Fuel poverty targets doomed to failure
04/02/2008
The Government’s legally binding fuel poverty target for 2010 for England will not be met, according to the Government’s own Fuel Poverty Advisory Group.
The rise in energy prices has made the fuel poverty targets much more challenging. However, the Government’s policies and lack of action have now made it impossible to meet the target and this will result in a shortfall much greater than necessary.
The Government in its recently published Annual Fuel Poverty Report said: “Our estimate is that there may still be 1.2 million vulnerable households in fuel poverty in England by 2010.”
But the legislation requires the Government to ensure that, as far as reasonably practical, vulnerable households do not live in fuel poverty in England by 2010. It is FPAG’s judgement that the Government has not done everything which is reasonably practical.
Peter Lehmann, Chair of the Fuel Poverty Advisory Group commented: “Unfortunately the Government, in spite of its good record on fuel poverty for some years and its continuing interest in the issue, has not been willing to take the difficult decisions needed to make further progress in eradicating fuel poverty”
There are a number of key areas where urgent policy action is needed. These have previously been underlined in FPAG’s Annual Reports:
• In the Comprehensive Spending Review, the Government cut the spending on Warm Front, the main Government Fuel Poverty programme. Warm Front expenditure will be nearly 25% lower in 2008-11 than it was in 2007/8 - even though FPAG had expressed concern over a number of years in its Annual Reports about the potential shortfall in resources, and had advised that the 2007/8 Warm Front level needed at least to be maintained to meet the targets. The cuts are even more troublesome, as the Government is receiving nearly £400m more in VAT receipts
from gas and electricity customers than in 2003, (as a result of the price rises).
• Warm Front spending could easily be restored and increased if Government expenditure was better targeted e.g by discontinuing Winter Fuel Payments for higher rate taxpayers; or if, as Ofgem proposes, the windfall gains being made by some electricity generators as a result of the EU Emissions Trading Scheme were recovered.
• Customers using prepayment meters for gas and electricity pay about £140 pa more than those paying by direct debit or online, and those paying by cash/cheque pay about £70 more than those on direct debit. These are huge differentials, much higher than those of 3 years ago. Ofgem, the energy regulator, must take effective action to protect low income customers, which it has not so far been willing to do, and the Government should step in if necessary.
• The energy companies have raised their prices, especially electricity prices, by more than their cost increases (with variations between companies), and Ofgem has done far too little even to investigate this. Customers are now spending £8bn (60%) more for gas and electricity than in 2003 and, as proposed in FPAG’s Annual Report, Ofgem should carry out a thorough assessment of where this money has gone.
• The recently published Energy Bill does absolutely nothing for the fuel poor. It should be amended to include provisions to ensure better prices for low income customers, especially by tackling the huge price differentials between customers paying by different methods.
The measures which we are proposing are all practical and feasible, says the Fuel Poverty Advisory Group, and it is difficult to understand why the Government does not take more effective action to meet its own statutory targets.
Help the Aged has responded to the growing crisis by calling for urgent action and a U turn in policy. Mervyn Kohler, Special Adviser to Help the Aged, said: "The government is failing to really tackle the issue of fuel poverty head-on.
"The projected cuts to the Warm Front budget - the main way in which the government seeks to alleviate fuel poverty - have consigned even more vulnerable households to the misery of fuel poverty. The government must urgently reconsider its fuel poverty strategy to end this disgraceful injustice.
"Help the Aged is calling for a system of automatic payments for benefits, to ensure full take-up of the money available within the system - £4.5 million of which goes unclaimed.
"But cutting back on the flagship Warm Front programme is madness."