Memorandum submitted by the Joint National
Right to Fuel Campaign and UNISON (FP 10)
1. INTRODUCTION
1.1 The National Right to Fuel Campaign (NRFC)
and UNISON welcome the opportunity to make this joint submission
to the Energy and Climate Change Select Committee enquiry into
fuel poverty.
1.2 The NRFC came into existence in 1975 with
the single aim of ensuring that every household was able to afford
adequate heat, light and power. Over thirty years later, the Campaign
is still fighting to achieve that objective. UNISON has been a
long time supporter of the Campaign. In addition to representing
members in the energy sector, UNISON also has many low paid members
and a large body of retired members—many of whom feel at
the sharp end of escalating fuel prices.
1.3 The background to this joint submission
is a piece of work that NRFC are shortly to publish on the fuel
costs issues faced by working people who have fallen on hard times.
The data for the report came from a series of interviews that
NRFC undertook with members who applied to UNISON's Welfare Fund,
which is the registered charity serving members of the union.
Its aim is to provide support to members and their dependants
during times of financial hardship or personal difficulty such
as redundancy, bereavement, illness or relationship breakdown.
UNISON Welfare Fund provides support services to current members
and their families (and to past members of NALGO) through the
delivery of confidential information, advice and guidance on areas
such as debt management, benefits and housing and through the
provision of financial assistance through grants and loans.
1.4 NRFC and UNISON believe that the research
will be of interest to the Committee as they undertake their inquiry
into fuel poverty. Not just for what it might tells them about
addressing the energy needs of people in similar situations, but
also for what it says about the fuel cost issues faced by people
on low incomes more broadly.
2. OVERVIEW OF
FINDINGS
2.1 This small scale piece of research involved
structured interviews with 11 people from different households
whose circumstances had changed due to factors beyond their control.
The household income dropped dramatically and they were no longer
able to sustain lifestyles which had previously been manageable.
Within a context of personal and multiple financial problems,
they were asked about the impact of fuel costs and their attempts
to get advice and support to help with these new conditions.
2.2 These respondents were dealing with a multiplicity
of problems, difficulties in adjusting to changing household circumstances
and sorting out various different repayment and debt issues. They
were trying to find out if help was available on a number of fronts,
whilst still suffering from the impact of the original problem.
2.3 The research concentrated on the energy
issues, cost and energy saving. Although the report is still being
finalised, we believe that the research highlights the problems
faced by households in fuel poverty, as they show the problems
of high fuel bills, inadequate help and support facilities and
the lack of resources to make their homes energy efficient so
they could keep their fuel bills down.
2.4 These cases also show fear and uncertainty
about the energy market and how households can find a clear way
through the options available and a fair, sympathetic treatment
by energy suppliers. In terms of developments relating to climate
change, this group also shows that they are reducing their energy
use, not to be more energy efficient but to try to keep out of
fuel debt. As fuel bills rise, in response to additional levies
for climate change investment and wholesale energy prices, households
in fuel poverty will be increasingly deprived of the ability to
use adequate energy for hot water and heating their homes and
for other functions which require energy. This will have increasing
impact on the health and social wellbeing of these and other households
in fuel poverty.
3. CATASTROPHE
3.1 Almost all respondents had been brought
to the UNISON Welfare Fund through a personal catastrophe, either
in the form of an illness, the loss of a partner through divorce
or prison or the loss of employment. Many of the respondents had
already been dealing with life on a low income. It was apparent,
through the conversations, that there was absolutely no capacity
within their situations to deal with anything that was out of
the ordinary. This was not through extravagant living. Several
were already dealing with their finances in a reasonably efficient
manner by paying bills by direct debit and ensuring that bills
came out at the beginning of the month. A small number of respondents
had had relatively high incomes by comparison to others, yet they
too found that the changes that brought them to the Welfare Fund
had had a catastrophic effect and were finding it difficult to
adapt to the changed circumstances.
4. INCOME LEVELS
4.1 Most respondents were left in a financial
position where they were not apparently entitled to any benefit
or benefits which would allow them to access grants such as Warm
Front. This group highlights problems for those households whose
income is above benefit cut off levels.
4.2 Mrs N had contacted her supplier to see
if there was any help but there was none available because they
were not on any benefits. She said that she used to "work
for a CAB and I know that there isn't much help for people not
on benefits. We have to pay for everything".
4.3 Mrs M never has money left at the end of
the month. She described herself as "being between a rock
and a hard place", she was not eligible for benefits, yet
her income did not meet her financial commitments [after the catastrophe
which had left her in this position].
4.4 Mr G is aware that his energy companies,
British Gas and Scottish Power, offer special tariffs and services
but believes that he is not eligible for them, "because I
am on incapacity benefit and not on income support".
4.5 Mrs V said she had not qualified for any
welfare support because she did not earn enough money for tax
credits and earned too much to receive income support.
5. ENERGY MARKETS
AND AFFORDABILITY
5.1 Most respondents had recognised that energy
prices and profits had increased and were shocked by the levels
of expenditure on energy for their daily needs.
"Disgusting that energy prices have shot
up as they have but that companies are still making ginormous
profits."
"Energy is too expensive and it should not
be down to the vagaries of the market, companies should not be
allowed to make profits out of essentials, it's not morally justifiable."
5.2 This was exacerbated in households where
there was additional need for heating where a household member
was ill or disabled.
5.3 Mrs B's husband's illness had required that
the heating be on all the time and the winter bill was £850.
Her energy supplier, npower, informed her, via her energy bill,
that her monthly direct debit was being increased to £160.
She said she had always paid by direct debit for as much as she
could so that she would avoid the shock of big bills. Her husband
contacted npower and explained their situation and the reason
for the high energy bills. She believed that npower may have offered
a discount as a consequence of his illness and said that it was
in the region of £15 per annum. Her husband's MacMillan nurse
had also contacted npower who said that they were doing all that
they could for them.
5.4 Mr F's electricity bill is around £80
per month and his gas bill is not far behind that amount. The
heating is on all the time for his osteoarthritis. He also has
a skin condition which means that it is uncomfortable to wear
too many clothes. He describes things as being "bad but not
the worst off in the scheme of things".
5.5 Responses also showed the problems arising
from switching energy suppliers when the level for the Direct
Debit is inaccurately assessed and the issues that can occur when
the customer contacts the supplier for help when their circumstances
have changed. The former problem resulted in some cases when switching
in response to a doorstep sale, where the expenditure on fuel
was underestimated. 8 out of the 11 respondents had one or more
problems with their energy supplier.
5.6 The level of direct debits being set either
too high or too low affected five of the respondents. Generally,
they were set too low initially which led to the build up of debt.
Then the supplier increased the direct debit to a much higher
level, beyond the limits of the customer's finances.
5.7 Mr G had switched to paying for gas by direct
debit. The level of the direct debit was not sufficient and he
ended up owing an additional £400. He fell behind and had
a prepayment meter installed.
5.8 Mrs V's current supplier had door-stepped
her and said her monthly energy bills would be £25 per fuel.
However, a debt had quickly built up because of an underestimation
of consumption and increasing energy prices. Mrs V had assumed
that her monthly direct debit was sufficient to cover her consumption
until she received a statement saying that her direct debit would
need to increase from £25 per month to £90 each for
gas and electricity.
5.9 Other problems included not being able to
get direct debits set up, bill disputes in spite of providing
meter readings and inability to get keys for meter boxes.
5.10 For some reason that British Gas had not
been able to explain, it had been impossible to set up a direct
debit for Mrs M's electricity account. This meant she had to pay
the bill at the bank.
5.11 In Mrs N's experience, energy companies
"estimate your bills and then get you to read the meter for
them and then, when you get the bill, it's still wrong".
5.12 Mrs R wanted a key for her meter box and
had been promised that one would be sent so that she could check
her consumption. Southern had not sent it to her and she was now
waiting for a statement to see what her bill would be.
5.13 Several respondents had a poor experience
of dealing with their energy suppliers "it was like talking
to a brick wall"; another said that her treatment was "terrible".
Only one respondent mentioned having any assistance dealing with
their energy suppliers though respondents were not asked this
question directly.
5.14 Mrs D said that her treatment by British
Gas had been "terrible". She had explained her financial
situation and none of the many advisers she had spoken to had
been at all sympathetic. She had had to make "millions"
of calls and had got "fed up" with the whole thing.
If she missed a payment even by a day, they were on the phone
straight away to ask her for the payment.
5.15 Mrs N had contacted her energy supplier
because she was trying to get them to correct a direct debit payment
that was too high. She found this difficult to achieve and said
that on occasions it was like "talking to a brick wall"
with the supervisor wanting to increase the payment to £135
per month. She stuck to her guns and kept the payment at £129.
5.16 Mr F pays for his gas and electricity by
direct debit. He had previously been paying by cash on a monthly
basis. "So I put it on direct debit and let them sort the
amount out. The overdraft has absorbed the increases." Mr
F had had an energy debt which he described as "a short term
thing bound up in paying for the repairs to the shower".
He had been reluctant to contact his energy supplier saying that
he was a bit "frightened that they would not be very sympathetic
because they can insist on you having a prepayment meter"
which he said were much more expensive to use. He said it was
"pointless to contact them and the less they know about you
the better. They have all the power in the relationship".
5.17 Mrs V described her supplier, SWALEC, as
being very good when she contacted about the massive increase
in her Direct Debit amount (see 3.3.3 above) and was "quite
surprised" at the support she had received. The adviser had
explained that the new payments had been generated automatically
and that she would not have to pay that amount. The adviser said
that they were expecting people to be in difficulty because of
the cold weather and higher energy prices. A new monthly amount
of £45 per month was agreed which would recover her debt
and pay for her current consumption.
6. THE FAILURE
OF MARKET
COMPETITION TO
DELIVER FOR
THE FUEL
POOR
6.1 An important issue around switching suppliers
is shown in these cases. From this small sample, nine of the 11
respondents had either switched and had problems or were fearful
of switching in case there were problems. Respondents feared loss
of supply, final bills that would upset finances, problems from
overuse of energy on a capped tariff or were generally sceptical
or confused about the process and benefits. The other two respondents
did not consider changing as they did not want upset current arrangements.
6.2 Mrs N said she would not switch supplier
because she would have to pay the final bill and also have two
direct debits in one month, the one from the previous supplier
and one from the new supplier, "they all want their money
in the same month".
6.3 Mrs M had considered switching to Marks
and Spencer Energy but had decided against this; she had heard
horror stories about switching supplier and she also had her servicing
contract with them which she did not want to disrupt.
6.4 Mr G knows that he can switch supplier but
has not attempted to do so, "with being in arrears to British
Gas, I can't imagine anyone else wanting to take them over".
6.5 Mrs D had been approached by Scottish Power
who said that she could save more with them. She switched supplier
and found that she was putting more money into her prepayment
meter so she switched back to EdF, "he (SP representative)
said it would have been cheaper than EdF but it wasn't".
6.6 Mrs V said that having got into trouble
as a consequence of switching supplier would make her unlikely
to switch again in future. She felt she had not made the savings
she had expected and described suppliers at "six of one and
half a dozen of the other".
6.7 Mrs R switched from EdF, because she felt
they were too expensive, to Southern Electricity. She could not
say whether or not she felt that Southern's prices had gone up
or down since May 2008. She was, however, having some difficulties
with Southern.
6.8 Mr F knew that he could change supplier
but had never tried to switch. Friends had switched telephone
supplier which had ended up leaving them without access to a phone
and he was fearful that the same thing might happen with his energy
supplier. "I don't want to be without a phone or fuel. I
don't know how to change supplier and I'm not sure I would make
any savings. They'd want their money back at some point in the
future."
6.9 Mr W has little idea whether or not he can
trust what gas and electricity companies tell him about energy
prices. He said it was all "so confusing, I don't know what
is true ... I don't know how they work it all out and I don't
know if I'm being ripped off ... I just go with the flow."
It appears that he switched supplier when sales agents were in
the area but had no idea that his previous supplier, British Gas,
would require him to pay off the debt he had with them and his
final bill. He has now had to sort out a payment arrangement with
British Gas.
6.10 Mrs C switched supplier last year to Eon,
having used a price comparison service, after seeing Martin Lewis's
advice on GMTV to look out for capped energy prices. She pays
£70 per month for her gas and electricity via direct debit.
She manages her account on-line and has worked out that she is
using a lot more energy than £70 per month according to her
calculations. She still turned off lights and appliances in her
home for fear that the energy company would say that she had used
more than she should have done. The capped price arrangement comes
to an end this month and she is hoping to arrange another deal.
6.11 Mr W said that he was also on a special
tariff, possibly a social tariff which gave him cheaper prices,
in addition to the discounts from the direct debit tariff of which
he was aware. He felt that British Gas were a reputable firm,
that everyone buys their gas and electricity from them. He had
previously been with npower but had switched to British Gas because
of the capped prices deals on offer. He had been contacted by
other suppliers but did not intend to switch again.
6.12 Until the onset of Mrs B's husband's illness,
they had switched supplier regularly as a means of ensuring their
energy costs were as low as possible. She said that her husband
was "always on the internet" trying to get the best
deal. Their most recent switch had come about as a consequence
of an approach at a supermarket. However a month into the deal,
and prices began "creeping up". She went on to add that
all energy suppliers were "much of a muchness".
6.13 In these conversations, there was some
evidence that respondents were unaware about the costs of different
fuels and how expensive they were to use. Mr W described his house
as "big and cold." One of his coping strategies is to
only use electricity because gas "is so much more expensive".
7. EFFECTS ON
DAILY LIFE
7.1 Two statements stand out from these interviews
about the impact of financial difficulties on a household; "not
living but existing" and "living from hand to mouth".
7.2 In this context, Mr G copes with high energy
bills by not using it. For example, he tries not to use the washing
machine. His daughter who lives with him takes her washing each
week to her mother's house over 15 miles away.
7.3 The size of Mrs D's energy bills have led
her to dramatically alter how she consumes gas and electricity.
She only heats water when she needs to and they don't turn the
central heating on, preferring instead to use the gas fire which
she described as being "cheaper to use". Her new home
is much more difficult to heat. She said that it was really cold
in winter and she had to increase the amount she spent on gas
to £20 per week.
8. HELP AND
SUPPORT
8.1 Only one respondent had had a reasonable
experience in asking his fuel supplier for assistance. Others
had either had a bad experience or had been too worried about
the likely outcome to contact them. No one mentioned being advised
about Consumer Direct, the Energy Ombudsman or Consumer Focus
for further advice and help with their problems.
8.2 While there was some awareness of the availability
of energy efficiency advice, none of the respondents mentioned
other advice sources suggesting they get this type of advice or
where they might be able to find it. There is a national network
of energy efficiency advice centres run by the Energy Saving Trust.
9. ENERGY EFFICIENCY
9.1 Most respondents had at least a basic understanding
of what was involved in being energy efficient. Only small number
linked energy efficiency to climate change policies about reducing
carbon emissions and that was either because energy issues were
part of their work or because the issue had been raised with them
by their children.
9.2 When describing what it took to be more
energy efficient, most respondents were able to mention normal
measures such as loft insulation, low energy light bulbs and cavity
wall insulation. No respondent mentioned any more advanced measures
such as boiler replacement, solid wall insulation, windows replacement
or renewables. The overall view was that there was little more
that could be done by way of making their homes any more energy
efficient.
9.3 There is a very patchy picture of how energy
efficient the homes of these respondents were; six of them mentioned
some energy efficiency measures but there is no sense that any
of them live in a dwelling that would rate very high on any scale.
9.4 Most talked about cutting back on energy
use, mentioning turning down thermostats or turning off lights.
Some respondents were clearly talking about reducing energy consumption,
turning off heating and hot water, in a punitary way as a means
of dealing with reduced income and high fuel bills.
9.5 There is limited experience of receiving
energy efficiency advice and most talked about getting leaflets
from gas and electricity suppliers and others and throwing them
away. No one mentioned getting energy saving advice from advisors
helping with fuel debt or being referred to this sort of help.
9.6 There was also some scepticism about using
energy advice if it was available, even a statement that "it's
not for people like me, I don't want to feel like a beggar".
10. REPORT RECOMMENDATIONS
10.1 Looking at a small number of cases in research
like this throws up all the human variations that make planning
difficult for Government, fuel suppliers and the regulator. However,
it does show up characteristics which could help improve help
and support provision to low income households and which can identify
households where energy efficiency investment should be targeted
as a priority.
10.2 Income levels
This group also shows the problems for households
whose income is just above cut off levels for benefits, or whose
benefits do not make them eligible for grants such as Warm Front.
This has always been an area of concern for the NRFC and UNISON.
There was a sense, in some of the interviews, that there is a
lack of fairness in the way low income households are treated.
The report of the research, when it is published,
will be urging the Government to find an innovative approach to
the issues in this research to be able to include these households
in its various programmes, especially for energy efficiency investment.
10.2 Fuel Suppliers
We have looked closely at the experience of
our interviewees with their fuel suppliers. The picture is not
good. There were problems with switching and Direct Debit amounts,
not much evidence of sensitive help with fuel debt and real worries
about contacting the fuel supplier in the first instance.
We are concerned that hard working staff in
customer service centres aren't always able to provide more help
and advice to customers because of the number of calls they are
required to make per hour and commercial considerations.
Fuel suppliers need to look at their customer
services arrangements to allow for more time, so that customers
who are having real difficulties are given realistic support,
such as longer debt repayment times, and avoiding expensive payment
methods such as prepayment meters.
There needs to be clearer, and more accurate,
information about and during the switching process. Suppliers
should improve the knowledge they have of customers' energy use
when they switch to ensure that there are no surprises when Direct
Debit amounts are adjusted.
Suppliers' advisors should ensure that clients
are referred either to an in-house energy efficiency advisor or
given the national energy efficiency advice helpline number.
Ofgem should be monitoring suppliers customer
services closely following the changes to consumer advice and
support with the set up of Consumer Direct, the Energy Ombudsman
and Consumer Focus.
10.3 Help and support
Energy Saving Trust should do more to publicise
their energy efficiency advice centre network to other types of
advice agencies, such as CAB and local advice centres.
While the issue of benefit entitlement did not
come up very much in these interviews, there is real concern that
low income households are not claiming benefits to which they
are entitled. A wide recommendation that all advisors dealing
with these clients should either do a benefit check or refer the
client to someone who can do this. This will ensure that these
households receive the maximum income to which they are entitled
and may make them eligible for other benefits and schemes such
as Cold Weather Payments, Warm Front or social tariffs from their
fuel suppliers.
10.4 Energy Efficiency
In addition to recommendations on access to
energy efficiency advice in the section above, we would also make
some recommendations on energy efficiency investment.
In response to all consultations on energy efficiency
investment programmes, the National Right to Fuel Campaign has
said that households in fuel poverty should be the priority group
for action. Households like those in this research should be on
priority lists for fuel supplier programmes such as CERT and HESP.
From the point at which they contact their fuel suppliers for
help, they can be marked as likely to need improvements in the
energy efficiency of their homes.
A couple of respondents mentioned seeing no
difference as a result of reducing their energy use a bit. The
Campaign has argued for higher ratings as targets for energy efficiency
investment. It is only with high standards of energy efficiency
of buildings that householders will see real financial benefits.
Limited financial benefits will deter households from making savings
in their energy use.
February 2010
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