Memorandum submitted by eaga (FP 07)
eaga - Background
eaga welcomes the opportunity to respond to the Energy and Climate Change Committee Inquiry on Fuel Poverty.
In order to put our comments into context, it may be helpful to briefly outline our role in the provision of services across the UK and Ireland.
eaga is the largest provider of residential energy efficiency solutions in the UK; we are a co-owned business working for DECC and the Welsh Assembly Government. As well as our services to Westminster and devolved nations, we have also worked closely with Utilities and Local Authorities in managing the delivery of energy efficiency programmes throughout the UK for the past twenty years. Since our establishment in 1990, we have grown considerably and now employ more than 4,500 Partners, the vast majority of whom are involved in our energy efficiency work.
We have also pioneered the development of Benefit Entitlement Checks (BEC) throughout the UK. This is a telephone service that offers confidential advice to people regarding the benefits they claim and what further benefits they may be entitled to. Through its dedicated team, eaga has delivered more than 220,000 BECs to date.
As well as our energy efficiency and social commitment through BEC, we are committed to helping the environment and combating climate change. eaga Renewables provide renewable energy solutions to private housing, specifically through the installation of solar thermal panels. This work is carried out in the private sector, both with private-funded work and public-funded work (notably the current Welsh Assembly Government pilot on renewable energy that forms part of HEES).
eaga has also launched the eaga Clean Energy for Social Housing programme which aims to enable low-income households to take advantage of the introduction of feed-in tariffs and use this to fund the installation of renewable technologies. This initiative attracts funding from private sector investors, who will receive a return from the feed-in tariff element. There is no cost to the tenant and no investment required from the social landlord.
For further information on eaga and our work across all sectors please visit www.eaga.com.
· The problem of fuel poverty is caused by a combination of poor energy efficiency in the home and low incomes. In many homes the water bill may also be of equal significance as the heating or electricity costs. Therefore eaga believes there could be merit in a programme that combines energy and water efficiency alongside income maximisation measures such as benefit entitlement checks. Such a whole-house, holistic programme may be the best means to remove or minimise the threat of fuel poverty.
· Warm Front is the flagship Government programme to tackle fuel poverty. It is extremely popular and has seen applications increase in line with the rise in fuel poverty caused by soaring energy prices. eaga believes it is important that stakeholders recognise that Warm Front is not able to act as an emergency service given the high level of demand for help.
· There are strong links in place between Warm Front and energy supplier CERT programmes through which many Warm Front delivered insulation works are funded by the latter. However as suppliers reach their CERT priority-group carbon targets, the ability to combine such funding will diminish. eaga therefore believes it extremely important that CERT is extended and incentives provided to suppliers to work with Warm Front.
· eaga has worked with local authorities, community groups and energy suppliers to reach those in fuel poverty that are most in need of help. Due to the popularity of Warm Front, there is always a substantial queue of households awaiting assistance. Clearly given the debate on public funding there are arguments to abandon such work and merely focus on those households that come forward voluntarily. While understandable, eaga believes this could leave those in greatest need unaware of the help available. It is also possible that such work will be abandoned to focus on just those that have been identified to date. While understandable, eaga believes this could leave those most in need unaware of the help available.
· eaga welcomes the mandatory Social Tariffs as being likely to help many households. At the same time we believe that their long-term sustainability will need to be monitored given the rising number of fuel poor households and OFGEM's predictions of future price increases. If correct, the rise in prices could make it difficult to afford a subsidised tariff structure.
Progress against Government targets
1. The Government's Fuel Poverty Strategy of November 2001 was predicated on stable energy prices over the coming period. On that basis the strategy adopted was a combination of short term alleviation through income benefits such as Winter Fuel Payments; coupled with long term eradication by improving homes through Warm Front and social housing programmes. This was intended to achieve the eradication of fuel poverty in vulnerable households by 2010 and in all households by 2016.
2. Unfortunately, while Warm Front and social housing programmes have led to substantial improvements in the energy efficiency of homes, substantial rises in energy prices have led to a rise in the number of homes in need of help. The total number of fuel poor households in 2007 was 4 million and this is believed to have risen to 4.6 million in 2009. While resources for fuel poverty programmes have also risen in the period, this has not been at the same rate as energy prices.
The issue of fuel poverty is one of both poor energy efficiency and low incomes. In many fuel poor homes the water bill may also be a significant issue, and will increasingly become so as metering is introduced in more areas and households. eaga believes that many fuel poor are also water poor households. Therefore eaga believes there is merit in a programme that combines energy and water efficiency alongside income maximisation measures such as benefit entitlement checks. Such a whole-house, holistic programme may be the best means to remove or minimise the threat of fuel poverty. At the same time it can pull together funding support from both energy and water utilities to help address the rising level of demand. For example, by installing basic water saving devices, it is possible to reduce household gas bills by some £25 a year and water bills (where metered) by £35. This would increase the total average saving through Warm Front alone by some 15%.
Similarly eaga completed 78,294 Benefit Entitlement Checks in 2009. In 40% of cases an additional entitlement was found raising income by an average of £1,615 per annum or £31.07 per week.
The definition of households in fuel poverty commonly used - ie, those households where more than 10% of income has to be spent on fuel for adequate heating
3. eaga accepts the definition submitted by the Department of Energy and Climate Change regarding Fuel poverty.
The coherence of the Government's initiatives on energy efficiency
Warm Front is the Government's flagship Scheme for tackling fuel poverty, it is an extremely popular programme that provides energy efficiency measures to vulnerable households to help them stay warm and reduce their heating bills. In homes where Warm Front has installed insulation and heating measures, the customer's annual fuel bill is on average reduced by between £360 and £400. The average Standard Assessment Procedure (SAP) rating of homes is increased from 38 to 62 points.
4. Warm Front has successfully delivered measures to assist over 2 million customers with 40,000 customers currently going through the process of receiving assistance from Warm Front. Warm Front visits more than one thousand households every working day and the Scheme fits or repairs a system every minute of every working day.
5. Warm Front was designed to assist fuel poor households and not as an emergency heating service. Applicants to the Warm Front Scheme are determined as being fuel poor by virtue of the eligibility criteria and by definition all are vulnerable and therefore treated in the same manner.
6. The popularity of the scheme means that households will unfortunately always face a delay in having work completed. This can create difficulties and stakeholders are often under pressure to support requests for some homes to be queue-jumped. Unfortunately, this means that other vulnerable households would suffer. The National Audit Committee Report recognised that the timescales are such as the "demand outstrips the grant funds available each year."
7. For Warm Front to provide an emergency-type service, the level of funds would need to be increased substantially. At the same time, eaga would need clear criteria on which criteria to prioritise one group of vulnerable households over another. For example: should a home with a broken central heating boiler be regarded as in more need than another that has never had any central heating?
8. eaga has also continued to seek improvements to the Scheme. For example in agreement with DECC, we are introducing electronic computer-aided surveying and tendering to both improve quality of work and achieve further cost reductions. It has also worked to integrate Warm Front with other programmes such as CERT.
9. Through the interaction process, eaga works with suppliers so that appropriate insulation works in Warm Front households are funded by CERT. This delivers efficiency savings for both programmes and allows Warm Front to assist more households. Similarly, eaga has arrangements with many local authorities that meet part of the costs of works for their residents should these costs be greater than the maximum grant available. This allows those households to avoid the need to make contributions where the cost of work exceeds the available grant. Similar links exist with area-based programmes and eaga is now looking at integrating Warm Front with the new CESP programmes.
10. The National Audit Office stated that eaga was "proactive in delivering cost savings" and that through interaction it had secured a further £45 million to be redistributed into Warm Front spending. DECC's independent auditor, White Young and Green have stated that eaga offered "value for money, delivering heating systems more than a third cheaper than the private sector equivalent and a level of quality that would be difficult for the private sector to better or match."
However, the links in place between Warm Front and CERT depend on the position of suppliers with regard to their CERT priority-group carbon targets. If they are close to achievement then their demand for such works is minimal. To maintain the linkage eaga believes it is important for the extension of CERT to be confirmed and incentives provided to suppliers to work with Warm Front.
Reaching those in most need
11. Traditionally, one of the biggest problems with targeting is that people do not consider themselves to be fuel poor and therefore do not seek help. To address this issue eaga works with local authorities, community groups and other partners to make sure that those in need are aware of the help available.
12. Due to the popularity of Warm Front, there is always a substantial queue of households awaiting assistance. Clearly given the debate on public funding levels there are arguments to abandon such work and merely focus on those households that come forward voluntarily. While understandable, eaga believes this could leave those in most need unaware of the help available.
Social tariffs and plans to put social price support on a statutory footing
13. eaga welcomes the Government's aims to included social tariffs in the proposed Energy Bill. As the increase in fuel poverty is largely a result of the continuing rise in energy prices, eaga believes that those on the lowest income should be offered the cheapest tariff and supplier offers.
14. At the same time we believes that their long-term sustainability will need to be monitored given the rising numbers of fuel poor and OFGEM's predictions of future price increases. If correct, the rise in prices could make it difficult to afford a subsidised tariff structure.
15. For those properties not connected to the mains gas supply, eaga already utilises the welcome support from the regulator, OFGEM to fund a connection. This then allows the installation of a high-efficiency gas central heating system.
16. For homes that are too far away from the mains gas network, Warm Front provides either an oil central heating system or electric storage heaters. In conjunction with DECC and NEA, eaga is examining the potential to offer a low-carbon or renewable package such as heat pumps and solar thermal systems.
17. If proven then eaga believes that such packages may offer better solutions for households that are off the gas grid.
Warm Front Case Testimonials
Mrs L, Stoke
Mrs Lewis, from Stoke, applied to Warm Front in 2008. She says "My husband wasn't well, was largely confined to the house and felt the cold. Our heating bills were rising enormously and I wanted to find a way of counteracting this. I'd seen some publicity around Warm Front and thought there's no harm in applying and seeing if I can get the insulation done. It wasn't until Warm Front visited that I realised I could get more. We had no heating in our main room where my husband used to sit and our only source of heat was an electric fire which was costing us a lot of money to run".
Mrs Lewis had loft insulation, a new condensing boiler and radiators installed in June 2008. Her property was improved from SAP 26 to 48. She says "I thought the Warm Front work would be very complicated and cause upheaval but it didn't cause any disruption at all. I couldn't believe how quickly and neatly the work was done. The insulation was completed in a morning and a new boiler and radiator was installed in only 2 days".
Mrs Lewis told Warm Front: "I've always paid my bills by direct debit and was staggered when instead of taking £100 one month, my supplier only took £13 and the next month only £6. I can't ever recall building up a surplus in my account and being charged anything as low as these monthly payments. I'm back to a regular direct debit amount now but it's lower than before and I'm still in surplus. This can only be down to the fact that the work I've had done under Warm Front means I'm using less gas and electricity". Mrs Lewis has already recommended Warm Front to others too: "My house is definitely warmer and cosier and all the work I've had done is very neat. Warm Front has said they'll come out this year and next to check everything and I'm always reassured by knowing they're only a phone call away. I've recommended Warm Front to lots of people - I have a much neater, more efficient boiler and an all round warmer home".
Mrs H, London
Mrs H applied in Oct 2008, and had three electric storage heaters installed on 7th February 2009. Previously, her only form of heating had been on-peak electric panel heaters. She also had loft insulation installed in her pre-1900 terraced property, meaning that the SAP rating of her property went from just 8 to 38, a significant improvement and one likely to have resulted in real reductions in running costs.
Mrs H stated that 'I was really struggling to keep the house warm as the heaters I was using cost a fortune if you keep them on too long. When I heard about Warm Front it seemed too good to be true but the team were really helpful and made sure that everything went like clockwork. Thank you Warm Front!'
Benefit Entitlement Check Testimonials
Mr and Mrs C, Devon
After applying to the Warm Front Scheme, Mr and Mrs C of Devon were offered a Benefit Entitlement Check. During the check it soon transpired that the couple were missing out on their full benefit entitlement. Mr C should have been claiming an additional amount in Pension Credit. Furthermore Mr C had some health problems that were affecting him on a daily basis. Mr C was signposted to the Macmillan Cancer Trust where they assisted him with completing the necessary forms.
Mr Cs application for Pension Credit and Attendance Allowance was successful, and he is now in receipt of an extra £73.60 per week in Pension Credit, and £70.35 per week in Attendance Allowance. In addition to this Mrs C has been awarded £53.10 per week in Carers Allowance for registering as a carer for her husband.
As a result of the Benefit Entitlement Check the couple's annual income has increased by £10,246, which has made a massive difference to their lives. The couple are also having gas central heating, loft insulation and draught-proofing installed in the
property under the Warm Front Scheme.
Mr C was delighted with the outcome. He contacted the Benefit Entitlement Check team to say: "The Benefit Entitlement Check service is excellent! I'm very grateful for what you have done for me and my family. The places you signposted me to were brilliant. Thank you."
Mrs T, Kent
Mrs C from Chelmsford had her heating repaired under the Warm Front Scheme. In addition to this Mrs C was offered a Benefit Entitlement Check. During the assessment the adviser noted that Mrs C was not receiving the correct amount of Pension Credit, and was eligible for Council Tax Benefit. With Mrs C's consent, the Benefit Entitlement Check adviser referred Mrs C's details to The Pension Service.
Mrs C was absolutely thrilled when her application was processed and she was awarded over £33.00 per week in Pension Credit, and full Council Tax Benefit of £24.93 per week. Not only had Mrs C 's income increased by £3,012.36 but she was also awarded over £1,600 in backdated payment.
Mr C was delighted with the outcome. He contacted the Benefit Entitlement Check team to say: "I can't thank you enough, the adviser was very helpful. I am very happy that I did not have to fill out any forms as my details were passed to the Pension Service.
The Benefit Entitlement Check service is excellent."
 The Warm Front Scheme Annual Report 2008/2009
 Ibid footnote 8
 The Warm Front Scheme Annual Report 2008/2009
 National Audit Report: Warm Front Scheme, February 2009 - para 4.5
 National Audit Office Report: Warm Front Scheme February 2009
 The National Audit Report: Warm Front Scheme; February 2009 para 2.14