The Coalition Government devolved the delivery of fuel poverty policy to the energy supply industry by introducing the Energy Company Obligation (ECO) to the household names in the energy supply business. Via their licence to supply, they are obligated to reduce domestic carbon emissions (ie help households to use less energy) by the most cost-effective method.
Scaling back of the Energy Company Obligation
This turned out to be a programme which added about 5% to gas bills and about 11% to electricity bills yielding some £1bn per year for remedial fuel poverty work. As global energy prices rose, these ‘extras’ on gas and electricity bills came into the firing line, and the Government scaled back ECO in 2013. With no tax-funded programme in play, and what is effectively a cap on what it obliges energy companies to do, the outlook for those in fuel poverty is bleak.
According to Ministers, the ECO programme has been a great success, with over 1m households benefitting. However this choice of words (and statistics) does not describe by how much those households benefit: most have received one ‘measure’ – such as a new gas boiler – which is helpful, but often addresses just part of the problem.
To be as energy efficient as most modern buildings are required to be, our older housing stock needs more radical treatment, which looks as well at its levels of insulation and the efficiency of its heating systems. A new boiler alone, without flushing out the pipes and radiators, or preventing heat loss through roofs and walls, is symbolic but not problem-solving.
Reaching those living in fuel poverty
The think tank Respublica comes striding into this issue, with its report Out of the Cold – supported by Age UK, Calor, Orbit and the WM Housing Group. Not mincing words, its report finds that ECO fails to reach many in fuel poverty, lacks ambition and scale, and is unstable and fitfully implemented. With ECO confirmed only up till March 2017, it looks ahead to what its replacement could look like and do better.
The top line keeps the financial commitment in place, but re-structures the delivery to be more locally driven and focussed on a ‘whole house’ retrofit. These are two eminently good principles. Poor standard housing is usually found in clusters, so it makes sense to work on it as an area action plan. Treating the whole house can be disruptive, but is better than sequential visits to make only marginal improvements.
Key recommendations for the next Government
The report envisages that cities, local authorities and housing providers be given the right to bid for ECO funding, involving local businesses and community organisations in the bid. It wants health authorities involved (since the consequences of living in a cold home are a real cost to health services), and proposes that GP practices should benefit from NHS savings when doctors support patients to get energy efficiency improvements done.
It would bring tougher regulation to the private rented sector, where much of the poorest standards are found. It calls for the next Government to pilot these new arrangements straight away, with a view to mainstreaming them from April 2017.
On top of that Respublica want a much more ambitious target than so far set out by the Government: the suggestions point to all housing reaching Energy Performance Certificate level ‘C’ by 2025. It calls on tasking the Office of Budgetary Responsibility to manage an independent review of all the budgets directed towards energy efficiency and fuel poverty: this would assess their impact, and recommend on scaling up the tax-funded contribution to the work.
Age UK strongly supports this set of proposals and hope the next government are similarly persuaded.