Select Committee on Transport, Local Government and the Regions Memoranda

Memorandum by NEA (AFH 16)


  1.1  NEA is a national charity working to ensure that low-income households have access to sufficient warmth for health and comfort at an affordable cost. NEA develops and promotes energy efficiency services to tackle the heating and insulation problems of low-income families and individuals. Working in partnership with central and local government; with fuel utilities, housing providers and health agencies; and with consumer groups and voluntary organisations, NEA aims to eradicate fuel poverty and campaigns for greater investment in energy efficiency to help those who are disadvantaged and vulnerable.

  1.2  NEA welcomes the opportunity to comment on the issue of affordable housing with particular reference to fuel poverty. Given NEA's specialised interest in the fuel poverty/affordable warmth-related element of this subject, comments will generally be confined to areas relevant to this.


  2.1  Decent accommodation at an affordable cost should be a universal entitlement. Energy efficiency is crucial to the issue of affordability since disproportionately high fuel costs will reduce the ability to meet housing costs and vice versa. The formula for assessing fuel poverty is complex and potentially intrusive in that it requires personal household income data. However, replacing the existing formula for calculating fuel poverty with energy efficiency standards is only acceptable where these standards are sufficiently high to imply affordable warmth. Failure to ensure adequate energy efficiency standards will result in extensive hidden fuel poverty. This will mean the Government's failure to comply with its undertaking to eliminate fuel poverty in social housing by 2010.


  3.1  In terms of simple affordability this is clearly dependent on two factors:

    —  household income; and

    —  housing costs.

  However, within this simple formula there are several complications. As would be expected, absolute housing costs are considerably higher in London than elsewhere although these additional costs are somewhat mitigated by higher household income.

RegionAverage weekly household income (£) Per cent of expenditure on housing costs Housing costs (£ per week) Mortgage costs (£ per week)Rent charges (£ per week) Private sector Rent charges (£ per week) Public sector Rent charges (£ per week) Registered Social Landlords
North East36315% 43.504356 36.8044.50
North West42115% 49.004675 40.6045.50
Yorkshire and
the Humber
15%48.70 456835.10 48.10
East Midlands
15%51.5045 6238.1048.40
West Midlands
15%50.3050 7039.8047.60
East48416% 57.606080 45.6054.10
London57118% 74.5082141 58.0061.40
South East53817% 67.707299 50.3059.90
South West42716% 54.805478 43.8052.20
England46916% 57.505890 53.1053.10

  3.2  Clearly an index of affordability would mean determining a theoretical ceiling for housing costs (expressed as a percentage of net household income) beyond which expenditure was deemed to be unaffordable. This, after all, is the basis for the formula used by Government and campaigning organisations in defining and quantifying fuel poverty. Where 10 per cent or more of income is required to be spent on fuel to meet the energy needs of a household, the household is considered to be in fuel poverty.

  3.3  However, as is shown in the table above, housing costs are much more complex than energy costs. Whilst energy expenditure does vary across socio-economic classes and regions this variation is much lower in money terms than is the case with housing costs. Whereas disproportionately high spend on fuel is a consequence of low income, poor heating and insulation standards and (sometimes) high energy costs, housing expenditure is much more sensitive to market forces reflecting both regional supply and demand and the preferences and aspirations of home buyers and tenants.

  3.4  Nevertheless, on average, residual income is higher in the area of highest housing costs (London) and lower in the area of lowest household income (North East) and this circumstance remains constant across all regions. Yet these averages conceal the real nature of the problem. Whilst, in general, there would appear to be a reasonable match between income and housing costs this is certainly not true at lower levels of earnings. Some indication of the particular difficulties facing low-income households can be seen in the varying levels of housing subsidies required by tenants in different regions.

Local authority
Registered social landlord (£) Private rented sector
North East37.3047.40 65.30
North West42.0051.90 57.10
Yorkshire and Humberside37.20 57.1053.40
East Midlands39.8052.70 51.90
West Midlands41.6050.70 59.90
East45.4058.30 63.90
London62.1076.30 98.70
South East49.3061.10 73.70
South West43.0053.90 61.50
England45.5058.60 66.60

  3.5  The table indicates that the most affordable housing is to be found in the social rented sector generally and, within that sector, in properties rented from the local authority. With regard to fuel poverty this tendency compounds the problem for private sector tenants—not only are they liable to higher housing costs, they generally experience considerably worse housing conditions.

>2020-30 30-4040-50 50-6060+All
Owner occupier44.66.1 6.917.631.3 23.115.013,581
Private tenants35.720.6 10.320.124.0 13.811.31,817
Council tenants43.97.6 9.819.725.8 19.517.53,340
RSL tenants47.46.8 6.814.323.4 25.523.2905
All tenures43.87.7 7.718.029.4 21.815.519,643

  3.6  Since there is a clear relationship between energy efficiency standards and affordable warmth, it is apparent that private sector tenants are further disadvantaged in that their energy costs will be disproportionately high. This assumption is borne out to some extent by further scrutiny of the proportion of households in fuel poverty. Although housing association tenants are more likely to be in fuel poverty this is presumably a consequence of their lower average household income and greater homogeneity in this sector. In contrast, the private rented sector is highly polarised: at one extreme being the dilapidated properties comprising pre-1919 houses; at the other is that element of the housing stock consisting of houses in good condition and purpose-built flats.

Per cent000s All
Owner occupied14.82,058 13,908
Local authority39.2 1,2933,299
Private rented38.4691 1,799
Registered social landlord42.4 418985


  4.1  The existing Fitness Standard is defined in the Local Government and Housing Act 1989 and covers dwellings deemed not fit for human habitation as a consequence of failing to meet one or more of a range of criteria including:

    —  It is free from disrepair.

    —  It is free from dampness prejudicial to the health of occupants.

    —  It has adequate provision for lighting, heating and ventilation.

  The English House Condition Survey 1996 indicated that just over 1.5 million dwellings were unfit. The overwhelming majority of unfit dwellings are in the owner-occupied sector as would be expected given the preponderance of this tenure group in the housing stock.
Household tenureNumber
Per cent
Owner occupied732,000 5.413,560,000
Private rented331,000 18.51,788,000
Local authority227,000 6.83,333,000
Registered Social Landlord34,000 3.8898,000

  However, as indicated in the table above, in percentage terms the private rented sector is by far the worst tenure group. Perhaps most surprising of all is the large number of public sector dwellings that failed to comply with the Fitness Standard.


  5.1  It is proposed that the current Fitness Standard be replaced by a Housing Health and Safety Rating System. In monitoring compliance with the new standard, local authorities will take account of the potential adverse health consequences of cold, damp and energy-inefficient dwellings in determining whether to use enforcement powers to remedy failings.

  5.2  NEA was supportive of this proposal in principle but was concerned that:

    —  The recommended energy efficiency standards would be inadequate to achieve what ought to be a priority objective of removing the occupant(s) from fuel poverty.

    —  Energy efficiency improvements could not be considered in isolation since, in many cases, more general repair work would be needed to tender energy efficiency measures effective.

    —  Without financial assistance property owners might be unable or unwilling to fund improvement works.

    —  Robust enforcement systems would be required to overcome lack of co-operation on the part of private sector landlords and to address those circumstances where tenants did not feel secure in bringing their landlord's failing to the attention of the authorities.

    —  Proposals as framed indicated that the vulnerability of the occupant(s) would be a factor in deciding whether poor housing standards posed a health and safety threat. NEA's view was that the condition of the property should be the main consideration regardless of the characteristics of those living in it.


  6.1  A core element of the Government's strategy to eradicate fuel poverty within a 15 year timescale is the commitment that all social-rented properties should meet a "decency standard" by 2010. The initial consultation paper[18] proposed that, in order to meet decency criteria, a property should:

    —  be above the current statutory minimum standard for housing;

    —  be in a reasonable state of repair;

    —  possess reasonably modern facilities and services; and

    —  provide a reasonable degree of thermal comfort.

  6.2  This last element, which is of most relevance to NEA, is the most contentious. The Department for Transport, Local Government and the Regions suggested that the thermal comfort criteria could be used as a proxy for affordable warmth. This would mean that the existing formula used to identify fuel poverty would no longer be applicable to social housing.

  6.3  NEA's response to the consultation paper expressed qualified support for this proposal. The existing formula for assessing fuel poverty required information about household income and energy costs that would not necessarily be held by social landlords, and the proxy concept seemed a pragmatic solution to these difficulties.

  Unfortunately the Department's proposed standards were totally unacceptable as a guarantee of affordable warmth.


  7.1  Effective insulation is defined in the document as the presence of cavity wall insulation, if appropriate, and/or at least 50 mm loft insulation where there is an accessible loft. There is no discussion of improvement potential for properties that lack one or other of these building characteristics. This is despite the fact that some 20 per cent of local authority properties have no cavity to fill and that 35 per cent of dwellings in this tenure group have no loft or no access to the loft.

  7.2  With regard to proposed levels of insulation, NEA was extremely disappointed and concerned about what was suggested as adequate loft insulation. The document indicated that 50 mm of loft insulation should be considered "effective"; this despite the fact that, since 1992, the Home Energy Efficiency Scheme has allowed top-up grants where 50 mm of loft insulation was present. The re-branded Home Energy Efficiency Scheme, Warm Front, allows for 200 mm of loft insulation material to be installed—an indication of what is currently recommended and acceptable. In fairness it should be noted that insulation standards for electrically heated properties are considerably higher but since many of these properties will have neither loft spaces nor cavity walls the concession is largely academic.


  8.1  The consultation document contained little detail of what would constitute efficient heating. The implication seems to be that a gas or oil-fired central heating system of virtually any form or age will be deemed satisfactory. The Energy Report of the English House Condition Survey 1996 indicated that whilst 78 per cent of all households had central heating provision, 3.5 million systems (23 per cent) were between 13 and 19 years old and four million (26.4 per cent) were 20 years old or more. It cannot therefore be assumed that the 25 per cent of tenants of local authority tenants and 35 per cent of tenants of Registered Social Landlords without central heating represent the full extent of the problem.

  8.2  NEA has proposed that a reliable and objective indicator such as the SAP rating should be used to determine which properties meet an acceptable energy efficiency standard, and that the DTLR should seek to establish a SAP rating of 70 across this element of the housing stock. It may be necessary to accept, in the short term, a lower standard in older properties or those of unconventional construction.
Advantages of proposalsDisadvantages of proposals
Simplifies identification of eligible households Cannot identify worst cases for priority assistance
Guarantees practical improvementsProposed standards are inadequate
Facilitates coherent work programmesEnds the holistic approach to fuel poverty by excluding prices and income data
Eliminates variables of income/pricesHypothetical energy efficiency does not ensure affordable warmth
Has potential to adopt best practice criteria Conflicts with the definition of fuel poverty adopted by the UK Fuel Poverty Strategy
Establishes benchmark for other tenure groups including the private rented sector Will not ensure compliance with requirements of the proposed Housing, Health and Safety Rating System

14   Regional Trends 2001. Back

15   House of Commons Hansard, 13 February 2002, Col 508. Back

16   Energy House Condition Survey 1996: Energy Report. Back

17   Fuel poverty in England in 1998, DTI and DEFRA, 2001. Back

18   Change to the Decent Home Definition-Consultation, DTLR 2001. Back

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