A hot summer for fuel poverty

"2.8m is a still shocking figure that needs to be addressed," says Ian Preston

25 July 2013

CSE's Senior Analyst, Ian Preston, reports:

You might have spent much of the last month looking out of the window at the blue sky thinking of weekend barbecues, days at the beach, tennis triumphs and the Test Match Special. But strangely enough, this could be one of the most important summers for fuel poverty in a decade.

Why, you might ask? Could it be summer overheating and the need for extra electricity to run cooling appliances? Well, while that's a potential issue, both the new and old definitions of fuel poverty don’t account for energy needed to keep cool.

No, it’s an important summer because the Government has finally announced what it intends to do about fuel poverty. Or rather, it has outlined the framework within which it will develop further what it intends to do. This includes finally, after over two years of consulting and deliberating (as highlighted previously here), a commitment to the Low Income High Cost definition (LIHC) of fuel poverty.

Fuel poverty has rocketed back up to over 5.1m households in England from a low point of 3.5m in 2010. The redefinition of fuel poverty has reduced the number to 2.8m households, but 2.8m is still a shocking figure that needs to be addressed.

In terms of DECC’s proposed framework for measuring fuel poverty, there is little change from its previous proposals, although the way in which household occupancy is accounted for has been improved as proposed by ourselves and others in the report “Improving Hills”.

The most important developments are:

The later amendment to the Energy Bill effectively means that the Government will need to set a new objective to tackle fuel poverty with a target date. This objective will then be backed up by a supporting strategy that contains targets. This is why this hot summer will be so important for fuel poverty. While the exact thinking of the Government is unclear, we welcome the following statement from the Framework for Action:

“Any new target should drive the right actions, which means delivering cost-effective support to households that are most in need. To this end, it is important that any target is specified in a way that reflects the impact that Government policies are having in improving people’s circumstances. We therefore propose focusing our efforts primarily on ensuring that those households who are fuel poor (as defined by the LIHC indicator) attain a certain standard of energy efficiency in their homes. Progress could be measured against an average or minimum standard of energy efficiency for fuel poor households.”

So it’s imperative that those working on fuel poverty, in fuel poverty, or aware of fuel poverty challenge the Government to set an objective that meets the scale of the challenge. Our latest 'Nowcast'* of Fuel Poverty in 2013 shows that under the old definition there were 6.7 million fuel poor households in GB and 5.1m in England. This figure of 5.1 million is considerably higher than DECC’s latest estimate of 3.5 million in 2011 under the old definition. Click here for more information on the tool used to predict future fuel poverty.

We need to tackle energy effiiency

Under the new Hills Definition of fuel poverty we estimate that there are 2.8 million fuel poor households in 2013. Importantly, in the context of the wording of the framework above, there are 1.56m fuel poor in the most inefficient homes – EPC band E, F and G – in 2013 for the Hills Definition (just over half of the new fuel poor at 56%). You can download tables here showing the breakdown of predicted fuel poverty in England in 2013 by EPC band for the two definitions.

CSE believes that, as a minimum, the Government needs to be developing a set of policies to improve these homes to EPC band B or C.

In terms of policy support, the framework for action identifies the following policies as opportunities to maximise delivery: the Warm Homes Discount, the Green Deal and ECO, the Local Authority Competition, Cheaper Energy Together, and the emerging Heat Strategy.

In terms of delivery, these listed policies aren’t sufficient well resourced unless the Heat Strategy utilises a tax funded Renewable Heat Incentive that has a strong focus on installations in low income households. Furthermore, in my view, the funding for the Winter Fuel Payment is notably missing from the list in the framework for action. We believe it should be re-framed as a fund for significant energy efficiency upgrades of the homes of the vulnerable elderly, so that in future, the end of the summer stops meaning a return to the misery of a cold, unhealthy home.

* The Nowcast has been produced using CSE’s Housing Energy and Fuel Poverty Assessment Tool (HEAT) which was funded by was funded by a coalition of funders Eaga Partnership Charitable Trust, Consumer Focus and Pilkington Energy Efficiency Trust.

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