presented by Pedro Guertler Head of Research, Association for the Conservation of Energy

1. The new fuel poverty policy landscape in EnglandAs seen through the lens of redefining fuel poverty presented by Pedro Guertler Head of Research, Association for the Conservation of Energy

2. Overview • Redefining fuel poverty. Why? (The good news) • Redefining fuel poverty. Why really? (The cynic’s view / the bad news) • What more could be done to tackle fuel poverty? ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future

3. Why redefine fuel poverty? • Officially, flaws with the current definition (that is if you need to spend more than 10% of income on adequate heating, lighting and cooking): • Secretary of State Ed Davey (June 2012):“the Queen could be in fuel poverty if fuel prices go up” • Definition too sensitive to fuel prices • And a number of other flaws ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future

4. The good news: new definition improves on current one in some areas • Restricts to low income households with less than 60% of median income, and: • Considers income after housing costs, and after required fuel costs • ‘Equivalises’ incomes, and fuel costs, by adjusting for household size and composition • Restricts to those households having to pay more than median fuel costs High income,low fuel costs:‘no problem’ Low income,low fuel costs:in income povertyalone Low income,high fuel costs:in fuel poverty High income,high fuel costs ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future

5. “Progress is impossible without change, and those who cannot change their minds cannot change anything” Now let’s give a bit more context (the bad news) ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future

6. Why really redefine? Why now? • Well…: • Statutory 2016 deadline for eradicating fuel poverty is nearing... • ...and fundamentals are challenging... • ...whilst budgets to tackle fuel poverty have already been significantly reduced. ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future

7. Falling fuel poverty budgets ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future

8. ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future

9. Impact on fuel poverty ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future

10. “Progress is impossible without change, and those who cannot change their minds cannot change anything” Change is impossible without progress, and those who cannot change anything cannot change their minds Am I being too cynical? It gets worse. ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future

11. Communicating this next bit is not: ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future

12. What other problems are there? • New indicator does not define fuel poverty: • Because low-income households having above median fuel costs does not equate to being fuel poor • New definition does not examine the relationship between fuel costs and income: • In doing this it ignores how (un)affordable fuel costs are ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future

13. The consequence • 1.3 million low income households: • With below median fuel costs (i.e. not fuel poor) • Who struggle to afford their fuel bills, and • Could reduce bills through basic energy efficiency improvements by £253 (23%) • Surely these cannot ‘just’ be in incomepoverty? ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future

14. Equivalising fuel costs The problems with the proposed new definition ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future

15. New definition – bad news • Right and proper to equivalise fuel costs, however: • Use of ‘household type’ masks wide variation in the number of people in households… • …and big variations in fuel costs (Couple, no dependent children = 100) ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future

16. New definition – bad news • Using household type rather than size is plainly inaccurate ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future

17. New definition – bad news • Does not equivalise for dwelling size • This despite the fact that low income households are much more likely to live in smaller dwellings, and compared to low income households in larger dwellings: • Struggle more to afford their fuel • Are at least as likely to be cold • And are more likely to be under-spending significantly ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future

18. New definition – bad news • The impact of not accounting for dwelling size quite simply means it is less likely for a low income household to be defined as fuel poor ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future

19. New definition – case study ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future

20. New definition – distribution across dwelling sizes ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future

21. Right? ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future

22. What more could be done? ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future

23. Restore Warm Front? • Pros: • Northern Ireland, Scotland and Wales have maintained or increased their public expenditure programmes, why can’t England? • Cons: • It’s only just been scrapped ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future

24. The Green Deal? • Pros: • It avoids the need for up-front capital for energy efficiency improvements • It stretches repayments over a long period of time, repayments which should be exceeded by savings • Cons: • Fuel poor households are debt averse • Lenders are fuel poor household averse • If a fuel poor household is under-heating, there aren’t any savings to be made, and they will be out of pocket • Major housing provider who piloted the Green Deal says its not for them ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future

25. Spend what money there is differently? • Pros: • New Energy Company Obligation will provide very large subsidies (ca €6,000) for able-to-pay households to install solid wall insulation at the same time as budgets for low income households are cut • Most of this could be spent on helping low income / fuel poor households (with a little left for subsidising the cheapest carbon savings in the able to pay households) •  Double the spending on low income households, 50% more carbon savings, same cost to bill-payers ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future

26. Regulate? • Pros: • Can ensure the worst-performing homes are improved • It costs the public purse little to nothing ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future

27. Conclusions ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future

28. New policy landscape means 50% less funding available to permanently reduce fuel bills • Fuel poverty is rising fast • New definition does away with ‘fuel poverty is rising fast’ • Fuel bills are consumers’ and voters’ “number one financial concern”… • …so surely politicians are very vulnerable to public pressure if they do not have a credible plan? ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future

29. www.energybillrevolution.orgwww.ukace.org Thank you. ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future