Fuel poverty - Consumer Focus

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, Ofgem’s 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?
Consumer Direct: www.consumerdirect.gov.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:
• National Energy Action: www.nea.org.uk

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