Fuel poverty Energy Policy into Practice: slides for advisers

What is the issue? Definition: people who need to spend 10% or more of their income on fuel to keep their homes warm and meet other energy needs Three causes: –poor energy efficiency and heating in the home –low income –high fuel prices, also higher costs for tariffs used by low income consumers Consequences: –cold homes and reduced quality of life –Ill health, mental stress and excess winter deaths –debts to fuel companies and foregoing of other essential needs –reduced educational attainment: no warm room to study Older people, lone parents, disabled people, unemployed particularly likely to live in fuel poverty

Numbers affected by fuel poverty 5.5m households in UK live in fuel poverty (FP) in 2010 –2.1m in 2004 –rising fuel prices are main cause of increase FP likely to continue to rise in future: –funding for energy efficiency grants for low income consumers in England (Warm Front) cut by 2/3 –rising unemployment and poverty –public expenditure cuts –further increases in fuel bills Government FP data for 2008, including local FP data: Consumer Focus modelled FP data for 2010:

Government FP programmes Government –2000 Warm Homes Act: legal duty on Government to eliminate fuel poverty among vulnerable consumers by 2010 and for all households by 2016 (2018 in Wales) –2001 UK Fuel Poverty Strategy sets out programmes to meet legal duty –missed 2010 target: 3.3m vulnerable households still in fuel poverty –not likely to hit 2016 target with current programmes Current energy efficiency programmes: –Warm Front (and equivalents in devolved admins) – finishes in 2012/13 –priority group element of fuel company Carbon Emission Reduction Target (CERT) –decent home programmes in social housing (and equivalents in devolved admins) – about to finish Future energy efficiency programmes –Green Deal and Energy Company Obligation (ECO) start 2013 –ECO will replace CERT: main energy efficiency programme for FP in England –publicly funded programmes in Wales and possibly Scotland will continue

Other fuel poverty programmes Income –Cold Weather Payments –Winter Fuel Payments (many regard as poverty, not FP, programme) –mainstream benefit, tax credits, pension, minimum wage policies Fuel prices –Warm Home Discount: mandatory £130 discount on electricity bills –older people mainly benefit, small amount for non-pensioners Ofgem –vulnerable consumers licence conditions, e.g. debt and disconnection –cost reflectivity licence condition has reduced prepayment and Standard Credit tariffs; still large differential with on-line Direct Debit tariffs –as fuel company FP responsibilities increase, Ofgems role will increase Local authorities also important, eg affordable warmth strategies

The consumer experience Many low income consumers no longer eligible for Warm Front CERT only has limited impact on fuel poverty, eg unlike Warm Front few heating systems provided No replacement programme for Decent Homes Many of the FP live in hard to treat homes with high heating costs: off the gas network, solid wall, high rise flats Very few low income families and disabled people will benefit from Warm Home Discount Many climate change policies paid for by flat rate levies on consumer fuel bills – hits fuel poor hard Payment methods used by low income consumers - prepayment & Standard Credit - carry higher charges than Direct Debit

Policy challenges? Fuel Poverty Charter: 10 calls to eliminate fuel poverty Central call: national programme to improve energy efficiency standards of homes to those of homes built today Current priorities: –Green Deal is accessible to all –minimum energy efficiency standards for private rented sector –common eligibility criteria for all FP programmes: low income older people, families and disabled people –public funding for energy efficiency continues after 2013 –fairer charging for climate change levies –up-rating of benefits and tax credits recognise that low income consumers harder hit by fuel price inflation –a better deal for off-gas consumers

Want more information? Citizens Advice consumer service: Consumer Focus: Citizens Advice: Energy Saving Trust: Home Heat Helpline: End Fuel Poverty Coalition: National Energy Action: