News Article

Our response to the Sustainable Warmth Strategy

Our home energy advisors have shared their insights as to how the new Sustainable Warmth strategy changes may affect those in fuel poverty.

On 11 February, the UK Government released its Sustainable Warmth Strategy for England. Severn Wye’s fuel poverty alleviation programmes in England – including Warm and Well – are built on the schemes and policies outlined in this strategy. It is the successor to the 2015 Fuel Poverty Strategy, born out of a 2019 consultation on the national fuel poverty strategy and features some significant changes to the way the government proposes to address fuel poverty in the country.

Our team of home energy advisors have read through the new strategy and shared their insights as to how these changes may affect those in our region who struggle to heat their homes affordably.

What you need to know

Here are some of the key highlights, if you don’t have the time to read through the whole strategy.

  1. The fuel poverty metric (the calculation to determine whether a household is considered fuel poor or not), has been updated. The 2015 method was to use a Low Income, High Cost (LIHC) calculation. The updated method takes into consideration your home’s energy efficiency rating, meaning that to be classified as fuel poor you must live in a home with an energy efficiency rating of Band C or below.
  2. Disability Living Allowance, Personal Independence Payment and Attendance Allowance benefits will no longer be considered as ‘residual income’ when calculating household circumstances.
  3. This strategy’s ‘Sustainability Principle’ moves away from using first-time fossil fuel central heating to address fuel poverty – stating clearly that these technologies can’t be considered a sustainable solution to tackling fuel poverty, alongside Net Zero and air quality goals.
  4. Grant schemes (such as the Green Homes Grant vouchers, Home Upgrade Grant, Local Authority Delivery scheme and an increased Energy Company Obligation programme) will favour a worst-first approach to support the improvement of England’s least efficient homes and may be used together to achieve as much as possible.
  5. The strategy proposes future schemes that will support rural (off-gas) properties to install low carbon heating, social housing providers to improve their properties and innovative finance options to help homeowners improve the energy efficiency of their properties.

What we like

There is some really good news in this new strategy. Good news for many of the most vulnerable in society, good news for those of us championing energy efficiency improvements and good news for efforts to decarbonise our energy system.

Protecting the most vulnerable

Opting to not include Disability Living Allowance, Personal Independence Payment and Attendance Allowance payments as dependable contributions to household income is great news for the clinically vulnerable. This group often find that the payments they rely on to maintain quality of life prevent them from accessing fuel poverty support and energy efficiency improvements. These benefits can artificially inflate income without considering the additional needs these payments address. Those with significant vulnerabilities will no longer be denied fuel poverty support due to the benefits they receive for these – meaning that we will be able to help more people in need.

It is worth noting though that benefits like these are already qualifying benefits of existing support schemes, such as the current Energy Company Obligation (ECO) scheme which helps to fund the installation of home energy efficiency improvements. It’s possible then that this will impact the number of households considered fuel poor, but it may not make such a big impact to the schemes that they are eligible for.

Ending reliance on fossil-fuels

Introducing a sustainability principle to England’s fuel poverty strategy is a strong statement of intent. We should expect all future strategies to factor in an ambition to ending fossil-fuel reliance on a national scale. We can all agree that this is a vital step in making progress towards our Net Zero commitments, and a move away from funding first-time fossil fuel installations means that fuel poverty strategy and carbon-neutral commitments are no longer in competition. But there is a reason that Severn Wye has for years been walking the line between promoting low carbon technologies and addressing fuel poverty with first-time central heating systems. We don’t have a viable, economic, easily-accessible universal solution yet. Gas central heating remains the most efficient way to heat the majority of homes affordably.

The Sustainable Warmth Strategy also invites research and evidence into the effect of decarbonisation on the fuel poor, an issue Government has commissioned Energy Systems Catapult to investigate, which is expected to deliver some insight following the project’s completion next month, and we will await its findings with eager anticipation. In the meantime, careful consideration will still need to be given to how we ensure people who suffer from fuel poverty are further penalised by a move away from fossil fuels – particularly the 500,000 fuel poor households living in rural areas (source).

Pick-n-mix energy efficiency grants

Mixing and matching energy efficiency grant schemes has always been one of the strongest contributions our home energy advice teams has been able to make to addressing fuel poverty. It’s good to see the Sustainable Warmth Strategy promote this approach, giving an example of a landlord that takes advantage of all available schemes to retrofit their properties to achieve the Minimum Energy Efficiency Standards (MEES) required to ensure their tenants live in a good home. But navigating a range of schemes with complex eligibility criteria, varying contribution requirements and a spectrum of possible technologies is no easy task. Severn Wye provides a specialist service to private landlords looking to navigate their MEES responsibilities, financial support options and improve properties as cost-effectively as possible.

In-keeping with the general trend of the strategy, the Warm Home Discount scheme is set to be reformed, mainly to support those fuel poor households with an EPC of C and below. One proposal is an automatic rebate system which would be based on data matching working-age households – effectively replacing the first-come, first-served system that may exclude many fuel poor households from the support they desperately need. However, part of the reform (yet to be consulted on) may also be to withhold payments to low income pensioners who don’t have high energy costs; albeit ‘consideration will need to be given to the impacts on low income pensioners, who may have come to rely on automatic rebates’ (source).

Understanding the effects of fuel poverty

The strategy demonstrates an appetite to better understand the effect of fuel poverty on health, education, employment and society at large – an area Severn Wye work alongside local care organisations and research partners as part of the Build to Low Carbon project to demonstrate and address locally. There is still a slight air of scepticism detectable in the strategy, largely owing to not having an agreed way to measure the link between poor health and cold homes. The strategy commits to developing a means to measure the link, and this could be a game-changer in future – for both healthcare services and those vulnerable to cold homes. Our experience on the ground suggests that a population living alongside Covid-19 are more likely to slip into fuel poverty and are at greater risk of serious illness.

Accessing fuel poverty support

A particularly exciting inclusion is the intent to explore how to use local partnerships to reach as many fuel poor households as possible. “Few people self-identify as living in fuel poverty,” the strategy begins. A focus on helping hard-to-reach households receive the support they are eligible for is something we continue to look for new ways to address. This month we launched our Energy Aware Communities programme, partnering in Gloucestershire with local inclusion networks to reach those who struggle to access support, understand the energy system, or have accessibility challenges to engaging. A year of living with Covid-19 has also led to many ‘newly’ fuel poor needing to seek support – often for the first time – due to loss of income, isolation and more time spent at home.

What we’ll need to watch closely

Strategies are, by definition, expressions of intent. Time is needed for the dust to settle, consultations to happen and future schemes to be developed to implement the strategy. But there are a few areas that we intend to watch closely, monitoring their impact on the lives of those in fuel poverty in England.

The fuel poverty metric

Clearly, the seismic shift in the Sustainable Warmth Strategy is the new fuel poverty metric. This is the method for calculating household circumstances in order to draw the line between those considered to be suffering from fuel poverty, and those not. The ‘Low Income, High Cost’ (LIHC) calculation used since the 2015 strategy has been replaced by a ‘Low Income, Low Energy Efficiency’ (LILEE) measurement that takes into consideration the energy efficiency rating of the home, as found on the property’s Energy Performance Certificate (EPC). Under the new formula, a household will be considered fuel poor if their income (after fuel costs) is below the poverty line and they live in a property with an EPC rating of D, E, F or G.

On the face of it, this is a useful way of linking fuel poverty directly to energy efficiency, rather than the fluctuations of energy tariffs, market forces and the English weather. But while this champions retrofit and encourages a better understanding of how property efficiency relates to fuel poverty (both points that we applaud), there is very little detail in the strategy on how to navigate the large gaps in EPC data. If a valid EPC is required to be considered fuel poor, this could lead to a significant proportion of fuel poor households missing out.

If you are a long-term tenant, long-term homeowner or in social housing there is a good chance you aren’t in a property with an EPC. This describes a great many fuel poor households. If you’re on a low income and struggle to manage household finances, it is very likely you aren’t frequently moving to a new house – with all the associated costs to doing so – the most frequent trigger-point for an EPC to be issued. The strategy is unclear as to how it will consider the millions of households without EPC data. Will we need a nationwide campaign of EPC testing? Who will conduct these EPCs? Who will foot the bill? Our Domestic Energy Assessors (DEAs) also point out that a straight EPC – while the best standard currently available – can be a crude measurement tool. At times, ratings are based on assumptions about a property, especially when generating certificates using standard industry software (RdSAP). Property ratings could be over or under-estimated depending on these assumptions, so relying heavily on their accuracy as an indicator of fuel poverty makes some of our advisors nervous.

Evidently, some modelling has been done. The new LILEE calculation will shrink the number of fuel poor households by 12% compared with the LIHC metric. 300,000 households in Band C properties have been taken out of fuel poverty overnight. Hallelujah!

The spirit of the metric change is to be more precise over treatable fuel poverty. Fuel poor households living in Band A-C properties probably won’t see huge benefits from further energy efficiency installations; but what if their energy debt is an early-warning indicator that they have multiple needs? What if a deeper understanding of their energy system, some greater confidence in using heating controls or having an advocate in their corner to identify when they are on the wrong tariff would help them overcome fuel poverty? One of our Energy Advisors recalls an occasion where a Band C property had an air source heat pump installed, but because the technology was unsuitable for the property the occupants found themselves in fuel poverty. By excluding those in fuel poverty whose homes are efficient, there is a risk that they will not be able to access support that could address their needs and they will continue to suffer.

Investment in energy efficiency

This strategy places investment in energy efficiency front-and-centre, as it should do. Retrofitting existing properties, prioritising insulation and using a treat-the-worst-first approach are included, with everybody asked to play their part in the ‘significant up-front investment’ required. That said, many of the figures included in the strategy seem puzzling. Some even seem token. £60m to help Registered Social Landlords to retrofit social housing stock won’t go far to addressing some of England’s least efficient properties, home to 15% of fuel poor households.

What’s more, current grant schemes included in the strategy as a sort of ‘golden goose’ for addressing fuel poverty are in desperate need of reform already. The Green Homes Grant, launched last September and extended until March next year has been lambasted in the press in recent weeks, and confidence in the ability of such schemes to deliver the solutions they claim is at rock bottom. The paperwork is famously too complicated even for contractors, energy efficiency enthusiasts and householders prepared to pay for improvements, so how can we seriously consider it a solution for the most vulnerable in our society?

The announcement of the Home Upgrade Grant, aimed at addressing the least efficient off-gas rural properties is planned to launch next March. Hopefully, lessons will be learnt in the running of the Green Homes Grant that will ensure the new scheme is more accessible and able to make a real difference to the many households in fuel poverty living in hard-to-treat homes.

What next?

Those of us who provide support to those in fuel poverty and work to bring an end to it do have much to celebrate here. The last few years have seen reduced energy efficiency installations, and the combination of schemes, standards and metrics included in this strategy places energy efficiency retrofit at the front line of attack. But it is the implementation stage that will demonstrate whether the strategy is likely to deliver the outcomes it suggests.

The Sustainable Warmth Strategy is full of ‘commitments’ – twenty of them in fact – but for the most part, they are not concrete. Phrases like “we will consider,” “we will explore” and “we will continue to be involved” don’t constitute binding promises, so good intent will need to be backed up by positive action. Only then will we see fuel poverty numbers falling; not by using a slightly different calculation, but by physically improving homes, offering financial support and daring to innovate so that reducing emissions and reducing fuel poverty can go hand-in-hand.

 

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