3 Targeting the fuel poor
PROXIES FOR FUEL POVERTY
16. One of the difficulties faced by the Government
in targeting help at the fuel poor is that it does not know who
they are. In addition to information about energy prices, the
Minister put it to us that "to be completely effective at
hitting the targets I have got...I would need real-time information
about household make-up, their income and the consumption of energy
and the condition of the property, and I do not have any of those
details in that form at all at the present time".[25]
17. In the absence of this information, the Government
has to use criteria such as age and receipt of benefits as proxies
for fuel poverty. The eligibility criteria for some of the key
programmes designed to tackle fuel poverty are as follows:
Winter fuel payments:
households with someone between the ages of 60 and 79 (£250
payment); households with someone aged 80 or over (£400 payment);
Cold weather payments:
people in receipt of Pension Credit or
income-related Employment and Support Allowance that includes
a work-related activity or support component; those in receipt
of Income Support, Income-based Jobseeker's Allowance or income-related
Employment and Support Allowance in the assessment phase if they
have a pensioner or disability premium included in their benefit
or if they have a child who is disabled or under the age of five;
Warm Front: Householders
aged 60 or over in receipt of one or more of the following benefits:
- Income Support
- Council Tax Benefit
- Housing Benefit
- Job Seekers Allowance (income-based)
- Pension Credit
- Income-related Employment and Support Allowance
Householders with a child under 16, or pregnant women
with maternity certificate MAT-B1, in receipt of one or more of
the following benefits:
- Income Support
- Council Tax Benefit
- Housing Benefit
- Job Seekers Allowance (income-based)
- Pension Credit
- Income-related Employment and Support Allowance
Householders in receipt of one or more of the following
benefits:
- Working Tax Credit (with an
income of less than £16,040, which must include a disability
element)
- Disability Living Allowance
- Child Tax Credit (with an income of less than
£16,040)
- Housing Benefit (which must include a disability
premium)
- Income Support (which must include a disability
premium)
- Council Tax Benefit (which must include a disability
premium)
- War Disablement Pension (which must include a
mobility supplement or Constant Attendance Allowance)
- Industrial Injuries Disablement Benefit (which
must include Constant Attendance Allowance)
- Attendance Allowance[26]
18. Such eligibility criteria do not guarantee that
the recipient is actually in fuel poverty, with the consequence
that a significant proportion of the resources earmarked for the
alleviation of fuel poverty are used to provide support or benefits
for people who are not fuel poor. The starkest example is that
of Winter Fuel Payments, a benefit provided to people aged 60
or over, regardless of their incomes, which we consider below.
However, even Warm Front - which relies on benefits' receipt as
a condition of eligibility - provides services for many people
who are not fuel poor. The National Audit Office's 2009 report
on the Warm Front Scheme found that "nearly 75 per cent of
households who would qualify [for support under the Scheme] were
not necessarily in fuel poverty" and that "over 236,000
grant recipients between June 2005 and March 2008 (37 per cent)
received only non-means tested benefits, but under Scheme regulations
eaga [the company which delivers the Scheme] were not required
to check whether those recipients were in fuel poverty".
(Although the report makes the point that a large number of the
households in receipt of assistance which were not in fuel poverty
"may have otherwise fallen into fuel poverty or be 'near'
fuel poverty".)[27]
The NAO also found that "eighteen per cent of households
that had received assistance under the Scheme between June 2005
and March 2008 already had a SAP rating above 65, meaning they
were less likely to have been fuel poor".[28]
19. Conversely, many people who are fuel poor are
not eligible for or do not claim the "passport" benefits
which would allow them to access measures designed to assist those
in fuel poverty. The NAO's "analysis of the 2006 English
House Condition Survey indicated the [Warm Front] Scheme is only
available to approximately 43 per cent of vulnerable households
(classified as families with children, the elderly or occupants
in long-term ill health) in fuel poverty, and 35 per cent of all
households in fuel poverty".[29]
The NAO told us that "one of the reasons is that many people
do not claim benefits to which they are entitled. The Department
for Work and Pensions has calculated, for example, that at least
a third of people eligible for pension credit did not claim it
in 2006-07. The Scheme has tried to account for this effect through
offering a benefit entitlement check to all applicants, to determine
whether they are eligible for additional benefits they are not
currently claiming, which may make them eligible for the Scheme".[30]
20. A more specific concern about the use of "passport"
benefits to access fuel poverty measures was raised with us by
Macmillan Cancer Support. They told us they had recently
become aware that people with cancer are
struggling to qualify for Employment and Support Allowance as
the work capability assessment is not sensitive to the problems
faced by these people. Others who should automatically qualify
for the benefit (ie those undergoing radiotherapy), should automatically
qualify for the support group (ie those undergoing non-oral chemotherapy)
or should be fast-tracked on to the main phase (ie those who are
terminally ill) are also experiencing problems with these rules
not being consistently applied.... This has a knock on effect
as this benefit allows the recipient entitlement to Cold Weather
Payments....People living with cancer also experience difficulties
claiming Disability Living Allowance (DLA) and Attendance Allowance
(AA) as well as other benefits. For example, a Macmillan study
in 2004 found that in the UK 54% of people (nearly 83,000) with
a terminal cancer diagnosis did not claim disability benefits
to which they were automatically entitled. Many have practical
difficulties filling out the complex forms and there is fear of
the stigma about claiming benefits. This prevents people from
claiming financial assistance under energy efficiency schemes
such as Warm Front.[31]
21. Whilst we have not looked in detail at the
benefits system we are concerned by the evidence we heard about
the difficulties being caused by the new work capability assessment.
We therefore urge the Department for Work and Pensions to work
closely with organisations such as Macmillan Cancer Support and
other relevant bodies to ensure these concerns are addressed.
A NATIONAL DATABASE
22. The problems associated with using benefits as
a proxy for fuel poverty were noted by our witnesses. Age Concern/Help
the Aged told us that "using the benefits we are using as
a proxy for people in fuel poverty is not a particularly effective
way of targeting those who are fuel poor. We will never be able
to target individuals in fuel poverty until we actually build
up a database".[32]
Consumer Focus has called for the development of a database and
told us that it "considers that targeting assistance at both
fuel poor and non-fuel poor households could be improved considerably
by compiling a national database of the energy efficiency standards
of every home in the country. The [Energy Saving Trust's] current
Home Energy Efficiency Database (HEED), supported by DECC's National
Energy Efficiency Framework, could potentially be developed into
such a database. However, if the Government were to require all
homes to have an Energy Performance Certificate over the next,
say, three years, HEED could be improved considerably. The proposal
would require improvements to the EPC system, mechanisms to ensure
the database is regularly updated and tools to enable individual
occupants to access the information specific to their home together
with tailored advice on how to improve them".[33]
23. The Fuel Poverty Advisory Group accepted the
need for a national database but was concerned about the time
it would take to develop and how it would be updated.[34]
It suggested that the national programme of fitting smart meters
in homes offered an opportunity to collect data.[35]
National Energy Action (NEA) - whilst in favour of collecting
energy efficiency data as part of the delivery of energy efficiency
programmes[36]- said
that it would be a "shocking crisis" if "we set
out to audit people's homes and we do not then offer something
to them, there is no route for them to take action, there is no
grant aid. They do not want to know they live in Band C - so what?
We would rather we did not waste money just doing that. If it
goes along with an offering, just to find out the housing stock
need, then that is important".[37]
NEA also raised practical problems associated with the development
of a database:
How would it be updated? One of the suggestions
is that, like an MOT, every so many years you might have to update
that information. People do not like that kind of bureaucracy
or reporting, so I do not know how realistic it would be to do
it. Things break down and get replaced in a slightly more efficient
replacement. Also, the programme used for SAP change, the methodology
changes. There is still a concern about how it can incorporate
some of the renewable, the small-scale renewable, so it is not
perfect yet in telling us what the real performance of the property
is...[38]
24. The Minister told us that the Government is developing
a "National Energy Efficiency Data Framework, which is going
to be a GB-wide energy consumption record of buildings and their
individual characteristics. The first data set will be established
by July of this year and phase two will be completed by the spring
of next year, and that starts to bring together information that
the local authorities have got at a local level to the national
level".[39] The
Minister subsequently told us that the research costs of scoping
and pilot work have been around £300,000 (which excludes
internal staff time) to date.[40]
DECC says that the pilots it is developing for the Framework will
link information together from existing databases
covering all buildings in the UK, combining data from energy suppliers,
buildings, installers and other sources. This should provide a
highly comprehensive source of information on building energy
use and performance. This can then be used, with appropriate confidentiality
and data protection safeguards, for analysis and reporting, and
to provide feedback to energy users. For example, it could enable
performance to be compared against benchmarks, and help identify
specific areas where energy can be saved. Such information is
also expected to be valuable for monitoring and evaluating the
effectiveness of different policy measures, for example how effective
local initiatives actually are at saving energy, so we can learn
from our experiences and keep improving schemes.[41]
25. Using benefits as a proxy for fuel poverty
is a rough-and-ready approach which means that some people in
genuine fuel poverty do not receive assistance, and others who
are not in fuel poverty do receive help. This is inefficient and
inequitable. However, there are significant logistical and bureaucratic
obstacles to the establishment of the kind of detailed domestic
energy efficiency database which would allow more accurate targeting
of resources. We welcome the work the Government is developing
on the National Energy Efficiency Data Framework and look forward
to seeing the results of the pilots underway. Taking into account
those results, the Government will need to consider whether it
would be cost-efficient and feasible to develop a more sophisticated
database of domestic energy efficiency. The Government should
also consider how it could utilise, with appropriate safeguards,
the national programme of installing smart meters in all homes
given the opportunity it provides for data collection.
DATA SHARING
26. Sharing data about people in or at risk of being
in fuel poverty offers the potential for more effective targeting
of resources. DECC told us it is "developing data sharing
arrangements between Government and energy suppliers for Pension
Credit recipients to support mandatory social price support...
A pilot data matching exercise is planned for later this year.
Subject to successful testing of data processes and systems, the
pilot will aim to give a rebate for electricity bill payers over
70 who are in receipt of Pension Credit guarantee only. This pilot
will inform the development of the mandated scheme, as well as
future mechanisms to further improve identification and targeting
of assistance to vulnerable households".[42]
27. Our witnesses welcomed the potential offered
by data sharing, but there was some frustration about the slow
rate of progress made in implementing it. The Fuel Poverty Advisory
Group said that data sharing was "entirely feasible, but
there are some hurdles that have to be overcome". Derek Lickorish,
the Group's Chair, argued that energy companies spend huge sums
and engage some of the best brains to develop sophisticated demographic
modelling and to target customers effectively, and that that skill
could be coupled with information about people's incomes to target
effectively the fuel poor. However, he noted that work on data
sharing began in 2005 and that "it has taken us five years
to get this far, which is unforgivable". Furthermore, he
said that the work had stalled again because of a change in one
particular word in a contract.[43]
28. In addition to concerns about the slow progress
made in data sharing, we heard concerns that work was being limited
to information about pensioners. Energy Action Scotland told us
that "there are huge swathes of fuel-poor households that
will not be subject to data sharing because they are not of pensionable
age".[44] Macmillan
Cancer Support, while recognising the sensitivity around data-sharing,
was in favour of "health data on people with cancer being
shared, because there is a very clear, potential benefit that
they would get very directly from the sharing of that data".[45]
Age Concern/Help the Aged also supported a greater degree of data
sharing, including that held by HM Revenue and Customs, as well
as the Department of Work and Pensions.[46]
29. The Minister was hopeful that data sharing could
lead to more effective targeting and, subject to the successful
outcome of the pilots underway, he would like to seek further
powers to extend the scope of data sharing. This would, he explained,
require primary legislation.[47]
The Minister noted that the Government had sought broader powers
to share data in the Coroners and Justice Bill, but the relevant
provisions had been dropped as a result of objections from civil
liberties groups and opposition parties.[48]
In terms of the time taken to implement data sharing, the Minister
said that the relevant legislation had been "passed in 2008,
regulations drawn up and approved in 2009... [and that] data sharing
taking place in the spring of 2010 is, for the parliamentary and
Whitehall machine, pretty good progress". He could not account
he said, for the period between 2005, when data sharing had first
been discussed, and the passage of the legislation in 2008.[49]
30. Given the imperative of using scarce resources
effectively, we are dismayed that it has taken five years to get
data sharing happening, and then only as a pilot with regard to
one cohort amongst the fuel poor. We urge the Government to assess
the results of the pilot speedily and, contingent on the outcome,
hope soon to see measures brought forward to extend the scope
of data sharing.
WINTER FUEL PAYMENTS
31. The most egregious example of a measure classified
by the Government as being designed to combat fuel poverty, but
which is not targeted on the fuel poor, is the Winter Fuel Payment
(WFP). The WFP is a tax-free lump sum paid at the rate of £250
for households with people aged 60-79 and £400 for households
with pensioners aged 80 or over. It does not take income into
account. Over £2.7 billion was paid out in 2008/09.[50]
32. Some of our witnesses, while recognising the
value of the WFP as an income supplement for older people, noted
that it was not targeted on the fuel poor. Energy Action Scotland
said it was "very worthwhile" as a way of raising people's
incomes generally, but not as a way of solving the problem of
fuel poverty;[51] Consumer
Focus told us that "the point about Winter Fuel Payments
is that word "fuel" in the middle. If we did not have
that word "fuel" in the middle, we would see this as
it was. It is an income support... The reason for making it universal
was very much to get those pensioners who did not claim, for stigma
and other reasons, the benefits they are entitled to. ... We should
take that word "fuel" out of the middle and stop putting
the charges of this against government fuel poverty programmes
because it is supposed to be an income support".[52]
33. Derek Lickorish, Chair of the Fuel Poverty Advisory
Group (although he stressed that the comments he made regarding
WFP were his personal views, and not those of the Group), told
us that
we live in desperate times and we have a
very uncertain future about the price of energy ...We are going
to have to tackle this very difficult issue. ... [WFP] is a pension
supplement and it is a misnomer for it to have anything to do
with fuel but, nevertheless, I cannot see why high rate taxpayers
get it. I would stop giving it to high rate taxpayers and then
I would look very seriously at whether it should not be taxed
full stop because if we believe the tax system is fair, whatever
that may mean, then we should be taxing this. The recovery for
high rate taxpayers, I am told it would save somewhere between
£160 million and £200 million, and that ... is a significant
sum of money....I do accept for an awful lot of people it is an
essential payment, there is no doubt about that, but then there
are a lot of others for whom it is not.[53]
34. As a means of tackling fuel poverty, the case
for Winter Fuel Payments is weak. Its payment is unfocused and
not targeted on people in or near fuel poverty. However, as a
universal means of supplementing pensioner incomes, which is easily
understood and easy to pay, the political case for the retention
of Winter Fuel Payments is strong. However, it would be more intellectually
honest to rename the benefit; concede that it a general income
supplement; and stop accounting for it as a fuel poverty measure.
35. If the Winter Fuel Payment is to be retained
and classified as a fuel poverty measure, it makes sense to pay
it at a time when it can do most to help people who are fuel poor.
We return to this matter in the section below about households
off the gas grid.
25 Q 123 (DECC) Back
26
http://www.warmfront.co.uk/do-i-qualify.htm Back
27
The Warm Front Scheme, NAO, February 2009, HC 126, Session
2008-09 Back
28
FP39, para 20 (NAO) Back
29
FP39, para 6 (NAO) Back
30
FP39, para 21 (NAO) Back
31
FP20, para 21 (Macmillan Cancer Support) Back
32
Q 40 (Age Concern/Help the Aged) Back
33
FP28, para 28 (Consumer Focus) Back
34
Q89 (Fuel Poverty Advisory Group) Back
35
Q90 (Fuel Poverty Advisory Group) Back
36
Q16 (National Energy Action) Back
37
Q13 (National Energy Action) Back
38
Q16 (National Energy Action) Back
39
Q123 (DECC) Back
40
FP01B (DECC) Back
41
http://www.decc.gov.uk/en/content/cms/what_we_do/consumers/saving_energy/esdirective/data_framework/data_framework.aspx Back
42
FP01, para 21 (DECC) Back
43
Q90 (Fuel Poverty Advisory Group) Back
44
Q17 (Energy Action Scotland) Back
45
Q53 (Macmillan Cancer Support) Back
46
Q53 (Age Concern/Help the Aged) Back
47
Q119 (DECC) Back
48
Q122 (DECC) Back
49
Q130 (DECC) Back
50
FP01, para 33 (DECC) Back
51
Q20 (Energy Action Scotland) Back
52
Q22 (Consumer Focus) Back
53
Q100 (Fuel Poverty Advisory Group) Back
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