Fuel poverty: the endless battle to keep homes warm

Fuel-poverty-feature

Ambitious Scottish Government targets to end fuel poverty by 2016 have been relegated to the realm of fantasy as one in three families struggle to pay soaring energy bills.

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22nd November 2013 by TFN Staff 0 Comments

KARID Hasim has much to praise Scotland for. It’s been seven years since she left her native Sri Lanka and since then she’s managed to become a big part of her local community in Falkirk, so much so that when she turned 50 last year, over 100 locals held a party for her.

Her health however is not great. She suffers from osteoarthritis, a particularly debilitating condition that makes mobility increasingly difficult. As such she can’t work and spends most of her time in the house being care for by her husband, Nasir.

Being on benefits and reliant on Nasir means she struggles not just physically but financially. Last year was the worst she says. Being housebound means her biggest cost is gas and electricity. Last year it cost her around £108 a month which she could barely afford; from December this year her supplier says she’ll be paying £127 a month.

Energy price rises, soaring food bills and shrinking or static incomes have played havoc with already tight budgets, and as winter is setting in, it’s not getting any easier

Her basic income of £180 a week is mostly used up by care costs, leaving her with, on average, around £90 each week to pay for food, heating, electricity and incidentals.

She’s now worried she can’t afford the latest energy price rise and has started rationing her heating, turning it off for four hours every day despite her doctor saying she needs constant heat to manage her condition.

“I can pay the increased heating bills but I’d have to cut back elsewhere,” she says. “My husband enjoys going out on Thursday to band practice, and after, has a meal with friends. He’s offered to give it up to save money but I don’t want him to – it gets him out of the house and he enjoys it.”

The council has told Karid her biggest problem is sub-standard, energy inefficient housing. It’s a two bedroom, early 1970s’ build made from breeze blocks with no cavity wall insulation.

Plans are afoot to make her home more efficient but it won’t be happening anytime soon. The council plans to phase in new boilers and insulation over a five to eight year period and can’t give her a timeframe.

Karid is one of thousands of people – particularly older people, those with a disability or families on low incomes – who face a stark heat or eat dilemma. Energy price rises, soaring food bills and shrinking or static incomes have played havoc with already tight budgets, and as winter is setting in, it’s not getting any easier.

A household is defined as being in fuel poverty if it needs to spend more than 10% of its income on fuel to maintain a satisfactory heating regime, which means 21C for the main living area, and 18C for other occupied rooms.

The level of national fuel poverty in Scotland swung from a high of over 730,000 households in 1996 to a low of just over 250,000 in 2002 and has now soared to an estimated 900,000 households – nearly 40%.

According to Energy Action Scotland (EAS) nearly one in every three people are in fuel poverty in Scotland.

According to Energy Action Scotland (EAS) nearly one in every three people are in fuel poverty in Scotland.

While rising energy prices can largely be blamed for the recent increase, efforts to improve domestic energy efficiency and maximise household incomes
are crucial in mitigating the effects, something that isn’t happening fast enough.

Norman Kerr, chief executive of Energy Action Scotland, says it can take years to get energy efficiency programmes off the ground and even longer to start seeing tangible benefits. As a result, it could be decades before any notable impact is made into fuel poverty in Scotland.

“Domestic energy efficiency is absolutely key to addressing fuel poverty in Scotland,” he says. “Fuel costs have been rising alarmingly and while that is a major problem we need to ensure everyone has an energy efficient home that uses less energy.

“We’re saying focus on the infrastructure now, make the investment and create tighter legislation.”

“These actions take time to implement and results take many years to show, so it has to be done sooner rather than later. In the meantime bills will rise which won’t be mitigated by the energy efficiency savings we’re calling for.”

According to Kerr, it is only when the energy efficiency of Scotland’s housing stock has been improved, that campaigners will have the ammunition they need to fight against prices. “Then we can work on the energy companies and force them to be realistic – and open – about fuel prices,” said Kerr.

Privately rented homes are more than three-times more likely to have a poor home energy rating than owner-occupied housing, with 10% of private lets rated as poor compared with 3% of those lived in by the owners.

However, local authority housing had the highest proportion of households in fuel poverty in October last year, with one in three struggling to pay their energy bills.

Fuel poverty: the cold hard facts

Who does fuel poverty affect?

Fuel poverty is an everyday reality for many low income and vulnerable households but it’s not just families with meagre resources. Living in exceptional energy inefficient accommodation means some families earning above the average wage threshold can still spend over 10% of their income on energy, creating fuel poverty. More generally it affects older people, those with disabilities or long-term illnesses which keep them at home, or low income families with young children. The consequences are misery, discomfort, ill health and debt.

How many people are in fuel poverty in Scotland? 

Around 900,000 households – more than one in three – are estimated to be unable to afford adequate warmth in the home. In turn, it is now estimated that there are some 7 million fuel poor households in the UK caused by a combination of poor energy efficiency of the dwelling, low disposable household income and the high price of domestic fuel. The Scottish House Condition Survey showed that 7.8% of households were in extreme fuel poverty in October of last year, spending at least 20% of income on heating and energy.

Is it getting better?

Not yet. For every 5% increase in energy prices as many as 2% of households in Scotland are pushed into fuel poverty and prices continue to rise.

“Private rented accommodation is a real issue,” says Kerr. “It is only now that this sector is being regulated more thoroughly and accommodation is being brought in line. That will take time but now landlords have obligations to bring their homes up to spec.”

For every 5% increase in energy prices, an additional 2% of households in Scotland are pushed into fuel poverty, so the latest round of increases will have a significant impact in pushing more people further into financial hardship.

So, as people associate the problem as stemming from price rises, energy companies are being urged to do more to help the consumer under the Energy Company Obligation (ECO).

The obligation forced them to implement energy-saving measures to hit three targets: to help poor and vulnerable customers; to tackle insulation in homes that are hard to heat; and to work with communities in rural or poor areas.

However, while the measure was originally seen as a way to offset price rises from the big six, energy companies are now threatening to pass the cost of running the scheme on to the consumer unless the ECO is subsumed through general taxation. They also want the government to take charge of its administration.

“The ECO needs rethought and reworked.

“Energy companies should be financing these measures but they’ve become so big they are able to bully the government. They shouldn’t be allowed to increase prices arbitrarily.

“We need tighter regulation of the market.”

In Scotland the government has a statutory duty under the Housing Act to end fuel poverty by 2016, but is unlikely to reach that target because cash is being transferred away from fuel poverty programmes to other budget areas.

This year’s Scottish Government budget saw finance minster John Swinney divert an underspend of several millions from the fuel poverty budget despite the SNP setting targets to eradicate fuel poverty by 2016.

For campaigners, the move proved the government’s  lack of commitment for the issue.

“Tackling fuel poverty in Scotland has been a slow but steady process,” says Norman Kerr.

“We think progress could be accelerated, but it needs more commitment and more resources and certainly budgets should not be raided and used for other needs.

“It is hard to see how the 2016 target will be reached when the big six are still implementing price rises well above inflation while the average income remains static.”

“That’s why we need to implement the measures now, to enable us to reap the rewards as soon as possible.”

Energy Company Obligation (ECO)

UNDER the Energy Company Obligation (ECO) each of the large energy companies in the UK is obliged to install energy-saving measures to hit three targets: to help poor and vulnerable customers; to tackle insulation in homes that are hard to treat; and to work with communities in rural or poor areas.ECO is funded by energy companies through charges they include in their bills to consumers, with the rest – about £1.3bn – coming from the taxpayer. However as the obligation gets more expensive for the big six energy firms, they have called for it to be taken care of under general taxation.The scheme started last January and runs until 2015 by which time energy companies must hit defined targets. However the big six want the government to extend the deadline, because at current rates they believe they cannot meet the targets.

Figures from Ofgem show a distinct lack of progress has been achieved so far.

Ten months on, just 3% of the overall target of installing solid and cavity wall insulation, particularly for people on low incomes or with hard-to-insulate properties, had been reached; 16% of what they need to do to help rural areas and put in improved heating systems; and 25% of the target on measures that reduce the overall cost of home heating for low-income and vulnerable households, including new boilers.