EUA Policy Position
Rural fuel poverty – the hidden problem It’s not often you will see in a ranking of poverty by parliamentary constituency the worst offender being many peoples’ idea of a rural idyll, North Herefordshire, where the unemployment rate is way below-average at 2.8% (August 2012) and the best performer being in London’s East End, Poplar and Limehouse, where unemployment is an aboveaverage 10.1%. But that is the reality of the fuel poverty statistics compiled by DECC for 2010. North Herefordshire has 11,128 fuel poor households, 30 per cent of the constituency compared to Poplar and Limehouse with 3441 households, or just 7 per cent. Fuel poverty is not limited though to just rural areas, far from it, with 15 of the worst 25 outcomes being in the classic urban deprived constituencies. However, rural fuel poverty is an issue that provides extra challenges to policy makers. Professor John Hills “Getting the measure of fuel poverty” reminds policy makers “fuel poverty is not only a distinct, but also a serious national problem” with severe health and well-being consequences (contributing to 27,000 excess winter deaths each year but also to a much greater number of ill-health incidents and their demand upon the NHS, as well as poor outcomes for young people). Fuel poverty, Hills claims, rather than face elimination by 2016 will still impact upon an estimated 9 million people, with the fuel poverty gap increasing from £1.1 billion in 2009 to £1.7 billion by 2016. Broadly speaking, fuel poverty is a consequence of low incomes, energy consumption levels and energy unit costs. Rural areas face added disadvantages providing further challenges for policy makers that governments, of whatever complexion, will need to address. The Energy and Climate Change Select Committee heard evidence that rural fuel poverty does not align itself with social poverty, as it does in urban areas, and that the relative isolation of properties and geographical sparsity prevent identification of fuel poverty in rural areas. Examining the income component of fuel poverty, the Select Committee heard evidence that benefit take up in rural areas is lower than in urban areas; median earning levels for those in work is lower in rural areas and the age profile is skewed with a larger proportion of retired
Date: October 2012 EUA, Camden House, Warwick Road, Kenilworth, Warwickshire CV8 1TH 01926 513777 www.eua.org.uk
EUA Policy Position people on fixed incomes living in rural areas. These provide the backdrop for fuel poverty to prosper. The relative energy efficiency of dwellings is a major determination of consumption levels. A third of rural homes are pre 1930’s properties with solid wall construction, making them relatively inefficient (35 per cent of heat can be lost through uninsulated walls) and expensive to improve (Up to £13000 for a 3 bed roomed semi) compared to cavity wall (£600) and loft insulation (£350). Existing schemes to improve energy efficiency in the home, such as CERT and CESP, tend to be geared towards urban areas with easier identification of the problem and at the same time offering greater economies of scale and hence lower costs. This may still apply to new schemes such as ECO, the Renewable Heat Incentive and Green Deal. The choice of energy is a major factor too. Rural fuel poverty is a particular problem if households are not connected to mains gas they will face higher unit energy costs. Evidence submitted by National Energy Action (NEA) shows comparative cost for space and water heating, with natural gas £1259 pa being substantially lower than oil (£1649) and LPG (£2331). Electricity is the fuel of choice for 28 per cent of households in rural areas (annual space and water heating cost £1314). Evidence provided to the Select Committee suggested that electricity supplier switching rates are also lower in rural areas; as a consequence many rural households are on expensive tariffs and paying more than they should for their fuel. Arguably this is something that can be partly addressed by Ed Miliband’s policy of ensuring all over 75s are placed on the cheapest energy tariff available. In an era where public finances leave little room for manoeuvre, there are short-term quick wins available to tackle fuel poverty in rural (and urban) areas. Half a million households have a gas supply in their home, but do not have gas heating. Over a third of these are fuel poor. Installing high efficiency gas central heating would be transformational and help alleviate the problems highlighted by Professor Hills. A further 1.3 million homes are located in “gas postcodes” but do not have a gas supply. For many, with a relatively small outlay, it would be cost effective to connect to the gas network, and installing gas heating would make sizeable inroads in tackling fuel poverty. I’ve seen first-hand this work in the former coalmining areas of the East Midlands, carried out by Affordable Warmth Solutions, an arm of Date: October 2012 EUA, Camden House, Warwick Road, Kenilworth, Warwickshire CV8 1TH 01926 513777 www.eua.org.uk
EUA Policy Position National Grid. When a coal merchants widow is telling you how her life is so much better now her home is connected to mains gas then you know you are onto a winner! Another simple, and cost-neutral way to help address fuel poverty which can bring added benefits to off-grid consumers, as suggested by Consumer Focus, is to bring forward the payment of the Winter Fuel Allowance to the summer months. Potentially allowing for the purchase at lower summer prices of heating oil, and certainly allowing for central heating systems to be serviced (at a quieter time for installers) improving energy efficiency and reducing consumption and cost. Figures from OFTEC suggest a typical rural household could have saved £170 if heating oil was bought in June 2010 compared to January 2011. Nearly doubling the value of the Winter Fuel Allowance. With fuel poverty set to worsen in the UK; with the scrapping of schemes that are tried and tested (and incidentally work) such as Warm Front, the challenge of tackling rural fuel poverty remains a formidable one. Professor Hills maintains that energy efficiency measures, both supplier and exchequer funded, are the most cost-effective ways to address fuel poverty. I’ve said it before, and as the autumn approaches and the chilly nights are upon us I’ll say it again, tackling fuel poverty is a social imperative that our sector should be concerned about. It simply doesn’t sit right having the world’s seventh largest economy, but experiencing 27,000 excess winter deaths each year. It is also in our financial interest to do so as it will be our new, efficient products that can lead the way to improved energy efficiency levels. That is why campaigns to promote energy efficiency awareness are so important and should be supported.
Mike Foster Chief Executive Energy and Utilities Alliance.
Date: October 2012 EUA, Camden House, Warwick Road, Kenilworth, Warwickshire CV8 1TH 01926 513777 www.eua.org.uk