Press Story

New analysis of government figures shows that the government will dramatically miss its target, set out in its 2015 Fuel Poverty Strategy, of ensuring fuel poor homes are upgraded to an energy efficiency rating (EPC) of C by 2030.

Recent government figures show that the 2.55 million households that live in fuel poverty in England face an average fuel poverty gap (the amount by which a fuel-poor household’s energy bills exceed reasonable costs each year) of £326. This gap is considerably larger for households which live in the most energy inefficient homes (with Energy Performance Certificates (EPC) of G) at £1,482.

The report by IPPR, the progressive policy think tank, calls for fundamental reform of the government’s scheme to tackle fuel poverty as the analysis shows the pace of progress is far too slow.

Based on the current pace of deployment of energy efficiency measures under the Energy Company Obligation (ECO) scheme, the government will not meet its target for upgrading fuel poor homes until 2091 at the earliest.

Since many ageing households are likely to require multiple home improvements before they reach an EPC of C, and because some fuel poor households are currently ineligible for the scheme as they do not meet the criteria to claim the benefits which could qualify them for the scheme, this timeline is likely to be even longer.

The research highlights that 20 per cent of fuel-poor households (500,000) are not even covered by the scheme because they do not receive, or are unaware of their eligibility for, benefits. Moreover, it is estimated that only 30 per cent of the available funds are likely to be spent on fuel-poor consumers.

At the same time, the levies on energy bills which provide the funding for the scheme are highly regressive, meaning that fuel-poor households spend a disproportionately larger share of their income on energy than affluent consumers. This situation is even worse for rural consumers who, despite paying more than £70 million in bill levies over two years, only received energy efficiency measures worth £3.5 million.

The report calls for wide-ranging changes to the Energy Company Obligation (ECO) - the main government policy for delivering energy efficiency improvements – which include:

Focussing the policy solely on addressing fuel poverty rather than providing energy efficiency measures for a range of households.
Funding the scheme through general taxation rather than as a levy on bills which is regressive, hitting the poorest households the hardest.
A new area-based approach delivered by local authorities with particularly intensive engagement in hard-to-reach places such as rural areas.
A more rigorous approach to targeting fuel-poor consumers by forcing energy suppliers to share energy consumption data and billing information with local authorities to be matched with the data that they hold on the energy efficiency of housing stock and benefits data.

Joshua Emden, Research Fellow at IPPR said:

“While we welcome recent government plans to focus 100% of funds on fuel poor, low income and vulnerable households (the Affordable Warmth group), everyone knows that there will still be problems with reaching fuel poor consumers within this group.

“Until we fundamentally re-design ECO and properly fund local authorities to deliver it, it will always look like the ghost of an old energy policy rather than the truly social policy it must become.”

Luke Murphy, Associate Director for Energy, Climate, Housing and Infrastructure at IPPR said:

“The Energy Company Obligation is not delivering for the fuel poor households it is designed to help. At its current rate of delivery, hundreds of thousands of fuel poor households will be left out in the cold until the end of the century.

“If the government is to meet its 2030 target then its approach to improving energy efficiency for those households in fuel poverty needs fundamental reform. Our report calls for a new scheme to be focused solely on fuel poor households and delivered by local authorities in a new area-based approach. Crucially this new scheme must be funded through general taxation, rather than as a levy on bills which is hugely regressive and hits those in fuel poverty the hardest.”

ENDS

CONTACT

Florri Burton f.burton@ippr.org / 07867 388895

David Wastell d.wastell@ippr.org / 07921 403651

The report authors are available for interview upon request

NOTES

The report Beyond ECO: The Future of Fuel Poverty Support can be found at http://www.ippr.org/publications/beyond-eco

1. The report argues for an entirely new approach to improving energy efficiency which would see ECO after 2022 transformed from a supplier-led scheme to a local authority-led, area-based scheme. This scheme should be supported by a national delivery body and funded through general taxation. The main aspects of this new approach would be:

a. An area-based approach delivered by local authorities. Local councils would deliver a future energy efficiency scheme through an area-based approach, with particularly intensive engagement in hard-to-reach places such as rural areas.

b. A national delivery body to support local authorities. A national body should be set up that has several key functions, including supporting local authorities in delivering the new area-based approach.

c. Alignment of the drivers for all participants to the overall objectives of the scheme. The scheme should be structured so that the drivers for government, consumers, landlords and industry are better aligned to support the delivery of the overall objectives. From a government perspective, the policy should be focussed solely on addressing fuel poverty. And local authorities should share their projections of energy savings among clusters of households with DNOs and GDNs to encourage their investment in the scheme. For consumers, the scheme should include free energy advice to increase engagement and be supported by effective enforcement of minimum energy efficiency standards in the private rented sector and an increase in their cost cap to £5,000.

d. A more rigorous approach to targeting fuel-poor consumers. Energy suppliers should share energy consumption data and billing information with local authorities to be matched with the EPC information and benefits data that local authorities hold, so that local authorities can better target fuel-poor households. Beyond 2022, we recommend that government should consider providing funding for a house-by-house assessment of the efficiency of properties, including questions on income.

e. Fairer and sufficient funding. After 2022, a future energy efficiency scheme should be funded through general taxation and distributed to local authorities according to the number of fuel-poor homes in each area. This should be supported by additional investment to support staffing in local authorities for this new approach.

f. A future-proofed energy efficiency scheme. In general, fuel-poor consumers should not be the target demographic for trialling innovations in energy technologies but any future scheme should prioritise energy efficiency measures that both meet the needs of fuel-poor consumers and are adaptable to all forms of heating system, such as wall and loft insulation.

2. Households in fuel poverty are defined by the government as those with higher than average energy bills which, when paid for, leave a residual income below the poverty line. In 2016 (the latest such figures from BEIS), 2.55m households were deprived in this way.

3. Though high energy prices are a key reason for high energy bills, another major factor is the inefficiency of households to retain warmth. The ECO scheme is designed to upgrade fuel poor households with energy efficiency measures such as boiler replacements, loft insulation and cavity and solid wall insulation, thereby improving heat retention and reducing energy costs.

4. While the strategy states that it will aim to achieve an EPC of C to as many fuel poor households as is “reasonably practice”, many advocacy groups have stated that this target should be applied to all fuel poor households.

5. Calculations for the 2091 figure are based on the following: (1) For simplicity, it is generously assumed that one measure delivered = one home upgraded to an EPC rating of C. (2) Using this assumption, the number of fuel-poor households as of February 2018 was estimated at 2.36 million from a base of 2.5 million in January 2015 by subtracting 30 per cent (in line with Committee on Fuel Poverty estimates of targeting accuracy) of all HHCRO and rural sub-obligation measures installed between January 2015 and February 2018. (3) The monthly average of measures installed as of April 2017 (the start of the current ECO phase) is calculated. (4) The newly estimated figure of 2.36 million fuel-poor households is divided by this monthly average and converted to years to show that the scheme will need to run for an additional 73 years to reach all 2.36 million households. Going from February 2018, this means that this will not be achieved until 2091.

6. IPPR (Institute for Public Policy Research) is the UK’s pre-eminent progressive think tank. Our mission is to open up opportunity, power and prosperity to everyone through conducting rigorous research and generating big ideas. With more than 40 staff in offices in London, Manchester, Newcastle and Edinburgh, IPPR is Britain’s only national think tank with a truly national presence. www.ippr.org