Memorandum submitted by Ronnie Campbell MP (FP 21)

 

This submission has been produced on behalf of Member of Parliament for Blyth Valley Ronnie Campbell. It is in response to a growing number of queries and complaints being dealt with through his office and a need for a more cohesive and simplified strategy on dealing with Fuel Poverty.

Ronnie Campbell has been an MP since 1987 and provides very busy local office in his constituency of Blyth Valley. As an ex-miner Ronnie has been involved in the sharp end of energy production and with the New and Renewable Energy Centre (NaREC) being established in Blyth Valley he is conscious of the new technologies coming on stream and through his office he is also acutely aware of some of the problems being faced by consumers and especially those who rely on Key/card meters where previous debt, administration charges and card costs severely hit the more vulnerable clients coming through his office.

Ronnie has also been involved in discussions with an international firm looking to establish a Biomass power plant in the area and has brokered meetings between local land owners and the company which is looking favourably at a new biomass power station being established within the next few years.

 

Headline issues for consideration by select committee on Fuel Poverty.

The main points being made are:

 

The need for a more accurate method of calculating the levels of fuel poverty which would not be unduly swayed by single elements such as fuel costs

 

The need for a statuary social tariff on energy costs allocated for eligible households basis and based on the estimated energy requirements for that home on an annual basis any excess of the allocation would be at the standard cost

 

The need for key/card meters payments to be at the standard or social energy tariff level and without administration charges, financial penalties or old debts being added. Fuel cards/keys are to help lower income families/clients budget for energy use not a way to make money and not a way of clearing debt.

 

The need for a continued programme to have EVERY home in the country insulated to the highest standard by 2020

 

The need for a combination of energy campaigning organisations to form an implementation partnership to manage the energy efficiency programmes and grants including Warm Front, CERT and other government schemes. These are all not for profit and work in the best interests of the consumer and do not have a profit element/requirement to sway their activities. Local councils should be given a monitoring role to ensure delivery and efficient practices are maintained.

 

The need to extend the gas pipeline network into all areas over a period of time to fit in with the overall strategy from the implementation partnership.

 

The need for a programme of introducing renewable solutions for "hard to treat" homes. This could be during or after the insulation programme is running. In areas where solutions are not simple then a combination approach is needed.

 

 

The need for a more accurate measure of Fuel Poverty is vital and needs to be a combination of several elements including, house type, fuel type, insulation status of the property (SAP measurement), the estimated fuel requirements to heat the property, The occupancy, financial position of occupants, medical conditions and other relevant details need also be added into a system of evaluating the fuel poverty status and thus arrive at an accurate measure of each households position.

A social tariff is also vital to help those householders in the lowest demographics but this has to be tied to an assessment of the standard assessed fuel needs of the house being occupied so energy efficiency can be encouraged. Thus a family (2 adults with 2 children in a 3 bed home) would be allocated a social tariff allowance of say 5000KWh and anything over this should be at the standard rate. Similarly a single person would be allowed 3000KWh as their need is much less.

Alongside all plans has to be the removal of extra charges on key/card meter payment methods. These extra charges create massive problems for families already struggling to heat their homes and have a direct impact on the health of families using this method of paying for their fuel. Outlawing these charges would be a huge step forward on tackling fuel poverty.

In order to tackle energy efficiency a full programme of insulation for EVERY home should be brought in coordinated by EST, NEA and the Warm Zones (all not for profit) and monitored by local authorities and set a timescale of say 2015 to have every home insulated to its maximum. The resources to cover this would come from an amalgamation of Warm Front grants, CERT funding and other funds available to tackle energy usage.

Winter fuel and cold weather payments are a vital lifeline at this point in time but could be phased out if legislation introduces a social tariff and removes extra charges for key/card meters. These resources could be incrementally added to those available for the national insulation programme which would lead onto a programme of tackling "hard to treat" homes and the development of renewable energy and community energy systems and availability. Alongside the strategy on the use of renewables can be run a roll out of gas pipelines to areas of most need initially and then to all areas over a structured timescale.

 

1. When considering the impact of government policy on fuel poverty it is important to consider clearly several issues. These can be broken down into the causes, the people affected and then potential solutions which differ according to the client group and the solutions vary according to the various situations.

2. I would also suggest that the current measure/identifier of "Fuel Poverty" (FP) should be reconsidered as the current definition of FP being when a household needs to spend more than 10% of their household income on all domestic fuel use including appliances to heat their home to an adequate level of warmth is producing an inaccurate evaluator of need.

While this indicator is simple and sounds good it is too often affected by outside influences which don't always reflect the energy efficiency status of a property and it is heavily influenced by the world oil price levels which in turn impact upon the costs of gas, electricity and other energy sources in the domestic market.

 

3. In order to avoid repetitive information I have addressed the key questions posed by the Call for written evidence:

 

Progress against Government targets

The definition of households in fuel poverty commonly used - i.e. those households where more than 10% of income has to be spent on fuel for adequate heating

The coherence of the Government's initiatives on energy efficiency

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

Social tariffs and plans to put social price support on a statutory footing

Winter fuel payments and cold weather payments

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

 

4. Progress against Government targets/ The definition of households in fuel poverty commonly used - i.e. those households where more than 10% of income has to be spent on fuel for adequate heating

 

The problem with measuring the progress of the government's fuel poverty target is in the measure itself and thus I combine the two issues in one because without a more accurate calculator the targets being set will continue to be unattainable. This can be and is easily warped by larger than expected increases in fuel poverty and takes no consideration of the thermal efficiency of a property. There is also an issue with the occupancy of a home and the size of a property particularly in the owner occupied sector. It is neither feasible nor right to try and take action against these home owners to remove them from FP.

5. What is needed is a method of comparing the required fuel usage of a standard home in normal use, on which data already exists. This needs to be compared alongside the occupancy of a home, the thermal efficiency, The estimated fuel use of that type of property, the actual fuel use (as per supplier), and then a means tested element which considers the income of the occupier (using a banding method to get a number), benefits recipients status (banded according to severity to consider health situation of occupier). By using all these in formulating an indicator and giving different elements a multiplier to highlight greatest need it would be possible to develop an FP indicator not affected unduly by any single element. This would allow a much better evaluation of need and thus allow the targeting of resources more effectively to target those most in need as well as identifying those homes most in need of insulation/energy efficiency action.

It should therefore only be by the accurate evaluation of a homes FP status that government targets can be judged.

 

6. The coherence of the Government's initiatives on energy efficiency

 

With the government having invested heavily in a range of initiatives over the years it is inevitable that some confusion exists over the various schemes. It is without doubt that more resource has been invested in tackling FP than ever before and a lot of good has come about because of this investment. However the results should be considered critically against the investment overall and the resources available from all of the various sources should be combined in order to come up with a more cohesive, understandable and sensible strategy.

For example the money invested in the Warm Front scheme needs to be combined with the financial equivalent of the Carbon Emission Reduction Target (CERT) funding as well as local authority resources being invested in energy efficiency to come up with a global "pot" which can then be used to target Fuel Poor homes. By doing this and then moving the resources into the control of proven operations without huge overheads or high administration costs such as the Energy Savings Trust (EST), National Energy Action (NEA) and Warm Zones a central cohesive strategy can be developed. These organisations would, under monitoring by local councils, be tasked with establishing a central one stop shop "FUEL POVERTY TASK FORCE" by working together to maximise their existing resources and minimising the costs of running an effective national strategy. This strategy would be set goals to be achieved by 2020 to insulate EVERY home in the country to its highest standard and at the same time be developing a database which contains the thermal details of EVERY property to enable a national work programme to bring to modern standards the thermal efficiency of every home. By measuring this against the revised measurement of FP it should be possible to measure accurately the progress being made. This would allow everyone to be able to understand the government strategy, recognise where the resources are coming from and what is available to the occupiers of homes in every sector. By developing this "one stop shop" approach it will eliminate confusion, encourage involvement and take us down a path which takes the thermal efficiency of a property out of the FP equation completely.

At the same time as this is happening it will be necessary to consider the homes in the country which are "hard to treat" due to their build type, age or location. Solid wall homes needing external or internal insulation need to be brought into the overall development of a national strategy right from the outset to avoid "cherry picking" by installers and a ratio of "hard to treat" properties to standard ones should be laid down to ensure action is taken on these as well as ensuring finance to do this work which is inevitably going to cost more money per property.

7. By using local authorities as the managers/monitors of the energy efficiency process you would enable a combination of databases detailing every property, its energy efficiency position (insulation, heating etc) and build type. This information is often already held by planning departments and by combining data from insulation installing companies, warm front and warm zones data and HECA information an accurate evaluation of the PROPERTY is possible. By then adding data on occupants from council tax records, benefits departments within the LA and the benefits agency and Pensions service as well as medical and social care records an assessment on the occupiers needs can be added. This then allows you to ascertain accurately, the complete picture on Fuel Poverty and also have a reliable indicator of the action needed to tackle the problems within each home. This "solution" would not necessarily be the same for each home and some people may need benefits advice or simple advice on energy usage whereas others may need more significant help and even renewable technologies to make the home energy efficient and out of Fuel Poverty.

 

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

 

The current targeting method for resources are very much a blunt instrument approach and based on benefits which do not necessarily provide help to those households in FP. Because some clients can receive a grant from Warm Front because of their being on Disability Living allowance they may actually be living in a very advantageous situation financially while others on low income cannot qualify. This is morally wrong and has to change. One option would be to establish a programme by which EVERY home in the country has to be fully insulated by 2020 as part of a revised policy and by linking this to the householders on means tested benefits who are the ones only to receive free measures and the rest pay a grant supported cost of around 1/3rd of the standard installation. This installation cost should also be weighted according to the area as it costs much less to insulate a home in the North of the country than it does in the South. An evaluation of insulation costs needs to be established from every area to allow an accurate measure of investment needed to insulate homes. Once ALL homes are insulated and new ones have to comply with modern building standards, activity can then be directed (with resources) to renewable energy options for "hard to treat" homes along with a review of how welfare benefits and social energy tariffs are mnanaged.

 

9. Social tariffs and plans to put social price support on a statutory footing

 

One of the biggest problems families needing help face is the disgraceful situation by which they are penalised even more for being poor. Despite energy companies knowing the situation poorer families face due to their lack of income they continue to charge them extra for using a key or card meter! While they insist the energy costs the same for these customers they avoid explaining the administration costs they charge or the payment made to the retailer for collecting the money on their behalf which also comes off the already poorer client. What is currently happening is people self disconnect and often the stark choice of heating or eating which in this day and age is an absolutely disgraceful choice facing a parent or an older person. The situation is exacerbated even more when a key/card customer goes into the emergency portion of their energy use and is charged even more for doing this. In some cases previous debt is added on and it is not uncommon for a client to be actually receiving less than half of the energy they think are paying for due to the charges taken first. Further, due to them already having less money they cannot afford to mitigate these charges by putting larger amounts on their cards because they haven't got it. Therefore they are continually hammered for being poor in the first place and the energy companies hide behind bland statistics.

10. The answer is not simple and certainly not single faceted. What is needed is a social tariff to be brought in by statute and this could be included as part of an extra "windfall tax" on energy companies profits or by using part of their CERT responsibility. With an energy efficient home, a social tariff set at around half or three quarters of the standard rate and with the abolition of any extra charges on key/card meters it would be possible to see families/householders avoiding the stark choice of feeding themselves and their families or keeping warm. One way of controlling by statue a social tariff would be to set this at 60% of standard fuel cost and every home should be identified and the standard energy use required by the occupant/s evaluated as per the national tables available already. The occupier would receive this amount of gas/electricity and any use over this would be at the normal price. This would encourage fuel efficiency, avoid abuse and allow fuel companies to operate a straightforward system. The qualifiers for the social tariff would be based on the fuel poverty calculation which would be arrived at in a new way to take into consideration all the various elements such as health, property type and size and energy efficiency status .

11. One issue which is not mentioned in the consultation is the health impact and it is well documented what the impact of a cold damp home has on winter death figures. The lower attainment levels of poorer children and the repetitive culture of doctor/hospital resources going into treating the affects of people living in these energy inefficient and homes costs the health service billions of pounds and this should also be factored into any long term strategy. Trial schemes need to be put into operation where treating a cold damp home can be measured on the impact on families and their health. Altogether social tariffs, energy efficient homes and renewable technologies can all be used to improve the FP levels in this country.

12. One method of managing and controlling abuse of a social tariff could be in the establishment of a set amount of energy needed to maintain adequate levels of heat in a standard home. The various householders type/size of properties all have estimated standard energy requirements and these need to be the basis for a social tariff. This would also encourage more effective insulation and energy waste and avoid the consumer using excess and irresponsible amounts of energy.

 

13. Winter fuel payments and cold weather payments

 

The continuation of winter fuel payments should be continued but in a different format and the recipients should receive a voucher payable only to the energy company instead of cash. They would be non transferable to avoid any misuse and only refundable by the energy company as part of their annual tax liability.

14. Once it has been established that 100% energy efficient homes have been achieved and social tariffs brought in the number of people in FP can be reconsidered and a decision of the winter fuel payments and cold weather payments can be made. Both at this point in time are essential and are a valuable asset to many of the people in receipt of these. The fact some people sue these for other purposes at the time of issue is one thing but the fact is hat the extra resource does help them.

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

 

One of the main causes of rural fuel poverty has to be the lack of access to gas supplies. The costs of running pipelines into every part of the country would be expensive to say the least but unless action is taken to reduce the costs of fuel for rural and other non gas properties the problem cannot be solved in a simple way. In the long term we should be setting down a programme of gas line extensions to try and help those not on the main gas networks and this could be funded after the completion of the insulation programme and as this part of the scheme winds down the resources being used for this would be transferred over to the gas pipeline extension project. In the meanwhile it should be considered another priority to develop and install renewable energy systems for individual properties or in the case of clusters of homes community energy schemes. With the organisations such as the New and Renewable Energy Centre (NaREC), EST and NEA working together a simplified project design and build system could be developed for every property off the gas main areas.

16. These would be either air or ground source heat pumps, solar, PV or wind turbine options depending on restrictions in National Trust or National Park areas or areas with planning restrictions.

 

February 2010