The Problem of Fuel Poverty
A warm dry home is a basic necessity of life, but one which the poorest households in the United Kingdom struggle to achieve. They spend a high proportion of their limited incomes on fuel, but they have still to choose between cold homes or fuel bills they cannot afford.
The principal reason is that far too many homes are poorly insulated and have uneconomic and inefficient heating systems. The consequence is fuel poverty, resulting in misery, ill health and premature death - winter death rates are markedly higher in the United Kingdom than in other countries with colder climates.
The Role of the Warm Homes Group
The Parliamentary Warm Homes Group was established to raise awareness of the problem of fuel poverty and the policies which will eradicate it. It seeks to stimulate debate about the need for long-term investment in energy efficiency improvements and the shorter term need for welfare benefit payments to meet the full cost of adequate home heating. It investigates the potential contribution which can be made by Government, local authorities, landlords, the voluntary sector and fuel suppliers to enable those on low incomes to keep warm at a price they can afford. The Group supported the passage of the Warm Homes and Energy Conservation Act through Parliament, which requires the Government to develop and instigate a strategy to eradicate fuel poverty in England by 2016 and Wales by 2018.
Although affordable fuel bills are a struggle for low income households, public policy has been uncoordinated and responsibilities are divided between agencies and departments with different priorities. The Government and the devolved administrations published their strategy to end fuel poverty in November 2001, setting out short-term targets and a range of policy development and funding streams which will be used to deliver the strategy. Key issues to be addressed still include:
. Landlords and low-income owner-occupiers cannot afford the capital investment needed to make necessary improvements. More flexible and comprehensive packages of measures must be made available via grant schemes for these people.
Challenge - to create effective schemes, accessible by all fuel poor households.
. The social security system takes no account of differences in climate or the condition of the property. Benefit levels are the same whether the home was built in the 19th Century or the late 20th Century. Financial assistance via the Winter Fuel Payments to elderly people helps towards the cost of their extra heating needs. Many families and disabled households also require additional assistance to meet high fuel usage.
Challenge - the long term reality of increased fuel prices and the need for tax incentives to favour renewables must be addressed through the social security systems so that low-income households are not penalized.
. Fuel companies incur additional costs in dealing with customers with payment problems. As competitive markets developed, low-income consumers became marginalised as the industry targeted the most profitable customers, and special arrangements are starting to be made under Ofgem's Social Action Plan to ensure low-income and disadvantaged groups also benefit from competition.
Challenge - to ensure equitable sharing of the benefits of the competitive markets.
. The use of prepayment meters avoids disconnection, but extra charges are levied for using this payment method. Fuel is priced beyond the means of consumers resulting in hidden disconnection and rationing of supply.
Challenge - to ensure the fuel poor do not pay more for their energy and cost differentials of payment methods are challenged.
. Environmental concern to reduce energy consumption may conflict with the need of others for increased warmth to avoid exacerbating health problems. Sustainable energy solutions should be identified and supported.
Challenge - to ensure the industry regulator addresses equally the social, economic and environmental duties and the role of renewables to assist the fuel poor is explored.
. The job creation potential and skills training opportunities of a comprehensive national energy efficiency improvement programme must be supported and the skills shortage in the industry must be addressed.
Challenge - to demonstrate the wider economic gain of delivering warm energy efficient homes to low-income households.
Whilst better building standards can gradually improve the situation, it is clear that priority must be given to existing homes which will be occupied for decades to come. Energy efficiency improvements are known to be cost-effective. The framework already exists to target those homes in most urgent need of assistance.
. The Home Energy Conservation Act provides the impetus, and through energy audits the methods, for assessing which homes need to be insulated first. Improved co-ordination at a local level could be managed by local authorities, the Sustainable Energy Act builds on local authority duties relating to energy efficiency and fuel poverty.
. The Home Energy Efficiency Scheme (branded Warm Front in England) provides basic insulation services (and heating systems to people over 60 on means-tested benefits). Linked to other public and privately-funded improvement programmes, it has the potential to be a comprehensive programme for affordable warmth. The scheme is under review with some changes from April 2004 and others likely in 2005.
The opportunity exists to put an end to the misery of cold homes and unmanageable fuel costs; to give people more money to spend on other goods and services and invest in local economies; to reduce expenditure on housing maintenance and repairs and make homes easier to let; to cut the costs of treating cold-related illnesses and create many thousands of new jobs. What other public spending programme can match this potential?
Please click here for more information on the Parliamentary Warm Homes Group