Written evidence submitted by The National Housing Federation (NHF) (WIN0011)

 

Introduction

The National Housing Federation (NHF) is the voice of housing associations in England. Housing associations are not-for-profit organisations providing 2.8 million homes for six million people in every council area of England.

 

Housing associations have been doing all they can to help mitigate the impact of energy price rises on social housing residents. This includes providing immediate support to residents throughout the winter in the form of hardship funds, as well as committing to energy efficiency works across their homes to bring down bills for residents in the longer term.

 

This response covers some of the questions set out in the Energy Security and Net Zero Select Committee call for evidence, Preparing for the winter, published 7 July 2023. Our response focuses on the support that was put in place to help households with rising energy costs throughout the winter, as well as what is needed to support households this coming winter and in the longer term. It is informed by discussions with our housing association members, as well as industry experts.

 

Questions

 

2.    What more could have been done to prevent price shocks being passed to consumer bills?

We welcomed the government support put in place to protect households from rising energy bills as a result of Russia’s illegal invasion of Ukraine. However, more could have been done to prevent price shocks being passed to consumer bills:

Protection for heat network customers

Approximately 400,000 households in England are not protected by Ofgem’s price cap and did not receive government support last winter via the Energy Price Guarantee and the Energy Bills Support Scheme because their energy is supplied through a heat network. While support was eventually confirmed for these households in the form of the Energy Bill Relief Scheme (EBSS) and the Energy Bills Support Scheme Alternative Fund (EBSS AF), this support was confirmed much later than the support for other domestic customers. In the case of the EBSS AF, heat network customers were not able to apply until 27 February 2023, meanwhile other households had been receiving the EBSS in instalments from October 2022. This meant that heat network customers were left without vital support for rising energy bill costs through most of the winter when it was needed most.

The short application window for the EBSS AF also prevented some heat network customers from accessing this support altogether. Within social housing, many residents who were entitled to this support were living in supported housing and may not have been aware of the fund or their entitlement to it, or would struggle to apply for it themselves. Our members were therefore sitting with each resident to support them through the application process. This meant going through hundreds, and in some cases thousands, of individual applications to ensure residents received the financial support they were entitled to and needed. Our members expressed that they had difficulty in ensuring all their eligible residents applied for the discount before the application window closed. Based on figures published by DESNZ, as of 29 June 2023, 207,890 applications had been made, with 140,970 of these having been paid, compared to the 900,000 households the scheme was intended to reach. We have called for the government to reopen the EBSS AF, alongside a clearly communicated campaign, to ensure heat network customers and other eligible customers have access to the support they desperately need. 

Social tariff for vulnerable customers

While all households were affected by energy bill rises last winter, people on the lowest incomes, including many social housing residents, were hit much harder. To prevent price shocks from being passed on to people on the lowest incomes, the government could introduce an energy social tariff. As evidenced by this CIH report, this would ensure that energy is affordable for low-income, vulnerable and fuel poor social housing residents. The introduction of a social tariff would provide a long-term solution and much needed support for those who need it most, protecting these households from future price shocks.

Focus on energy efficiency and a shift to renewables

In the longer term, the best way to prevent price shocks being passed on to consumers is to reduce our reliance on global energy markets. We can achieve this by focusing on improving the energy efficiency of all homes, which would reduce demand and bring down bills for consumers. Alongside measures to improve energy efficiency, we can also install clean heat technologies in our homes. Once the electricity grid is decarbonised, this would deliver decarbonisation of all our homes while also building a secure, home-grown energy market. This would mean that household energy costs are no longer susceptible to price shocks caused by the global energy market.

To facilitate the shift to clean heat technologies and improve the energy efficiency of our homes, government funding for retrofit works is essential. Housing associations are committed to decarbonising all their homes, to contribute to the country’s net zero goal but also to bring down bills for residents and make their homes warmer and more comfortable to live in. In the years to 2050, housing associations already plan to invest £70bn in the fabric, heating systems and components of their existing homes, but we estimate that decarbonising all housing association homes will require a minimum additional £36bn of investment on top of that already planned.

Housing associations cannot meet the challenge alone, we need to work closely with the government on all aspects of delivery, but particularly on financing this work. Government backed programmes like the Social Housing Decarbonisation Fund provide crucial funding to enable housing associations to deliver energy efficiency measures and decarbonised heating for their residents. Building on the SHDF, and enabling organisations to bid for larger, more ambitious retrofit projects will deliver benefits for residents and the environment. Housing associations need the long-term funding in place from the government to ramp up the scale and speed of their retrofit programmes, bringing down bills for residents and protecting them from future price shocks.

 

3.    How should energy companies respond if customers cannot pay their bills and what actions should they not have recourse to?

The energy crisis and cost of living increases are causing severe financial difficulties for many housing association residents. Housing associations are doing all they can to help mitigate the impact of energy price rises on residents, but there are some customers who still struggle to pay their energy bills. While we understand that energy companies need to recoup their costs, they should also treat customers who cannot pay fairly. Customers who cannot afford to pay their bills should not face disconnection, instead, energy companies should engage with these customers to find a payment plan they can afford.

Energy companies should not be able to force customers onto prepayment meters without their knowledge or permission. While many people decide to use prepayment meters because this method of payment suits them, it should always be the consumer’s choice. We welcomed the government’s announcement to end the prepayment meter premium, meaning these customers (who are typically on low incomes) are no longer forced to pay more for their energy than direct debit customers. However, moving customers onto prepayment meters when they cannot pay their bills should still be a last resort and should never happen without the customer’s knowledge and permission.

The priority services register is an important support for vulnerable customers whose health and wellbeing would be particularly impacted if they lost their energy connection. Energy companies should continue to promote their priority services register and encourage vulnerable households to sign up to it. If customers on the priority services register cannot pay their bills, energy companies should take additional steps to support them, and these customers should never be moved to prepayment meters.

As outlined in our response to question one, we would like to see the government introduce an energy social tariff to protect vulnerable energy consumers from volatile prices. This would help to minimise the number of customers who are unable to pay their energy bills by protecting those on the lowest incomes from high energy prices. A social tariff would also help to address fuel poverty and would address disparities between payment types.

August 2023