FUEL POVERTY BILL WOULD HALVE ENERGY USAGE NEEDED TO HEAT HOMES - ÖPIK

10.36.35am GMT Fri 20th Mar 2009

Lembit Öpik, Liberal Democrat MP for Montgomeryshire, will this Friday (20th March) support the Fuel Poverty Bill, which has been put forward by his colleague David Heath MP.

The Bill has the backing of a wide range of organisations concerned with the elderly, poverty and the environment, including Age Concern, the Association for the Conservation of Energy, and the Child Poverty Action Group.

It proposes two measures: firstly, a major energy efficiency programme to 'fuel poverty proof' existing homes by bringing them up to the current energy efficiency levels enjoyed by modern homes; and secondly social tariffs to limit vulnerable households' exposure to high energy bills

Speaking ahead of the debate, Lembit said:

"This matter is so important I have changed my plans to specifically attend the debate in the House of Commons to improve its chances of becoming law. It's real action from the Liberal Democrats to help people struggling to heat their homes. But it needs the votes of MPs from all parties in Parliament to ensure it gets through.

"This winter, millions of people across Britain struggled to afford to heat their homes, including four out of five single pensioners.

"The Fuel Poverty Bill would deliver a massive home insulation programme which would halve the energy needed to heat the average home and it would end the scandal of those who use pre-pay meters - generally the least well-off - paying higher rates for their gas and electricity.

"Not many MPs are likely to actually oppose it, but it needs 100 supportive MPs in Parliament on that day to ensure it cannot be blocked. That is why I have cleared my diary to enable me to be in Parliament on March 20th to vote for the bill and help ensure it passes its first hurdle.

Ends/diwedd

Notes to editor:

A household is fuel poor if it cannot afford to keep adequately warm at a

reasonable cost. Fuel poverty statistics for Wales are reported against two definitions. These are the 'Full Income' definition in which a household is said to be in fuel poverty if, in order to maintain a satisfactory heating regime it would be required to spend more than 10% of its income (including Housing Benefit or Income Support for Mortgage Interest) on all household fuel use.

FUEL POVERTY BILL

Background briefing

The Government now accepts that it is not going to hit its target of ending fuel poverty among vulnerable households by 2010. The Fuel Poverty Bill will enhance the use of energy efficiency measures to tackle fuel poverty.

The Fuel Poverty Bill:

• Puts energy efficiency centre stage in the battle against fuel poverty

• Stipulates that homes must be brought up to a measurable energy efficiency level so they are 'fuel poverty proofed' and household energy bills can be reduced by up to 70 per cent

• Mandates that social tariffs are provided until homes are 'fuel poverty proofed'.

The Bill's energy efficiency measures will allow the Government to meet the statutory target to eliminate fuel poverty by 2016. It will also help prevent nearly two million (1.8m) households being driven into fuel poverty from programmes designed to meet the Government's renewable electricity and heat targets - the stark prediction of the Committee on Climate Change.

The Government already recognises the need for a more ambitious programme to make homes more energy efficient. In its draft Heat and Energy Saving Strategy (HESS) it accepts the need for "more substantial changes to our homes" than insulating lofts and cavity walls - such as small scale energy generation and solid wall insulation. It refers to the need to "start building capacity to do this more challenging work now" and provide all homes with a 'whole house' package of energy saving measures.

The Fuel Poverty Bill shares the same vision but with an initial and essential focus on the fuel poor. The Government's plans to tackle fuel poverty have been knocked off course by rising energy prices and the Bill will put the Government back on course to end fuel poverty by 2016.

Setting the standard

The Fuel Poverty Bill proposes that substantial improvements are carried out to homes so that their energy efficiency standards are the same as those enjoyed by modern homes - or as close as possible. It believes that the best way of achieving this is to apply measurable standards. It sets minimum energy performance certificate (EPC) targets for improving homes which would bring about a 52%, on average, reduction in fuel bills with reductions of up to 70% in many cases. It will reduce the dependence of low income households on high and volatile fuel prices. It would result in a considerable increase in comfort and health for households living in properties improved. The Bill refers to the proposed programme as 'fuel poverty proofing' properties.

The Bill requires the Secretary of State to produce a strategy to fuel poverty proof homes. That strategy would require substantial investment in 'hard to treat' homes (those off the gas network and/or built with solid walls) in order that households can enjoy similar standards of living to those living in homes that only require less expensive, staple measures. The strategy is likely to require the extensive use of area-based approaches to delivering measures, involving systematic, street by street methods to ensure vulnerable households are reached (a central theme of the Government's pilot Community Energy Support Programme) .

Social tariffs

The Bill also mandates social tariffs as a means of providing immediate help to households facing high fuel bills. It requires the Secretary of State to set minimum legal standards for social tariffs such that all fuel suppliers are obliged to offer tariffs at a rate lower than any existing market tariff to certain prescribed consumers. The Secretary of State would be responsible for determining eligibility for social tariffs. Suppliers would provide social tariffs to eligible consumers until their homes have been 'fuel poverty proofed' and they no longer live in fuel poverty.

Why the Bill is needed

The 2001 Fuel Poverty Strategy referred to "continuing action to maintain the downward pressure on fuel bills" as a key component of the Strategy. Since 2003, electricity prices have risen by 109% and gas prices by 76%. Despite recent, limited price cuts, the era of cheap energy prices has ended. Furthermore, the Government's targets to reduce carbon and increase renewable heat and electricity generation will lead to further upward pressures on fuel bills and hence fuel poverty.

Despite the emphasis of the original fuel poverty legislation (the 2000 Warm Homes and Conservation Act) the contribution of energy efficiency to reducing fuel poverty is relatively modest. The Government's 6th annual fuel poverty progress report looks at the effect of the three main influences on fuel poverty levels between 1996 and 2006, namely income levels, energy efficiency standards and fuel prices. It estimates the impact of each of these factors as follows:

• If only income changes had taken place (i.e. energy efficiency and fuel prices remained constant), fuel poverty would have declined by 26%.

• If energy efficiency improvements were added to this, fuel poverty would have declined by a further 1.4%.

• If fuel price changes were added, fuel poverty would have increased by 11.5%.

The minor contribution of energy efficiency, to date, towards reducing fuel poverty is evident. The Bill would prescribe a much more extensive and 'deeper' energy efficiency programme and make this a central element of a strategy to end fuel poverty.

According to research commissioned by Consumer Focus proposals would:

• Remove the vast majority - 83% of households from fuel poverty, i.e. those living in properties that can be improved to EPC B or C (and for some, those improved to EPC D). It would reduce, on average, their fuel bills by 52% and their carbon emissions by 59%. For many fuel poor households, the fuel bill savings would be up to 70%. The standard would also protect most households from falling back into fuel poverty as a result of possible future fuel price rises

• A further mix of policy measures would be required to remove the remaining 17% of households from fuel poverty. These could consist of installation of more extensive measures than those modelled by the research, installation of community-wide technologies, the ongoing provision of social tariffs and provision of benefit uplifts.

The programme would undeniably need major investment. But it is investment that will create jobs, provide a major boost to the economy and help Britain take advantage of the economic opportunities presented by the shift to a low carbon world. It will also reduce NHS costs considerably due to the reduction of cold and damp related illnesses.

• Using Government costs for external wall insulation (EWI), the average cost of the measures envisaged in the bill is £6,800 per property if all properties are improved or £8,800 if the programme stops with properties occupied by the fuel poor or those threatened by fuel poverty

• The proposed programme would provide a major economic boost and add £6.6 billion Gross Value Added (GVA) to the economy in total, or £943 million pa over the seven year period to 2016. This would sustain 35,658 jobs per year, compared to the current 4,353 jobs pa sustained by the Warm Front and priority group element of the Carbon Emission Reduction Target (CERT) programme, i.e. an eight fold increase

• The programme would also lead to considerable indirect economic benefits, such as those arising from increased disposable income due to reduced fuel expenditure, estimated at £1.6bn per year for fuel poor households (2006 fuel prices). This could have particular benefits for the economies of deprived areas, since low income households spend a much higher proportion of their income in the local community than higher income households.

For more information please contact Jenny Holland at jenny@ukace.org or on 07875 629781 or Nancy Platts at nancy.platts@consumerfocus.org.uk or on 0207 799 7989.