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



APPENDIX 15

Memorandum by the NEA

  The Government's fuel poverty target is adequate, however more commitment is needed to tackle fuel poverty amongst households not currently categorised as vulnerable.

  While the target is achievable, it will not be achieved given the current policies and programmes. Specifically:

    —  Warm Front

      —  it is unclear the extent to which the homes currently treated are actually removed from fuel poverty;

      —  it is unclear how well-targeted Warm Front grants are on the fuel poor;

      —  the scheme currently does not adequately address solid wall and other difficult-to-heat properties.

    —  Decent Home Standard

      —  the standard as currently drafted will not guarantee affordable warmth to all social housing tenants.

    —  Energy Efficiency Commitment

      —  the regulations limit the impact which such schemes have on fuel-poor households

    —  Downward pressure on prices and increased income

      —  neither of these measures are sustainable and are vulnerable to future energy price increases.

  Recent reductions in the number of fuel poor households are unlikely to be sustainable as much of the reduction has been as a result of reductions in price and increased income.

  Issues of commercial confidentiality make it difficult to assess the impact of industry-led initiatives.

  Changes in the eligibility rules for current schemes could assist households whose incomes are just above benefit level. An alternative approach is to target assistance on properties rather than households.

  Technological advances such as micro CHP and some renewable and sustainable energy sources offer the potential to provide affordable warmth to households who will not be assisted by current schemes.

  1.  National Energy Action (NEA) is a national charity which, for more than 20 years, has campaigned for policies to secure the eradication of fuel poverty. NEA develops and promotes energy efficiency services to remedy the heating and insulation problems of low-income households. NEA works in partnership with central and local government; with fuel utilities, housing providers and health services; and with consumer groups and voluntary organisations.

  NEA's work includes:

    —  Research and analysis into the causes and the extent of fuel poverty and the development of policies to address the problem.

    —  Providing advice and guidance to local authorities, fuel suppliers and installers on best practice in delivering energy efficiency services to low-income households.

    —  Developing national qualifications and managing their implementation to improve standards of practical work and the quality of energy advice.

    —  Producing educational resources to teach young people about the importance of energy efficiency.

    —  Managing demonstration projects in urban and rural areas which show innovative ways of tackling fuel poverty and bring the wider benefits of energy efficiency to local communities.

  NEA welcomes the Trade and Industry Committee's decision to hold an inquiry into the important subject of fuel poverty, and the opportunity to submit written evidence. Comment will, in the main, concentrate on the specific issues raised in the Committee's initial announcement of the inquiry.

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?

  2.1  NEA applauds the current Government's commitment to the eradication of fuel poverty amongst vulnerable households by 2010. While NEA wishes to see the eradication of fuel poverty amongst all households, the charity does support the principle of the prioritisation of vulnerable groups. While it is debatable whether the Government's definition of "vulnerale" includes all those households at risk, it is recognised that any definition is likely to be problematic. Although NEA regards the current target as adequate, the charity would wish to see a stronger commitment by Government to the eradication of fuel poverty in non-vulnerable households in line with the requirements of the Warm Homes and Energy Conservation Act 2000.

  2.2  NEA believes that the Government's target can be achieved and indeed, must be achieved; it is intolerable that millions of households cannot afford sufficient fuel for warmth and comfort in the generally affluent United Kingdom. The Environmental Audit Committee in its 1999 report on energy efficiency described fuel poverty as a "persistent national scandal." However, NEA does not believe that the measures set out in the UK Fuel Poverty Strategy are adequate to achieve the sustainable eradication of fuel poverty.

  2.3  The UK Fuel Poverty Strategy sets out the three main approaches to fuel poverty reduction:

    —  Energy effiency programmes.

    —  Downward pressure on energy prices and support for utility initiatives.

    —  Action on general poverty, low incomes and social exclusion.

    The adequacy of these approaches will be considered in turn.

2.4  Energy Efficiency Programmes

  2.4.1  The principal schemes to improve the energy efficiency of homes occupied by low-income households identified in the Strategy are:

    —  Warm Front in England and equivalent schemes in Scotland (Warm Deal and the Scottish Executive's Central Heating Scheme for Pensioners), Wales (New Home Energy Efficiency Scheme and Northern Ireland (Warm Homes Scheme).

    —  Local authority (Housing Executive in Northern Ireland) capital programmes for public sector housing.

    —  Fuel suppliers' Energy Efficiency Commitment programe (Consumer Levy in Northern Ireland).

  2.4.2  NEA has consistently supported energy efficiency as the most rational and sustainable approach to a solution to fuel poverty, but has serious reservations about the adequacy of these programmes to deliver this objective. The following comments are made principally in relation to the programmes in England, however some of the issues raised may also be applicable in Scotland, Wales and Northern Ireland.

2.5  Warm Front

  2.5.1  Warm Front (formerly the Home Energy Effiicency Scheme (HEES)), is the main mechanism to improve the energy efficiency of low-income households in the private sector. Grants of up to 1,500 are available for insulation measures and heating system improvements for households in receipt of a means-tested benefit and with children under the age of 16 or expectant mothers. Grants are also available for households claiming one of a range of long-term sickness or disability benefits. In addition, householders of pensionable age (60 or over), and in receipt of a means-tested benefit, may be eligible for grants of up to 2,500 for a new central heating system in addition to the other mesaures (Warm Front Plus).

  Hence, even within the category of "vulnerable households" the grant scheme provides more assistance to eligible elderly households than to others. It is likely that many of the non-elderly vulnerable households will require an efficient central heating system to provide affordable warmth.

  NEA recomends that the Warm Front Plus grant should be extended to all eligible households where there is a dependent child or expectant mother, or where a household member is in reciept of a qualifying disability benefit and pensioners over the age of 75.

  2.5.2  It is not clear to what extent those households who receive a Warm Front grant are lifted out of fuel poverty. NEA is concerned that significant numbers of grant recipients will not be lifted out of fuel poverty as a result of receiving a grant. There are a number of reasons for this concern including:

    —  the average Warm Front grant in 2001-02 was in the region of 300[9] (compared to a grant maximum at the time of 1,000) and the average Warm Front Plus grant was 664[10] (the maximum Warm Front Plus grant at the time was 2,000). It is unlikely that this level of intervention will be sufficient to lift many low-income households out of fuel poverty.

    —  The average Standard Assessment Procedure (SAP) increase following a Warm Front grant is 19 and the average SAP rating following a grant is 59 on a 0 to 100 scale (current Building Regulations give a SAP rating of 65-70). Once again it is likey that many low-income households will remain in fuel poverty even with a SAP rating of 59.

  The Scheme Managers do not currently collect income data on grant recipients, so it is not possible to estimate the impact of the scheme in terms of the number of households lifted out of fuel poverty.

 

 

  2.5.3  Recent work by NEA[11] suggests that a significant proportion of those households in receipt of Warm Front grants are not in fuel poverty even before the work has been carried out. Whilst this work undoubtedly provides a benefit to these low income households (and to subsequent occupants many of whom may be fuel poor) such grants do not contribute to the Government's fuel poverty reduction targets. The interim targets in the Strategy are set in terms of properties treated, and reliance on such targets may result in serious slippage in the real reductions in fuel poverty if the patterns identified in Camden and North Tyneside are repeated nationally.

  An investigation into the incidence of Warm Front grant take-up by non-fuel poor households should be included in the research recommended above.

  2.5.4  The work carried out by NEA in Camden and North Tyneside also indicates that there are significant numbers of fuel-poor households who are not eligible for Warm Front grants. There are a number of reasons for this, including:

    —  Those not claiming benefits to which they are entitled.

    —  Those with incomes marginally above the eligibility threshold.

    —  Benefit recipients not in one of the "vulnerable" categories.

  The first two groups may contain significant numbers of households from the "vulnerable" categories. Whilst it may be possible to address the first difficulty through benefit take-up campaigns the second requires a different approach. This may require greater flexibility in the eligibility criteria for grant schemes. As a first step it will be necessary to quantify the extent of this problem.

  NEA recommends that research be undertaken to determine numbers of vulnerable households in fuel poverty not currently eligible for assistance.

  2.5.6  There is also the question of the so-called difficult-to-heat properties. These are mainly properties with solid wall construction where conventional, cost-effective insulation methods are not appropriate and those properties not currently connected to the mains gas network. In the case of the former, the current Warm Front grant scheme will only have a limited impact which is unlikely to provide affordable warmth in the majority of cases. Similarly, the current range of measures is less likely to provide affordable warmth in properties which do not have access to mains gas. The UK Fuel Poverty Strategy made a commitment to progress the extension of the gas network where it was feasible and cost effective. A commitment was also given to explore the potential of renewable and other sustainable energy sources to provide affordable warmth, particularly in solid walled properties and those off the gas network. However, to date little progress has been made in these areas.

  NEA recommends that the work to assess the impact of renewable and other sustainable energy sources and the extension of the mains gas network should be pursued as a matter of urgency by Government, and the necessary funding for pilot schemes should be provided.

  2.5.7  There is a need for the Government to consider changes to the Warm Front scheme to enable it to provide more assistance to the households currently receiving a grant. The scheme will also need to be extended to ensure it can provide affordable warmth to households occupying properties which are difficult to heat. In this respect, NEA supports recent changes to the scheme regulations which pave the way for additional measures to be included. However, it should be noted that to be effective the additional measures may require extra resources to be made available.

  NEA recommends that the Government should retain flexibility within Warm Front to include any necessary additional measures to enable the scheme to treat the widest possible range of properties.

 

2.6  Local Authority Capital Programmes

  2.6.1  The UK Fuel Poverty Strategy relies heavily on local authority capital funding to ensure that all public sector tenants are removed from fuel poverty by 2010. This is to be achieved by ensuring that by 2010 all local authority properties conform to a Decency Standard which includes a thermal comfort element. Originally the thermal comfort element was to be measured in terms of affordability, but this was subsequently revised to exclude any consideration of fuel costs and household income; the Decency Standard now refers only to compliance with basic heating and insulation criteria. The criteria make cavity wall insulation optional, where minimal (50mm) loft insulation is present and define any controllable gas or oil central heating system as adequate, irrespective of its age or efficiency. Many of the current 1 million fuel-poor households in the social rented sector already occupy properties above the recommended Decency Standard. Hence, compliance with the Standard will not guarantee affordable warmth for public sector tenants.

    NEA recommends that the Department of Transport, Local Government and the Regions revisit the Thermal Comfort criteria of the Decency Standard for social housing with a view to setting a minimum energy rating target that will ensure warmth and comfort for public sector tenants.

2.7  Energy Efficiency Commitment

  2.7.1  The Energy Efficiency Commitment (EEC) schemes will deliver over 500 million of energy efficiency improvements, funded through energy supply companies, over the period 2002-05. Since 50 per cent of the energy savings from these schemes must come from programmes to benefit low-income households, the EEC schemes have the potential to make a significant contribution to the eradication of fuel poverty, however a number of factors may prevent this objective being realised. The targets for the schemes are expressed in terms of energy savings and, as there is no direct pass-through of the cost of works to electricity and gas consumers, companies have a powerful incentive to minimise expenditure on required savings. This may lead companies to concentrate on measures such as low-energy light-bulbs, which will have only limited benefit to low-income households. Companies are being encouraged to link EEC schemes to their marketing and promotional strategies. Whilst this may, in the long term, encourage companies to provide energy services (including energy efficiency) rather than simply supplying power, in the short term it limits the impact that programmes will have on low-income households. As these are an element of their marketing strategy companies are reluctant to share good practice preferring to extract market advantage from successful innovation. The wish to maintain company profile also militates against national programmes with their potential economies of scale and limits the capacity for combination with other programmes.

  2.7.2  There is considerable duplication in provision for low-income households with Warm Front and Energy Efficiency Commitment resources covering similar measures to similar client groups (although unlike Warm Front EEC assistance is available to social sector tenants). This reduces the scope for the programmes to complement one another and, in some cases, results in competition for the same market.

    NEA recommends that EEC targets for the low-income sector be expressed in terms of numbers of households to be taken out of fuel poverty and that annual reporting requirements show the extent to which these targets have been met.

2.8  Downward pressure on energy prices and support for utility initiatives

  2.8.1 The strategy places considerable emphasis on the role of competitive energy markets in exercising downward pressure on gas and electricity prices, and in fostering an environment where innovation in developing new tariffs and specialist energy services, from a socially aware perspective, can contribute to fuel poverty reduction. Whilst NEA recognises the contribution of the above factors as legitimate elements in the strategy there are concerns about their sustainability and, to some extent, about the degree of abdication of responsibility by Government.

  2.8.2  The downward trend in gas prices has recently been arrested and reversed, and neither gas nor electricity prices in the future are sufficiently predictable to make energy prices a reliable and constant element of any strategy. In addition, data published by the energy regulator Ofgem, suggests that some categories of vulnerable consumers are much less likely to switch supplier and so benefit from lower prices available in the competitive market.

Switching rates % by vulnerable groups

Gas

Electricity

Very low income customers

38%

43%

Disabled customers

35%

44%

Single parent families

39%

43%

Pensioners

29%

30%

Prepayment customers

28%

31%

All domestic consumers

37%

38%

Source: Ofgem 2001



2.9 Action on general poverty, low incomes and social exclusion
    

  2.9.1  The third element of the strategy emphasises the importance of income maximisation, including special measures through the social security system, and the impact of the recent economic upturn in reducing fuel poverty. Undoubtedly measures such as Working Families Tax Credit and the Minimum Income Guarantee will benefit many households, and contribute to their removal from fuel poverty, but there is inconsistency in the treatment of different categories of the vulnerable fuel poor.

  2.9.2  By far the most significant investment in the alleviation of fuel poverty is the Winter Fuel Payments scheme which will involve expenditure of some 1.7 billion in 2001-02 and a similar sum in the following year. This scheme provides all pensioner households with a 200 payment which can be used to defray the cost of high energy consumption over the winter months. Whilst accepting the argument in favour of universality and against means testing in this particular case, it seems perverse to award this payment to affluent pensioners whilst excluding those in most need such as families with young children, and particularly the chronically sick or disabled.

  NEA recommends that the Winter Fuel Payment should be extended, as a minimum, to those households in receipt of Income Support or Income-based job seeker's allowance who are eligible for Cold Weather Payments through age, disability or young dependent children.

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

  3.1  NEA accepts that there has been a reduction in the incidence of fuel poverty in recent years. However, the extent of the real reductions, the contribution of the various factors and the sustainability of the reduction are more difficult to judge.

  3.2  The latest Government figures[12] suggest that in England in 2000, fuel poverty had fallen to between 2.8 million and 3.9 million depending on the definition of income employed. The major factors identified for the reduction were lower energy prices and increased incomes. NEA has however, reservations about the extent of the reductions claimed. The Government itself suggests some of the published figures should "be treated as broadly indicative only", and NEA believes that there are too many assumptions and too large an element of modelling for these figures to be completely reliable.

  3.3  The downward trend in the numbers in fuel poverty can only be sustained if the factors contributing to affordable warmth continue to improve, or at the very least, some remain constant without deterioration elsewhere. Clearly energy prices are potentially the most important element here and the most susceptible to rapid change and increase. The Energy Report of the Performance and Innovation Unit posits significant real-term increases in fuel prices in response to environmental concerns and, whilst recognising fuel poverty concerns, it suggests optimistically, that these issues are effectively dealt within the UK Fuel Poverty Strategy. It should be stressed at this point that historical tensions between environmental and social objectives are likely to increase in the future. At some point these tensions may test the resolve of the Government in making use of the powers in the Utilities Act 2000 to protect disadvantaged consumers, which includes the Secretary of State's reserve power to cross-subsidise specified groups of disadvantaged consumers. This issue may become more significant with the ending of price controls for domestic consumers.

  NEA recommends that there should be a more robust collection of data and the Monitoring and Evaluation Group set up by the Government should ensure that adequate information is collected to monitor progress in achieving the targets.

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

  4.1  NEA has consistently maintained that energy efficiency is the only rational and sustainable long-term solution to fuel poverty. Clearly if household income is sufficiently high then it can accommodate high energy costs resulting from poor thermal efficiency in the home. Similarly, energy can be made affordable through subsidies and other pricing mechanisms but neither of these responses is rational in the context of finite energy supplies and environmental degradation as a consequence of energy use. If it is accepted that a hands-off approach to the energy market limits Government intervention, and that energy subsidies make neither economic nor environmental sense, the area in which significant intervention is feasible and desirable is in the energy efficiency characteristics of the housing stock.

  4.2  The piecemeal approach to fuel poverty should be replaced with a properly co-ordinated national energy efficiency programme. Examination of the UK Fuel Poverty Strategy illustrates the problem. The Strategy recites a lengthy list of worthy but ad hoc initiatives dealing with every conceivable aspect of fuel poverty including initiatives from utilities, regulatory and consumer bodies, central government, local authorities and the voluntary sector, often duplicating efforts and replicating programmes.

  NEA recommends that the considerable resources available for practical energy efficiency work through local authorities, central government and utilities should be rationalised and dedicated to a single programme addressing the needs of all housing across all tenures. Consideration should be given as to how this programme should be implemented at a local level.

 

5.   How effective are the industry-led initiatives?

  5.1  It is extremely difficult to evaluate the effectiveness of industry-led initiatives as they have a commercial imperative and are frequently subject to the same commercial confidentiality concerns as any other business enterprise. Whilst many individual households have benefited from these initiatives, another valuable contribution which they could make is to demonstrate what succeeds and what doesn't work and what is suitable for replication. But this requires the sharing of experience and good practice between agencies that are in an intensely competitive market rather than pursuing a socially beneficial objective. Certainly projects undertaken under the Social Action Plan have been sufficiently diverse to cover all of the main elements of fuel poverty including:

    —  Research programmes.

    —  Preferential tariffs and payment method switching.

    —  Health-oriented initiatives.

    —  Income maximisation through benefit checks.

    —  Financial exclusion.

    —  Energy advice and practical energy efficiency improvements.

  NEA recommends that Ofgem should encourage, as far as is compatible with genuine commercial sensitivities, development of a forum for the exchange of experience and good practice of Social Action Plan initiatives by energy supply companies.

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

  6.1  The issue of fuel-poor households with income levels just above benefit thresholds was touched on in paragraph 2.4.5 above. Such households can often be worse off than households with income slightly lower because the latter are eligible for a range of passported benefits. These "nearly poor" households will be unlikely to be able to make a significant contribution to the cost of the necessary improvements.

 

  6.2  One approach would be to change the eligibility for grant schemes to include all households in fuel poverty. This would require a complex assessment of the energy efficiency of the property and the household income. Such an assessment is likely to be time-consuming, intrusive and expensive. An alternative approach would be to extend eligibility to households with incomes which are a set percentage above benefit levels. In this case, income assessments would only be required for those with incomes above benefit thresholds. Households in receipt of benefits could be passported in the same way as at present.

  6.3  An alternative approach would be to concentrate on improving properties rather than concentrating on households. As there is a high correlation between poor housing conditions and low-income, any scheme which concentrated on improving the energy efficiency of the worst housing stock would benefit a high proportion of fuel-poor households. Even if the property was not occupied by a household in fuel poverty at the time of improvement, it may be at some time in the future. The argument for such a scheme is strengthened by NEA experience of North Tyneside which suggests that there is a considerable movement in and out of fuel poverty by non-elderly low-income households.

  NEA recommends that a pilot scheme which targets properties with the worst energy efficiency standards should be operated and assessed for its effectiveness in addressing fuel poverty.

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

  7.1  In NEA's view these issues should be considered separately. In the context of practical energy efficiency work the optimum outcome would be an end to the myriad schemes and agencies funding and implementing these works. Within a predetermined area (that for which a local energy conservation authority has responsibility) there should be a single scheme administered by a single agency. Rather than co-ordination of a multiplicity of schemes and programmes, existing resources and responsibilities should be rationalised and integrated. However given that, at least in the short term, sponsors and managers of existing programmes will wish to preserve their control and involvement, the priority should be to develop relationships between programmes to make them genuinely complementary rather than replicatory, as is so often the case at present. Co-operation can foster the initiative and enterprise lacking in most current programmes, and create innovative approaches to the more intractable problems of fuel poverty encountered in many rural areas, or in those elements of the housing stock not amenable to orthodox improvement works. Approaches such as that taken in the Warm Zone pilots have much to commend them.

  7.2  The current Energy Efficiency Commitment will last until March 2005. This will provide an opportunity for a review of energy efficiency programmes generally and consideration of how best to integrate funding. Decisions will have to be made about divorcing this major resource from company marketing strategies and reinventing it as a major instrument of social, economic and environmental policy. This may require that the commitment be transferred in whole, or in part, to the distribution side of the gas and electricity industries.

  7.3  The scope of financial intervention to contribute to the eradication of fuel poverty through the welfare benefits systems is potentially enormous, but generally irrational, since it is clearly better to deliver a permanent solution through energy efficiency investment than to subsidise profligate use of finite resources in a housing stock that is of such poor quality. The disparity between sums spent on Winter Fuel Payments and the budget of Warm Front has already been referred to above. However there is certainly a case for direct financial assistance through the social security system where significant practical improvements are delayed or impracticable.

  7.4  The reduced rate of Value Added Tax on energy works promoting a social objective eg Warm Front and Energy Efficiency Commitment expenditure has made a modest contribution to affordable warmth in terms of maximising the benefits from the finite budgets of these schemes. Broadening this tax concession would be of limited benefit to most low-income households but would possess the more general advantage of promoting the importance of energy efficiency and encouraging its implementation.

  7.5  In the past the Government has implied that only European Union tax regulations prevent the reduction of VAT on domestic fuel to its former zero-rated status. NEA has suggested that, in recognition of this "unwanted" revenue, to the Exchequer from this source, it would serve a range of social, economic and environmental objectives if this were to be dedicated to the funding of a national energy efficiency programme.

  NEA recommends that the inbalance between resources to reduce fuel poverty through energy efficiency investment and those to reduce fuel poverty through financial subsidy should be redressed.

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

  8.1  The UK Fuel Poverty Strategy recognised that there would be circumstances where conventional energy efficiency measures would have limited potential to improve the circumstances of fuel-poor households. The main areas of difficulty were identified as:

    —  Properties without access to the mains gas network.

    —  Hard to heat properties.

  Since there is no apparent prospect of the gas mains being extended nationwide, and since effective insulation in solid-walled properties is comparatively expensive, the main concerns are caused by rural dwellings and by older properties built without cavity walls. Whilst electric storage heating may be a solution in some rural dwellings the willingness on the part of Government to consider more innovative solutions is welcome.

  8.2  NEA, in partnership with National Energy Services (NES) and the Energy Technology Support Unit (ETSU) has proposed a feasibility study into the possible role of sustainable energy sources in addressing fuel poverty. In addition to this the Department of Trade and Industry is conducting a parallel study into photovoltaics through several pilot projects. Whilst it is impossible to speculate on the outcome of these initiatives they do demonstrate a forward-looking and innovative element within the fuel poverty strategy. This is also the case with proposed pilots for micro-CHP and this is recognised in the recent amendments to the regulations governing Warm Front which, in addition to increasing maximum levels of grant aid, paved the way for incorporation of these emerging technologies in a Government-funded scheme to tackle fuel poverty.

  8.3  Technological development may bring other benefits such as the introduction of "Smart Meters" that provide the consumer with a detailed analysis of energy consumption and serve as aids to monitor energy use and budgeting accordingly.

9.  OTHER ISSUES

  9.1  There are a number of other issues which impact on the Strategy and the Government's ability to meet its targets. These issues include:

9.2  General housing and other policies

  9.2.1  The UK Fuel Poverty Strategy identifies wider housing and social inclusion policies as having relevance to the alleviation of fuel poverty. However no assessment is made of the extent of this impact or of the changes required to the priorities and delivery mechanisms in these policy areas. The Strategy refers to the Housing Health and Safety Rating System, which will soon replace the Fitness for Human Habitation Standard, Building Regulations, Private Sector Renewal Grants, Home Improvement Agencies and a range of general initiatives such as the Neighbourhood Renewal Fund, New Deal for Communities and the Single Regeneration Fund. However the Strategy concedes that these schemes have a range of competing priorities and objectives. NEA concludes that, unless fuel poverty is made a dominant factor in such initiatives they will not achieve their full potential in contributing to the eradication of fuel poverty. Significantly, NEA believes that without such a contribution that fuel poverty targets will not be met. As an example, unless Private Sector Renewal Grants can be used to remedy disrepair in properties occupied by vulnerable households, it will not be possible to improve energy efficiency in many of these dwellings.

  9.2.2  New-build policy will also be of great importance. Some properties will not be capable of cost-effective, energy efficient improvement and will have to be replaced if their occupants are to be provided with homes they can afford to heat. Also, if the problem of under-occupation is to be addressed there must be access to adequate stock of appropriate housing to offer as alternatives to current unsuitable accommodation.

9.3  Industry capacity

  9.3.1  The issue of industry capacity, particularly in the gas industry, has been identified as a potential barrier to achieving the objectives of the Strategy. Estimates vary, but it has been suggested that the current shortfall of gas heating engineers is in the region of 5,000. The Government has instigated a number of initiatives to increase the provision of qualified staff but, in the short term, further natural wastage will exacerbate the problem. Some estimates suggest that the shortfall may be in the region of 15,000 in three years' time. It is important to guard against complacency and the attitude that because some action has been taken then the problem has been resolved.

  9.3.2  A similar problem exists in the insulation industry, particularly in the shortage of skilled cavity wall insulation installers. However, since the training period is considerably less in this field of work, this issue is less pressing. It should be noted that shortages of skilled staff may result in increased prices which will make it more difficult for current schemes to meet productivity targets within existing budgets.

Annex 1

 

How well could Warm Front deal with fuel poverty?

  In seeking to determine how effective Warm Front is, or might be, in reducing fuel poverty, NEA carried out further analysis of two existing data sets, from North Tyneside and Camden, with the following interim conclusions:

  1.  Approximately half of the fuel poor are Warm Front-eligible. (Camden: 51 per cent; North Tyneside: 48 per cent).

  2.  Approximately 40 per cent of those whom Warm Front can help are not fuel poor (Camden: 44 per cent; North Tyneside: 36 per cent).

  3.  If energy efficiency improvemens under Warm Front were able to raise the property of all eligible households up to SAP 70, and if eligible households participated, then:

  3.1.  More than one third of the Warm Front-eligible fuel-poor would be taken out of fuel poverty. (Camden data: 35 per cent).

  3.2. Warm Front-treated fuel-poor households' mean required fuel spend would fall from 19.5 per cent of disposable income (after housing costs) to 12.5 per cent (Camden data only).

  3.3.  Warm Front would have been able to take 16 per cent of fuel-poor households out of fuel poverty.

  3.4. Distance travelled measure. If we regard "the amount of fuel poverty" as all the required fuel spend above 10 per cent disposable income for all households, then Warm Front would have reduced the amount of fuel poverty by 37 per cent.

  4.  North Tyneside improvement data suggests that a target of SAP 70 for the dwellings of fuel poor and near-fuel poor households would be unattainable at current grant maxima. In Sample A (which is fairly representative), maximum feasible cost-effective measures improve the mean SAP from 49 to 62, with just 23 per cent being brought to SAP 70 or above. In sample B (which contains more social housing) the equivalent figures are 52 rising to 63, with 29 per cent above 70.

  These mean figures suggest a reduction in the percentage taken out of fuel poverty to about 14 per cent and the distance travelled measure equates to a 35 per cent reduction in the amount of fuel poverty. However, these figures are optimistic in that the mean figure conceals the fact that many properties can make zero or very small energy efficiency improvement within the Warm Front package. The effect of this has not been estimated.

  5.  The figures are based on the assumption of 100 per cent take-up of grant.

  6.  Finally, penetration will have been further diminished by the ending of Warm Front-eligibility for social housing tenants in 2002, although this should be compensated by spend from other budgets. Also, acceptance rates are likely to be much higher in this sector for obvious reasons.

  7.  Findings from the Warm Front pilot study (CSE, 2000) and from experience in Sandwell Warmzone bear out the broad conclusions above. However, none of the findings can be reliably generalised to either England or the UK as a whole, although, deeply rural areas apart, there is no reason to expect anything radically different elsewhere.

NOTES ON SAMPLES:

1.   North Tyneside

  Total sample 532; figures above based on the 386 cases for which there is a full set of accurate fuel poverty data with SAP, required fuel costs, household income and the results of a full NHER audit. The sample is in two waves:

  Wave A:  298 cases derived initially from a random survey of North Tyneside residents for whom phone numbers were available, who said they had at least some difficulty keeping their homes warm in winter, and who agreed to take part in the study.

  Wave B:  236 cases as Wave A but recruited by selecing areas of expected high fuel poverty level (Howdon, Percy Main, Willington Quay, Rosehill).

2.   Camden

  Total sample constructed from:

  A.  1999 Housing Needs survey (council properties only). Random sample of 899 households of which 623 had complete data to enable fuel poverty analysis. Required fuel costs were estimated by adjusting reported fuel spend by income decile, using multipliers derived from the English House Condition Survey.

  B.  1996 Private Sector House Condition Survey (includes Registered Social Landlords, private rented, owner-occupied). Random sample of 2,270 dwellings in Camden. Valid sample 1,009 because no energy survey was completed on about a third, and income data was unavailable on others. Required fuel costs were estimated using NHER cost table, with property floor area and NHER rating.

  Overall Camden figures were assessed by weight average of fuel poverty and Warm Front eligibility percentages for A) and B) in proportion to incidence of tenure types in Camden Borough.

Note: Eaga data apparently gives a somewhat more optimistic figure in terms of effect on SAP ratings. However, it is not known whether or not this includes households where zero or minimal intervention is feasible.

 


9   Hansard, November 26, 2001. Column 689. Back

10   Hansard, March 1, 2002. Column 1593. NEA recommends that DEFRA should commission research to assess a statistically valid sample of grant recipients to determine the extent to which the Warm Front scheme does lift households out of fuel poverty. Back

11   NEA investigation into Fuel Poverty in Camden and North Tyneside: Appendix 1. Back

12   Fuel Poverty in England in 1999 and 2000-DTI, DEFRA (January 2002). Back

 
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