House of Commons - Energy efficiency and fuel poverty - Environment, Food and Rural Affairs Committee

Energy efficiency and fuel poverty - Environment, Food and Rural Affairs Committee Contents

4 A comprehensive approach

154. Fuel poverty is a complex issue and a comprehensive approach is needed which draws together policies on all three key factors—fuel prices, incomes and energy efficiency of homes.

Delivery of a national action plan—an area based approach

155. We received evidence criticising the fragmented delivery of energy efficiency programmes. The Fuel Poverty Advisory Group proposed an in-depth review of the interaction between CERT and Warm Front and considered that "the case for such a review is now evermore stronger with the £350 million in new resources proposed by the Prime Minister for the Community Energy Saving Programme" in September 2008.[229]

156. The Local Government Association considered that a long-term strategy was needed which scaled up assistance "in a coordinated area-by-area approach".[230] It cited the example of Kirklees Council which offered all households, regardless of income, "free insulation and other basic energy efficiency measures" but which also had a partnership based approach which delivered "multiple solutions to fuel poverty—both income maximisation and energy efficiency".[231]

157. Kirklees Council's area-based approach reduces the administrative burdens and the costs of identifying households. Kirklees argued that their "we will come to you" message motivates all householders to take up the offer of free insulation.[232]

Kirklees Warm Zone
This is a three year project run by Kirklees Council which began in February 2007 aiming to:
·  Increase the energy efficiency of local housing stock—increasing the average SAP of 51 to 65 in the private sector (the average SAP of Kirklees social stock is now 76 following Decent Homes programme investment);
·  Reduce fuel poverty;
·  Reduce carbon emissions;
·  Improve the health and wellbeing of Kirklees residents.
The scheme will cost £21 million of which £11 million has been provided by Scottish Power as part of its CERT programme. The remainder of the funding will come from the Council's own budget. The Council points to increased efficiency from economies of scale and the lower administrative costs incurred by not having to target specific groups.
In addition Kirklees operates a £3 million Re-Charge scheme offering interest free loans of up to £10,000 for installing renewable or low-carbon technologies in households, with 10% of funding ring-fenced for fuel poor households.[233]

158. The Environmental Change Institute argued for an area-based approach and integrating energy efficiency schemes better by giving more responsibility to local authorities and/or the Homes and Communities Agency, together with the appropriate funds".[234] Energy supply companies also supported an area-based approach. Centrica told us about its area-based programme, Green Streets, which, by highlighting the positive impact of simple energy efficiency products and behaviours, led to a reduction in energy consumption of around 30% compared with the previous year.[235]

159. The Parliamentary Warm Homes Group has pressed for "the systematic roll-out of a single national energy efficiency scheme which is delivered at a community level" and argued for a study of the "benefits of merging all of the current energy efficiency and microgeneration schemes and pooling their funding".[236] The Group noted that a single scheme would enable the suppliers' obligation to become "a simple financial obligation".[237]

160. The National Audit Office's report on the Warm Front scheme published in February 2009 concluded that "there are a range of Government initiatives and programmes at both local and national levels to help tackle fuel poverty, which risk duplicating efforts in targeting and assisting fuel poor households". It recommended that DECC "make effective arrangements to enable work on the different energy efficiency schemes to be coordinated".[238] However Centrica argued against specifying a single approach for all homes. The company emphasised the benefits of targeting people at key life stages, such as moving home or retiring, when motivation to act is higher.[239]

161. The Government's proposed new Community Energy Savings Programme will pilot a coordinated, community-based approach in which energy efficiency and heat generation are considered together, "working door-to-door and street-to-street to cover the needs of the whole house",[240] and assessing the potential for community scale projects, such as district heating.[241]

162. The Government is considering establishing a single body to coordinate the schemes but it also recognises local and regional government roles in implementing schemes and their good local knowledge.[242] Many local authorities have already adopted targets with local partners to improve household SAP levels in their communities.

The Scottish approach—Scottish Energy Assistance Package
In Scotland a comprehensive approach is being adopted in an attempt to tackle all aspects of fuel poverty, not just energy efficiency. From April 2009 the "Scottish Energy Assistance Package" is offering a range of advice and measures.[243]
The project will receive Government funding of £55.8 million per year—a 20% increase on existing fuel poverty budgets—together with CERT funding from the energy companies.
The integrated package is aimed at helping to increase incomes, reduce fuel bills and improve the energy efficiency of homes through, for example energy, benefits, tax credit and tariff checks, standard insulation measures provided free for those most vulnerable to fuel poverty and enhanced energy efficiency measures—including central heating, renewable heating systems and insulation for hard to treat homes—for properties occupied by low income households.

163. We welcome the Secretary of State for Energy and Climate Change's recognition that energy efficiency proposals have to date been incremental and his support for a comprehensive national approach delivered at a community level.

164. We regret that there has to date been a lack of ambition in the Government's plans to upgrade the energy efficiency of our existing homes, which is in stark contrast to the clear aims for improving the energy efficiency levels of new homes. We consider that the piecemeal approach to programmes has been a deterrent to setting higher ambitions for energy efficiency of English homes and that the arguments for an area-based approach, focusing first on the areas of most need, are compelling.

165. Given the experiences already gained under existing schemes such as CEEF and Warm Zones we do not think it is justifiable to wait for the outcomes of CESP before developing detailed proposals on area-based approaches. We therefore recommend that DECC undertake an assessment within the next six months of the costs and benefits of realigning existing programmes into a comprehensive, area-based programme, examining the potential benefits to be had from more efficient targeting and delivery, with improved customer awareness and uptake. This assessment should encompass how area-based approaches could enable integration of energy efficiency with income maximisation and price minimisation measures for the fuel poor. It also needs to address the benefits of integrating energy efficiency and heat generation programmes.

166. Locally-led programmes can be highly effective in utilising local knowledge, joining together local partners and engaging local residents. Local authorities are well placed to lead on energy efficiency and fuel poverty programmes, with their unique combination of cross-organisational links, democratic mandate to deliver local priorities, contacts with local residents and in-depth understanding of local circumstances on a range of factors such as the condition of housing stock and socio-economic profiles.

167. We recognise that there is a need to define areas for schemes carefully, including setting the appropriate geographical scale as well as location and therefore support the use of local authorities as coordinators and delivery agents of area-based programmes, and not merely as partners in delivering energy companies' targets.

168. This approach could enable energy company delivery of CERT programmes to be replaced 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 action plan to upgrade energy efficiency.

Refocusing Government priorities

169. Many submissions referred to the apparent low priority given by the Government to tackling fuel poverty. Up until 2008 Defra had a Public Service Agreement (PSA 7) to "eliminate fuel poverty in vulnerable households by 2010 in line with the Government's Fuel Poverty Strategy objective". Since 2008, however, fuel poverty has been downgraded to subsidiary objectives under PSAs on poverty.

170. Since the creation of DECC fuel poverty has been the responsibility of one department—previously responsibility was split between Defra and DBERR. Consumer Focus welcomed the integration of fuel poverty within DECC but expressed concerns about its level of resources.[244]

171. Fuel poverty has slipped down the list of Government priorities at a time when rising energy prices mean action is most needed. The creation of the Department of Energy and Climate Change provides the opportunity to rectify this but there is little indication that this is yet happening.

172. We recommend that the Secretary of State for Energy and Climate Change sets out in the next three months the level of priority his department will give to fuel poverty objectives and how it will work with other Government departments, agencies and private organisations to fully implement its proposals.

A comprehensive fuel poverty strategy and action plan

173. A number of organisations highlighted the need for a comprehensive review of the Government's fuel poverty strategies and programmes. RWE npower argued for a poverty working group comprising Government and key industries impacted by poverty issues tasked with producing a long term, coherent and integrated strategy".[245] Scottish and Southern Energy argued for an independent central "National Fuel Poverty Agency" to coordinate information sharing, energy efficiency schemes and benefits assistance.[246] The Parliamentary Warm Homes Group called for Government to develop a "fully costed, cross-departmental fuel poverty strategy" including a "distinctive rural fuel poverty strategy which responds to the particular challenges experienced by those living in more remote areas".[247] The Minister told us that she had instigated a thorough review looking at all aspects of fuel poverty.[248]

A NATIONAL PLAN FOR ENERGY EFFICIENCY

174. Energy efficiency measures have a central role in delivering sustainable, long term reductions in fuel poverty. Organisations including Consumer Focus, Friends of the Earth, Age Concern, Barnardos and the Child Poverty Action Group have called for a "national programme to bring all properties up to a minimum energy efficiency standard of SAP 81 starting with the homes of the fuel poor".[249] The TUC estimates that £3 billion could fund free cavity wall insulation for every home in Britain and that insulation work would provide "around 40,000 person years of employment", supporting the construction industry".[250] Unite told us about the German mass insulation scheme planned jointly by the German Government and the unions in the early 2000s which saved 200,000 construction jobs and helped to get "every home up to a high degree of energy efficiency".[251]

175. The Minister told us that SAP 81 across all housing stock was unrealistic but believed it was "not unreasonable to have a SAP rating target of 65" for the Warm Front programme.[252]

176. The Government has a challenging aim for "emissions from existing buildings to be approaching zero by 2050" as well as for all homes to have received a "whole house package including all cost effective energy efficiency measures" by 2030 and all lofts and cavity walls to be insulated by 2015.[253] The Secretary of State for Energy and Climate Change called this "the Great British refurb".[254]

177. The Government needs to set out a road-map showing how it intends to meet its fuel poverty targets and identifying the contributions from each of the three elements affecting fuel poverty levels (namely prices, incomes and energy efficiency levels) towards reaching the targets. This strategy should include a costed action plan which identifies the levels of funding required to deliver the programmes needed, together with a timetable for planned phasing of expenditure and identification of key funding sources. Responsibilities of each department should be clearly set out.

178. The major factor in derailing the Government's progress towards its 2010 target was the unanticipated and unplanned-for hike in electricity and gas prices. While it is not always possible to accurately forecast price movements it is nevertheless possible to set out a range of likely price scenarios. DECC's action plan therefore needs to be based on a range of scenarios for fuel prices, covering the spectrum from high to low, in the coming years and decades. This should set out specifically how it plans to meet the 2016 target within its fuel price scenarios.

179. We recommend that as part of this plan the DECC sets a target date for improving the English housing stock to a specific level of energy efficiency. This level will be dependent on the modelling of the impact of price rises and income levels on fuel poverty. We recommend that SAP 81 should be adopted wherever practicable, with a minimum SAP level of 65.

180. We are surprised that the Government has not previously undertaken work to examine how the experiences of other European countries could be used to inform approaches in the UK. Alongside the work on the action plan, we recommend that DECC commission, and report on within 6 months, a review of fuel poverty reduction policies undertaken by similar European countries and assess their effectiveness in a UK context.

229 HC (2007-08) 1099, Ev 5 Back

230 HC (2007-08) 1099, Ev 99 Back

231 Ibid Back

232 Ev 96 Back

233 Ev 97 Back

234 HC (2007-08) 1099, Ev 123 Back

235 HC (2007-08) 1099, Ev 61 Back

236 HC (2007-08) 1099, Ev 88 Back

237 Ibid Back

238 Report by the Comptroller and Auditor General, The Warm Front Scheme, HC 126 (2008-09), p 7. Back

239 Ev 102 Back

240 Department of Energy and Climate Change and Department for Communities and Local Government, Heat and Energy Saving Strategy Consultation, February 2009, p 4. Back