EEH0115

Overview of National Energy Action (NEA)’s 2020 Comprehensive Spending Review (CSR) priorities for the Environmental Audit Committee (EAC) inquiry on energy efficiency

Introduction

On the 21st July, the Chancellor launched the 2020 Comprehensive Spending Review (CSR). The Review, which will be published in the autumn, will set out the UK Government’s spending plans for the parliament.

National Energy Action (NEA) works to ensure that everyone in the UK can afford to live in a warm, safe home[1]. NEA works collaboratively with many national and local organisations[2] who are at the forefront of the current Covid-19 crisis. We believe urgent action is needed to improve health outcomes and support the most vulnerable people who are at most risk of needless death and cold related morbidity. Within this short paper, NEA outlines its key priorities for the forthcoming CSR to create warmer and healthier homes, help stimulate the economy, reduce poor air quality and reduce carbon emissions.

Provide urgent clarity on the future expansion of Warm Home Discount (WHD)

According to NEA’s recent YouGov poll, one in three British households are concerned about the health impacts of living in a cold home this winter[3] and further research conducted by Citizens Advice estimates 6 million people have fallen into arrears during the pandemic. This includes 3 million people falling behind with their utilities[4].

The Warm Home Discount (WHD) scheme provides the poorest pensioners across Great Britain with an automatic reduction of £140 off their energy bills each winter as well as support to other vulnerable customers through further discretionary rebates and advice and support provided by range of third parties, including NEA. The current scheme is due to end post 2021 and there has been no formal confirmation of an extension, despite it providing a lifeline for millions of the poorest consumers across GB and being the principle funding vehicle for offering vulnerable customer assistance during the current crisis.

In addition to considering new mechanisms to accelerate the clearance of utility debt[5], urgent clarity is needed on the immediate extension of the WHD scheme from April 2021 and further improvements and a necessary expansion of the programme should also be implemented from April 2022-26. Whilst expansion may imply the increased cost of the scheme would be borne by energy consumers, NEA and our campaign partners Fair by Design have previously highlighted how this outcome could be achieved in a cost neutral way for energy consumers[6].  

Fully implement the new Home Upgrade Grant Scheme (HUGs) in fuel poor homes and the Social Housing Decarbonisation Fund (SHDF)

Millions of people face every winter in properties which are dangerous or unfit for colder seasons and one in ten households in England live in fuel poverty, meaning they live below the poverty line but also have much higher bills due to poor levels of energy efficiency[7]. During cold spells, poor housing can also lead to sharp rises in energy use.[8] A recent independent analysis has also suggested that, if a second lockdown was re-imposed during winter months, families in cold, leaky homes would face heating bills elevated on average to £124 per month, compared with £76 per month for those in well-insulated homes – a difference of £49 (£48.7) per month[9]. The same NEA YouGov research noted above has also showed strong public support for fixing Britain’s cold, leaky housing, with three in four people supporting the UK Government urgently investing to improve home energy efficiency and two thirds supporting the local jobs this could create.

On the 8th July, the UK Government started to respond to these crucial issues and confirmed they will invest £2 billion to improve home energy efficiency in England through a new voucher scheme - the Green Homes Grant (GHG). About half of the fund is aimed at supporting the poorest households, who will not have to contribute anything to the cost of energy efficiency measures. Whilst most of the budget for the new grant is directed at the new vouchers for home improvements, it is welcome that local councils are also at the heart of the UK Government’s implementation plan. In total £500m will go to local authorities over two years - £200m this financial year and £300m next financial year with the first tranche of funding for local authorities accessed through a competition.

This recent investment is hugely welcome and alongside our supporters, NEA has been assisting the policy design and delivery of the new GHG scheme. However, a more comprehensive, long-term strategy and corresponding programmes are ultimately going to be needed to meet the statutory requirements to help all fuel poor households in England[10]. In particular, the Conservative Manifesto contained welcome proposals for a new £2.5bn Home Upgrade Grant Scheme (HUGs) deliberately targeting fuel poor homes in the least efficient homes alongside a £3.8bn Social Housing Decarbonisation Fund. These commitments were reaffirmed in the Queen’s Speech on the 19th December 2019. The CSR provides a critical opportunity for ensuring the momentum of the new GHG is sustained and adequate investment is made throughout this parliament, continuing to address the UK’s building stock which remains notoriously inefficient and hard to heat. 

As well as reducing energy costs, the more targeted HUG and SHDF schemes will help maintain a vital lifeline for jobs in the energy efficiency industry once the furlough scheme ends[11], continue to help address regional variances in economic deprivation and provide a major stimulus to the economy[12] . These actions would also help to provide active referrals to many existing health and housing schemes[13], reduce poor air quality which also damages respiratory health and reduce carbon emissions to make a direct contribution to meeting the UK Government’s goal of becoming net zero.

Extend the Energy Company Obligation (ECO)

Another key priority on energy efficiency is to extend the Energy Company Obligation (ECO) from April 2022- March 2026 and maintain its key focus on low income and vulnerable households. Beyond sustaining current levels of investment and the key focus on vulnerable households, key improvements should also be made to the programme to improve its targeting and the accessibility of those its is there to support up until 2026[14].

Ensure the Shared Prosperity Fund (SPF) helps end cold homes across the UK

Across the UK, NEA estimates that over the last five winters the number of excess winter deaths due to a cold home is approximately 10,000 per year[15], this is often because households are unable to afford the energy needed to keep their homes warm. As a member of the European Union, the UK received structural funding worth about £2.1 billion per year[16] which has helped boost several aspects of economic development across the different nations of the UK, including vital support for domestic energy efficiency[17].

Given the UK has left the EU, this funding will cease and to replace it, the Government has pledged to set up a Shared Prosperity Fund to “reduce inequalities between communities”. Whilst there are several areas that will need to be prioritised when setting up the new Fund, NEA stresses that the SPF must help the nations across the UK end cold homes by improving energy efficiency levels. This UK wide assistance could be funded by the increasing revenue that will be generated by the new UK Emission Trading Scheme (UK ETS)[18].

Extend and strengthen the increase to Universal Credit for low income households

To date, the UK Government has adopted a progressive approach to addressing the direct financial impact of the crisis on household incomes[19]. It is critical that this approach is maintained and strengthened. In particular, NEA is calling on the UK Government to extend and strengthen the increase to Universal Credit for low income households and address other key gaps in provision to help address the direct financial impact of the crisis on the poorest households[20].

Sources and further information

MD