will be waiting for several
years before seeing action. More area-based activity, systematically
working through an area, raising local public awareness and minimising
contractors' travelling and administrativetime, could speed up
the process, but of course there would be more jobs to be done
with consequences for the capital costs of the programmes.
2.4 Meanwhile, people are urgently looking
for help now to meet their bills. There is a case for additional
cash payments for those in fuel poverty awaiting a makeover of
their homes. This might even incentivise people to come forward
to seek help with energy efficiency improvements, which is also
an increasing issue for the service providers. Benefit health
checks are important, given what is known about the underclaiming
of benefits, but where possible these should be face to face:
telephone enquiries tend not to identify the important potential
benefits such as Attendance Allowance and Disability Living Allowance.
2.5 The announcement around the Budget and
the 11 September measures put an emphasis on social tariffs. So
long as different suppliers have different names for these schemes,
and different qualifying criteria for potential applicants, they
are difficult to promote—despite their self-evident value.
In passing, one might note that social tariffs, because they are
not factored into the modelling which identifies the fuel poor,
make no contribution, however widely they are taken up, to impacting
on the fuel poverty statistics.
3. The balance between fuel poverty and greenhouse
gas emissions
3.1 This has been commented on above. A
key issue is establishing an energy efficiency rating scheme as
a widely and well understood part of housing assessments, so that
householders know where they are.
3.2 A second order issue is that the fuel
poor will always need help with capital improvements—whether
it is heat source pumps or replacing freezers. Widening the scope
of grants is probably impractical on grounds of cost, and potentially
unacceptable as it adds to the sense of unfairness associated
with the cliff edge of means-tested benefit eligibility. We need
to explore a third way, including perhaps soft loans and equity
release.
4. Government and energy supplier obligations
4.1 Either programme could be described
as bribing people with their own money. But it seems rather odd
that the energy suppliers should have this big and ever widening
responsibility for an area of activity so far away from their
core business. The driver seems to be that competition is to be
encouraged in all circumstances. But the discretion now built
into CERT only serves to add another layer of confusion in the
public mind, with few people having any understanding of what
their supplier may be prepared to offer by way of help. It may
be time to see CERT as a financial obligation rather than a driver
of programmes offered by companies—consolidating the money
with central, devolved and local government initiatives.
4.2 It will be interesting to see if, in
the consultation about the proposed Community Energy Saving Programme,
the suppliers agree to pool their resource allocation and nominate
an independent contractor.
4.3 CERT and its proposed extensions could
well represent a surcharge of £23-24 per fuel per year on
domestic bills. The one-off increase in the Winter Fuel Payment
this year is £50. We have probably seen CERT funding reach
its acceptable limit.
5. Social housing
5.1 Relatively speaking, social housing
has been the success story of the fuel poverty programme. At SAP
57 (2006), the average social sector house is considerably more
energy efficient than those in other sectors, but clearly there
is still room for improvements.
5.2 The Government has also accepted the
challenge toimprove all social housing to "lifetime homes"
standard. The opportunity therefore exists to drive forward with
both objectives in one integrated programme.
6. Hard to treat homes
6.1 There has got to be more work to find
an acceptable and affordable solution to the issue of solid walls.
In terms of insulation, it is the most important issue to which
there is no satisfactory solution at present.
6.2 Improving heating systems is the next
solution, and one key strategy must be to extend the gas pipeline
network to make efficient gas-fired heating more accessible: 34%
of fuel poor households live off the gas network. In tower blocks
and some districts, there is probably scope for combined heat
and power schemes, which could deliver energy more efficiently.
Heat pumps are well understood in other countries, and solar panels
and other forms of micro-generation have a part to play.
6.3 As noted above, we also need financial
mechanisms which can help householders beyond the reach of publicly
funded schemes to take action in their homes.
7. Smart meters, new technologies and micro-generation
7.1 Northern Ireland has shown the way with
smart meters. Meters which help consumers to monitor their energy
consumption, which make switching tariffs easier, which eliminate
the surcharge on pre-payment tariffs, and which provide accurate
bills are an essential part of the way forward. Smart meters could
also be a building brick for other forms of "smart home"
technology—for example, the various sensor devices which
have been marketed to support older people living alone.
8. Identifying those at risk of fuel poverty
8.1 Where once there was an almost pathological
refusal to share data, it is now more widely accepted that shared
data, properly managed in a secure way, can be very helpful. The
DWP is taking positive steps to use data-sharing to improve the
take up of means-tested benefits. One way forward, for example,
would be to use the data about bereavements, and seek sensitively
to engage with a survivor who may be suffering from a sharp fall
in income, be struggling with the problems of living alone, and
may be "over-occupying" a home which is becoming more
difficult to maintain—including to heat adequately.
8.2 Energy Performance Certificates have
also got a part to play. Monitoring these in their own area would
give local authorities a very good idea of where to focus action
to driveenergy efficiency improvement initiatives.
9. New homes
9.1 A potential link between energy efficient
homes and "lifetime homes" was identified above. Thus
far, the Government has chosen to use building regulations rather
sparingly, and relying more on exhortation to drive up standards
on both agendas. This seems unduly pusillanimous. Especially if
three to four million new homes are to be built over the next
couple of decades, it is vital that this significant extension
to our housing stock is built to the highest standards on both
these fronts.
10. The Winter Fuel Payment
10.1 The Winter Fuel Payment is something
of a misnomer. It is a cash payment, so not, as would have been
the case if it was a voucher, specifically linked to fuel bills.
Its value has never been linked to the cost of fuel: in 2003,
the £200 would have paid for about 40% of an average home's
annual energy bills, but in 2008 the £250 will barely cover
20%. It was introduced at a time when the Government was resisting
pressure to uprate the state pension in line with earnings, and
looked rather like a peace offering to the older population—just
as the Christmas Bonus was when the Heath Government initiated
it whilst freezing pension increases in 1972. In truth, it is
a supplementary payment to shore up a rather miserly state pension
scheme.
10.2 It has become axiomatic to bundle this
expenditure with the other Government money allocated to energy
efficiency measures, and in that context it represents a substantial
part of the budget. But the issue is surely not how large the
Winter Fuel Payment appears to be, but how modest the funds are
for energy efficiency improvements.
10.3 Pensioner poverty rates in the UK are
high—23% live below the poverty line according to the latest
DWP statistics, and a further large proportion are only just above
it. For them, the Winter Fuel Payment is a significant element
in the managing of their overall budget. The option of adjusting
it, for example by with-holding it from higher rate taxpayers,
would depend on improved data-sharing between the DWP and HMRC.
Help The Aged
October 2008
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