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New funding deal must reach the fuel poor first

ImageWith Warm Front on the way out the new Energy Company Obligation must have the resources to lift almost 5m households out of fuel poverty

When the Warm Front scheme closes in 18 months, it will mark the first time since 1978 that there has been no taxpayer funded scheme for installing energy efficiency measures into vulnerable and low income households. This is despite there now being more households, approaching 5m, acknowledged to be in fuel poverty than ever before.

The traditional definition of a household being in fuel poverty is when its occupants need to spend upwards of 10 per cent of income (after housing allowances) just to keep warm. This October a government-sponsored inquiry, headed by Professor John Hills, published its provisional conclusions as to whether this definition is in any sense outdated. Given the content of much of the evidence presented to the inquiry, and the results of a similar inquiry in Northern Ireland by Dr Christine Liddell, it would be both surprising and perverse were that objective to be relaxed when the final conclusions appear next January.

Whatever this latest inquiry concludes, the English publicly funded programme is already in steep decline, pending closure. This is despite Warm Front having been an extremely successful and beneficial programme. Since 2000 the scheme has assisted over 2.3m households, saving an average of £610 per year on energy bills.

Slashed funding

Warm Front’s budget is already a fraction of previous funding levels, just £110m and £100m over the current two years. The scheme, which as recently as in 2008 helped almost 300,000 households, will benefit under 100,000 households this year. Millions of fuel poor homes – with no other equivalent source of help available – are missing out on the support they need to reduce their fuel bills by making their homes considerably more energy efficient.

In addition to installing better boilers and insulation, for many years Warm Front also offered a Benefit Entitlement Check (BEC). This service had been identifying on average over £1,600 per year in additional income for participants; making a life-changing difference to the most vulnerable households. But from this May, Ministers decided not to continue with BECs as part of Warm Front, entirely due to that whopping budget cut.

On the positive side, the introduction of changes to the criteria that gives access to the scheme may help to allow the very limited monies to be directed at some of the people on the lowest incomes in the least thermally efficient properties. Even so, at this rate, it would be towards the end of the century before every relevant household is living in a truly “fuel poverty proof” home.

When the Green Deal begins in 12 months time, a new Energy Company Obligation (ECO) – of as yet uncertain size – will be responsible for taking up where both Warm Front (and the energy company-funded CERT scheme) have left off. It is intended to provide measures for those low income and vulnerable customers for whom the standard Green Deal “pay-as-you-save” model simply will not work.

The ECO is set to provide assistance for both the hardest to reach and the hardest to treat properties (estimated to include over 10m such properties in England alone), subsidising more expensive measures such as solid wall and non-standard cavity wall insulation. This scheme must focus support initially on the fuel poor as the priority. There will need to be a weighting of the target towards ensuring fuel poverty eradication, as opposed to carbon savings, at least for the first years of the scheme.

Vulnerable households

The Government’s 2011 Annual Report on fuel poverty contains this important statistic: “In 2009, around 4.5m vulnerable households in the UK were fuel poor, an increase from around 3.75m the previous year”. Under the Warm Homes & Energy Conservation Act 2000, all vulnerable households had been expected to be removed from fuel poverty by 2010. And by 2016 the Act states that fuel poverty must be eliminated in all households.

The legal challenge undertaken in 2008 by Help The Aged and Friends of the Earth failed, very largely because the relevant Act contained six weasel words. These apparently permitted the Government to fulfil this requirement only “as far as is reasonably practical”. At the time, lower court judges were persuaded that the existence of Warm Front and related policies fulfilled that requirement.

I really doubt whether the Supreme Court could ever regard withdrawing all taxpayer funding for energy efficiency assistance in low-income households, while leaving ‘around 4.5m vulnerable households’ still in fuel poverty, as an example of the government doing all that is ‘reasonably practical’. Unless, of course, the new ECO is made sufficiently large, and sufficiently focused on the fuel poor, to compensate.

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