It is “unacceptable” that fuel poor households receive less than one-sixth of the budget allocated to energy efficiency and support with fuel bills, the government’s statutory advisor on fuel poverty has said.
In its annual progress report, the Committee on Fuel Poverty also warned ministers against raiding energy efficiency budgets to pay for the decarbonisation of heating, which should instead be supported with additional dedicated funding.
The report, the last to be issued before the term of the current chair David Blakemore ends, said that the number of households living in fuel poverty has fallen from 4.35 million when it was established in 2016 to 3.18 million.
However, the report said it is “unacceptable” that out of a current total budget of over £2.55 billion per year allocated to improving energy efficiency and assisting householders to pay their fuel bills, only about £0.4 billion is received by fuel poor households.
The £2.55 billion of funding covers the Energy Companies Obligation, Winter Fuel Payment and the Warm Homes Discount schemes in the current financial year.
The committee noted that although this amount is set to rise to around £3 billion per year, only £0.6 billion of the total has been earmarked for the fuel poor. It said these funds and programmes should be targeted at those “most in need”.
It also chastised the government for missing its target to improve the energy efficiency of fuel poor households to Energy Performance Certificate (EPC) band E.
In his foreword to the report, Blakemore wrote it is “regrettable” that the milestone has been missed despite the availability of schemes and sufficient funding to achieve it if they had been “properly targeted”.
“Government failed to apply its own fuel poverty guiding principle to target available funds on assisting those in the deepest levels of fuel poverty to improve the energy efficiency levels of their homes and assist them to pay their fuel bills,” the report said.
It warned that there is a “high risk” that the 2025 milestone to upgrade all fuel poor homes to EPC band D will also be missed.
The committee urged the Treasury to be “creative” in using carbon related taxes and revenues to address the impact of net zero policies on the most vulnerable households.
Switching from gas heating to an electric heat pump will cost an additional £160 a year based on current energy prices, the report estimated.
And it expressed concern that if government programmes for energy efficiency promote the installation of heat pumps, some of those on the lowest incomes will be early users of the devices.
For example, energy efficiency programmes such as ECO4 no longer support the routine installation of gas boilers for heating but do fund the installation of heat pumps in low-income homes.
The report said the shifting of fixed costs from electricity to gas without mitigation will “adversely impact” the fuel poor who have higher than average heating needs and 82% of whom heat with gas.
“It is essential that in the transition to a low carbon future those most vulnerable or in fuel poverty are not adversely impacted either in terms of bills or access to new technology,” it added.
The committee called on Ofgem, BEIS and all other government departments working on net zero transition programmes to publish an impact assessment on those in fuel poverty and ensure that they do not suffer.
It also protested that using budgets originally targeted at energy efficiency, including the £2.5 billion earmarked for Home Upgrade Grants in the 2019 Queen’s Speech, for heat decarbonisation will undermine efforts to achieve future fuel poverty reduction targets.
“Although these programmes were originally described as improving energy efficiency, they are now being designed to also include decarbonisation of heating. Whilst we understand government’s commitment to decarbonise heating, it is important to recognise that decarbonisation is not the same as fuel efficiency as it does not necessarily lead to reduced fuel bills.”
Commenting on the committee’s findings, former energy and climate change secretary Ed Davey said it showed the Conservatives are leaving millions in fuel poverty at a time when energy bills are rocketing.
The Liberal Democrat leader said: “As a result of this government’s abysmal failures, people could find themselves unable to heat their homes this winter. With empty shelves in the supermarket and soaring energy bills, the Conservatives are leading us into a winter of discontent.
“The government needs to step up now and help those struggling to pay their bills. Ministers must expand the Warm Homes Discount now and roll out an emergency programme of home insulation right across the country.”