Policy gaps are failing fuel poor

As the ongoing energy crisis leaves millions of people struggling to pay their bills, Utility Week speaks to outgoing Committee on Fuel Poverty chairman David Blakemore about his frustrations over the government’s failure to find replacements for the committee’s departing members and his concerns over the slow progress in getting the UK’s leaky homes up to standard.

David Blakemore has just received his first winter fuel payment but he’s clearly not entirely chuffed about the handout, which all UK households of pensionable age receive to help with their heating bills.

It’s not that the outgoing Committee on Fuel Poverty (CfP) chairman is sensitive about his age; it’s more a case that he doesn’t feel he deserves the assistance.

“It’s so unjust that I should get help when I don’t need it,” he says. “I’m very fortunate my fuel bill is not on my radar but there are 2.5 million fuel poor households who are not pensioners who don’t get that help.”

The winter fuel payments themselves should be more tightly focused on those most in need, including non-pensioners in fuel poverty, while around half of the budget should be devoted to energy conservation, the ex-oil executive argues.

Pointing out that only around one in ten pensioners are living in fuel poverty, he says: “It’s not a well targeted assistance.”

And such anomalies are likely to become more glaring as energy costs rocket up the agenda, Blakemore says: “A lot of people are on the cusp and will not be able to heat their homes next winter.” Charity National Energy Action has recently estimated that the number of fuel-poor households could nearly double from the pre-pandemic figure of 3.2 million to 6 million.

Delayed reaction

By the time he received this first winter fuel payment, Blakemore didn’t expect to still be in post at the CfP. All but one of the existing commissioners were due to have stepped down from their roles last November when their terms expired. However, more than two months later, the government has yet to name replacements.

Describing the process as “frustratingly slow”, he says it seems “strange” that the appointments to the relatively low-profile committee have to be vetted by Downing Street.

For the time being, Blakemore and two of his fellow committee members have agreed to carry on until replacements are in place. He says: “We don’t feel that we can let the thing drop.”

They have used this extra time to fire off letters to Ofgem and business and energy secretary Kwasi Kwarteng, which raise concerns about the looming hike in household fuel bills. The letter to Ofgem is a response to the regulator’s recently published consultation on spreading the impact on bills from failed retailers, which have been forced into the Supplier of Last Resort process.

The committee urges the regulator to find a way to protect fuel-poor households, which don’t receive benefits, from picking up the tab for the companies’ failures, says Blakemore. “These exceptional costs are due to regulatory failure so to penalise low-income households for regulatory failure is just wrong.”

The letter to Kwarteng, meanwhile, calls for a broadening of the Warm Home Discount scheme with additional funds supplied by the Treasury.

The priority for additional assistance should be those fuel-poor households that do not currently qualify for the discount because they do not receive benefits. Blakemore says: “Rather than just doubling protection to existing recipients, any additional protection should be prioritised at the 1.5 million households not on benefits.”

While the government continues to use benefits receipt as a “proxy” for fuel poverty, this doesn’t capture an estimated 45% who struggle to pay for heating, he says. “A lot more work needs to be done about data and statistics to really understand where these fuel poor and low-income households live. Once you know that you can start to address the issue of a just transition.”

Blakemore believes government and local authorities have enough data to identify these additional fuel-poor households, such as those who receive council tax rebates. Where data is missing, tools like artificial intelligence could be used to identify where fuel-poor households are likely to live, such as in areas of ­deprivation.

Despite the flaws he identifies with the scheme, Blakemore believes the Warm Home Discount is the best option for providing “immediate additional assistance” to customers.

The government can also relieve pressure on cash-strapped customers by postponing the planned imposition of the green gas levy on to bills, he says: “People say it’s only £6 [per annum] but the social and environmental levies add up.”

Targets at risk

More broadly, speaking in a personal capacity rather than on behalf of the committee, Blakemore says the current costs crisis has been fuelled by a long-term failure to ensure security in the energy market. “We’ve been bidding against the rest of the world for a couple of LNG [liquefied natural gas] cargoes, hence these spikes.”

And the CfP’s most recent annual report, published in October, also contained some stiff criticism of the government’s progress in tackling energy efficiency.

While pleased with overall progress achieved since the committee’s establishment in 2016, he is “very disappointed” the 2020 target to upgrade the energy efficiency of all fuel poor homes to Energy Performance Certificate (EPC) Band E has not been hit. And he worries the UK risks missing the 2025 target to meet Band D.

“If we get the longer-term commitments, we would make progress on 2025 to 30 but I don’t think we will hit the 2025 target,” he says.

The government has only committed funding for the next two years, while on the industry-backed schemes, the Warm Home Discount and Energy Company Obligation (ECO), which are due to run until 2026, he says: “It seems they are more willing to commit longer term on the back of customers than taxpayers.”

This insufficiently long-term funding visibility is a problem for those installing energy efficiency measures, Blakemore says. “From a fuel poverty perspective, the lack of long-term commitment is a negative: the supply chain would prefer more than two years certainty.

“The supply chain can see four years of ECO but there seems to be lack of willingness to commit to what were manifesto commitments long term.”

Other worries are that the sums announced for energy efficiency as part of the package, alongside November’s Heat and Buildings Strategy (HABS), add up to around £2 billion less than the sums pledged for warm homes in the Conservatives 2019 election manifesto, even when the cash for the abortive Green Homes Grant is taken into account.

“The positive is that it [energy efficiency] has got some money but the negative is that it’s less than the manifesto commitment.

“The commitments today are not in line with the funding commitments in the manifesto,” he says.

Another concern for the committee is that the focus of the government’s energy efficiency programme has shifted from tackling fuel poverty to helping to deliver the government’s goal to increase the roll out of heat pumps to 600,000 per annum by 2028.

“What were flagged as energy efficiency programmes are now flagged as heat decarbonisation, which seems to be getting off the ground on the back of what were energy efficiency programmes.”

Failing to address affordability

Overall, the HABS largely sidestepped the issue of fuel poverty, he says: “The HABS didn’t really address affordability. It talked about the need to rebalance electricity against gas bills but didn’t come up with how to protect the fuel poor.

“We have a big high-level strategy to decarbonise homes but haven’t thought through holistically who we are going to protect and how: some of those difficult decisions are going to have to be made.”

A similar criticism applies to the Treasury’s net zero review. Like the HABS that it was published alongside, the review recognises the need for fairness in the transition to renewable heat in homes but lacks detail on how it will be achieved, he says. According to Blakemore: “It raised several areas where the relative price of gas and electricity and the transitional costs would have to be addressed but there wasn’t any meat on the bones about how we are going to do this.

“The Treasury’s view is that, given the transition to renewable heat is largely a one-off cost, making changes to universal grants or to the tax and welfare system isn’t the most effective way of manage distributional impacts.”

He agrees with this approach, albeit noting that it is “inconsistent” with the continuation of the winter fuel payment.

On a more positive note, Blakemore says the committee strongly endorses the HABS proposal to ratchet up the minimum energy efficiency standard for social housing and improve all private rented properties to EPC Band C by 2030.

Improved energy efficiency standards will have a “really big impact” on tackling fuel poverty, overshadowing what could be achieved through schemes like the Warm Home Discount or ECO, he says. “If you talk about the impact of a single piece of legislation, minimum energy efficiency standards on the rented side by far will have the biggest impact,” he concludes.

The combination of the two measures could take 2 million homes out of fuel poverty, nearly two-thirds of the 3.2 million total.

But while it is right landlords should pay for these improvements, given that they should be treated as a cost of carrying out their business, he is concerned that they will simply pass the cost to their tenants by hiking rents. “If rents go up as a result, it may solve one issue but create another,” he says.

“There are a number of things that need looking at in the round rather than as individual pieces of the policy in isolation.”

Having wrestled deeply with these issues for the five years and counting, Blakemore wants to use his experience to contribute to such wider debates around poverty: if of course, the government ever gets round to actually replacing him.