Fact Checker –Annual Fuel Poverty Debate 2018

Last week, Parliament held its annual fuel poverty debate, where MPs got the chance to talk about the effects of fuel poverty on their constituents, government policy in general and what they would do to help end fuel poverty. A number of topics were discussed in the debate: MPs raised issues surrounding: Excess winter deaths and the horrendous spike we have seen from last winter; some of the smart innovations that could be used to help fuel poor households and the help that is needed for those with serious health issues. In this blog we would like to provide a fact check on some of the comments made on behalf of the UK Government by the Parliamentary Under Secretary of State for BEIS and the Minister of State for Energy and Clean Growth.

£3bn of government help

In his opening remarks, The Under Secretary of State set out his disagreement with Caroline Lucas, who raised the point that there was a lack of public funding for energy efficiency.

Caroline Lucas:

I do not know how the Minister can say he has put in place something that is so ambitious when no public funds are going into domestic fuel poverty and energy efficiency, for the first time in years. In the past we had Warm Front and other schemes, but right now the Government are putting no taxpayers’ money into these schemes.

The Under Secretary of State:

I respectfully disagree with the hon. Lady, and I will outline the £3 billion-worth of Government help…A key way in which we are delivering energy efficiency measures to meet that ambition is through the energy company obligation, which has led to energy efficiency upgrades to at least 2 million homes across England, Scotland and Wales since 2013…..We are also clear that landlords should play a role in upgrading the energy efficiency of the properties they rent out.”

Whilst The Under Secretary of State is partially correct, in that ECO is a scheme that helps to fund energy efficiency, it is not a “government scheme” and is supplier-led and funded via a levy on energy bills. This does not touch the public purse and does not constitute public spend. In addition to this, the policy that The Under Secretary of State speaks of with regards to landlords is a new minimum energy efficiency standard meaning that landlords must pay up to £3.5k to ensure that their property is at least EPC E. Again, this is not Government spend on energy efficiency and the Government have yet to state when in 2019 they will finally amend the current PRS regulations, 9 years after Parliament first voted to improve conditions in the least efficient privately rented homes.

Verdict – Caroline Lucas was correct. There continues to be no central government funding for energy efficiency measures in England.

The government has responded to the Helm Review

The Under Secretary of State said, in reaction to a question from Graham Stringer MP regarding the Helm Review, that the Government had responded to the Helm Review.

Graham Stringer MP

It is some time now since the Dieter Helm review came out with a number of recommendations… why do the Government not respond and implement those recommendations?

The Under Secretary of State

I will make one small change to what the hon. Gentleman said, in that I have read that report and I have met Dieter Helm. I will happily send the hon. Gentleman a copy of the recent energy speech that my right hon. Friend the Secretary of State made. If the hon. Gentleman does not have a copy, I will send it to him with my compliments—I might even get the Secretary of State to sign it for him for Christmas.

The Under Secretary of State here implies that the speech that the Secretary of State made earlier this year constitutes the Government’s response to the Helm Review. Whilst this speech did reference Helm’s review there was little to no detail on whether the specific recommendations would be adopted or the rationale for not doing so. NEA are especially keen that the Government responds to proposals around more progressive recovery through a universal basic allocation of fixed costs, removing policy costs from an initial block of usage for vulnerable consumers and rising block tariffs.

Verdict – The Government has not adequately responded to the Helm review through the Secretary of State’s speech. NEA believes that a more comprehensive response is still required.

The default tariff price cap is a safeguard tariff

The Under Secretary of State talked very briefly about the new default tariff price cap.

Under Secretary of State

A new safeguard tariff coming into effect on 1 January will protect 11 million consumers from high bills

The new default tariff price cap will provide protections to millions of customers who are on standard variable tariffs. However, Ofgem have said that customers who receive the warm homes discount and who do not have a prepayment meter will be moved away from the safeguard tariff and onto the new default price cap. NEA believes that this could actually mean that some vulnerable customers ultimately pay more for their energy than they would have done without the introduction of the default tariff cap.

Verdict – The Under Secretary of State was wrong to call the default tariff price cap a Safeguard Tariff. It is an alternative to a safeguard tariff which might ultimately be more expensive for those who can least afford high energy bills.

ECO focused on the fuel poor

A little later in the debate, The Minister of State went on to talk about the new ECO scheme, and specifically the change in targeting going in to the new scheme running from 2018 to 2022.

The Minister of State

I have taken personal responsibility for reforming the energy company obligation, which was only 30% focused on fuel poverty just a few years ago and is now 100% focused on fuel poverty

Whilst the new scheme is 100% focussed on the affordable warmth segment, it is not 100% targeted on fuel poor homes. Analysis from the Committee on Fuel Poverty says that that only around 30% of funding is expected to go to fuel-poor households . This preferred policy option was chosen despite it having the least impact for those households in fuel poverty and the lowest Net Present Value (NPV).

Verdict – ECO is not 100% focussed on fuel poverty and NEA stresses the need for the Government to clarify that the widening of the eligibility criteria by including Ministry of Defence administered benefits, Disability Living Allowance (DLA) and/or Personal Independence Payments (PiP) is not subject to any income cap and this will reduce support for the poorest households in the worst EPC bands.

A centrally funded scheme is needed

It is clear from correcting these Parliamentary errors that there is no government funded scheme for energy efficiency, and the scheme that does exist, ECO, does not do enough to address fuel poverty. NEA therefore is advocating for a £1bn Fuel Poverty & Clean Growth Challenge Fund, proposed by the Committee on Fuel Poverty to ensure resources are sufficient to meet statutory targets and milestones and the Government urgently address a drop off in delivery and key gaps in provision.

 

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