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



APPENDIX 13

Memorandum by the National Association of Citizens Advice Bureaux

THE UK FUEL POVERTY STRATEGY

 

INTRODUCTION

  1.  Citizens Advice Bureaux (CAB) across England, Wales and Northern Ireland received 146,200 enquiries about utilities, including utility debt, in 1999-2000. Enquiries about fuel and fuel debt made up the greater part of these enquiries. CABx also advised on 1.7 million welfare benefits enquiries in 1999-2000. Many CAB clients will fall within the definition given in the consultation of the "fuel poor", due to a combination of their income levels and quality of accommodation. The CAB Service therefore welcomes the government's pledge to end fuel poverty and the commitment to end the blight of fuel poverty for vulnerable households by 2010.

  2.  The draft UK Fuel Poverty Strategy is comprehensive, combining a range of measures including:

    —  Programmes to improve the home energy efficiency of fuel poor households;

    —  Action to maintain the downward pressure on fuel bills, ensuring fair treatment for the less well off;

    —  Development of energy industry initiatives to combat fuel poverty (expected to be principally through tariff measures); and

    —  Continuing action to tackle poverty, low incomes and social exclusion.

  3.  We particularly welcome the wide range and scope of the initiatives described in the Strategy including:

    —  The changes to the Regulator's duties brought by the Utilities Act 2000;

    —  The new powers for the Regulator to be given guidance on social and environmental objectives;

    —  The programme of work designed to enhance the protection which licence conditions offer for disadvantaged consumers;

    —  Improvements to the HEES scheme and other benefits, such as the Winter Fuel Payments; and

    —  The renewed interest in the role of the Fuel Direct scheme.

  4.  It is clear that to be effective the Strategy will involve Government, the private and public sector in tackling fuel poverty for vulnerable households (identified as older householders, families with children and householders who are disabled or suffering from a long-term illness). The need for effective partnership between Government and the private sector, taken together with the wider context of competitive incentives in the fuel industry, in our view presents three challenges to the Strategy as follows:

    —  Action will be needed to ensure public awareness of the full range of statutory and voluntary innitiatives designed to reduce and eliminate fuel poverty;

    —  Customer Service across a range of interactions with customers has a key role to play. In particular fuel companies and the Benefits Agency, and also local authorities administering Housing Benefit, will need to deliver highly responsive, and generally much better standards of customer service and communications than they do now if they are to play their roles in the delivery of the Strategy; and

    —  Fuel industry sales practices need to be improved. CABx continue to report a range of problems for vulnerable consumers emanating from poor standards of service and improper practices designed to encourage consumers to switch suppliers. Standards of service relating to competition need to be improved and abuses of consumers eliminated. If not vulnerable consumers will not trust suppliers as an agent to alleviate fuel poverty.

THE POTENTIAL ROLE OF THE CAB SERVICE IN THE FUEL POVERTY STRATEGY

  5.  CABx are uniquely placed to play a part in the Government's Fuel Poverty Strategy for a number of reasons including:

    —  The profile of CABx users is skewed towards people on low incomes and dependent on social security benefits, in social class DE (Mori, Peoples Panel 1999). CABx collectively advised people about over 6 million problems in 1999-2000. 28 per cent of those enquiries (1.7 million) concerned welfare benefits—of which enquiries about disability benefits was the single largest area of benefit enquiries. A further 16 per cent of enquiries concerned debt problems, of all kinds. Where people have one debt CABx frequently find there are multiple debts for both essential services such as utilities and housing costs as well as for consumer credit. CAB clients are more likely than the population in general to be experiencing fuel poverty.

    —  CABx can advise people about a range of problems—offering holistic advice straddling areas such as employment problems, debt and welfare benefits. They also carry comprehensive information and can give advice about a range of energy efficiency information and grant schemes. CAB workers have wide experience and training in welfare benefits, debt and consumer rights.

    —  CABx have a wide network and are close to people, offering both face to face, telephone and email advice. CABx deliver advice from over 2,000 different locations across England, Wales and Northern Ireland. And 83 per cent of CABx offer home visits which are vital for people who cannot reach the CAB. Many CABx can advise in more than languages than English, for example 18 per cent of CABx have Urdu speaking advisers. Punjabi, Gujerati, Bengali, Hindi and Welsh language speaking advisers are available at many CABx. Through this work CABx often advise clients living on state pension or disability benefits who are not getting all the benefits they are entitled to. A CAB adviser can help to maximise income in these cases.

    —  Through its social policy work the CAB Service has established systems for reporting the problems of the clients to the National Association of Citizens Advice Bureaux. The case reporting enables policy makers and service providers to gain an insight into the perspective of people and customers who might not normally complain or make their views and experiences known through other means.

  6.  The following case studies are just a few examples to illustrate these points:

    An elderly Asian couple from London on a basic state pension came into their CAB because they needed to have a gas boiler repaired and had nowhere near the funds to cover the cost. They were unaware that an HEES grant may have been available to them.

    A male single parent came to a CAB in the north of England for help with his financial difficulties. His fuel bills made up over 16 per cent of his weekly income of 187 and his benefit payments were not sufficient to cover his utilities bills and adequate food and clothing costs. The man had fallen behind with his mortgage payments and was facing eviction the next day.

    A single mother with three children from the Midlands visited the CAB because she wanted her gas debt to be paid direct from her benefits. The Benefits Agency told her they had had a change of policy and wouldn't allow deductions from benefit if a payment plan or prepayment meter were available. The woman was anxious to avoid a meter as she and the children could end up with no heating if they were disconnected due to insufficient money to put in the meter in a particular week. She wished that the system of dealing with the debt via her benefits were the same as in the past.

  7.  The CAB Service is already involved in looking at how it can play a part in the Government's Strategy. A partnership project between the National Association of Citizens Advice Bureaux (NACAB) and British Gas, "Delivering High Quality Energy Advice", aims to improve energy efficiency and fuel debt advice for CAB clients, suggest improvements in services for British Gas customers on low incomes and help reduce poverty overall for vulnerable households.

  8.  The intention of the above project has been to find gaps in CAB advisers' knowledge of schemes designed to alleviate fuel poverty and to fill that gap. By increasing advisers' awareness, more CABx clients will find their fuel staus is an issue routinely addressed when they visit bureaux. Underpinning the project has been an investigation into the nature of the problems brought to CABx by gas and electricity consumers who are experiencing fuel poverty. Such consumers are concerned with being able to pay for the service they require in a manner and at a rate they can afford, and to avoid debt and disconnection.

THE RANGE OF FUEL PROBLEMS BROUGHT TO CABX

  9.  We have analysed the experiences of CAB clients with a range of fuel suppliers as reported by CABx to NACAB in the 12 months ending November 2000. The analysis, summarised below, is a useful means of assessing whether the Fuel Poverty Strategy is addressing all of the key issues. Over 1,700 individual case reports were reviewed and analysed. 1,200 of those cases related to problems with gas suppliers and 500 related to electricity suppliers, although it is increasingly difficult to distinguish between the suppliers on a fuel supplied basis.

  10.  It is recognised that CAB evidence is, by definition, evidence of problems and representative only of CAB clients. experiences rather than those of the customer base at large. Our analysis is not, therefore, a survey of customers as a whole. Nevertheless, evidence of service failures experienced by customers who are on the lowest incomes, or benefits, and who are arguably the most vulnerable is vital information in the context of the present Government's strategy for tackling fuel poverty experienced by the most vulnerable households.

  11.   The introduction of competition in the fuel industry has been a very significant project for the industry. It is not, therefore, surprising that such a major change will have had an impact on CAB clients. CABx are reporting today problems which would have been inconceivable a decade ago. And they are also continuing to report many long standing problems such as problems with using prepayment meters.

  12.  Some key findings from our analysis are as follows:

Sales practices

  20 per cent of all cases submitted to NACAB by CABx concern poor sales practices on the part of fuel suppliers. Most of the CAB evidence refers to problems arising from doorstep (and other public place) sales but telephone sales also feature. (This latter group have been the subject of discussion with the Office of Fair Trading's Distance Selling Team as fuel fits within the provisions of The Distance Selling Regulations that came into effect on 31 October 2000.) CAB evidence frequently illustrates the power of fuel suppliers to change people's suppliers without their consent and, in the process, cause a major loss of confidence in those who had previously been seen as trusted. Most of our evidence indicates the elderly and vulnerable as the prime "targets" for this abuse. Although these issues may not appear to policy makers to have an immediate impact on fuel poverty or budgeting it is relevant to note this body of our clients' experiences. In many cases confidence in the integrity of the supplier, and the industry at large, has been dented by these experiences. This will affect vulnerable consumers' views of fuel suppliers as an agent for alleviating fuel poverty. Some suppliers will need to consider how they can re-build confidence on the part of the most vulnerable consumers in order to work with them to tackle fuel poverty.

 

Transferring between suppliers

  35 per cent of cases submitted to NACAB by CABx concern problems with billing and payment methods. The majority of these reports concern the often chaotic aftermath, for CAB clients, of supplier transfer. A number of problems appear to occur regularly including confusion about supplier identity, erroneous or unwanted transfers, problems with estimated meter readings at transfer, lack of co-ordination between suppliers, consumers receiving bills from two suppliers and consumers receiving no bills after transfer.

  In some cases clients on low incomes have found they had higher bills after transfer.

  And it has taken years for some clients to cancel unwanted transfers. By the time this is achieved the client often feels vulnerable at home and has often accumulated debts that had previously been avoided by prudent budgeting. This is because meter readings at transfer are inaccurate and the "new" supplier commonly stops existing payment arrangements.

  It is particularly worrying that many apparently vulnerable and by definition fuel poor households have come to CABx with problems around transfer which have caused chaos to their household budgeting.

Billing problems

  For fuel poor households regularity and certainty of bills is a key requirement to assist budgeting. But many CABx have reported cases of estimated bills over long periods; no bills and billing errors and poor presentation of information about accounts. These are not new problems—but solving them would assist people on low incomes with budgeting. This aspect of customer service is highly relevant to managing fuel poverty.

Payment methods

  CABx report a range of problems with payment methods such as prepayment meters including delays in installations; installation against the wishes of the customer, lack of easy or no cost access to payment points, problems of disconnection, in many cases arising from faults on cards and payment systems and delays in sorting out these problems. Information about the status of prepayment meter accounts is often poor and errors can go undetected for long periods of time. If a CAB client is suddenly faced with either a demand for more money or a huge overpayment neither is satisfactory from the perspective of budgeting on a low income. Although the Fuel Poverty Strategy notes initiatives are to be taken to improve service on payment methods it is too soon to say there are discernable improvements.

Arrears collection

  Many CAB clients approach us for advice on utilities because they either are in debt or fear they may be where problems with billing or payment arise. In a relatively small number of cases reported, however, the customer is actually experiencing formal debt recovery action and is having difficulty negotiating a reasonable payment arrangement. Our evidence suggests that customers in these circumstances are not always treated reasonably, and particularly where they are not represented by a CAB the rate of recovery sought by the supplier can be too high. And in some cases debt collection agents acting for suppliers exhibit oppressive and abusive practices which are inconsistent with guidance from the Office of Fair Trading to consumer credit licence holders. These issues can compound fuel poverty.

Poor communications with customers

  A recurring theme of the cases reported by CABx is poor communications on the part of fuel suppliers which make it time consuming and difficult to resolve simple problems quickly, particularly for customers who are older or disabled. The automatic answering systems used by many suppliers have been described by elderly CAB clients as `robophones' and in some cases the challenge of simply getting through to a supplier is what has brought a client into a CAB. One CAB estimated that they spent over three hours on the telephone to one supplier in a quarter accounting for 6 per cent of their telephone bill—out of all proportion to the volume of enquiries about that supplier.

Other issues

  Other issues covered in evidence from CABs include experience of disconnection procedures; disputes about liability; problems about security deposits. At all these junctures the fuel company may be dealing with a customer who is "fuel poor". It is, therefore, very important that procedures for resolving disputes or dealing with the advanced stages of debt recovery are as sensitive to the customers needs, and the potential for them to benefit from fuel poverty initiatives, as any dedicated fuel poverty/energy efficiency enquiry service.

POOR STANDARDS OF SERVICE PROVIDED BY THE BENEFITS AGENCY

  13.  The Benefits Agency will have a key role to play in the delivery of the Fuel Poverty Strategy. Through their advice work CABx often find that the quality of advice and information available from Benefits Agency staff is in great need of improvement. Errors and delays are commonplace. It is also extremely difficult to contact parts of the Benefits Agency and initiatives to make information and application forms available on the internet do not seem to have reached all parts of the Benefits Agency yet. Recent reports from CABx of problems with Winter Fuel Payment applications demonstrate the range of issues that need to be tackled.

    A CAB in Northern Ireland advised a man aged 64 who was on income support in May 2000, but came off in September 2000 when the household income rose, floating him above the level for benefit. The client received payment for the current year but not for previous years, because of his change of circumstances. The bureau believes there may be a hole in the system affecting men aged between 62 and 67 years who came off benefit between May and November 2000. The client was passed back and forth between the local Benefits Agency and the Winter Fuel Helpline, with each denying that they were responsible, before eventually changing their decision.

    A CAB in the East of England reported a man aged 65 who had not received his payment in November 2000. The bureau contacted the Benefit Agency, and found that their systems showed that the client and many others had been issued with cheques.

    A CAB in Essex advised a man who had asked for a winter fuel payment claim form in November 2000. He filled it in but heard nothing, so rang again. He was told he had filled the form in incorrectly, and that it would be returned. In February, the client rang again, and was sent a new form to complete. The client rang again to ask about payment, and was told that it would not be made before June 2001. The bureau pointed out that paying the money in June rather defeated the object of a winter fuel payment.

    A CAB in Cheshire saw a client who had difficulty in meeting the 31 March deadline for claims for the year 2000. The client came in on 29 March, and had been advised that the form could be posted or downloaded from the Internet. The client went to the BA, who said they were not on the Internet, and would not accept a telephone claim or a faxed claim. Other bureaux around the country have described similar problems for their clients.

    A client of a CAB in Dorset received 100 instead of 200, and was told that records showed she was not the only person in the household, which was wrong. A CAB in Derbyshire reported a client who rang the winter fuel helpline three times to ask why he had not received his payment. The client was told that he would "just have to be patient" as they were so far behind it was impossible to say when his payment would be made. Another client at the same bureau was told that there was a backlog of 20,000 claims in January, and that payment would take six to eight weeks.

    A CAB in Somerset reported that a client was sent to them by the Benefits Agency to download a form from the Internet. This was time-consuming for the adviser. The local library also complained that it was being asked to download the forms on a daily basis, because of the inability of the Benefits Agency to provide them.

  14.  If the Benefits Agency continues to deliver service to the standards described above it will frustrate the delivery of the Fuel Poverty Strategy. The problems are not confined to the handling of Winter Fuel Payments. CAB clients regularly experience incorrect advice on their benefit entitlement, difficulties accessing claim forms, delays and errors in payments. The CAB Service is very aware of plans to re-organise the Benefits Agency and Employment Service and create a new Pensions Agency. We are also involved in discussion with the DSS about an initiative called Partnerships Against Poverty, to be launched later this year, which aims to ensure that a variety of agencies are working in the same direction to tackle pensioner poverty and ensure that pensioners are getting all the benefits they are entitled to.

CONCLUSIONS AND MESSAGES FOR THE UK FUEL POVERTY STRATEGY

  15.  The CAB Service considers that to be fully effective the Strategy for eliminating fuel poverty must be built on a sound foundation of high standards of supplier customer service for all customers and especially for customers managing on a low income. Aspects of customer service such as billing clarity, accuracy and frequency, payment options and arrears policies are important for managing fuel poverty over time.

  16.  The overwhelming conclusions NACAB draws from the analysis of CAB case reports is that unless fuel suppliers and the Benefits Agency dramatically improve the standard of service they provide to the most vulnerable people they will fail to play the part they should in delivering the Government's wider strategy for eliminating fuel poverty. The Strategy needs, therefore to incorporate actions directed at:

    —  Securing high levels of public awareness and effective access to high quality information.

    —  Ensuring high standards of customer service and communications across the full range of types of interactions companies and the Benefits Agency have with low income consumers.

    —  Ensuring high standards of sales practices and service for customers who switch suppliers.

PUBLIC INFORMATION AND AWARENESS

  17.  The Strategy refers to a range of initiatives addressing fuel poverty to be delivered through a range of partners. But there is no detail in the Strategy to explain how the Government will ensure that people can get access to comprehensive information about the full range of energy efficiency/fuel poverty intiatives available. We note that the Government proposes to set up a Fuel Poverty Advisory Group (para 6.46). The development of this Strategy may be an appropriate task for the Group.

  18.  CABx are increasingly observing that where individual companies innovate with packages of benefits, and brand similar schemes differently it is becoming harder to locate comparative information and compare what is available. This need will continue and the Strategy should explicitly incorporate action on public information and awareness.

  19.  More generally the Strategy should include a co-ordinated and measured programme aimed at securing customer awareness and take-up of various initiatives.

SECURING HIGH STANDARDS OF CUSTOMER SERVICE

  20.  As we have pointed out above fuel companies will play a key role in delivery of the Fuel Poverty Strategy. The same applies to the Benefits Agency. We also observe that actions companies or the Benefits Agency take or do not take on the customer service front can affect the ability of customers to budget to pay their fuel bills, avoid arrears and disconnection. Responsive, high quality customer service should be seen as an important feature of the Strategy, across a full range of interactions between fuel companies and the Benefits Agency and customers.

  21.  In addition, services specifically available for customers with special needs (which could well be a key delivery channel for advice and action on tackling fuel poverty) need to be promoted more effectively and properly bolted into other customer service systems to ensure customers receive appropriate services.

COMPETITION/FUEL SALES

  22.  We have noted above that CABx report a significant number of problems for their clients emanating from the introduction of competition in the fuel industry. The number and nature of cases reported to NACAB does not appear to be subsiding as a result of the "settling down" of market competition. The level of reporting is out of proportion to the volume of fuel related enquiries to CABx. This illustrates the level of CAB advisers' concern about the fuel cases they are dealing with.

  23.  The nature of CABx evidence reported has also remained the same. The underlying issue appears to be the lack of effective control of sales staff and poor standards of service leading to long delays in resolving disputes post erroneous or unwanted transfers. We believe that the quality of this area of company/customer interface also needs to be improved to ensure that companies are acting to progress, rather than frustrate, the Fuel Poverty Strategy.

National Association of Citizens Advice Bureaux

May 2001

 


 
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