"I’m seriously unimpressed"

CSE’s Ian Preston delivers his verdict on Government’s fuel poverty efforts

14 November 2012

CSE's Ian Preston is frustrated by the lack of progress on fuel poverty, which currently blights the lives of some 7 million people in the UK

"I was recently in a meeting with many of the big names in fuel poverty policy," said Ian, "when I found myself referring back to work CSE did years ago – sometimes on behalf of Government departments – and wondering why we seem to be continually going over old ground.

"Are we, the lobbyists, doing something wrong, or is 'the system’ simply unable to assimilate the evidence and alter its course? There are people out there suffering, and we're too stuck to meet the challenge of tackling fuel poverty adequately."

Ian is CSE's senior analyst; he has contributed to the development of fuel poverty policy for over ten years and is a member of the Energy Efficiency Partnership for Buildings' Fuel Poverty Strategy Group, the National Right to Fuel Campaign, and the Public Utilities Access Forum.

Below, he shares his personal reflections on more than a decade of missed opportunities and own goals in Government fuel poverty policy and programmes.

You can also download his paper here.

Fuel Poverty – reasons for being seriously unimpressed
Ian Preston | November 2012

For the last two weeks I have spent a great deal of time writing long emails to Government about fuel poverty policy or attending numerous meetings and workshops on the subject. The two topics for debate are the Hills Definition of Fuel Poverty and the ECO Affordable Warmth scoring mechanism.

What do these two have in common? The answer is that they are both (a) overly complex and (b) an imperfect way of targeting and helping the fuel poor.

Frustratingly in many of these meetings I find myself referring to reports published by CSE going back several years which presented findings that are extremely pertinent to the debates we are having now.

So one, some or all of the following must apply: CSE is failing to communicate the things we’ve discovered; ‘the system’ (DECC, Ofgem, BIS, DoH and their former incarnations) isn’t listening to us; ‘the system’ is unable to assimilate evidence and analysis which requires it to alter practice and improve policy so that they better address the challenge of fuel poverty.

For me, the last straw was the announcement on 7 November 2012 by the Green Deal Finance Company that householders will face a credit check when taking out a loan under the Green Deal. CSE had warned about this in 2010. Along with the Association for the Conservation of Energy (ACE) and the Energy Saving Trust,  we prepared a report for Consumer Focus called ‘Access for All’ which highlighted the fact that 1.5 million low income households in financial stress may not be able to get a loan due to bad credit ratings. This was dismissed at the time by DECC who insisted that the Golden Rule protected householders and that the loan was tied to the property not the person.

Early optimism
When I started at CSE over eleven years ago in 2001, the Government had just published its Fuel Poverty Strategy.  This set out the plans for delivering the aims of the Warm Homes and Energy Conservation Act and included a target to eliminate fuel poverty in ‘vulnerable’ households by 2010, and in all households by 2016. [The strategy defined a fuel poor household as one that would need to spend more than 10 per cent of its income to maintain a ‘satisfactory’ heating regime.]

At the time I remember a real sense of optimism and excitement in the office about eradicating fuel poverty. Energy prices were falling, fuel poverty had fallen to 1.7 million from 4.3 million in 1996, and the Government had launched its flagship Warm Front programme to tackle fuel poverty with £130 million of tax payers' money.

The energy market had recently been liberalised and there was a belief (which seems incredible now) that this could reduce prices further.

But this optimism took an early dent. The very first piece of work I undertook for CSE monitored over two years the impact of newly liberalised gas and electricity markets on a national panel of low income households. What we found was that many low income consumers – particularly those on pre-payment meters – were being left behind in a market dominated by dual fuel direct debit offers. Sadly, despite numerous calls from researchers and policy makers, we’ve had to wait another 11 years for Ofgem’s Retail Market Review to face up to this ‘market failure’.

Since then I’ve been lucky enough to work on a further 75 CSE projects covering energy advice, community engagement, renewables, energy efficiency, fuel poverty and all manner of energy related issues. I’ve even dressed up in a washing machine outfit – in public. We’ve done some excellent and important work. But in too many of these a similar theme emerges, which is that Government policy around fuel poverty is not based on the best evidence available.

Here’s another example. Between 2001 and 2005 CSE tended to focus on ‘best-practice’ approaches for fuel poverty alleviation, establishing regional and local plans for action and developing local area models to target fuel poverty.

Two projects on which I worked spring to mind. The first is the Fuel Poverty Indicator, the first ever small-area model of fuel poverty and a piece of work of which I’m particularly proud. A second is the independent review of the Government-supported Warm Zones programme which highlighted the benefits of partnership working and integrated services.

The learning from these and other project found its way into a study for Defra looking at the local and regional opportunities for action on fuel poverty and subsequently into  successful energy efficiency schemes. They include, for example, complementary advice on benefits (e.g. energy advice with benefits advice), and partnerships that span local authorities, energy suppliers, energy agencies, health providers, debt agencies, community groups and more.

So in this instance I can say that the wider community of delivery agents listened; but has the Government? I would have to say, no, and add that despite our best efforts Whitehall has never recognised the financial value of the approaches we highlighted, nor tailored policy design to help them flourish more widely.

You can see this within the Green Deal and the ECO. These seem to be designed with large-scale operators in mind, and not the small local actors which our experience suggests would make for better policy delivery.

The trend reverses
In 2006, the number of fuel poor households jumped to 2.4 million, up from 1.5 million in 2005, largely due to hefty fuel price rises. As a consequence, a number of organisations became interested in understanding the growth in fuel poverty numbers and the scale of investment required to eradicate the problem. One of them, Eaga PCT, engaged CSE to research and write a report, ‘How much? The cost of alleviating Fuel Poverty in England’.

The headline finding from this study had major implications for the delivery of UK statutory targets for eradicating fuel poverty. It showed that a total of £6 billion was required to alleviate fuel poverty for the 3.3 million households who we projected would be fuel poor by 2010. (As it turns out, the actual numbers of fuel poor households in 2010 was reckoned to be 3.9 million (DECC); we’d slightly underestimated the impact of rising fuel prices.)

Furthermore, we estimated that the cost of ‘fuel poverty-proofing’ the homes of the fuel poor by increasing the homes’ SAP rating to 81 would be some £24 billion (see the CSE and ACE report for Consumer Focus in 2010 ‘Raising the SAP’).

Both findings should have demonstrated to Government that a step-change, not a gradual increase, was required in funding and ambition to tackle the issue. And ours wasn’t a voice in the wilderness. A number of other high profile reports at the time – 40% House (2005) and Home Truths (2007), both from Oxford University's Environmental Change Institute, CSE' How Low? (2008) and BRE's Reducing Carbon Emissions from the UK Housing stock (2005) – measured the investment required to retrofit the UK housing stock in billions.

The Government’s response was to increase the budget for Warm Front from £225 million to a peak of £395 million in 2008.

If the Government was both listening and committed to either its fuel poverty or climate change targets then the scale of support would have increased significantly from 2008 onwards; instead support for Warm Front began to decline and fell to £345 million in 2010.

According to recent internal research from ACE, spending on all fuel-poverty focussed programmes has fallen from £3.9 billion in 2009/10 to £2.7 billion in 2012/13. With this sort of cost-cutting, the country was never going to meet the targets for eradicating fuel poverty that I thought I’d been working towards since 2001.

So, in a last ditch attempt to get the Government back on track, Friends of the Earth, with support from a coalition of organisations attempted to take the Government to court to force it to meet it statutory targets. The court case failed with the judge stating that the Government had done what was ‘reasonably practicable’ to eradicate fuel poverty in the face of unforeseeable price rises.

With that phrase the Government has been effectively freed from its legal obligation to tackle the problem, but has it done everything reasonably practicable?

If we reflect on the outputs of the research and policy community between 2001 and 2010 then it becomes clear that the Government’s funding and activities associated with policy have been woefully inadequate. As fuel prices began to increase significantly, Defra and then DECC failed to react and review the strategy they had in place. The Government should have identified the necessary resources several years ago and then focussed them on those that need them most.

Reviewed to death
Instead following the court case DECC launched an 18 month internal review – which has never been published – subsequently followed by the protracted Hills Review into the definition of fuel poverty: “two years of navel gazing” in the words of ACE’s Andrew Warren at a recent workshop.  In that time, there must have been more than 50,000 excess winter deaths and hundreds of thousands of avoidable illnesses exacerbated by cold homes which Government programmes have failed to reach or treat.

The Hills Review leaves a particularly bitter taste in the mouth of the fuel poverty community because here, too, the Government is turning a deaf ear, not least to the many organisations who have suggested that the proposed approach is way too complex for anyone with a normal brain to comprehend.

(On a personal level, my chief concern is that Hills has created an indicator that changes very little over time with either fuel price changes or indeed energy efficiency improvements, and is consequently of little value to policy makers and practitioners.)

In the last two years much of my research at CSE has focussed on the differing merits of policy design. This can range from tariff structures to policy targeting. The key lessons which the Government seems to consistently overlook are the need for a more progressive to approach to recovering policy costs from energy bills and better targeting.

For example, in two pieces of work for Ofgem and Consumer Focus we looked at recovering the costs of the ECO on a per-unit basis from gas customers as opposed to electricity customers, which is currently the case. Our research clearly shows that the status quo has electricity customers paying a disproportionate amount towards the costs of environmental policies, and since low income households are more likely to use electricity as their heating fuel this is not fair from a social justice perspective.

As for targeting, I find myself sympathising with the energy suppliers who complain that ‘CERT super priority group’ households whom they are obliged to seek out and support with energy efficiency measures are extremely difficult and expensive to find. CSE can confirm this as a managing agent who delivers a scheme (Warm Streets) on behalf of Scottish and Southern Energy.

What we need is better data sharing – like we had with the Warm Homes Discount – and if the Government was at all serious about the problem then it would bang a few heads together to improve this. The heads I have in mind are DWP (holds data on qualifying benefits), CLG (holds EPC data on property condition), EST (a formerly public funded body that holds a large amount of housing data) and the energy suppliers themselves who hold data on where measures have already been installed. And, yes, this needs to be data at household level.

And finally, I can only conclude that, despite the Marmot Reviews which present overwhelming evidence regarding the health impacts of fuel poverty, the matter just isn’t being taken seriously in Whitehall. If it was then a new cross-departmental strategy to tackle the problem would have been created in 2010 following the court case.

However, none of this will matter when fuel poverty is redefined by an insolvable and intangible definition.

You can download his paper here.

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