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


Memorandum by the National Right to Fuel Campaign

  The National Right to Fuel Campaign (NRFC) welcomes the opportunity to submit evidence to the Trade and Industry committee's inquiry into Fuel Poverty. The Campaign has a membership comprising voluntary organisations, local authorities, trade unions, individuals, academics and professionals in housing, welfare benefits and environmental health. It was founded over 25 years ago with the objective of achieving a warm, well-lit home for all and has taken a leading role in getting fuel poverty onto the political agenda.

  The Committee have indicated that it is particularly interested in receiving evidence on the following questions:

1.   Is the government target of ensuring that by 2010 no members of a vulnerable household need risk ill health due to a cold home, adequate? Can it be achieved?

  The NRFC believes that the Government's Fuel Poverty Strategy fails to meet the requirements of the Warm Homes and Energy Conservation Act 2000[8] as it only sets targets for one section of the fuel poor, namely the so-called ``vulnerable'' fuel poor. The Government needs to set programmes for tackling all fuel poverty, including those for the ``non-vulnerable'' fuel poor.

  This failure is compounded by the fact that the official definition of vulnerable households, namely older households, families with children and householders who are disabled or suffering from a long-term illness, takes no account of the degree of fuel poverty suffered by households. A low income, middle aged lone adult, for example, who is not termed vulnerable, but is in severe fuel poverty, may in practice suffer a significantly higher risk of a severely cold home and consequent ill health, than a member of a, so-called, vulnerable household that is only marginally fuel poor.

  Even on its own terms, the Government target is unlikely to be achieved for a number of reasons:

  Firstly, there is currently no comprehensive fuel poverty strategy, which aequately integrates energy efficiency, fiscal and housing management measures for individual households. Yet, successive English House Condition Surveys (EHCS) have shown that severe fuel poverty is generally caused by a combination of low household income, high fuel prices, poor energy efficiency and often under-occupation and, on average, cannot be eliminated by energy efficiency measures used in isolation. (See also evidence under question 3 below).

  The separate policies aimed at the individual causes of fuel poverty, such as the energy measures provided by Warm Front/new HEES are alone likely to have limited impact on the problem. The DTLR's 1998 Energy Follow-up survey shows that a half of all the fuel poor live in homes of average or above average energy efficiency (ie homes with SAP ratings of 40 or above). Even in 1996, some 70 per cent already had central heating systems meeting the DTLR's recently revised standard for "a decent home".



  This poor targeting is likely to be replicated in the Energy Efficiency Commitment (EEC), where suppliers are required to focus at least 50 per cent of their obligated energy benefits on households in receipt of means-tested benefits. This and the fact that the Commitment is likely to focus on social housing and insulation measures will prevent EEC from being used generally to target those groups not eligible for Warm Front.

  This all suggests that current programmes are inadequate for reaching fuel poor households, whether vulnerable or non vulnerable. It is clear that energy efficiency and other fuel poverty measures need to be much better targeted, with eligibility criteria being based on both household and housing circumstances.

  Even where well targeted, many fuel poor households who are eligible for Warm Front will still not be taken out of fuel poverty by the measures provided. This is because Warm Front is only really effective in homes with cavity walls and a gas supply, and a significant proportion of the fuel poor do not have these. Possible means of addressing this problem include:

    —  raising the grant level of Warm Front and providing more flexible measures and packages, such as wall cladding;

    —  giving increased priority and resources to DTI's plans to extend the gas network;

    —  the use of renewables, heat pumps and community heating etc; and

    —  micro combined heat and power (CHP).

  In this respect, the NRFC welcome the Government's pilot schemes but wonders whether these will become mainstream. It would like to see some assessment made of the likely scale of the problem and resources required to tackle fuel poverty among hard to heat houses, solid wall houses and houses off the gas network, etc?

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

  The recent reduction in the number of fuel poor households has resulted mainly from the general falls in fuel prices and increased incomes and has been limited largely to those in marginal fuel poverty. There has been little reduction in the number of households in severe fuel poverty, when defined in terms of full income and, on the definition of fuel poverty using basic income, an actual increase in the number of households in greatest need. For example, the DTLR's 1998 Energy Follow up Survey shows that the number of fuel poor needing to spend over a fifth of their basic income to achieve satisfactory heating and cover other essential energy costs increased by over 30 per cent, to well over 1.3 million, in the two years following the 1996 EHCS.

  The fact that most of the recent reduction has come from reduced fuel prices and little from improvements in the energy efficiency of the housing stock and has been largely confined to those in marginal fuel poverty, suggests that the reduction is unlikely to be sustained. It is generally agreed that the reliance on declining fuel prices is not sustainable and that, in future, fuel prices generally are likely to rise. With rising energy prices, the numbers of severe fuel poor are liable to further increase, with the overall numbers in fuel poverty becoming more static if not actually also swelling.

  While energy efficiency measures alone may not take some households out of fuel poverty, they still represent a long-term investment in the improvement of the housing stock. They could prevent households who are more marginally fuel poor from moving in and out of fuel poverty with fluctuations in fuel prices and/or their household incomes.

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

  There are four main causal factors in fuel poverty: low incomes, high fuel prices, poor energy efficiency; and also the under-occupation of dwellings. The more serious the degree of fuel poverty, the more likely the cause will be a combination of these factors. The relative significance of these four factors is indicated, with reference to different degrees of fuel poverty, in Table 1 below. This shows that, as the severity of fuel poverty increases from the fuel rich (with required fuel costs of 5 per cent of income or less) to the severe fuel poor (with required fuel costs of over 20 per cent of income), both existing average incomes and energy ratings progressively fall, while actual unit fuel costs progressively rise. There is little difference in the general size of dwellings occupied by the fuel rich and the severe fuel poor, both being larger than the average for the housing stock.


 Table 1: Existing average household incomes, unit fuel costs, SAP ratings and floor areas compared with household incomes, unit fuel costs, SAP ratings and floor areas required to each give a total fuel cost of 10 per cent of basic income.

Required Fuel costs
as % of net income

Actual mean income

Required mean income

Actual unit fuel costs p/kWh

Required unit fuel costs p/k/Wh

Actual mean SAP rating

Required red Mean SAP Rating

Actual floor area sq.m.

Required floor area sq.m.

5% or less




































Over 20%


















Source: 1996 English House Condition Survey Energy Report

  The Table also shows that in 1996, households in severe fuel poverty would, on average, have needed to increase their net incomes nearly threefold or, alternatively, to have fuel prices reduced to nearly a third of their actual cost to achieve affordable warmth in their existing unimproved homes, The average energy rating required to give these households fuel costs of 10 per cent of existing incomes, was, at 100, generally above that which could be achieved economically with currently available energy improvement measures. Given their existing low incomes and very inefficient homes, the severe fuel poor could generally only achieve affordable warmth in accommodation measuring under 18 square metres.

  With the benefits of reduced fuel prices going more to the already fuel rich than the fuel poor, particulary those in severe fuel poverty, the pattern of relationships showing in Table 1 is unlikely to have changed substantially since 1996.

4.   How effective are the industry led initiatives?

  It is difficult to assess how effective the industry-led initiatives are as there is currently no independent (or even fuel company) monitoring of the impact of these initiatives on fuel poverty status. This applies to both the Energy Efficiency Commitment (EEC) and so-called social tariffs (and similar initiatives such as "Nestmakers"). Industry initiatives such as Staywarm, Nestmakers etc are subject to market conditions and the varying fortunes of the fuel companies and within Staywarm, for example, this has resulted in fluctuating tariffs.

  To have a greater impact on reducing fuel poverty, EEC should include affordable warmth targets as well as energy saving targets. The Government should also attempt to quantify the impact of EEC on fuel poverty.

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

  The Energy Efficiency Commitment had the potential to complement Warm Front schemes by specifically targeting those fuel poor households who fell just above the benefit level. However, as already mentioned, as currently constituted it is likely to only compound this problem; with companies arguing that it too difficult to identify such households.

  Targeting houses with low energy efficiency (SAP) ratings, in order to capture the worst cases, might be one way forward. Other less tangible possibilities include increasing general awareness of the benefits of energy efficiency and providing greater encouragement for energy service companies (ESCOs). These could be encouraged through fiscal measures.

  More generally, there is a need to clarify the differences between households whose income is just above the benefit level, those not claiming benefits and fuel poor households not eligible for benefits. Addressing the problem of non-claimants should not rely on benefit checks by fuel companies and welfare rights officers, but should be solved directly by the Benefits Agency, for example, through simplifying benefit forms, adopting a different ethos and setting targets for increasing take up. This might be helped by reversing the move towards ever-greater means testing and encouraging a more universal approach, including generally higher state pensions, particularly for lone households.

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

  It has already been argued that the solution to fuel poverty, and severe fuel poverty in particular, requires the integration of energy efficiency, fiscal and often housing management measures. The NRFC advocates, one single "one-stop" national scheme for the fuel poor which brings together the provisions of the Warm Front/new HEES. The Energy Efficiency Commitment and other energy programmes as well as any required additional income benefits and, where appropriate, sensitive re-allocation and re-housing programmes.

  However, in the absence of such a scheme, better co-ordination of the great plethora of existing policies is clearly required. The area approach of Warm Zones represent one attempt at better co-ordination. However, the problems of Warm Zones include:

    —  the added expense of this approach;

    —  the reliance on fuel company sponsorship: This is feasible for the pilot schemes; but may not be feasible for the wide-scale implementation of the strategy?

    —  fuel company sponsorship also undermines the ability to bring into play a full range of anti-fuel poverty measures. For example, Warm Zones are not providing full advice on relative tariffs and are only pulling in EEC funds from the sponsoring company; and

    —  they also need long set up periods if they are going to be fully effective.

  The big advantage of Warm Zones is the systematic, street by street approach, although this is expensive to implement. This approach is more effective than the current one of self-referral or referral by a third party and means that the worst cases are likely to be identified. However, it is debatable whether other structures would be moe appropriate, including the use of existing, albeit variable, local authorities, through a possible expansion of their responsibilities under the 1995 Home Energy Conservation Act.

  A more fundamental question is whether an area approach is appropriate for the elimination of fuel poverty. Many fuel poor are widows and widowers on low income who continue to live in and now under-occupy their largely unimproved, traditional family homes. Although such households are occasionally found concentrated in neighbourhoods, they are increasingly likely to be pepper-potted in areas of predominantly improved housing, occupied by younger more affluent households. Possible as a result, the initial surveys undertaken in the pilot Warm Zones show these areas to have little or no higher concentation of fuel poverty than the national average.

  Generally, public health should be given greater prominence in setting health priorities (to counter the current medical emphasis) and housing expenditure increased in areas where it could have the greatest impact in reducing health inequalities. For a more integrated strategy, the NRFC would also like to see more co-ordination of relevant policy making within central Government. For example, it does not find the current split in the policy responsibility for fuel poverty between DTI and DEFRA and divorce from the housing responsibilities of DTLR conducive to ``joined up thinking'' on this issue. It would point to DTLR's axing of key energy questions from the EHCS survey series and the recent downgrading of the thermal criteria for a ``decent home'' as indicative of this problem.

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

  The UK Fuel Poverty Strategy faces particular challenges in meeting its objectives where conventional energy efficiency measures have a limited potential to lift poor households out of fuel poverty. In particular these are properties:

    —  without access to the mains gas supply, mainly in rural areas;

    —  with a solid wall construction, primarily in older housing stock.

  The range of building types these properties represent will mean that they elude a simple set of measures. Rather solutions to address these challenges will more likely be packages assembled from a wide range of measures tailored to the particular features and location of the relevant properties. These could include heating systems based on heat pumps, solar thermal or biomass together with external wall cladding in rural areas. In rural towns and villages where densitiy of buildings is sufficient it may include community heating fired by oil or biomass. Similary, in older inner city areas where solid wall construction is prevalent and architectural features are protected by conservation orders it may also use community heating with CHP in association with dry wall lining. The Government has commissioned a feasibility study into the possible role of sustainable energy sources in addressing fuel poverty. Additionally it has announced a pilot of 6,000 micro-CHP units. Furthermore DTI is conducting a study into photovoltaics through several pilot projects. Lastly, it is supporting the development of community heating through the Community Energy Programme.

  Whilst it is impossible to speculate on the outcome of these intitiatives NRTFC welcomes the willingness on the part of Government to consider such innovative solutions as well as the flexibilitiy of grant maxima under Warm Front necessary to pay for them. However, it may be that some properties are beyond cost effective improvement in their energy efficiency. In which case the Government should provide for local authorities to undertake selective demolition.

  In addition to the above questions, the NRFC respectfully submits that the Trade and Industry Committee should also be seeking evidence on the following questions:

8.   Is the Government's definition of fuel poverty adequate and, if not, how should it be revised?

  The NRFC believes that the Government's current definition of Fuel Poverty masks the true extent and distribution of the problem and the real progress, or lack of progress, made towards its elimination. The official definition—which is based on "full" or "basic" income rather than the "disposable" income of households—can be shown to conceal not only the real number of fuel poor but the relative severity of the problem, its regional and local distribution and the household types most likely to be affected. By ignoring increases in housing costs, particularly in the rented sectors, the current definition also tends to indicate much greater recent progress towards the elimination of fuel poverty than, in fact, has been the case.

  The National Right to Fuel Campaign submits that a proper definition of fuel poverty is central to the development and implementation of a comprehensive fuel poverty strategy. Without such a definition, it is impossible to identify and efficiently direct scarce resources to those in real need and to determine the true extent of progress in meeting those needs. We submit that central to the proper definition of fuel povety lies a meaningful definition of income and that in determining what fuel costs are affordable, it is only logical and practical to limit income to that which can actually be spent on fuel. We therefore propose the replacement of the existing fuel poverty definition with the use of "disposable income", excluding net housing costs, to define a fuel poor household.

  (For full details of these arguments, please see NRFC's Position Paper 2: Fuel Poverty Definition—Using Disposable Income (Not printed).)


8   This Act requires the Secretary of State for England and the National Assembly for Wales "to publish and implement a strategy for reducing fuel poverty and set targets for its implementation". In terms of eligibility, there is also a serious mismatch between Warm Front and fuel poverty status. Some 46 per cent of all households in fuel poverty are not eligible for Warm Front and, conversely, 52 per cent of households eligible for Warm Front are not fuel poor. The main group of the fuel poor ineligible for Warm Front are likely to be pensioners with small occupational pensions or those not claiming benefits to which they are entitled. While it recognises the administrative advantages, the NRFC believes that the use of benefits as the sole proxy for fuel poverty is an inefficient way of targeting the problem. Back

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