Scattergun approach to fuel poverty prompts calls for targeted action towards those most in need

(Title Image: National Assembly of Wales, Crown Copyright)

Environment Committee
Fuel Poverty in Wales (pdf)
Published: 24th April 2020

“Fuel poverty comes at a cost: to educational attainment, to the economy, and to health and social care services. With approximately 10% of excess winter deaths attributed directly to fuel poverty, the personal cost can be devastating.

“With a new fuel poverty strategy for Wales being developed, we are calling on the Welsh Government to renew its commitment and reconsider its approach, to eradicating fuel poverty.”
– Committee Chair, Mike Hedges AM (Lab, Swansea East)

1. The Welsh Government’s “ambitious” targets to eliminate fuel poverty by 2018 have been missed

Fuel poverty, by the present definition, is when a household has to spend more than 10% of their income on energy.

The Welsh Government set a target to eliminate fuel poverty in Wales by 2018. Unsurprisingly, this target has been missed, with 12% of all households (155,000) still living in fuel poverty in 2018; 151,000 of these live either in social housing or are otherwise deemed to be vulnerable (a household with at least one person aged over-60, under-16 and/or a disabled person). There’s also marginally more fuel poverty in rural areas (14% of households) compared to urban areas (10%) in Wales.

Witnesses told the Committee the target was “overly ambitious” given the Welsh Government’s limited powers over energy pricing and welfare – both of which were blamed for their failure to hit said targets.

Despite this headline failure, fuel poverty was said to have halved over the last decade – though the Bevan Foundation claimed the Welsh Government didn’t target enough resources at households living in poverty, instead targeting all “hard to heat” homes. Such homes may be more expensive to run but aren’t necessarily home to households in poverty; the sharpest falls in fuel poverty were amongst higher-income homes.

2. Any new fuel poverty targets have to be tied to decarbonisation

Another Welsh Government target is to cut residential carbon emissions by 80% by 2050. The cheapest way to power a home at present is gas, which the Wales Audit Office said presents challenges on how to cut carbon emissions whilst also cutting energy spending.
17% of rural homes are off mains gas and rely on things like LPG, oil or electric heating – which are more expensive.

The Welsh Government intends to retrofit all social housing and other households living in fuel poverty to “Band A” EPC Rating – the highest energy efficiency rating – though witnesses said this was unrealistic.

There was also some criticism of the Warm Homes Programme – made up of two separate schemes. The first scheme is Arbed (see also: Arbed – Will it leave more than green slime behind?), which delivers energy efficiency measures to  neighbourhoods and the second is Nest, which focuses on individual households.

Citizens Advice said just under 94% of energy-efficient measures carried out by Nest were boiler replacements, when structural measures to homes may be required. Nest’s focus on those receiving means-tested benefits also meant some low-income households – single people earning low pay in private rented accommodation, or pensioners who earn slightly above the threshold for pension credit – miss out completely.

Meanwhile, Arbed has seen a massive under-spend. In 2018-19 it’s spent just £1.2million of a £9million budget.

3. People need more help to find the best energy deals

While some witnesses said households should be encouraged to take up smart meters, Warm Wales told the Committee that many households were overpaying simply because they didn’t understand the energy market or information provided by energy companies on prices (energy companies have to tell customers about their cheapest deals). This means many were stuck on things like pre-payment meters.

Due to digital exclusion, only 37% of disabled people use price comparison websites to find energy deals compared to 57% of the non-disabled. Additionally, £214million of pension credit goes unclaimed in Wales each year – which may otherwise help pay for energy – while the Bevan Foundation argued for the Winter Fuel Allowance to be devolved.

People who rent privately (20% of households) were also far more likely to be in fuel poverty than social tenants (9%) and owner-occupiers (11%). The Committee recommended a support scheme for private landlords to improve the energy efficiency of their properties as they may face enforcement action for properties which are EPC Band F or G under Minimum Energy Efficiency Standards as of 1st April 2020.

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