The Warm Front Scheme - Public Accounts Committee Contents


1  Improving household energy efficiency

1. The Warm Front Scheme (the Scheme) provides a valuable service for those households unable to keep their property at a reasonable temperature during cold weather. The Warm Front Scheme allows such people to apply for a grant to improve the energy efficiency of their property. In 2008-09, up to £2,700 was available for insulation, gas central heating installation and other energy efficiency measures, or up to £4,000 if the property required oil rather than gas heating systems. Between June 2005 and March 2008, the Scheme helped over 635,000 households.[3]

2. The Scheme was originally developed as a tool to reduce carbon dioxide (CO2) emissions, but has subsequently become a focus of initiatives to tackle fuel poverty. The Scheme was the responsibility of the Department for the Environment, Food and Rural Affairs until 2009, when it transferred to the Department of Energy and Climate Change (the Department). The Department is considering how the Warm Front Scheme and other public funded schemes and initiatives, designed to improve household energy efficiency, might be better co-ordinated in future.[4]

3. In 2007, over three million households were estimated to be in fuel poverty, although the time lag in collating and analysing data on households makes it difficult to estimate numbers accurately. In 2006, nearly two million vulnerable households (defined as households with young children, elderly people, or individuals with long term illness or disability) were estimated to be in fuel poverty, the latest data available. A household is defined as 'fuel poor' when it needs to spend more than 10% of its net income on fuel to maintain an adequate heating regime. This is defined as approximately 21°C in the main living room and 18°C in other occupied rooms during daytime hours. Changes in the condition of a home and its heating, household income levels or energy prices can all affect the number of households in fuel poverty. Between 2005 and 2007, an extra 1.5 million households may have fallen into fuel poverty because of increases in domestic electricity and gas prices. The number could increase further as a result of reductions in average income due to the current economic recession.

4. The Government is unlikely to meet its target to eradicate fuel poverty, as far as reasonably practicable, from all vulnerable households by 2010 and in all households by 2016.[5] Progress requires more funds to be directed to those in fuel poverty by improving the targeting of the Scheme. Effective targeting of the Scheme was a principal concern in our previous report in 2004.[6] The Department for Environment, Food and Rural Affairs adjusted the eligibility criteria in the intervening period, but nearly 75% of households entitled to a grant are unlikely to be in fuel poverty, and the Scheme is only available to 35% of households likely to be fuel poor. The difficulties in targeting arise in part from the inclusion of non-means tested benefits to determine eligibility. Households not in fuel poverty who qualify for assistance include the disabled and people aged over 60 years, and the grant may help to prevent such households from falling into fuel poverty. The Department plans to review the eligibility criteria in 2009.[7]

5. The difficulties targeting the Scheme at those in fuel poverty have been compounded by the requirement to meet the Scheme's other objective to improve energy efficiency. Between 2005 and 2008, for example, Scheme expenditure on energy efficient light bulbs amounted to £4.9 million, and a further £10.5 million was spent on draught proofing and tank jackets. Such measures will save households money, but are unlikely to be sufficient to lift a household out of fuel poverty. Additionally, the property's existing level of energy efficiency is not considered during the initial assessment of eligibility. Some 18% of those households assisted between June 2005 and March 2008 received an average grant of £409, despite their property already being relatively energy efficient. Expenditure on such properties amounted to £34 million.[8]

6. The Department for Environment, Food and Rural Affairs relied on its contractor, eaga plc, to determine whether a household applying for assistance was eligible for a grant and, if applicable, to put them on a waiting list. In view of the difficulties in obtaining accurate and timely data on those in fuel poverty, the contractor relies on evidence of benefit entitlement to confirm eligibility. There is no prioritisation based on customer need, although eaga will make exceptions where appropriate.[9]

7. The maximum grant available under the Scheme did not change between July 2005 and April 2009. Labour costs for gas and oil central heating rose by 8.9%, and costs for other services by 7.3% over the same period. When the costs of work are above the grant maximum, the customer is required to pay the difference before work can take place. In 2007-08, the average contribution was £581. The number of applicants required to pay towards the cost of work increased from under 1 in 10 in 2005-06 to one in four in 2007-08. Around 4% of customers (6,076 households) withdrew their application, and around 1,400 opted for less expensive measures. The Scheme may be failing the poorest and most vulnerable households living in fuel poverty who are least likely to be able to make a contribution. In April 2009, the Department announced that the maximum grant for households connected to the gas grid would increase by £800 to £3,500 and for those dependent on oil heating by £2,000 to £6,000.[10]

8. Households in rural areas wait longer for their installation work and often have to contribute more than households living in urban areas (Figure 1). In 2006, 28% of vulnerable households in fuel poverty were from rural areas, yet they received only 15% of the funds available. Many of the properties in rural areas are relatively hard to treat as they are often not on the gas network and may have solid walls which can make the building more difficult to insulate. The Department is piloting some alternative methods of heating, such as using solar energy to heat water, but it was not clear when the results of such pilots would be published or what options really existed for hard to treat homes.[11]

Figure 1: Service provided to rural customers
RURAL HOUSEHOLDS
ALL HOUSEHOLDS
Time to install insulation
31 working days
27 working days
Time to install heating
76 working days
64 working days
Average customer contribution
£869
£538
28% of vulnerable fuel poor households were in rural areas, but only 15% of households assisted under the Scheme were rural

Source: C&AG's Report, para 2.5, Figure 4

9. The Scheme only funds work on installation measures. These can leave customers with exposed pipe work and wires, which many consider unsightly (Figure 2).[12] Scheme literature sent to customers sets out the specifications of completed work. eaga plc acknowledges, however, that a third of their customers are unable to read or write and even where a customer understands the extent of the work, they may not be able to fund, for example, the boxing in of pipes, which would leave living space in a more attractive state.[13]

Figure 2: Examples of exposed pipe work



Source: Ev 20


3   Qq 25, 102; C&AG's Report, paras 1.5, 2.1 Back

4   Qq 139-140; C&AG's Report, paras 1.4, 2.14-2.5 Back

5   Q 144; C&AG's Report, paras 1.2-1.3 Back

6   Committee of Public Accounts, Fifth Report of Session 2003-04, Warm Front: helping to combat fuel poverty, HC 206 Back

7   Qq 6, 23, 122; C&AG's Report, paras 2.6-2.7 Back

8   Qq 9, 21, 31-32, 38, 45, 47, 82, 124-128; C&AG's Report, para 2.11 Back

9   Qq 62-64; C&AG's Report, paras 1.6, 1.8 Back

10   Qq 11, 12, 65-66, 95, 122, 129, 131; C&AG's Report, paras 3.1, 3.6 Back

11   Qq 14, 27, 48-57, 60-61, 83; C&AG's Report, paras 2.4-2.5, 2.12, 3.4 Back

12   Qq 16, 133-137, 144; Ev 20 Back

13   Q 96; C&AG's Report, para 2.2 Back


 
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Prepared 24 July 2009