Written evidence submitted by Centre for Sustainable Energy (WIN0054)
We’re a charity supporting people and organisations across the UK to tackle the climate emergency and end the suffering caused by cold homes. We do this by sharing our knowledge, practical experience and policy insights. For over 40 years, we’ve supported people to take effective action on energy in their homes. We help communities and local councils to understand energy issues, set priorities, and put plans into action. Our research and analysis focus on making the energy system greener, smarter and fairer. Through our advice line, home visits and one to one support, we support around 15,000 people a year to reduce their bills and make their homes more energy efficient.
We deliver fuel poverty services for two of the electricity network operators and six local authorities. Through these services we support thousands of people of low incomes who often have multiple vulnerabilities. They are unable to navigate the energy market without our support. Our support helps them stay warm by increasing their income via benefit applications, lowering their unserviceable debt by trust fund applications, establishing affordable debt management plans and wherever possible improving the energy performance of their homes. We help transform people’s lives and in many instances are the only agency who understands the energy market sufficiently to address their issues.
The Centre for Sustainable Energy (CSE) is a member of the End Fuel Poverty Coalition. We whole heartedly support their response to the select committee. For completeness we have included it below.
Summary and background
- In winter 2022/23 the Government provided significant financial support to help households meet the rising cost of energy bills.
- While this support for all households has (in the main) now ended, energy bills will still be unaffordable for millions of households - including some of the most vulnerable - throughout 2023/24.
- It is predicted that energy bills in winter 2023/24 will still be almost double what they were in 2020/21 and 60% higher than before the start of the war in Ukraine.
- The cost of inaction will be a surge in demand on the NHS and care system as the health impacts of living in cold, damp homes hits hard.
- We also need to tackle the growing energy debt mountain caused by the failed policies of the last few years.
- Immediate measures to prevent millions living in cold damp homes, must also be combined with long-term solutions, such as improved energy efficiency and reform of the energy market, to make energy affordable beyond this winter.
The problem: the hardest hit, the elderly, disabled and vulnerable still face abject fuel poverty
The Government may try to show the latest Ofgem price cap as proof that bills are falling. This is not the case in real terms.
While on the surface, it may appear that energy bills are declining year on year, the reality is the Government’s Energy Bills Support Scheme has ended. This kept the average bill 16% below the Energy Price Guarantee rate. Therefore, people will not feel any reduction in unit costs as the EBSS money has been taken away from them this winter.
Furthermore, analyst forecasts show that household energy bills will remain at dangerously high levels until at least July 2024:
- Gas unit costs have more than doubled since winter 2020/21 with standing charges also rising.
- Electricity unit costs have shot up by more than 50% since winter 2020/21 with standing charges doubling.
Of course, households are also battling record prices for all other essentials and are still cutting back on essentials. According to the University of Bristol, a third (35%) of people were not able to afford a healthy balanced diet at least once in the past month and one in five of those in serious financial difficulties had not eaten for a whole day at least three times during the last month.
The Bank of England predicts that households have already used their savings accounts to support them through the cost of living crisis, eroding their ability to continue to pay energy bills which remain at record levels. Energy debt is also at record levels, with 5.5m adults owing their energy firms significant funds, while energy firms made record profits and are set to bank £1.74bn in profit over the next 12 months.
Research for the Warm This Winter campaign found that over 9 million adults already lived in cold damp homes last winter and official figures showed that cases of hypothermia surged by 36% while excess winter deaths soared by 13% compared to the year before.
But 2022/23 was also a relatively mild winter, but records show that if average temperatures drop below 3.6 degrees for a prolonged period, we will see many more die. We cannot leave the safety of the most vulnerable to the chance of good weather.
All of these factors mean that winter 2023/24 could be worse than last winter.
While support has been promised to vulnerable households of up to £1,350 it does not go far enough as this is in the form of “cost of living payments” which will be swallowed up by the higher cost of essentials other than energy.
Among these households will be many who have pre-existing health conditions, are disabled, elderly or have young families. They often have higher energy requirements for health reasons and are the most susceptible to the health complications caused by living in a cold, damp home. In many cases these health complications will be life threatening.
Other groups, such as very low income single households, some rural areas and those living without mains gas or electricity only energy will also be hardest hit by fuel poverty this winter.
The Immediate Solutions
- Tackle the growing debt mountain
- Introduce the widely supported “Help to Repay” proposals from the Money Advice Trust to help reduce household consumer debt through a payment matching programme.
- Provide additional financial support to help with energy bills directly, targeted at the most vulnerable groups in society:
- Remove policy costs from energy bills and move funding for vital energy efficiency and fuel poverty prevention programmes to be covered by general government spending to reduce all bills by £165.
- Support local authorities by investing the underspend in the Energy Bills Support Scheme into Household Support Funds / Scottish Welfare Fund.
- Reform and re-run the Energy Bills Support Scheme (EBSS) Alternative Fund, designed to give a crucial £400 to households that receive their energy supply indirectly via a landlord, site owner, or other intermediary which failed in winter 2022/23.
- A new Extreme Weather Payment is needed that credits the energy account of all eligible households on every day that the Met Office declares the temperature will drop below -4 degrees Celsius on the following day. The payment should be available to all vulnerable households (see definition of vulnerability below in the Priority Services Register section) and the level should be set at £6.50 per day, but kept under review as energy prices rise and fall.
- Ensure that all households who received the Warm Homes Discount in winter 2021/22 can access a £150 rebate this winter, regardless of the new process introduced in winter 2022/23 which uses an algorithm to decide who benefits.
- Provide a new energy cost support scheme for households most in need of support, most affected by high energy prices and those that have stopped using gas for heating. This should be applied directly to energy accounts (for example via the reduction of unit costs for a specific group of customers, of tariff types or those on the priority services register) rather than issued via vouchers or payments to bank accounts. It is recommended that this payment is equivalent to £1,000 off people’s bills.
The cost of these measures to general taxation would be around £16.9bn.
- Household Support Fund = no cost as using underspend from 2022/23, estimated at between £70m-90m.
- EBSS Alternative Fund = no cost as using underspend from 2022/23, estimated at £300m
- Extreme Weather Payments = c.£2.5bn
- New EBSS for 2023/4 = c.£8bn
If the Government requires additional ideas to raise the funds for implementation for these proposals, there are a range of simple suggestions which could be adopted. For example, closing the energy firms windfall tax loophole, using the already allocated budget (but no no longer needed) to underwrite the Energy Price Guarantee, examining the additional profits generated by suppliers due to Ofgem rule changes around the Wholesale Cost Adjustment / Covid True Up allowances and examining the profits made during the energy bills crisis by energy trading firms and network distributors.
- There are a range measures, which do not have a direct impact on the public purse, which the Government can provide:
- Reform standing charges and move network costs to be a percentage of bills, with a cap in place to ensure high-need vulnerable groups are not unfairly disadvantaged by this change.
- Reform of the pre-payment meters regime (PPMs)
- A full ban on all forced transfers of households onto pre-payment meters, whether by court warrant or remotely via smart meters.
- A PPM amnesty for energy firms to return all PPM users forced onto these meters to normal meters at no cost.
- Increase the emergency credit allowances on PPMs.
- Move people off legacy PPMs more systematically (using data to identify PPM customers on the priority service register to move to faster smart meter rollout for those on pre-payment meters)
- Remove the premium paid by Economy 7 and standard credit customers and ensure energy firms have a legal obligation to provide the best value tariff to all consumers (even if this means, for example, that consumers without Electric Vehicles can access EV tariffs).
- End the electricity price premium, which results in electricity tariffs being linked to the gas price by overhauling the Electricity Market Pricing Arrangements as soon as is feasible and not being kicked into the long grass.
- Expand the Priority Service Register to include all vulnerable customers, i.e. those households that have a resident who:
- Is medically dependent on powered medical equipment in order to stay healthy at home (e.g. dialysis machines, oxygen concentrators, use artificial ventilators) or rely on energy to power equipment (e.g. charge wheelchairs, run fridges for medicines)
- Has a respiratory disease
- Has a cardiovascular disease
- Suffers from mental ill health
- Has Sickle Cell Disease
- Has issues with nutrition, or may be at risk from poor nutrition caused by not being able to use energy (e.g. if a young child is present in the household)
- Is young or a school age child
- Could otherwise be considered elderly or disabled
- Are in energy debt, could otherwise be considered financially vulnerable or at risk of “self disconnection”
- Launch a centralised public information campaign to ensure people are aware of, and signed up to the Priority Service Register.
- Guidance to local authorities on best practice in using the Household Support Fund (HSF) to deliver free boiler repairs (where ECO criteria are not met), providing warm packs and financial support on non-means-tested benefits (e.g. ESA).
- Work with charities and local authorities to increase the provision of energy advice (for example, single local point of contact for those struggling) and to develop guidance on how social prescribing could be used to help tackle fuel poverty.
- Reforming and simplifying application processes for energy firms’ support funds and ensuring energy advisers, friends and relatives are able to easily act on behalf of vulnerable customers.
- Working with landlords, the Government could also support tenants in fuel poverty:
- Introduce rules so that if a landlord is in breach of the Minimum Energy Efficiency Standards, the tenant can apply for a Rent Repayment Order to compensate for the additional energy bills they have incurred.
- Introduce a social rent cap, alongside ring-fenced funding to social landlords so that energy efficiency improvements are not sacrificed in the event of supply chain costs increasing.
- Introduce a private sector rent freeze (similar to that introduced by the Scottish Government) and an enhanced security of tenure so that when renters apply for energy efficiency upgrades, rents are secured and landlords unable to profit from use of public funds to improve properties.
- Urge, and support with additional funding, local authorities to ensure landlords comply with existing private rented sector regulations - highlighting that enforcing these regulations is cost-neutral in the long term.
We also need to see the Government commit to:
- Rapid reform of the energy market by following through on the commitment to work with consumer groups and industry to consider the best approach to consumer protection from April 2024, including options such as Energy For All and/or a new social tariff. Energy For All would offer a free allocation of energy to meet households’ basic needs, paid for in part by higher tariffs for excessive use of energy. A social tariff would be mandatory for suppliers to offer, set below the price cap, be additional to current protections, offered to a well defined set of low income and vulnerable households and have auto-enrolment.
- Protect people from future price shocks by tackling energy waste through a longer-term Great Homes Upgrade, unblocking the cheapest forms of renewable energy and reducing UK dependence on international oil and gas markets (see the other Warm This Winter briefings on energy efficiency and renewables).
Outside of the energy market, we support moves to provide additional cost of living support to help those who need it most:
- The Government should provide a further £150 uplift in disability benefits.
- The Government should make funding available to restore the Local Housing Allowance to a decent level so that people can use it to access the cheapest 30% of local homes and introduce a return to annual uprating linked to housing markets.
- The Government should ensure benefits are increased in line with inflation and should restore the £20 Universal Credit uplift (which was available during the pandemic) as well as ensuring it is also available to everyone on means-tested benefits.
- To further help those with pre-existing health conditions, the Government should also suspend all prescription charges in England until December 2024.
- The Government should also suspend any deductions to benefits to recover money owed for a variety of debts and advances and make sure all benefits claimants are given the chance to prevent deductions for debt - in line with the recent court case that ruled that the existing benefit deduction process is flawed.
- Introduce a nationwide programme for providing free meals to eligible children during school holidays and provide cost of education allowances to households to cover increased costs, such as bus passes for schoolchildren and school uniform costs.
- Scrap the two-child limit to benefit payments, which sees families who claim benefits miss out on money for the third or more child. This policy directly pushes families with children into poverty. It could be scrapped at a cost of £1.6billion and would immediately lift 250,000 children out of poverty.