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More than 5 million UK households experienced fuel poverty last winter. The Government's statutory target to eradicate fuel poverty, as far as reasonably practicable, in vulnerable households by 2010 (and in all households by 2016) is likely to be missed; highlighting the weakness of a policy which attempts to address fuel affordability issues and domestic energy efficiency simultaneously. The Government should have reviewed its fuel poverty policies earlier given the upward trend in the number of fuel poor and rising fuel prices.
The Government announced plans for a "Great British refurb"—providing basic insulation for all UK homes by 2015. That completion date is unambitious and there is little practical detail on how it will be delivered. The series of consultations will only delay action and the Department of Energy and Climate Change (DECC) should set out a detailed action plan in the next three months on how it will deliver its aspirations.
Resources for tackling fuel poverty
- This year less than £400 million has been allocated to Warm Front, the Government's main energy efficiency programme aimed at helping vulnerable people and next year's budget is less than £200 million. Winter Fuel Payments (WFP) will cost more than £2.7 billion this year yet only 12% of WFP recipients are in fuel poverty. Taxing WFPs and ending payments for higher rate tax payers could release £250 million a year. This funding would then be available to finance a much larger programme of energy efficiency improvements for the fuel poor and other households with, for example, disabled people who have disproportionately high personal energy needs.
Sources of funding
- Energy companies are expected to invest over £3.3 billion over the next three years under the Carbon Emissions Reduction Target (CERT). But CERT costs are recharged to customers. There is a lack of transparency over who pays for such schemes. Ofgem should require energy companies to provide customers with information on their bills about the costs they are paying each year, as well as to report annually on each energy company's overall spend on such schemes including the use of their own funds.
- While it is right that energy companies contribute to improving the overall energy efficiency of the UK, policies to address fuel affordability should be funded from general taxation. Fuel poor customers must also be able to benefit as much as better off customers from climate change mitigation programmes such as CERT.
Regulation and competition
- Ofgem has finally conceded that some customers, such as those with pre-payment meters, have not fully benefited from competition. It has proposed remedial measures but the regulator must be pro-active and rigorous in protecting all consumers' interests and we urge the Energy and Climate Change Committee to keep this under review.
- We welcome recent clarification in Ofgem's guidance on social tariffs but more could be done to disseminate information to customers and Ofgem should require energy companies to publicise criteria determining who is eligible for social tariffs.
Energy efficiency schemes
- We welcome the recent increase in the grant maximum level of Warm Front since its low level had deterred a significant number of applicants. However the £6,000 maximum only applies to hard-to-treat properties that are off the gas grid and should be extended to all hard-to-treat properties. DECC must review in 12 months' time whether the levels have now been set high enough to fully address the problem.
- Warm Front needs to be further reviewed to assess if timescales for completion of work can be reduced, whether the target SAP 65[1] is being achieved, and if complaints about the scheme's contractors are being handled effectively. The review should also include an assessment of any remaining barriers that prevent the greater use of local contractors.
- DECC and the Department for Communities and Local Government should require a higher level of energy efficiency in the capital investment programme following on from the Decent Homes programme for social sector housing. They should assess the cost and feasibility of introducing a SAP 81 standard.
Low carbon energy supplies
- CERT's emphasis on cavity wall and loft insulation has not been effective in helping those living in solid wall properties. The Government must analyse how new technologies, such as air source heat pumps, can be deployed for these hard to treat homes, including developing a financing model to enable fuel poor households to take advantage of these technologies. There is greater potential for fuel poor households to benefit from community scale schemes.
New homes
- We welcome the ratchetting up of the energy efficiency requirements under Building Regulations but are concerned these are not being fully enforced.
Data
- Those charged with tackling fuel poverty need better access to data on a range of variables including energy efficiency levels of homes, household incomes and fuel costs. DECC should survey current data needs and access arrangements as a precursor to putting in place improved data sharing arrangements for agencies such as local councils, Government departments and energy supply companies.
A comprehensive approach for the future
The creation of the Department of Energy and Climate Change provides an opportunity for the Government to get back on track towards achieving its fuel poverty targets. There needs to be a comprehensive strategy that will identify the contributions of each of the three elements affecting fuel poverty levels (namely prices, incomes and energy efficiency levels) towards meeting the targets. This "road map" should set out how the energy efficiency of English housing stock can be improved to a specific level of energy efficiency, using SAP 81 wherever practicable, with a minimum level of SAP 65.
Achieving this will require a means of bringing together the current disparate set of programmes. We recommend the realigning of existing programmes into a comprehensive, adequately funded, area-based programme led by local authorities, potentially replacing energy company delivery of CERT programmes with a levy on energy companies paid into a central fund. Combined with funding from other programmes, this would be distributed to local authorities to fund delivery of the national plan to upgrade energy efficiency.
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