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What does the new Conservative Government mean for fuel poverty?

Liz Warren, SE2

Following the May 2015 election, we reviewed the Conservative Manifesto to glean any clues about where fuel poverty strategy and action may go over the next five years.

It’s a mixed bag! On energy policy, the Manifesto is bullish, building on trends from the past five years, including commitments to insulate one million homes by 2020 and to lower energy prices by encouraging greater competition in the energy market, more switching and more accurate billing through the deployment of smart meters. Each of these is noble in itself, but fraught with difficulty when it comes to implementation.

We have already seen the challenges of large scale insulation programmes – particularly as the focus turns to solid wall insulation which is expensive and – perhaps – technically risky – and it remains difficult to identify and support fuel poor households, particularly in the private sector (and even more so in the private rented sector).

Greater competition is supposed to drive down prices, but perhaps the drivers of price are more about global trends in oil and gas prices than about the effects of competition. There is some price pressure coming from new entrants like Ovo, who have different drivers and a more equitable ethos than some of the larger incumbents, so we shall see.

Switching is growing in popularity but remains a game of diminishing returns, especially when measures to simplify the energy market mean that there are actually fewer tariffs to choose from. Households without internet access, with literacy or language issues, or without any say over their energy supply, continue to lack easy access to the switching market.

Smart meters promise a great deal, but it’s to be seen what they will deliver. My concern is that technology – mobile phones, wireless networks, new user interfaces – is moving on so fast that the models of smart meters approved for roll-out will be obsolete before they arrive.

However, I remain cautiously optimistic on the energy policy side – we know the challenges and dangers of different policy approaches on this front because we have faced them for a number of years.

In wider policy terms, the Conservative manifesto promises:

  • A 7 day a week NHS – which could help to provide more immediate support to those made ill by the cold, and greater social and community care provision (though it is unclear how this might be funded 0r staffed)
  • A increase in the income tax threshold and a tax-free minimum wage – which will help low income working households to have more disposable income which can be put towards energy bills.
  • A cap on benefits and the move to Universal Credit – the benefits cap will put a squeeze on the largest families’ household income – and these are families who often have the greatest energy need. Provision of childcare for 3 and 4 year olds may help with some aspects of this, but there will still be households with children which are facing a benefits cap and living in cold homes and, so, are particularly vulnerable to energy price rises.
  • Right to Buy for housing association tenants – firstly, it’s not yet clear if this is legally possible. Secondly, the concern is that this places homes in the hands of tenants who may not have the resources available to invest in their energy efficiency (or may choose to prioritise other repair and improvements measures). The next stage, often, is that those properties are sold on in the private sector, often to landlords, thus adding to the provision of higher-cost rental accommodation. And we know that private landlords, historically, are the laggards when it comes to energy efficiency.
  • Greater devolution to cities – the devolution of health budgets to Manchester is the beginning of a greater programme of more power to cities. This could be a great boon for local action on fuel poverty where it is a priority in a city – so it will be interesting to see how this develops. It does not necessarily do anything to help with rural fuel poverty – which can be the most extreme – so that may still require a response from central government or local authorities (which face further funding cuts and have no mandatory requirement to address fuel poverty).

It’s a mixed bag – and it’ll be interesting to see how much of the Fuel Poverty Strategy published in 2014 and the plans for regulation of the private rented sector remain in place now that we no longer have a Coalition Government.

What do you think? Tweet us at @LDNFuelPoverty to share your views.

London has Hills to climb

John Kolm-Murray, London Borough of Islington

Whilst the old definition of fuel poverty had its detractors, mainly due to a perceived oversensitivity to fuel price rises and apparent insensitivity to large amounts of energy efficiency works over the years, it did have a certain attractive simplicity. Knowing a household’s income and their annual fuel bill you could do a very rough calculation. The new definition, created by Professor John Hills and subsequently adopted by DECC, is a much more sophisticated model but one that comes with a different set of problems.

A number of detailed criticisms have been made of the Hills mode but I‘d like to focus on one here. I know of no-one who disagrees with the principle of the ‘Low Income’ element of the model but many who take issue with the ‘High Costs’ element. Despite the attempted sleight of hand of some voices in pointing out that domestic energy unit costs are amongst the lowest in Europe the fact is that poor energy efficiency means that our actual bills are amongst the highest. When this is the case it seems puzzling that Professor Hills would set the median energy bill as the threshold when that median is unacceptably high.

The relevance to those of us tackling fuel poverty London should become immediately clear when you consider that the median energy bill for households in Inner London boroughs such as Islington is around 80% of the national level, in large part due to the prevalence of smaller properties such as flats. This may lead you to conclude that fuel poverty would be lower until you realised that Islington is the fourteenth most deprived district in England, with nearby boroughs such as Hackney, Newham and Tower Hamlets even more deprived. A significant flaw in the Hills model is that, no matter how low your income, you are not considered fuel poor if your annual energy bill is below the median. Hence fuel poverty in areas such as Inner London is underestimated, perhaps significantly.

When asked about this Professor Hills and the Fuel Poverty Team at DECC have told me that this would then surely be a poverty issue, rather than specifically a fuel poverty issue. Whilst this may have an element of truth it must be seen in the context of stagnating incomes, social security reform and ever-rising energy prices. As a fuel poverty officer I can’t do a great deal about macroeconomic policy but I can try to ensure that people have warmer homes. I need a measure that’s meaningful.

It could be argued that, given the likely irrelevance of the new definition to eligibility for fuel poverty alleviation schemes, this discussion is of barely more than academic interest. That is however, not the case. When policymakers review the statistics for fuel poverty they will believe that it’s not a great problem in London when in fact it is. London has lost out on pretty much every energy efficiency programme going, from CERT to Warm Front. There is a risk that this funding deficit will continue as long as fuel poverty is underestimated in the capital. DECC should lower the costs threshold to one that recognises the excessive levels of energy bills.

John is fuel poverty officer at the London Borough of Islington

A true reflection of the numbers of Londoners in fuel poverty?

Syed Ahmed, energy for london

The FT reported this week that a “rare spell of sunshine appears to have worked wonders to the UK economy” with the feel good factor from several weeks of warm weather contributing to UK businesses seeing sales grow.

Energy companies may, however, have been more ambivalent about this summer. While many of us were happy spending on things like ice cream and sun tan lotion, we probably all welcomed the temporary relief of having to worry about the cost of our energy bills, and how much gas and electricity was being used to heat and light our homes.

Autumn has arrived all too swiftly and, with it, newspaper reports are already appearing on consumer concerns over paying this winter’s heating bills, and predictions of further energy tariff price hikes – of as much as 5-10 per cent – from the ‘big 6’ energy suppliers later this year.

Similar to the past few years, there will be an onslaught of press stories over the coming months on how consumers are being ‘ripped off’ by energy suppliers and how vulnerable households – or maybe that should be nearly all households (even the Queen got a fuel poverty ‘name-check’ last year..?!) – are struggling to keep up with their gas and electricity payments. This will be exacerbated if it is a particularly cold winter again. Compared to the mild winter of 2011/12, DECC has reported that the increased demand for heating last winter led to a £100 increase in an average household’s gas bill compared to the year before.

Government data also highlights that a typical consumer pays an average electricity bill of around £500 and a gas bill of £839. Taken together these sums represent – in real terms – an almost doubling in household energy costs over the past decade. The number of fuel poor households has consequently risen dramatically and despite recent pledges by Ministers to “to tackle the scourge of fuel poverty” the Government’s legally binding target to eradicate fuel poverty by 2016 is now – and has been for some time – simply impossible to achieve.

There have been a number of important developments this year in relation to the Government’s approach to fuel poverty, some with specific impacts London, particularly the new fuel poverty definition as recommended by the Hills review. Much has been written about the new definition – and it’s fairly involved stuff – but what has largely been missed in discussions are the regional differences in the impact of the changes. In short, the costs of energy to a household will now be considered after housing costs have been taken into consideration (see Q6 of the Government’s July response document). This change is to be welcomed as it provides a better indicator on the ability of a household to pay for energy used, and it also helps ensure that the true extent of the numbers of Londoners in fuel poverty will be more properly reflected. Calculations from the Hills Review team and DECC suggest that the number of London households deemed to be fuel poor under the new definition will increase by 50 per cent.

Regardless of how the government defines the problem, around one million Londoners will struggle to heat their home properly this winter. But there is some good work already going on to tackle the problem – and the new London Fuel Poverty Hub is a really useful resource to bring together all of those working  fuel poverty and its effects on London and Londoners.

The community bridge: fuel poverty and the voluntary sector

Liz Warren, Director, SE2 Ltd

It’s estimated that 1 in 6 households in London face the difficult challenge of living with low incomes and higher than typical energy costs.

Most London Boroughs, the GLA, the energy suppliers and a range of national organisations offer support, advice and funding to help householders address this challenge. In part, that’s why this website exists: to help you navigate the range of support that is available.

Every householder helped by one of these support schemes has a greater chance of:

–          Staying healthy at home in the winter

–          Avoiding the anxiety and stress of falling into debt with their energy supplier

–          Managing their weekly budget in a way that means they don’t sacrifice heating for eating, or vice versa

–          Keeping their home free of drafts, damp and mould

But the thing that the majority of scheme providers find most difficult is identifying and meeting householders who would really benefit from their support.

Why is this so difficult?

Fuel poverty is often a hidden problem. People don’t talk to their friends and neighbours about being “fuel poor”; they talk about falling behind with their bills or problems with damp at home. Sometimes, they don’t talk about it at all: we see a lot of older households who do not like to admit that they are struggling and do not come forward for help. Many of the people struggling to keep warm at home are those who are most marginalised generally: the lone elderly; people with mental health difficulties; those with English as a second language.

Overcoming isolation and exclusion is vital in many respects, not least in helping to tackle the causes and effects of fuel poverty.

And that’s where the communities and voluntary sector can play a vital role.

Here’s an example: in Kensington and Chelsea, Age UK has played a central role in identifying isolated older people on low incomes and facing high energy costs. Age UK actively talks to its clients about their energy bills and their ability to keep warm at home, bringing the issue into focus and encouraging open discussion of the problem. Through these conversations, Age UK is able to signpost to a range of support including the Borough’s Healthy Homes advice service, opening up access to energy advice and energy efficiency measures. Age UK has even trained one of their advisers to help older residents think about switching energy tariff.

The voluntary and community sector is often the first (and only) point of contact for people in need of assistance. The sector breaks down barriers, encourages openness and builds a trusted relationship with its clients. This can help to address residents’ concerns about dealing with big bureaucracies, whether the energy supplier, the local authority or the housing association. A friendly face and the feeling that someone is “on your side” can make all the difference to ensuring that isolated Londoners get the help they need to stay warm and well this winter.

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