Will the government’s updated fuel poverty strategy have better results?
Around ten per cent of England’s population is estimated to be living in fuel poverty. This is where households on low incomes live in homes with poor energy efficiency and struggle to pay their energy bills. The government has just published an updated fuel poverty strategy, building on its 2015 predecessor which set out how it aims to support as many homes as is “reasonably practicable” to achieve a minimum energy efficiency rating of Band C (EPC C) by 2030.
The 2015 strategy set an interim target to get as many fuel poor homes as practically possible to EPC E by 2020. While the most recent statistics only go up to 2018, there has been some evidence of progress in reaching these targets. The number of fuel poor households with an energy efficiency rating of band C and above has increased from just under two per cent in 2010, to 12.4 per cent in 2018. Similarly, households living in a home with an EPC E and below has reduced from almost twenty per cent in 2010, to just over seven per cent in 2018.
However, this progress can’t be attributed to the 2015 strategy. Energy efficiency improvements have been extremely slow, and the proportion of English households in fuel poverty has remained relatively unchanged since 2015. Investment in energy efficiency was almost £1.4 billion every year from 2009 to 2014. But this rapidly decreased after 2015, to just over £300 million in 2016.
Tackling fuel poverty is a devolved matter, and annual investment by other nations has been significantly higher than England. In 2017, England spent only £8 per head a year on energy efficiency, compared to £35 in Scotland, £23 in Northern Ireland and £17 in Wales. This underinvestment has depleted supply chains and reduced the skills base just when they are needed most. For the government to be able to meet its commitments in the fuel poverty strategy, much more funding is urgently needed.
Capacity and confidence building needs funding
The updated strategy includes some hopeful policy announcements: investment in social housing and the Homes Upgrade Grant, an extension of the Energy Company Obligation (ECO) scheme, and an extension of the Warm Home Discount.
It also flags the £2 billion Green Homes Grant as a way to tackle fuel poverty, announced last year as part of a Covid 19 recovery package. But this flagship policy has so far failed miserably to live up to expectations, with only five per cent of funds allocated to date, and suggestions that the shortlived scheme will actually be scrapped. This failure is mainly due to its short term nature and the lack of long term incentives for contractors to train staff, meaning there hasn’t been a supply chain available to meet the demand.
The intentions of the fuel poverty strategy can only be fulfilled if the government takes a longer term view and supports the energy efficiency sector to build capacity, while ensuring that the public has confidence in the scheme to invest in improvements.
Landlords have a responsibility to reduce fuel poverty
A third of fuel poor households in England live in private rented accommodation. The strategy makes clear that landlords are responsible for investing in energy efficiency building upgrades so their tenants are not living in fuel poverty.
It also recognises the role that local authorities will play in identifying which households most need support and monitoring the progress of improvements in private rented properties. The government will be publishing a best practice toolkit advising local authorities on how to enforce standards.
Minimum Energy Efficiency Standards (MEES) require all privately rented homes to be EPC E by 2020. Local authorities have been monitoring the private rented sector’s progress for years and the threat for landlords who fail to hit the standards is that they risk penalties and being added to a public register. However, as of May 2019, not a single council in England and Wales had used this register to declare penalties imposed against non-compliant landlords.
There are also serious concerns that local authorities don’t have the capacity to properly enforce these standards, and that the EPC system itself has a number of issues. These include that up to two thirds of EPCs could have errors and that some of the technologies, such as heat pumps, are not included as an energy efficiency improvement measure.
The strategy can bring warm homes and jobs to where they are needed most
Fuel costs for EPC G properties are almost three times higher than costs for the most efficient homes. This means people are having to make terrible trade-offs between whether they heat their homes or eat. It’s a particular problem in rural areas, where affordable transport is sparse, and where homes are often off the gas grid and poorly insulated. Rolling out a programme to address the energy efficiency of these homes will have a huge impact on the economy as a whole, not only protecting the most vulnerable households from high energy costs, but also providing a new source of jobs across the country.
In the north west, one of the areas hardest hit by Covid-19, up to 20 per cent of households are classified as fuel poor. In Blackpool, where three quarters of homes are below EPC C and unemployment is the highest in the country, it is estimated that energy retrofitting of homes could create around 1,000 new jobs.
Other departments need to help
The government’s fuel poverty strategy is achievable and could have positive implications for every region of England. But it should not be seen as solely owned by the Department for Business, Energy and Industrial Strategy. Other government departments have a role to play in making sure it is successful. The Ministry for Housing, Communities and Local Government should make sure local authorities have the resources they need to tackle fuel poverty, while the Treasury should be factoring in the long term economic opportunities of combatting fuel poverty and decarbonising homes, particularly in the context of Covid-19 and addressing regional inequalities.