Background to the inquiry
1. The Government defines fuel poverty as occurring
when a household must spend more than 10% of its income on all
household fuel use in order to maintain a satisfactory heating
regime. Having set targets
to reduce fuel poverty the Government showed progress up until
2003-04 but, following the rise in energy prices, then the trend
2. Britain sees 25,000-40,000 more deaths in winter
than the summer months. This phenomenon is not unique to the UK
but the variation is higher than for other European countries
with similar (or colder) climates and living standards. In England,
mortality rates are 19% higher in the winter than in the summer.
This compares to 10% in Finland, 11% in Germany and 14% in Austria.
The low energy efficiency level of many English homes is a factor
in the UK figure.
3. At the launch of our inquiry in July 2008, we
invited evidence about the policies and programmes of both Government
and the energy supply industry aimed at improving domestic energy
efficiency and alleviating fuel poverty. Following the creation
of the Department of Energy and Climate Change (DECC) on 3 October
2008, we discontinued this inquiry as responsibility for fuel
poverty passed from the Department for Environment, Food and Rural
Affairs (Defra) and the Department for Business, Enterprise and
Regulatory Reform (DBERR), to the new Department.
4. On 6 November 2008 we published the 68 submissions
of written evidence we had received in a special report and recommended
the new Energy and Climate Change Select Committee hold an inquiry
into fuel poverty at the earliest opportunity.
However when it transpired that this new Committee would not be
established until January 2009 we re-opened this inquiry.
5. A list of those who gave oral evidence can be
found at the end of this report. We are grateful to all those
who participated in this inquiry and would like to thank our specialist
adviser, Dr Jim Watson, of the Science and Technology Policy Research
Unit, University of Sussex.
Government objectives and targets
6. The Warm Homes and Energy Conservation Act 2000
required the Government to prepare and publish a strategy setting
out 'policies for ensuring, by means including the taking of measures
to ensure the efficient use of energy, that as far as reasonably
practicable persons do not live in fuel poverty'.
Levels of fuel poverty depend on three main factorsfuel
prices, incomes and the energy efficiency standards of homes.
The Government has policies to address all three, with programmes
funded and delivered by various public and private sector agencies.
7. The Fuel Poverty Strategy published in November
2001 covered the entire UK.
It set targets to end fuel poverty (for vulnerable households
by 2010 and for all households by 2016) and set out a broad package
of energy efficiency, energy market and social inclusion measures.
Fuel poverty subsequently became a devolved matter with respective
targets for each of the three administrations. In 2004 Defra published
Fuel Poverty in England: the Government's Plan for Action
that set out measures to meet the 2010 target.
8. David Heath MP introduced a Private Members' Bill
in January 2009 requiring DECC to publish a Fuel Poverty Strategy
sufficient to 'fuel poverty proof' a certain number of existing
properties to a specified standard by December 2016 and making
social tariffs mandatory for 'vulnerable households'. The Bill
won backing from charities including Help the Aged, Friends of
the Earth, Consumer Focus and the Association for the Conservation
of Energy but has, to date, failed to receive a Second Reading.
PROGRESS AGAINST FUEL POVERTY TARGETS
9. Most of the evidence we received suggested that
the Government will miss its 2010 target to eliminate fuel poverty
among vulnerable households. National Energy Action believed this
lack of progress constituted the "collapse of the UK Fuel
FPAG likewise stated that "the Government appears to have
given up on the legally binding 2010 Fuel Poverty Target".
Even DECC accepted that "the current mix of fuel poverty
measures will not totally eradicate fuel poverty in vulnerable
households by 2010".
10. The latest official statistics on fuel poverty
published in 2008 only go up to 2006 when 3.5 million households
lived in fuel poverty across the UK, an increase of around 1 million
since 2005 (See Graph 1).
Graph 1: UK Households in Fuel Poverty 1996-2006
Source: Department for Environment, Food and Rural
Affairs, The UK Fuel Poverty Strategy, Sixth Annual Progress Report,
11. Based on the results of the English House Condition
Survey, the overall number of fuel poor households in England
in 2006 was estimated at 2.4 million (around 11.5%). Of these
1.9 million were categorised as vulnerable,
defined by Government as households containing older people, families
with children, disabled people or anyone suffering from a long
12. The Fuel Poverty Advisory Group (FPAG), a non-Departmental
Public Body formerly sponsored by Defra/DBERR, published projected
figures for England in 2007 of 2.9 million households in fuel
poverty, of which 2.3 million were classified as vulnerable. FPAG
believes that fuel poverty is now as its highest level for nearly
a decade, and estimates
that 4 million households in England were in fuel poverty by September
2008. Consumer Focus
(formerly energywatch) estimates the current UK-wide figure to
be 5.5 million households in fuel poverty.
These statistics imply that progress on fuel poverty has been
reversed since 2005.
13. Some witnesses questioned a definition of fuel
poverty based around the income percentage spent on heat and light.
The National Right to Fuel Campaign (NRFC) considers the current
definition "not adequate for the task of ending fuel poverty"
but recognises "the difficulty in altering definitions, especially
at this stage of the fuel poverty strategy".
The Minister responsible for delivering the targets refused to
estimate the number of fuel poor because, she said, this group
is "a constantly shifting group of people depending on [fuel]
prices, depending on their incomes and of course to a degree depending
on the severity of the weather".
IMPACT OF PRICE RISES ON FUEL POVERTY
14. Estimates suggest that each 1% rise in fuel prices
pushes an additional 40,000 households into fuel poverty.
Falling domestic energy prices from the mid 1990s to 2003 were
reflected in lower levels of fuel poverty. Prices have risen since
thengradually from 2003 but rapidly from autumn 2005 to
December 2006 (See Graph 2). A price decrease in 2007 was followed
by steep rises over 2008 with a corresponding escalation in fuel
Graph 2: UK domestic gas and electricity prices
Source: Social Indicators, Research Paper 08/76,
House of Commons Library, October 2008.
15. According to Consumer Focus, the average domestic
energy bill rose from £554 in 2003 to £1,308 by December
2008. However, while
the oil price peaked in July 2008 and fell back almost two-thirds
by December 2008, wholesale gas prices fell by only around 20%
over the same period.
As a result, both the Government and consumer groups called on
the energy companies to cut their prices urgently. Prices remained
volatile around the turn of the year but the main suppliers have
since reduced their prices, though on average by less than 10%.
16. The Committee on Climate Change (CCC) acknowledges
that its recommendations for cutting GHG emissions of greenhouse
gases could raise electricity prices for the average family by
25%, pushing 600,000 more households into fuel poverty by 2022.
Gas price impacts could add a further 1.1 million households by
2022. However CCC argues this number could be reduced by improving
home energy efficiency and subsidies for the poorest households".
17. Long term price forecasts remain uncertain but
Ofgem foresees a future of rising geopolitical risks to energy
security, potentially higher energy prices and stronger efforts
to reduce greenhouse gas emissions while making sure everyone
can afford to adequately heat their homes.
Ed Miliband, Secretary of State for Energy and Climate Change,
said in December 2008 that "whatever the recent fluctuations,
given global trends it would be unwise to base policy on low prices".
He added that "global demand will keep [energy] prices relatively
high and the move to low-carbon will mean further cost pressures".
18. The 2001 Fuel Poverty Strategy recognised the
importance of fuel prices and acknowledged that price movements
would fall outside the anticipated range. In fact energy prices
for domestic customers have increased well beyond the Strategy's
forecasts, although price volatility was not unexpected. The Minister
argued that the Government was "doing what is reasonably
practicable" to ameliorate fuel prices in the teeth of very
high global fuel prices.
19. Despite a clear statutory target for the Government
to eradicate fuel poverty, as far as reasonably practicable, in
vulnerable households by 2010 and in all households by 2016, we
are witnessing the opposite, with a sustained increase in the
numbers of those experiencing fuel poverty.
20. With the 2010 target date less than 12 months
away, we agree with the Department of Energy and Climate Change
that this target is likely to be missed. The Government should
now explain why it did not review its fuel poverty policies earlier
in the light of the upward trend in the number of fuel poor which
began in 2005.
2 Department for the Environment, Food and Rural Affairs,
Fuel Poverty in England: the Government's Plan for Action,
2004, p 7. An adequate standard of warmth is defined as
21 degrees C in the living room and 18 degrees C in the other
occupied rooms, Department of Business, Enterprise and Regulatory
Reform, UK Fuel Poverty Strategy 2001, para 1.1. Back
Environment, Food and Rural Affairs Committee, Fifth Special Report
of Session 2007-08, Energy Efficiency and Fuel Poverty,
HC 1099. Evidence published in the Special report is referenced
in this report as "HC (2007-08) 1099, Ev xx". Note:
energywatch became part of Consumer Focus in October 2008, and
this report therefore refers to its evidence as Consumer Focus
Warm Homes and Energy Conservation Act 2000, section 2(1). Back
Department for Business, Enterprise and Regulatory Reform, Fuel
Poverty Strategy 2001. Back
Department for the Environment, Food and Rural Affairs, Fuel
Poverty in England: the Government's Plan for Action, 2004. Back
HC (2007-08) 1099, Ev 11 Back
Department for Business, Enterprise and Regulatory Reform, Fuel
Poverty Advisory Group (for England) Sixth Annual Report 2006,
March 2008. Back
Ev 64 Back
The UK Fuel Poverty Strategy, Sixth Annual Progress Report,
2008, para 2.2. Back
UK Fuel Poverty Strategy, 2001, para 1.12. Back
Fuel Poverty Advisory Group, Sixth Annual Report 2007.
HC (2007-08) 1099, Ev 3 Back
HC (2007-08) 1099, Ev 14 Back
HC (2007-08) 1099, Ev 36 Back
Q 318 Back
High Court of Justice Queen's Bench Division Administrative Court,
between the Queen on the application of Friends of the Earth and
Help the Aged and the Secretary of State for Business, Enterprise
and Regulatory Affairs and the Secretary of State for Environment,
Food and Rural Affairs, CO/3333/2008, Second witness statement
of Brenda Boardman, 11 September 2008. Back
"Consumers left waiting for energy prices to fall",
Consumer Focus press release, December 2008. Back
"Npower cuts electricity prices but gas tariffs remain",
The Herald, 23 March 2009. Back
Committee on Climate Change, "Building a low-carbon economy-the
UK's contribution to tackling climate change", 1 December
Ofgem, sustainability web pages, http://www.ofgem.gov.uk Back
Ed Miliband, The Rise and Fall and Rise Again of a Department
of Energy, speech to the Energy Futures Lab, Imperial College,
9 December 2008. Back
Q 336 Back