Select Committee on Trade and Industry Appendices to the Minutes of Evidence



APPENDIX 6

Memorandum by Energy Action Scotland

 

1.  INTRODUCTION

  Energy Action Scotland (EAS) is the Scottish Charity with the remit of ending fuel poverty. EAS has been working in this area since its inception in 1983 and since that time has campaigned on the issue of fuel poverty and delivered many practical and research projects to tackle the problems of cold, damp homes. EAS has worked with both national and devolved administrations on energy efficiency programme design and implementation. The organisation is currently a member of the Scottish Executive's Fuel Poverty Advisory Group and sat on the Scottish Executive's Central Heating Advisory Group.

  EAS is also a campaigning group and has recently produced the attached document, Fuel Poverty Now. This outlines the organisation's recommendations for Government to further tackle the blight of fuel poverty and cold, damp homes in Scotland.

  EAS believes that fuel poverty is caused by three main factors: the cost of domestic fuel, the level of disposable income of the household and the thermal efficiency of the dweling. All of these are linked and require to be tackled collectively and individually for the permanent eradication of fuel poverty. The responsibility for the three areas lies across Government and the devolved administration. Energy regulation is within the legislative remit of the UK Government, as is Social Security which sets benefit levels. The Scottish Parliament is responsible for the area of domestic energy efficiency, housing and building standards including those of thermal efficiency. It is therefore essential that a national overview is taken of not only the causes of fuel poverty, but the decisions used and the progress met against targets.

  This enquiry sets out to examine a number of issues as set out in the accompanying press notice and EAS would wish to respond to these. These are listed below.

2.   Is the Government target of ensuring that by 2010 no members of vulnerable households need risk ill health due to a cold home adequate? Can it be achieved?

  The Government target relies on current initiatives to deliver its reduction of vulnerable households in fuel poverty. It needs to look at weakneses in these initiatives and whether all fuel poor households would be able to benefit from these programmes. In many cases fuel poor households will not benefit from the full range of measures available either because of their house type or because they already have a partial heating system still in working order, even though this does not provide adequate warmth at an affordable cost. In these cases the household is unlikely to be removed from fuel poverty.

  The target for 2010 is to be welcomed and is a major step in tackling fuel poverty in vulnerable households. However, current schemes alone will not be sufficient to achieve this target. For example, over 28 per cent of all Scottish households live in dwellings which have solid walls. Another 1 per cent of dwellings are of a non traditional construction type. (Source: Scottish House Condition Survey 1996). These homes will only receive limited insulation measures or in many cases none at all because they cannot have cavity wall insulation, which is a common mesaure in most of the current schemes. For these households, the provision of a heating system without the provision of insulation may actually increase the amount spent on fuel.

  The thermal efficiency, or "U" value, of solid wall properties is considerably poorer than that of modern homes (ie post 1991) or those with a cavity which has been filled. This can have a major effect on the ability of the house to retain warmth.

  Soid wall and non traditional dwellings can be improved by external or internal cladding. EAS believes that these measures should be added to grant schemes.

  According to the SHCS 1996, around 22 per cent of dwellings in Scotland do not have a loft. This is due to a combination of the dwelling not having a heat loss roof, eg a mid floor flat, or having a flat or some other inappropriate roof construction. This then implies that 22 per cent of dwellings are not able to take advantage of the grants available for loft insulation. Further analysis conducted on the SHCS by Scottish Homes states that 731,000 (34 per cent) properties in Scotland could take advantage of grants to boost loft insulation to 200mm. Since 1996, considerable investment has been targeted at loft insulation as an energy efficiency measure (HEES, Warm Deal, EESoP), therefore this 34 per cent is now likely to be smaller.

  A similar argument could be formulated for cavity wall insulation, although it is likely that there is still a reasonable potential in Scotland for cavity fill in less well targeted tenures, eg owner occupied and private rented sectors.

  This is basically an argument that supports the notion of looking again at the mix of measures available under the various schemes in terms of their potential in the marketplace. EAS is not suggesting that cavity wall insulation or loft insulation measures should be removed, but that possibly a proportion of the investment attributed to them could be re-directed to other less well-supported and much needed improvement measures. A strategy which relies upon achieving energy efficiency savings based on measures which have become or are becoming increasingly hard to apply needs to change its focus or risk a shortfall in assumed uptake.

  EAS believes that unless the Government is able to expand the measures available under its curent grant initiatives to allow more homes to access grants and gain better insulation and heating systems, then the target will not be met.

3.   Why has the number of fuel poor households fallen recently? Can this reduction be sustained?

  There are currently two definitions of fuel poverty in use. One includes housing benefit, and is the definition used by the UK Government. The second is net of housing costs, and is the definition preferred by EAS. Each definition produces a different number of those in fuel poverty. By including monies from housing benefit, EAS believes that this falsely inflates the level of income and, importantly, the level of disposable income available to the household. The Government in the UK Fuel Poverty Strategy has chosen to use the definition which includes income from housing benefit and ignores housing costs as an element which the householder has no control over. The Scottish Executive in the Scottish Fuel Poverty Statement consultative draft has also chosen this definition to measure its progress against targets. However, both the UK Government and the Scottish Executive have agreed also to show numbers of fuel poor against the other definition which uses net income after housing costs.

  The most recent Scottish House Condition Survey in 1996 showed that there were 738,000 fuel poor households in Scotland. The next Scottish House Condition Survey is currently underway and EAS would wish it to measure the number of fuel poor using the definition of net income, that is excluding housing benefit, and against all fuel use, not just heating.

  Reduction in numbers of the fuel poor can only be sustained by continued downward pressure on fuel costs, rises in income levels for households and increases in the thermal efficiency of the housing stock. However, there are some projections which estimate that over the next few years the prices of domestic gas and electricity could fall by around 5 per cent or increase by 15 per cent. Given the uncertain nature of fuel prices, the numbers of fuel poor could rise or fall if price is relied upon as the sole measure to alleviate fuel poverty.

  It can be further argued that by increasing the building standards to a level whereby a zero heat load can be achieved (that is, to achieve a level of thermal efficiency whereby no heating system is required), then amendments to housing standards will alleviate fuel poverty. However, changes to building standards only ever apply to new buildings and retrospective legislation is not considered as a workable option. Therefore, while EAS would wish to see further legislation introduced to increase building thermal efficiency, we would also wish to see more options for current housing stock and this is discussed later in this paper.

4.   What is the relative significance of factors such as poor energy efficiency, low incomes or the cost of fuel ?

  Three factors together impact on fuel poor households: the cost of domestic fuel,the level of disposable income of the household and the thermal efficiency of the dwelling. Tackling any one of these in isolation may not ensure a permanent end to fuel poverty.

  Ofgem, the gas and electricity industry regulator, has claimed that the changes in prices paid for fuel since deregulation have removed around one million consumers from fuel poverty across England. However, this calculation was made prior to increases in the price of domestic gas across the UK. Before NETA, electricity prices in Scotland were 5 per cent lower than those in England. They are now 9 per cent higher. This is to be addresssed by the introduction of BETA in 2004. These rises have undoubtedly moved many consumers back into fuel poverty.

  There are also a number of factors relating to household income which need to be considered. Life changes such as the loss of a job, retirement, or a disability which prevents someone from working all have the potential to substantially reduce income and lower the disposable income available for the purchase of fuel. Increases to benefit levels and earnings would maximise disposable income for households to purchase essential items such as fuel for heating, lighting and appliance use (cooking, refrigeration and washing). This may also allow people to invest in new energy efficient appliances.

  EAS argues that the level of expenditure on all fuel should be no more than 10 per cent of disposable income that is net of housing costs. This would provide for affordable warmth and other essential fuel use. EAS has used the definition of a standard heating regime as its measure of warmth, that is to say that a dwelling should be able to achieve 21 degrees centigrade in the living area and 18 degrees centigrade in all other areas for 9 hours per day Monday to Friday and 16 hours per day over the weekend. This is increased to 23 degrees centigrade in the living area and 16 hours per day, seven days per week when referring to an elderly householder. For a house to be able to reach such levels of warmth, the fabric of the building should be sound and the thermal efficiency of the house requires to be extremely high.

  The 1996 Scottish House Condition Survey showed that the average energy rating for Scottish households is 4.1 on the National Home Energy Rating scheme (NHER). This scheme measures the efficiency of the house, based on all fuel use for heat, light and power, on a scale of 0 to 10 where 0 is the least efficient and 10 is most efficient. EAS would argue that a dwelling which scores less than 7 on the NHER scale cannot be considered to be affordable using average levels of income or benefits. EAS is therefore recommending a minimum of NHER 7 for all properties.

5.   How effective are industry-led initiatives?

  Industry-led initiatives can be split into two main areas: those under regulation and those under corporate social responsibility. The first of these is driven by regulation and until April 2002 has been known as the Energy Efficiency Standards of Performance (EESoP or SoP) but is now known as the Energy Efficiency Commitment (EEC). In this scheme, gas and electricity suppliers place a levy on consumers and use the income to provide energy efficiency schemes and programmes, such as free low energy lightbulbs or discounted energy efficient white goods and insulation measures.

  The second set of initiatives is driven by individual fuel suppliers' corporate social responsibility and is funded from each company's core costs and not directly by the consumer. For example, initiatives such as the Transco Affordable Warmth scheme or the ScottishPower funded Warmth for the Millennium fund administered by EAS, play an important part in delivering energy efficient services to fuel poor and other households.

  Many of these schemes replicate Government schemes which also offer cavity wall and loft insulation measures. For example, in many respects, the qualifying criteria for SoP or EEC schemes is identical to those for Warm Front or Warm Deal grants and there is then the potential for these schemes to be competing for customers. EAS would want to see Government schemes work more in harmony with those of industry to avoid duplication and avoid competition for the same customers. The fuel suppliers manage these schemes very effectively, but are sometimes hampered by the limitations of allowable measures set by the regulator, which can appear to stifle innovation. An example would be the inclusion of measures for insulating solid wall properties.

  It could be argued that industry-led initiatives are driven by energy and emission savings while Government initiatives are driven by social responsibility. These do not need to work against each other and could be used more imaginatively to allow both industry and Government to reach their targets. By allowing schemes to deliver measures with joint funding and by allowing industry to provide measures which are different from those of Government programmes, better results will be achieved.

6.   How can Government promote the take-up of energy efficiency measures in households whose income is just above benefit level?

  The Government already supports the Energy Saving Trust (EST) which carries out a great deal of promotional work to publicise energy efficiency and relevant measures and schemes. However, there is a myriad of grants and schemes available to members of the public and it is often difficult to find a starting point for information. The EST also makes effective use of their national network of Energy Efficiency Advice Centres (EEACs), but these still do not manage to fully cover all aspects of grant funding. EAS has suggested that Government provides a single point of entry via a national energy efficiency helpline to promote both energy efficiency and grant availability, and to advise which grant or programme is right for the enquirer. Governments have used short advertising campaingns to raise awareness of energy efficiency initiatives such as the Switch it Off campaign and the current Scottish Executive Do a Little Change a Lot campaign. All of these are very worthy, but are short term and need to be co-ordinated. Government needs to provide long term focus and help. Only then will energy efficiency become a higher priority for the public.

7.   How much could better co-ordination between agencies or fiscal measures help?

  As stated previously, EAS has been calling for greater co-ordination of schemes and of resources. The reduction in VAT on energy efficiency works from 17.5 per cent to 5 per cent has been a positive step, as has the reduction of VAT on fuel from 17.5 per cent to 8 per cent. However, greater links between Government and industry initiatives would provide more effective schemes. EAS has already stated the need to avoid schemes competing for the same customers (see section 5). The two drivers of social and environmental responsibility need not be exclusive, but should work constructively together.

8.   What contribution to the elimination of fuel poverty might be made by technological advances?

  Here there is perhaps the greatest of all opportunities. Technological advances made in the last decade have not yet been fully embraced as mainstream practice by Government, industry or the public. EAS has just published research entitled "Easthall 10 years on". This research revisited a number of innovative projects carried out in the Easterhouse area of Glasgow to assess their value some 10 years after their completion. The projects at the time used high thermal values for refurbishing buildings and solar technologies to preheat air going into the dwellings, along with passive solar design to capture energy from sunlight. These projects were ahead of their time and some aspects still exceed today's standards. A copy of the report is attached for the Committee to consider. It suggests that it is possible to design and live in homes without a heating system as such and use only background heating.

  Furthermore it can be argued that a number of health problems, such as asthma, can be exacerbated by the condition of our homes. By sealing up homes without adequate ventilation we create internal mirco climates that can damage our health. EAS has been funding a research programme by the University of Strathclyde into the links between asthma and housing and a copy of the project findings are attached for the information of the Committee. The results show that by providing proper levels of warmth and ventilation the levels of asthma can be dramatically reduced in many cases.

  Domestic fuel price and disposable income—drivers of fuel poverty—can fluctuate and to some extent are out with the control of any individual household. These are governed by regulation, benefit and minimum income levels. However the thermal efficiency of the dwelling can be sustainable and if, as suggested, houses can be built without the need for heating systems, then there would be reduced reliance on the income level or the fluctuating cost of fuel.

  There is also the need to consider the longer-term view on where the UK's energy will come from and the likelihood of needing to import more of our fuel. With greater energy efficiency in our homes, the fuel load reduces. This would also work towards meeting the UK's environmental targets.

9.  CONCLUSION

  EAS welcomes the Government and the Scottish Executive commitment to tackling fuel poverty, but believes that the strategy documents as currently set will not deliver on the target of ensuring that no vulnerable household need risk ill health due to a cold home. EAS would wish to see greater co-ordination of schemes and programmes, including between those of industry and those of Government, a single point of entry for householders to access grants and advice, an expansion of measures available in grant programmes and a greater lead in promotion taken by Government.

  EAS also firmly believes that there is a general need for greater innovation to produce better and more cost effective energy effciency solutions. There is also the need to embrace and adopt tried and tested measures as demonstrated in research such as "Easthall 10 Years On", which could change our view of the home.

  Finally, more must be done in the field of health and housing research across the UK. Unless the Health Service is actively engaged and is able to commit resources to tackling health and housing issues, and link into existing initiatives, then limited progress will be made all-round.

SUMMARY OF EAS RECOMMENDATIONS:

    —  greater co-ordination of all schemes

    —  single point access to advice and schemes

    —  expansion of measures in grant schemes

    —  greater promotion by Government of energy efficiency

    —  on-going innovation for cost effective energy efficiency solutions

    —  adoption of successful measures

    —  further research into links between health and housing

    —  active engagement of Health Service in housing and fuel poverty initiatives

 


 
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