‘People Living in Water Poverty and Fuel Poverty’ – a year one
Project Development Manager, Jess Cook reflects on the first year of NEA’s three-year work programme, ‘People Living in Water Poverty and Fuel Poverty’.
It’s hard to believe I joined NEA just over a year ago – I’m not really sure where that time has gone. It’s been a whirlwind of activity with some significant steps forward for our ‘People Living in Water Poverty and Fuel Poverty’ work programme. From publishing our first discussion paper, to being featured in the New Statesman and partaking in their water poverty roundtable, to engaging directly with the water companies and key stakeholders in the sector. We’ve been busy, and our work has been generating quite a bit of interest.
But now, in these rather uncertain times, we’re having to re-focus our plans. We don’t want to lose momentum, but the plans we made for further engagement and awareness events have unavoidably been put on hold. Instead, the coming months will see us focus on our developing our thinking further. Thinking around how water poverty is linked to the many other issues low-income and vulnerable households face, and how water itself plays a part in the climate crisis. Thinking about improvements that can be made to some of the financial support companies already offer. And thinking about how holistic action can make a more significant impact to some of these major discussion points. I want to explore a few of those points with you now.
Water poverty, or the affordability of water, is, put simply, another strand of poverty in the UK; another bill that some people struggle to afford, but one which is absolutely essential to life. The Joseph Rowntree Foundation (JRF) estimate that around 14 million people in the UK are in poverty – that’s over 1 in 5. And over half of the people in poverty, around 56%, are part of a working family. In-work poverty is on the rise, and so the ability of households to try and improve their own situations is proving, more and more, to be limited. But what does this mean for water?
A way to measure how many people live in water poverty has still not been formally agreed but is usually measured as a bill-to-income ratio; either 3% or 5% of household disposable income, after housing costs. NEA believe that the income side of this calculation should be aligned to the JRF ‘Minimum Income Standards’, and that the most appropriate measure to use is 3%,with 5% indicating that a household is living in severe water poverty. Using these measures, almost 22% of the population live in water poverty, with 10% being classed as being ’severe’.
So there’s a picture for you – over a fifth of us are in poverty in the UK, and around a tenth of us are in in-work poverty. Incomes are undoubtedly one of the major issues facing us when looking at eradication, but we don’t have a magic wand that can suddenly increase incomes. So what can we do?
Company initiatives such as flexible payment plans, payment holidays, debt write-offs and social tariffs can make a significant difference to those who benefit from them, addressing both short-term and some longer-term changes in customers’ financial situations. But the regionality of these schemes means that support is subject to a postcode lottery, with some households finding they are unable to access the support, or the same level of support, that they might receive if located in another company’s operating area. This is something that NEA are campaigning to change. But financial support isn’t the only option here.
Looking at the world of fuel poverty, greater investment in domestic energy efficiency is key. Low-incomes still play a part, but the warmer and better insulated a home is, and the more efficient their heating systems and appliances, the less the household spends on energy. Historically, improved energy efficiency has strengthened UK energy security, reduced energy supply infrastructure costs, and saved the typical dual fuel household over £500 per year. It is also well understood that energy efficiency is essential in every scenario where carbon targets are met, before we even consider ending fuel poverty.
Some of these energy efficiency measures could potentially save water too, and we estimate that around 70% of domestic energy consumption is related to the heating of water, for cooking, washing, cleaning and space heating. One of the things we’ll be campaigning for is greater alignment between the delivery of energy and water efficiency measures – a more holistic, collaborative approach, considering all the customers’ needs in one interaction. And, as we move to an electrified world, hot water, or more specifically the heating of water, will become more and more important to consider.
Taking the average figures for domestic energy consumption in England, 1,800kWh of household energy consumption is for hot water each year. To heat that using gas will cost a customer well over £100, and potentially in excess of £280 if it’s heated using electricity. These values can change depending on tariffs, the technology for heating the water, and household behaviour, but clearly water heating costs are significant, as are the costs of the best technologies for heating it. Heat Pumps are a highly efficient technology for generating heat, but are expensive, complicated and have other disadvantages. One such disadvantage is the need to raise the temperature of stored hot water periodically beyond that which can be efficiently achieved by the heat pump alone – this needs to be done for the prevention of legionella, and requires topping up, usually by an electric boiler.
It’s a well-known fact that the cost of electricity is significantly higher than gas. So while electrification of heat will help us towards our goal of net zero carbon, it could make heating more expensive, exacerbating affordability issues for those who already struggle to afford their current energy bills. We may have the potential of halving the number of kWh’s required to heat a home and hot water through electrification and the use of alternative heating technologies, but, based on typical gas and electricity prices, this could cost significantly more than current bill levels for each electrified household. We need to ensure we safeguard some of the most vulnerable households against this, and education on how they could reduce their personal water use, in particular their hot water use, is likely to be key.
So, with careful thought and some safeguarding, energy and water efficiency measures have the potential to save customers money on their bills and reduce carbon emissions. And, although they’re both pretty big wins on their own, it also reduces the overall investment per household, giving the opportunity for available funding to be maximised across all sectors. By addressing both water and energy together, you remove the need for two separate home visits and installation charges, and you improve the overall customer experience. Our work programme will be looking on how we can deliver efficiency improvements in a holistic manner, maximising funding resources and partners, and supporting customers in the round.
The end goals are clear, and I’m confident that they’ll be shared by the organisations we work with; to alleviate affordability issues, to mitigate the impacts of the climate emergency and to improve the lives of the customers we serve, both now and in the future. We must consider all three in the round if we are to succeed.