The New Fuel Poverty Strategy- 300,000 set to 'disappear' from figures with new definition
Last week saw the publication of the much awaited Fuel Poverty strategy, setting out the Government’s approach to tackling the impact of high energy costs on low income families. With the pandemic shifting our working, schooling and social lives into our homes, the issue of rising fuel bills has become even more acute for millions of households.
The strategy has however made some fundamental shifts in scope which seem to move the emphasis on to the house itself rather than the needs and realities of the people living in it. It risks creating a silo- approach to fixing fuel poverty with all the focus being on the insulation of the building, rather than long term sustainable solutions which improve building quality, change consumer behaviour, and open access to the flexible energy market of the future.
Our first concern comes with the shift in definition of who is in fact fuel poor. Up until now, a household was considered to be in fuel poverty if it had a low income combined with high fuel costs (LIHC). This recognizes the very real scenario of people having to choose to skip meals in order to heat their homes, or self-disconnecting from their energy supply in order to ensure income goes to cover the other basics. The new report introduces the definition of LILEE. That is Low Income Low Energy Efficiency. What this does is to tie the definition of fuel poverty to the EPC rating of the building you live in. Now, unless you live in a property with an EPC rating below C, you cannot be considered fuel poor, even though your income cannot keep up with your energy needs.
This redefining of the terms has removed 300,000 households from the numbers. The reasoning for this move is that if you are already living in a property with a rating of C or above, you cannot gain substantial benefit from home insulation measures.
This is problematic in two ways. First, our experience has shown that there are still cost savings to be found from improving the thermal performance of a C rated building, and many homes whilst rated at a C actually perform in real terms far below this level. Whilst we absolutely support the ‘worst first’ approach and would agree that basic improvements to the building infrastructure must be tackled, this approach creates a one-dimensional solution. Focusing on home insulation alone, ignores the fact that the energy market is changing.
Most analysts predict a steady increase in the cost per KW/hr through to 2030 at the very least. Focusing solely on energy consumption reduction through better insulation, still shuts a whole group of consumers out of the new, flexible energy market. The strategy goes one further and reiterates the commitment to supplier switching as the means to exercise consumer power in the market. This does not serve the lower income household well. Those with poor credit records or pre-pay meters do not have the ability to switch supplier and sign up to lower fixed deals. Seeking only to address the EPC of the home, will therefore create households where people are sitting in better performing homes, but with their energy costs still outstripping their income.
For long-term, sustainable improvement in fuel poverty, more households must be given the opportunity to live in better energy performing homes, combined with access to cheaper electricity. This means a solution or community solution which includes micro- generation, battery storage and access to flexible tariffs. The ‘whole house’ retrofit is a great start. But placing the tools for change into peoples’ hands is even better.
Integration in the way that energy is generated, stored and consumed is the key to a sustainable and affordable approach. It is disappointing to see a fuel poverty strategy that puts all the emphasis on EPC ratings.
At Neutral Home our methodology is to work with Housing Associations and other social landlords to unlock the terrific potential of the integrated approach.