House of Commons - Fuel Poverty - Energy and Climate Change

Fuel Poverty - Energy and Climate Change Contents

4 Energy Efficiency

36. Improving the energy efficiency of homes is the most effective long-term means of alleviating fuel poverty. Incomes and, especially, fuel prices may fluctuate; however, if a home is made energy efficient its fuel consumption will be reduced in the long-term and its occupants are less likely to be in fuel poverty. We therefore agree with Consumer Focus that increasing energy efficiency "is the way that we can protect consumers from price hikes and therefore to some extent fuel-poverty-proof consumers".[54]

37. The Government recognises the importance of energy efficiency (the Minister told us it was "the most sustainable way of helping people out of fuel poverty"[55]) and DECC's memorandum set out the steps taken by the Government to improve levels of energy efficiency, including:

The Carbon Emissions Reduction Target (CERT), and its predecessor scheme, which, it is estimated, will have provided £2.7 billion of expenditure by energy suppliers on energy efficiency measures for a priority group of low income and vulnerable households by 2011. DECC's memorandum states that "the Government is currently consulting on an extension to CERT to December 2012[56] which proposes to increase the carbon saving target on energy suppliers, increasing the amount of assistance to the Priority Group[57]. It also proposes to increase the balance of investment towards the most vulnerable Priority Group households who can least afford to pay for measures (the central proposals would see an approximate £1.3bn additional energy supplier investment in the Priority Group by December 2012)";[58]
The Community Energy Saving Programme (CESP), launched in September 2009, which involves working with energy companies, local communities and others to deliver £350 million worth of energy efficiency measures using a street-by-street approach focused on low income areas;[59]
The Warm Front Scheme which, as we noted above, has provided energy efficiency measures for two million vulnerable households. We consider the performance of the Scheme below.
The Decent Homes Programme, which, as we noted above, is designed to ensure that social landlords tackle the worst housing conditions across a range of criteria, with a target to ensure that all social homes are made decent by 2010.

38. While there is widespread agreement about the importance of energy efficiency, the adequacy of current measures has been criticised. NEA, although noting the "significant" support for energy efficiency programmes provided directly by the Government and suppliers, said that "the current structure of domestic energy efficiency programmes makes them unfit for purpose in terms of eradicating fuel poverty. A fragmented approach in which individual households make individual applications for assistance followed by individual assessment and installation work represents grossly sub-optimal use of resources".[60] The Fuel Poverty Advisory Group agreed, telling us "there is no doubt that the schemes we currently have, bearing in mind the task that we face, are unfit for purpose and, therefore we do need to have a radical rethink".[61]

THE STRATEGY FOR HOUSEHOLD ENERGY MANAGEMENT

39. The Government's attempt at such a rethink is set out in Warm Homes, Greener Homes: A Strategy for Household Energy Management. We have not had the opportunity to take detailed evidence on the strategy (which was published they day before we took evidence from Consumer Focus, Energy Action Scotland, National Energy Action, Age Concern/Help the Aged, Macmillan Cancer Support and eaga, and eight days before we took evidence from the Fuel Poverty Advisory Group and the Minister) but it sets out a wide range of steps the Government intends to take, including:

Paving the way for 'pay as you save' green finance to make energy efficiency pay from day one
Up to 7 million British households to benefit from eco upgrades by 2020
Up to 65,000 jobs in the green home industry
Energy companies and local authorities to join forces to help consumers
New standards for social and rented accommodation to be proposed ...
The new strategy will also be good for jobs, with up to 65,000 jobs required in the green homes industry as a result, for example installing and manufacturing energy saving measures or providing home energy advice.
The strategy will be implemented in a three stage plan:
To insulate 6 million homes by the end of 2011
To have insulated all practical lofts and cavity walls by 2015
To have offered up to 7 million eco upgrades by 2020; all homes to have smart meters.[62]

40. In his oral evidence, the Minister highlighted a number of areas where he expected the household energy management strategy (HEMS) to make a difference, including:

The requirement for partnerships between energy companies and local authorities to work together on energy efficiency measures;
Targets for the numbers of hard-to-reach homes to be improved by 2020;
Installing smart meters in all homes by 2020;
More transparency in the reporting of how CERT obligations are met by energy companies;
More support offered by energy companies to priority groups most in need; and
Targeting social housing in blocks and providing assistance in terms of renewable energy technologies and district heating systems.[63]

41. The requirement for energy companies to work with local authorities was described by the Minister as "a very significant measure".[64] HEMS states that the Government will create (by legislating, if necessary) an obligation for energy companies to work with local authorities. The latter, it argues, have good knowledge of local housing stock, are a trusted presence in their communities and have good links with third sector, community and regional bodies. It highlights the example of the work undertaken by Kirklees Council in partnership with Scottish Power, where both bodies have contributed £10 million each to provide an area-by-area approach to install home insulation measures. All homes in the district have been visited and 24% of the population have benefited from energy efficiency measures, with an estimated £7.8 million reduction in fuel bills annually.[65] The Fuel Poverty Advisory Group welcomed the requirement for energy companies to work with local authorities, but argued that this should take place within the context of the road map discussed earlier.[66]

42. The model of local authorities, community groups, third sector organisations and energy companies working together offers the possibility of achieving the street-by-street approach to implementing energy efficiency measures advocated by our witnesses. Energy Action Scotland told us "there is a need to have [an] area-based approach... where there is an approach made on a door-to-door, street-by-street approach" and that this would make it simple for the householder and take "the hassle factor" away.[67] Such an approach, if implemented nationally, would also obviate the need for a sophisticated database of domestic energy efficiency, as it could identify energy inefficient households. Consumer Focus noted that the CESP programme is designed to provide measures to households within designated low-income areas, regardless of benefit status. They told us that "while only 90,000 homes will benefit from the programme, it potentially could provide valuable lessons... These include the systematic delivery of measures on an area basis, reaching fuel poor households (particularly those categorised as 'hard to 'reach' and those not claiming passport benefits) and integration with other support... and funding mechanisms".[68]

43. Another aspect of HEMS which was welcomed by out witnesses was the consultation on setting minimum standards of energy efficiency for rented accommodation. The strategy document notes that, while the private rented sector is, on average, as efficient as the owner-occupied sector, it still has the largest proportion of G rated properties[69] of all tenures (7.8% compared to 3.8% in owner-occupation) and a high proportion of non-decent housing (44%, compared to 32% in owner-occupation). The Government therefore intends to consult on the introduction of regulations which would require the installation of standard insulation measures (loft and cavity insulation) where feasible, as a precondition for being able to rent out a property.[70]

44. NEA supported this approach[71] and Energy Action Scotland compared it to standards required for car rentals, telling us "you would not be able to rent out a car as a car rental company unless the car was worthy for the road".[72] The Fuel Poverty Advisory Group agreed, saying "we ought to be able to put in place the regulations that do require the private rented sector and the socially rented sector... [to achieve] a certain standard of thermal efficiency to be achieved...".[73] Both NEA and the FPAG were sceptical about the suggestion that introducing such standards would lead to landlords taking their properties off the market.[74]

45. We welcome the Government's household energy management strategy, which contains a range of measures designed to increase levels of domestic energy efficiency. In particular, we welcome the provisions requiring local authorities and energy companies to deliver programmes which are sensitive to the needs and characteristics of local areas. We hope that this work will, with the outcome of the CESP trials, lead quickly to the provision of energy efficiency measures being delivered on a comprehensive street-by-street basis, in a way which obviates the need for households proactively to come forward. This would be an ambitious long-term objective, which we would like to see included as an important part of the fuel poverty road map we are advocating.

WARM FRONT

46. The Warm Front Scheme has provided energy efficiency measures for over two million customers in vulnerable households, with 40,000 customers currently in the process of receiving assistance. eaga, the company which delivers the Scheme, told us that households assisted see their annual fuel bills reduce on average by between £360 and £400 and the SAP ratings of their homes increase from 38 to 62.[75]

47. Our acting Chair has received more than 50 emails or letters making complaints about various aspects of the service offered by eaga and its contractors following discussion of our inquiry in the media. These complaints relate to: standards of workmanship; time taken to carry out work; customer service; quality of advice; and costs. Annex A gives an indication of the types of criticisms made.

48. Some of the complaints make accusations of shoddy workmanship and unprofessional behaviour on the part of those assessing homes or carrying out the installations. We do not doubt that there have been incidents where people have received unsatisfactory service; however, the anecdotal criticisms made to us have to be set aside the assessment of the Warm Front Scheme made by the National Audit Office in 2009 which found that "scheme satisfaction is high, with 86% of households assisted by the Scheme satisfied with the quality of the work done, and five per cent dissatisfied. Where customer concerns were raised, they were around common themes such as installation, customer contributions and delays".[76] The Report also stated that "delivery of the Scheme has been largely effective and to that extent has provided value for money" (although it did state that value for money had been impaired as a result of the difficulties in targeting the Scheme successfully on the fuel poor, as we discuss above).[77]

49. eaga's evidence to us suggested that customer satisfaction was actually higher than that stated in the NAO report. They told us that their latest statistics indicated 92% customer satisfaction and that 93% of customers would recommend Warm Front to friends and family. In comparison, they noted that customer satisfaction with local authority performance, public sector organisations nationally and utility companies was 72%, 69% and 68% respectively.[78] They also told us about some of the changes they have made to improve the system, including:

giving each customer a computer-aided design drawing to show them what the proposed works will look like;
introducing a performance rating score for installers;
surveying 2,000 customers each month;
having all installers undertake post-installation customer calls; and
increased levels of grants for work, meaning that the number of consumers needing to 'top-up' payments has reduced from seven-in-ten to one-in-ten.[79]

50. One of the recurring complaints made is that vulnerable customers have to wait for long periods of time without heating and hot water as a result of boilers breaking down, and the time taken for eaga to fix or replace them. For example, Mr P of Cornwall told us that:

Before Christmas our boiler broke down. I have contacted Warm Front and have been informed that we are able to get a grant for a new boiler. We have been informed that we will have a visit in four to six weeks and the boiler will be fitted in about three months. The offer of a boiler is very appreciated and we hope that we will still be alive when we get the visit about the end of February.

51. eaga accepted that such delays were a big challenge for them, and that they were largely caused by budgetary constraints. We were told:

52. Despite extremely high levels of demand for Warm Front services, the Scheme's budget is reducing, albeit not so dramatically as originally envisaged. eaga told us "we were scheduled to take a substantial reduction in budget next year. Thankfully, the additional amount of money that the Chancellor announced in the Pre-Budget Report means that the budget will only drop from £369 million this year to £345 million next year".[81] This follows a reduction from the £397.4 million spent in 2008-09.[82] The Minister noted that the Scheme has a maximum three month wait for insulation measures and six months for a heating measure. He understood that if customers "rung up in the depths of a really cold winter because their boiler has just broken down, it is not their idea of a good response to say, "in six months' time we will come and fix it for you"" and pointed out that while this was the maximum wait time, in practice waits were often much shorter. He also stressed that "Warm Front never has been an emergency repair service and it still is not" and said that this misunderstanding was at the root of many of the criticisms made in the media.[83]

53. Given the scarce resources available to it we considered whether the Warm Front Scheme should do more to prioritise its most vulnerable customers and direct services to them more speedily. eaga does not prioritise amongst those who are eligible for its services, and they explained to us that "everyone that comes to Warm Front, and is eligible for Warm Front, does so because they either are on a low income, so in receipt of an income-related benefit, or they have a disability so they are in receipt of a disability related benefit. So from the point of view that everyone that comes to us is either on a low income or disabled, we have to treat everybody as a priority. We know and understand that there are some customers who will have particular circumstances, such as terminal illnesses and things like that, and in those cases our contractors are human beings, at the end of the day, and they will make every effort to get that through as quickly as they can".[84]

54. The Minister supported this position, emphasising that "every customer of Warm Front is a vulnerable householder because of [their] eligibility. They are either exceptionally poor or they are exceptionally disabled and in need of support, and so it gets quite invidious to say, "You are even more in need because of your poverty", or, "You are even more in need because of your disability than your neighbour who applied before you did". It is quite difficult to say to people that we can do that prioritising". He also noted that Warm Front will lend heaters to people while they are waiting for boilers to be fixed or replaced.[85]

55. The Warm Front Scheme has done some very good work in improving the energy efficiency of vulnerable households and thereby reducing fuel bills. We accept that it is difficult to prioritise certain categories of eligible Warm Front customers above others. However, the Warm Front Scheme is experiencing extremely high demand and diminishing budgets. Furthermore, we know from the NAO's work that the Scheme does not always target effectively those who are actually fuel poor. In that context, we think the Government should look again at this issue and seek to focus the work of Warm Front on those who need its support most. We accept also that the Warm Front is not an emergency scheme; however, we think there is scope, in the longer term, for the Government to move resources away from the Warm Front Scheme towards a CESP-style, street-by-street approach as advocated earlier, and for the Warm Front Scheme to move towards providing an emergency service for the most vulnerable people in fuel poverty with urgent heating needs. The Government should start considering the longer term cost benefits of such a transition.

56. Macmillan Cancer Support raised with us the problems experienced by some people with cancer in utilising grants offered by Warm Front. Such grants are time-limited and we were told that

57. We recommend that the Government reviews the operation of the Warm Front Scheme to ensure that any barriers which may be preventing it being accessed by people with cancer or other debilitating conditions - such as time-limited grants - are removed or modified.

54 Q1 (Consumer Focus) Back

55 Q112 (DECC) Back

56 Extending the Carbon Emissions Reduction Target, published on 21 December 2009 http://www.decc.gov.uk/en/content/cms/consultations/cert_ext/cert_ext.aspx . Closing date for contributions is 14 March 2010. Back

57 At least 40% of CERT must be met in a 'Priority Group' of households where at least one occupant is a benefit recipient (including disability benefits, income support and income-based jobseekers' allowance, housing benefit, council tax benefit, pension credit and child tax credit) or is aged 70 and over Back

58 FP01, para 9 (DECC) Back

59 FP01, para 13 (DECC) Back

60 FP26, para 4.5 (National Energy Action) Back

61 Q81 (Fuel Poverty Advisory Group) Back

62 http://www.decc.gov.uk/en/content/cms/news/pn2010_037/pn2010_037.aspx Back

63 QQ112 and 140 (DECC) Back

64 Q112 (DECC) Back

65 Warm Homes, Greener Homes: A Strategy for Household Energy Management, DCLG and DECC, March 2010, pp20-21 Back