Ten Years of SE² #7: The Unfinished Business of Fuel Poverty

One of the advantages of reflecting back over time – as we’re doing in this series of blogs to celebrate our tenth birthday – is that you can see which things were short-term fads and which were long-term structural challenges.

Fuel poverty falls into this latter category. Over the past decade, we have seen the number of fuel poor households rise from around 6% in 2004 to nearly 15% in 2011 (based on the old 10% definition). And this is despite one of the largest concerted efforts to improve energy efficiency that the country has ever seen.

Fuel poverty should be a simple nut to crack: it’s caused by a combination of energy prices, household income and the energy performance of a property. So if you can address these, you solve the problem. Right?

Energy performance is – on average – improving. But it’s been improving most in those homes which have been easier to treat – those on the gas network who can take up efficient condensing boilers and those with lofts and cavity walls that make for straightforward, replicable insulation jobs.

The recent Hills Review suggests that the most severe fuel poverty occurs in households off the gas network, and for those with solid walled properties. Larger homes, low household income and privately renting are also factors which contribute to the severity of fuel poverty. Policy recognised this – the original design of ECO made provision for insulating a significant number of solid walled homes and CSCO deliberately had a rural component. Changes to ECO have watered this down – reducing the obligation on solid wall insulation, allowing “easy” insulation to re-enter the fray. It also seems that early delivery of CSCO has focused on density rather than need.

So, point number 1: let’s make sure that energy efficiency improvements are available at the least cost to those who need them most.

Household income has stagnated over the past few years. Energy related rebates are very popular, and can be effective – the Warm Home Discount slices £140 off the electricity bills of the most vulnerable and is a very direct form of moving money around. Debate continues about the Winter Fuel Payment – should it go to every older person regardless of circumstance? Does the money get used in the way that is intended – ie, to enable people to keep their heating on for longer – or does it get used for other household bills, with the householder choosing to remain cold? It would be interesting to research how people view their Winter Fuel Payment and how they compartmentalise and use the money.

But point number 2 – whilst rebates are valuable, they can just be an accounting trick, offsetting the costs of customer contributions to schemes like ECO. Tariff reform provides an opportunity to make sure that the poorest in society are not paying disproportionately for their energy (whether ECO, standing charges or because they have prepayment meters). And an ECO paid through general taxation, rather than customer contributions, would mean that those who can afford to pay contribute more than those who can’t.

Energy prices: well, here’s where it gets problematic. It’s easy to say “just regulate the price of energy” but a number of consequences fall out of that. Firstly, cheap energy incentivises people to use more. Good if you’re a household that can now afford to put the heating on. Bad if you’re an energy guzzler who now feels even less compunction about buying the next gadget, or leaving all the lights on. Secondly, cheap energy disincentivises investment in more expensive forms of generation (largely renewables), forcing energy suppliers to drive down costs by using cheap (and usually dirty) fuels. And thirdly, cheap energy can reduce the resources available to the energy companies to invest in infrastructure upgrades – this is a more tenuous one to me. I think there are funding models which could stimulate investment in infrastructure, most probably by bringing private and public sector partners more closely together (a step towards renationalisation but not quite that far – because it’s hard to put genies back in bottles).

 So a third point here: cheap energy is not necessarily a good thing.

Over the years, we have worked on a wide range of fuel poverty projects. Since 2009, we have helped around 800 households in West London to be better able to pay their bills and live in a warm home.  We have trained over 1000 health and voluntary workers to spot the signs of fuel poverty, understand its implications for health and wellbeing, and make referrals to local support schemes. And, last year, we established the London Fuel Poverty Hub, to provide a central point of information about fuel poverty in London, including details of support, advice and grant schemes in all 33 London Boroughs.

The Government will be publishing a Fuel Poverty Strategy consultation in the next few weeks, and we look forward to understanding more of their vision for how fuel poverty will be managed and minimised in the coming years. We asked Jenny Saunders, Chief Executive of fuel poverty charity NEA, what she would like to see from the Strategy, and she said:

If the strategy is to be successful the Government must

• Set  minimum energy efficiency standards – EPC  band D by 2020 and band C by 2025 - for low income households whose properties fall below those standards
• Commit public funding to meet the required level of investment and a move away from more regressive levies on energy bills
• Take a holistic, cross departmental and long-term approach to affordability and social justice

We also asked Emma Adams for her views. If you work in fuel poverty or energy efficiency in London, you’ll know Emma. If you don’t, you should. She’s a project development and relationship building dynamo who has done more to bring people together on the issue of fuel poverty in London than anyone else we know. She said:

1. A funding stream managed by local authorities to support vulnerable people living in the private sector with essential home heating where they meet the fuel poverty criteria. Key to this is targeting measures to those in fuel poverty
2. Pressure on the energy companies to give more support to their customers living in fuel poverty.   This would include tariff advice and help to continue their Warm Home Discount support and include actual fuel poverty targets as part of their ECO delivery.
3. A focused and funded campaign with Public Health to support local authorities, the voluntary sector and other stakeholders supporting vulnerable people to fully identify people living in fuel poverty.
4. A target for social housing providers to ensure there is substantial support for tenants living in fuel poverty.  An annual report should be required to show the actions and outcomes of their work and support to their residents.

We would absolutely encourage anyone with an interest in the issue of fuel poverty (which should be everyone!) to watch for the Government’s forthcoming consultation, to think about the issues and to respond. Fuel poverty is an issue that affects people’s health, their state of mind, their educational and work chances, the quality of their homes, their ability to afford other living costs, and so much more. Watch this film from the Energy Bill Revolution to see the real impact that fuel poverty has on people’s lives, and then start to put your consultation response together.