Memorandum submitted by Age Concern and Help the Aged (FP 18)

 

From April 2010 Age Concern and Help the Aged will be known as Age UK. We will celebrate ageing and work to create opportunity in later life; and we will also challenge disadvantage and unfairness wherever we find it.

 

Age UK will work with partners in the UK and across the globe. We will be working with Age Cymru, Age Scotland and Age NI and with local Age UK partners in communities across England. Internationally we will work through HelpAge International to support a network in 100 countries around the world.

 

1. Introduction.

 

1.1 Age Concern and Help the Aged welcome the opportunity to respond to this inquiry into Fuel Poverty by the Energy and Climate Change Select Committee. Older people account for around half of the more than 5 million UK households now living in fuel poverty. This means that one in three pensioner households were in fuel poverty last winter. It is now clear that the Government will not meet its statutory target to eliminate fuel poverty among vulnerable households by 2010. Progress has clearly been hindered high energy prices over the past few years. The Government cannot insulate the population from the effects of rising energy costs. However, it can - and must - do more to prevent the poorest and most vulnerable households from falling into fuel poverty.

 

2. Progress against Government Targets

 

2.1 In the early years of the Fuel Poverty Strategy, there was clear progress, with the number of households in England in fuel poverty falling to 1.2m (of which 1m were 'vulnerable') in 2004. But as energy prices began to rise sharply, that was not ever going to be maintained with the programmes in hand. By 2007, the last year for which official figures are available, there were 2.8m households in fuel poverty (2.3m vulnerable), and the Government estimates 3.6m in 2008, and 4.6m in 2009. About half of these are pensioner households. Clearly, the 2010 target is history. To stand any chance of reaching the 2016 target to eradicate fuel poverty in all homes in England, particularly in the face of irresistibly upward moving fuel prices as indicated by both the Committee on Climate Change and Ofgem, we will need much more challenging and vigorous policies than are currently in place.

 

3. Definition of Households in Fuel Poverty

 

3.1 The definition was formulated over 20 years ago, and the numbers in fuel poverty are estimates derived from modelling. So it is not a precise measure. However it gives a feel for a problem which we all recognise exists, though for practical purposes (such as targeting available resources to appropriate households) it is not particularly helpful. With the development of domestic Energy Performance Certificates we will slowly build up, at individual dwelling levels, a picture of the energy efficiency of our housing stock. With more work on income data-sharing, we can then match the household income to the energy efficiency of the individual dwellings. In this way we can begin to develop a more precise map of fuel poor households, but it will require an unprecedented degree of co-operation and data-sharing between Department for Energy and Climate Change (DECC), Department for Communities and Local Government (DCLG), Department for Work and Pensions (DWP), Her Majesty's Revenue and Customs (HMRC) and local government.

 

4. Coherence of the Government's initiatives on energy efficiency

 

4.1 Government strategies in this area have always sought to elide two objectives within the energy efficiency elements of its domestic housing framework - to reduce energy use and thus carbon emissions and to reduce fuel poverty. This twin track is not always coherent, since the various programmes in play are designed to achieve differing objectives and are available to differentiated parts of the population. Certainly from the perspective of the consumer, the picture of what is available looks anything but coherent. In addition, the specific programme to address fuel poverty, Warm Front, has been the victim of some erratic budgetary decisions, and the stop/go nature of its funding has caused confusion for customers as well as the service providers.

 

4.2 What emerged clearly from the Government's evidence in last year's judicial review of its fuel poverty targets and strategy, was that it had a strategy to do whatever was 'reasonably practicable' to meet its targets, but if what was examined (for example extending the mains gas network) was outwith existing budgets, it was considered not reasonably practicable. So effectively, its fuel poverty strategy was constrained by existing budgets regardless of how effectively it was or was not reaching its targets. In the absence of new funding from the Treasury, if it was to up the tempo of energy efficiency work, the Government had to rely on arm-twisting the energy companies to increase their social spending, and in the area of social tariffs for example, that has led to a very confusing and incoherent system. Each supplier has a different 'product' with different eligibility criteria, and consumers and consumer advisors struggle to identify what is available. The proposal in the current Energy Bill to introduce a mandatory 'social price support' scheme from 2011 will at least introduce clarity to this area.

 

5. The methods used to target assistance at households which need it most

 

Warm Front

 

5.1 The NAO, with its report in February 2009, has had the last word on targeting Warm Front. Since fuel poverty is essentially a theoretical construct, we have had to rely on proxy measures, such as entitlement to particular benefits, to target the scheme. The NAO identified that 57% of households in fuel poverty (on the vulnerable definition) do not qualify for Warm Front because they do not claim the appropriate benefits, and at the same time, 75% of households claiming those appropriate benefits (and so would qualify) are not in fuel poverty. Since that report, there have been changes to both the design and delivery of the scheme which have improved it - for example, raising the upper limit of the grant per household has largely eradicated the ludicrous position where people in receipt of means-tested benefits were being asked for capital contributions in order to get work deemed necessary carried out. The Government repeatedly rolls into its litany of the support it provides to the fuel poor the cash payments it makes, and these are discussed in (6) below.

 

5.2 Last year Age Concern and Help the Aged ran a campaign to improve the Warm Front programme. A major issue was top ups which were forcing the poorest older people to withdraw from the programme. Complaints to our information and advice services about top ups seem to have receded since the increase in the level of the grant.

 

5.3 The main issue we have encountered over this winter has been delays with fixing broken boilers. Warm Front is not an emergency programme and waiting times can lead vulnerable older people with multiple health conditions to spend months without heating and hot water. There are also continuing concerns regarding the standard of workmanship and information given to clients.

 

5.4 We have included some of our case studies on this issue as an annexe to the written submission. As some of these case studies show, problems arise when older people can no longer cope without heating and hot water, take things into their own hands and get the job done by a local contractor who is not part of the Warm Front programme.

 

Community Energy Support Programme

 

5.5 The proposed Community Energy Support Programme will deliver area-based, street-by-street, house-by-house improvements in areas with high levels of multiple deprivation. This is likely to be better targeted, but it is currently a very small programme. If it is the model for the future (as is envisaged), and if it was significantly up-scaled, it too would become less focused on fuel poor households over time. The only way to really understand and target fuel poor households would be the comprehensive survey and data-matching approach discussed in (2) above.

 

6. Social tariffs

 

6.1 Age Concern and Help the Aged have campaigned for a number of years for social tariffs to be made mandatory and we very much welcome the provision in the current Energy Bill that will achieve this. Our campaign was partially realised in July 2008 when Ofgem introduced guidelines that required companies to make their social tariffs at least as low as their lowest tariff (usually for those paying online or by direct debit). Prior to this, research showed that the social tariff was not necessarily the lowest. However, we also think it is important that the same eligibility criteria and core elements should be required. At the moment, each supplier's social tariff is different in terms of eligibility and level of discount.

 

6.2 We are not persuaded by the companies' opposition to this on the basis that it stifles innovation and their ability to differentiate. The point about social tariffs is they should be available to fuel poor households who are very unlikely to be searching for the cheapest tariff on websites. These households are more likely to seek advice and help from local advice agencies such as Age Concern. The variation between the companies of who is eligible and what the tariff offers makes it difficult for advice agencies to be sure of advising the client on which supplier is offering the best tariff for them, let alone individual households.

 

6.3 There are also issues about customer 'churn' - how do customers know when they have slipped into eligibility for help, and more significantly how are they deprived of their social tariff if their circumstances change for the better? The Government seems minded to restrict the social price support scheme to older people (possibly over 70) on Pension Credit, a group which is unlikely to churn very much, but this restriction is likely to seriously upset the other parts of the population in fuel poverty - who probably make up more than half the total household numbers.

 

7. Winter fuel payments and cold weather payments

 

7.1 Cold Weather Payments are clearly well targeted in that they are only paid to people on means-tested benefits when the weather is cold. But of course this begs the question of whether people claim their means-tested benefits, and Pension Credit (for example) is only claimed by 65-70% of those households entitled. The Winter Fuel Payment, on the other hand, is universal so is hardly a policy to help the fuel poor. It is really a Winter Payment to all pensioner households, since though it was introduced in 1997, it assumed its present scale (and became universal as against means-tested) during the period when the State Pension was uprated by only 75p per week. It can be seen as a fig leaf to cover the decision to hold the State Pension increases to the link with inflation rather than earnings. This point is worth emphasising, because the amounts of money spent on the Winter Fuel Payments constitute the most substantial part of the support which the Government claims to be allocating to fuel poverty measures. However helping poor households with money has to be a central part of any fuel poverty strategy until such time as their houses have been sufficiently refurbished to allow them to be adequately warm at an affordable cost.

 

8. Support for households which are not connected to the mains gas grid

 

8.1 Gas currently offers the cheapest space heating, and so the best fuel to provide to help the fuel poor. This will not always be true. Renewable technologies (such as photo-voltaics or heat pumps) have a part to play for households off the mains gas network today, but their deployment as part of the Government's fuel poverty strategy has barely started. District heating schemes using renewables could also be helpful to communities away from the mains gas network, but these initiatives receive only minor recognition in the suite of Government programmes on the table. Meanwhile since only gas and electricity supply companies have license obligations to provide customers with energy efficiency services, other fuel users lose out, and as only gas and electricity prices are regulated by Ofgem the users of other fuels enjoy no such protection.

 

February 2010

 

ANNEXE 1: WARM FRONT CASE STUDIES

 

Mrs P had a new boiler installed in February 2009 under the Warm Front programme. Over Christmas she had to contact the firm who installed her heating system on numerous occasions as she had no heat. They did come out to the property 3 or 4 times for the same problem - frozen pipes. The last time she contacted them they refused to come out and told her to boil a kettle and pour it over the pipes. To do this she would have needed to climb a ladder as the pipe is located quite high up on her gable end. At 92 she did not feel this was an option. She eventually managed to get a private contractor in who said that whoever installed it had done a poor job and the pipes should not have been placed where they were. She has had to pay 240 for the work and would like to be reimbursed by Warm Front.

 

Mrs M is experiencing problems with the outside pipes of her heating system, which you fitted last year. The outside flue became blocked with ice causing the system to break down. Emergency action was requested by the adviser.

 

Mr and Mrs M have been waiting for an engineer to assess their heating system since November. Originally, the system worked but not properly but then stopped working altogether leaving them without heating. Mr M rang the call centre and was informed that they could not deal with the matter until the end of the month due to the current cold weather conditions. The adviser requested that they treat the case as an emergency and provide temporary heating in the meantime - the latter was not offered by the call centre.

 

One adviser commented, 'In this exceptionally cold weather we are concerned about older people waiting for Warm Front installations, where their heating systems are no longer functioning. In the last few weeks we have had 2 clients who have contacted Warm Front because they have no source of heating and both were offered heaters but they have not been delivered. One client has become so desperate she has cancelled the order, borrowed 1k from family and ordered a new boiler privately. She is using her recently awarded Attendance Allowance to repay the loan. She wanted her plight highlighted to save other older people'. Eaga informed the adviser that they have a limited stock of temporary heaters available.