Fuel poverty

1. Fuel poverty Energy Policy into Practice: slides for advisers

2. 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

3. 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:www.decc.gov.uk/en/content/cms/statistics/fuelpov_stats/fuelpov_stats.aspx • Consumer Focus modelled FP data for 2010:www.consumerfocus.org.uk/publications/now-cast-for-fuel-poverty-in-2010

4. 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

5. 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 reflectivitylicence condition has reduced prepayment and Standard Credit tariffs; still large differential with on-line Direct Debit tariffs • as fuel company FP responsibilities increase, Ofgem’s role will increase • Local authorities also important, eg affordable warmth strategies

6. 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

7. Policy challenges? • Fuel Poverty Charter: 10 calls to eliminate fuel povertywww.consumerfocus.org.uk/assets/1/files/2010/03/Fuel-Poverty-Charter.pdf • 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

8. Want more information? • Consumer Advice consumer service: www.adviceguide.org.uk • Consumer Focus: www.consumerfocus.org.uk • Citizens Advice: www.adviceguide.org.uk • Energy Saving Trust: www.energysavingtrust.org.uk • Home Heat Helpline: www.homeheathelpline.org.uk • End Fuel Poverty Coalition: www.endfuelpoverty.org.uk • National Energy Action: www.nea.org.uk