House of Commons - Rural Communities - Environment, Food and Rural Affairs Committee

Rural Communities - Environment, Food and Rural Affairs Committee Contents

6 Fuel poverty

Background

168. A household is considered to be in fuel poverty if more than 10% of its income is spent on heating the home to an adequate level of warmth. Three main factors contribute to whether a household is in fuel poverty—the household income, the energy efficiency of the property and the cost of energy.[233] Marginally more rural households are in fuel poverty than urban households (18.4% compared with 15.9% in figures from 2010) but the depth of that poverty is much deeper. In his 2012 review of Fuel Poverty Professor John Hills noted that rural households had an average fuel poverty gap of £622 compared to £362 for urban areas.[234]

169. Households without mains gas, which depend on more expensive alternatives, suffer the greatest fuel poverty—36% of rural households lack mains gas compared with 8% in urban areas. Rural homes are also likely to be detached and larger than urban homes, making heating them comparatively more expensive. The most remote communities suffer the highest fuel poverty.[235] Professor Hills' review confirmed that fuel poverty is a serious national problem: it exacerbates other hardships faced by those of low incomes, has serious health effects (including contributing to extra deaths in winter), acts as a barrier to efforts to reduce carbon emissions, and, most worryingly, is set to rise.

170. While the higher cost of off-mains gas is a main driver in rural fuel poverty, households in rural areas are also less likely to take up benefits that might reduce fuel costs. This may be due to lack of awareness of schemes or even to a lack of broadband; certainly, that is considered a factor in the low take-up of electricity switching by rural customers.[236]

Energy Company Obligation and the Green Deal

171. There have been a series of initiatives aimed at reducing fuel poverty and increasing a household's energy efficiency from CERT, CESP and Warm Front to recent replacements of those schemes such as the Energy Company Obligation and Green Deal. The earlier schemes have been criticised for not being effective in reaching rural areas.[237] Defra told us they were aware that "rural households have not benefited from Department for Energy and Climate Change (DECC) energy efficiency schemes, which is why we are working with DECC to ensure the design of the Green Deal and ECO meets the specific needs of rural people".[238] While it is too early to judge the success of the Green Deal and ECO,[239] several witnesses raised concern with us over the extent to which the new schemes might benefit the most rural areas.[240]

172. The Energy Company Obligation is an initiative whereby the major energy companies fund energy efficiency improvements in people's homes and recover the costs through energy bills. The RCPU secured an agreement from the energy companies that 15% of the targeted recipients of the scheme should be vulnerable households in rural areas—an achievement that ACRE described as an example "of where the RCPU's role is having real impact outside government".[241] The RCPU's intervention means that all low-income rural households are now eligible for the Carbon Saving Community Obligation strand of the fund rather than only those in deprived areas. Defra state that "this will see energy suppliers delivering energy saving measures to the most deprived households in rural communities and not just those in areas of concentrated deprivation".[242]It is important that the energy companies follow through on the spirit of the rural safeguard in the Energy Company Obligation. They must target the isolated rural communities where the problems of fuel poverty are at their most extreme and not just the lowest-hanging fruit—those communities which are classed as rural but are market towns or in urban fringes and thereby easier to access.

173. Holly Sims, Corporate Affairs Manager, Calor Gas, warned that lack of marketing of the Green Deal and ECO in rural areas might be a barrier to delivery:

I think there is still a huge amount of uncertainty around Green Deal. I do not think consumers know very much about it and, particularly in rural areas, we know that getting any information out into rural areas is difficult due to things like the lack of broadband. Communication networks just do not exist in the same way as they do in urban areas.[243]

Getting to vulnerable people who are suffering fuel poverty but are unaware that schemes exist that might help them is a challenge which the Government must overcome. Some of the schemes are complex and finding out sufficient information can be a daunting process without online resources. Councillor Begy and Sonia Mangan described to us the benefits of a personal approach in which people were visited in their homes and had schemes explained to them.[244]Through its network of rural stakeholders such as ACRE, rural community councils and the Rural and Farming Networks, Defra is well-placed to take a lead on communicating the Green Deal and ECO schemes to a rural audience. The most vulnerable in society have the most to gain from schemes aimed at addressing fuel poverty and the Government should ensure organisations that work with at-risk groups are aware of what is available.

Energy Performance Certificate

174. In order to benefit from some of the Government's energy efficiency schemes households must achieve a high Energy Performance Certificate (EPC) rating. The EPC rating gives an indication of how costly the building is to heat and light and what its carbon emissions are likely to be. As fuels used to heat properties off the gas grid are more expensive than mains gas, those homes off the gas grid, of which there is a greater proportion in rural areas, will receive a lower EPC score. This means that rural homeowners will benefit less, if at all, from the incentives intended to assist the uptake of energy-efficient or renewable technology, such as the Renewable Heat Incentive and Feed-In-Tariffs as they are being limited to homes that meet minimum EPC levels.[245] It is disappointing that off-grid households are being prevented from accessing the same incentives and finance to improve their properties as on-grid households. We look to the RCPU to rural proof energy efficiency policies and see that the bias against rural communities is removed.

Bulk-buying initiatives

175. Bulk-buying schemes can reduce energy bills through the power of collective action. Examples such as the scheme piloted and pioneered by Oxfordshire Rural Community Council for bulk-buying heating oil[246] or Cornwall Together's plans to switch 10,000 households to cheaper energy tariffs can make a real difference in helping rural communities address the problem of fuel poverty. This is particularly true in rural areas which lack the benefit of effective internet access to search for the cheapest tariffs for electricity. Rural households dependent on heating oil typically exist in clusters, such clustering also lends itself as a natural group to take advantage of a bulk buying scheme.

176. Defra recognises the benefits oil-buying groups can deliver. In the 2012 document The Cost of Fuel in Rural Areas Defra points to the support it gives to the Rural Community Action Network (RCAN) which, "amongst other things, promotes local action in relation to fuel purchasing". In addition to supporting RCAN:

Defra and DECC worked closely in Autumn 2011 with Citizens Advice, Consumer Focus, Action with Communities in Rural England (ACRE) and the Federation of Petroleum Suppliers on the development of buying tips for consumers using heating oil and a Best Practice Guide for Oil Buying Groups. This publication provides practical information to help communities to set up oil buying groups and ideas on how to run and manage a group once established. It also highlights some pitfalls to avoid and helps assess what is the best option for a community.[247]

177. Collective buying groups have the potential to reduce energy bills for our rural communities. We are encouraged by the steps Defra has taken to support those communities wishing make use of the benefits of collective buying power. In order to be able to judge the effectiveness of this approach, Defra should set out how many communities have set up oil-buying groups since 2011-12 in its response to this Report.

233 Ev 115 [Defra]; a household is considered to be in fuel poverty if it needs to spend more than 10% of its income heating the home to an adequate level of warmth. Back

234 John Hills, Getting the measure of fuel poverty: final report of the fuel poverty review, March 2012 Back

235 Ev 115 [Defra] Back

236 Ev 101 [Calor Gas] Back

237 Ev 101 [Calor Gas] Back

238 Ev 115 [Defra] Back

239 The Green Deal was launched in January 2013 and as of 27 June 2013 had helped four households. Back

240 Ev 101 [Calor Gas], and Ev 98 [Rural Services Network] Back

241 Ev w32 [ACRE] Back

242 Ev 115 [Defra] Back

243 Ev 205 Back

244 Q 341 Back