Finally, could this be the budget that gives the fuel poor a warm HUG?

Blog written by Adam Scorer, Chief Executive, NEA

On Wednesday the Government presents its first Budget. It will be unlike any in recent years.

It sits on a healthy majority. The UK has now left the European Union. It happens as the economic impact of a global pandemic emerges. Infrastructure spend to bind northern constituencies to the Conservative party. This could make you apprehensive or excited.

From NEA’s perspective, we want the budget to nail down two manifesto commitments. Firstly, £3.8 billion Social Housing Decarbonisation Scheme focusing on improving insulation in 2 million social homes, reducing energy bills by an average of £160 a year.‍ Secondly, £2.5 billion Home Upgrade Grants in private tenure fuel poor households. This programme will replace boilers, provide insulation and wholly replace energy systems providing an average annual saving of £750 a year. The latter is called the Home Upgrade Grant scheme (or HUGs, if you want a brilliant acronym and an even better metaphor for how a newly warm home can feel to a family that has endured the cold). These schemes are immensely important.

For the poorest in the least efficient homes, a warm HUG can’t come soon enough as progress towards current fuel poverty targets is flat-lining. Only 10% of all households meet the 2030 requirement and approximately 200,000 of the poorest households need to spend £2000-£2800 keeping warm and well.

Addressing energy efficiency is the longest-lasting way of helping to end fuel poverty and permanently reducing energy costs for households. Reducing demand enables us to decarbonise the remaining energy supply faster. But these improvements don’t happen overnight. They don’t even just happen through an act of political will or by merely setting a target. They need a good delivery system and local support for the people they are intended to help.

Alongside urgent and welcome investment in energy efficiency, we are calling for an extension and expansion of the Warm Home Discount (WHD, for a rather less brilliant acronym).

For nine years, WHD has provided the poorest pensioners with an automatic reduction off their energy bills each winter. The current scheme has however yet to be extended post April 2021, despite it providing a lifeline for millions of the poorest consumers. As well as preserving the value of current rebates to low income pensioners, current legislative powers (which were introduced in the Digital Economy Act three years ago) also allow the Government and suppliers to provide this support automatically to working age households too but the powers have never been used.

But, despite being eligible, and paying the cost of the policy through their energy bills, up to 2 million households miss out on the £140 energy rebate. People apply, are eligible but get turned away. Smaller suppliers do not need to participate in the scheme and so eligible customers that do what they are exhorted to do, and switch suppliers for a cheaper deal, can lose a hugely valuable rebate. Unfair, inefficient and perverse.

Our joint campaign with Fair By Design to protect and expand the Warm Home Discount has already gained significant coverage and support on social media, and in our full Budget submission we highlight how these issues can be addressed in an efficient and cost neutral way. As with HUGs, we also provide a summary of the likely effectiveness and value for money of our proposals, the macroeconomic implications, distributional impacts and administrative and compliance costs etc.

Government has announced that it will phase out the sale of coal and wet wood for household heating. This is an important decision for improving air quality and decarbonising homes. But, it is not a surprise that it turn a blind eye to the inevitable fact that many low income households relying on these fuels could struggle to heat their homes. Households for whom switching to a bulk purchased, higher quality and higher priced product is either fanciful or punitive

Fuel poor households need support. This Budget is an opportunity to make protection of the most vulnerable, the first step on the journey toward a net zero economy and society. HUGs is an opportunity to start providing a safe transition to a low carbon future. By levelling up the quality and energy efficiency of our housing stock, by reaching net zero in a way that is fair to all and that gives millions of people a warm embrace in their homes.

HUGs and the social housing retrofit programmes will help to reduce domestic emissions, reduce stress and costs on the NHS, increase economic growth, create jobs and deliver a fair transition to net zero. Now is a crucial time for you to show your strong support for both of these key policies too and we urge you to do all you can to support us in the final days before the Budget.

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