Consultation on Fuel Poverty Strategy. NEA Cymru Response. 4 th January Source : Welsh Assembly Government. Jurisdiction : Wales

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1 4 th January 2010 Consultation on Fuel Poverty Strategy Source : Welsh Assembly Government Jurisdiction : Wales NEA Cymru Response National Energy Action Cymru (NEA Cymru) welcomes the opportunity to comment on the proposed new Fuel Poverty Strategy for Wales. NEA Cymru is part of National Energy Action (NEA) which operates in England, Wales and Northern Ireland. NEA is the UK s leading fuel poverty charity and has been actively involved in the campaign to eradicate fuel poverty in the UK for over 25 years. In Wales, NEA Cymru is a UK charity with the sole mission to eradicate fuel poverty. This paper sets out our response to the strategy and answers specific questions posed by the Welsh Assembly Government. We believe this strategy is an improvement on NEESP and there are a number of initiatives and developments that we welcome. But we remain concerned about some of the key elements of the proposals in the Strategy. We welcome the Strategy s commitment to ongoing monitoring and to reviewing progress in 2010 based on a thorough analysis of new evidence. We remain disappointed that this evidence will not be gathered and analysed until after the Strategy has been implemented. We are concerned that the strategy contains new proposals for new ways of doing things without any clear evidence to show these will help address previous problems or that these will be the most cost effective way of lifting people out of fuel poverty. We expect the Welsh Assembly Government to be fully committed to reviewing its strategic approach as soon as this information becomes available. We welcome specific initiatives, like the crisis fund and the expansion of area based approaches. But we remain concerned about the fundamental direction of the proposals. We are most concerned about the proposal to reduce by 80% the number of households receiving home improvements. We believe such a reduction is utterly unacceptable at a time when more people are in desperate need of help. We understand the reasoning behind the approach is to address fuel poverty in off the mains gas houses. However, our view is that if the Assembly Government wants to introduce new measures it must be prepared to pay for them. Anything else is just robbing Peter to pay Paul.

2 We also have concerns about the proposed central hub. This model has been adopted in Scotland and our analysis suggests that it may not be successful in Wales. We are concerned that the central hub will involve extra administration that does not justify the costs. Further, based on experience in Scotland, we are concerned that it may make it more difficult for people to access the scheme, rather than easier. The proposed strategy also fails to provide a clear pathway towards meeting the various fuel poverty targets. We accept that the 2010 target is not going to be met, and think that the strategy should be similarly honest and set out a timetable for when it will be. The ultimate target is to do everything reasonably practicable to eradicate fuel poverty by We therefore expect that the strategy should set out a clear path to 2018 which anybody can look at and conclude that it has a reasonable chance of succeeding. The strategy provides no such pathway. The proposed reduction in the number of households supported by measures makes it seem extremely unlikely that vulnerable households will be lifted out of fuel poverty by the target date. Q1: Do you agree with the definition of fuel poverty as outlined here? Please provide evidence to support your responses. Measurement of fuel poverty is not currently a contentious area across the UK. This is not because the definition itself is agreed and endorsed by all parties- rather because the debate on this issue is a distraction when 5 million households across the UK are in fuel poverty. The energy of both government and campaigners are better used in developing and advocating programmes to address the scale of the problem. Nevertheless, NEA would like to make a number of points about the definition of fuel poverty used by Government in target setting. The extent of fuel poverty referred to above is based on the Government s preferred definition of household income which includes Housing Benefit and Income Support for Mortgage Interest. Clearly this definition is flawed. As an illustration, a significant increase in household rent may lead to increased Housing Benefit which, in turn, will be interpreted as higher household income, despite the fact that the disposable income of the household has not increased by a single pence. This definition of household income, in which phantom resources are imputed to families and individuals has the effect of underestimating the actual numbers of households in fuel poverty. Therefore, the most rational definition of household income in terms of energy affordability would be based on disposable income- the level of resources remaining to a household after housing costs and consequently, a measure of what could be considered discretionary expenditure. Whilst this has always been a matter of concern to NEA as highlighted above there are more pressing issues, and the UK government has offered a degree of reassurance by asserting that: We will publish the numbers of fuel poor on both definitions (i.e. households income minus housing subsidy). And the nature of (fuel poverty) programmes means we will meet our target on both definitions (what the Government terms full and basic income). 1 We suggest the Welsh Assembly Government follows suit. Q2: Do you agree with the proposed overall approach? We agree with the key principles reflected in the overall approach set out in page 16 of the Strategy. Our concern is that the detailed proposals in the Strategy are not the best way of delivering the approach. We comment in more detail on each of the core elements in the rest of this response. 1 Michael Meacher MP, 2001.Minister for the Environment, in a speech to the Associate Parliamentary Warm Homes Group, February

3 We would add that we remain concerned that, despite the heading stating Focusing action in response to progress so far the actual proposals are not really based on a robust understanding of progress so far. In 2007 the Minister 2 announced that there would be a review of progress to date and an updated strategy based on that evidence. We welcomed this news as the existing data was from 2004 and the Strategy had not been reviewed since it was produced in However, no such review appears to have been carried out. To date we have only seen new proposals for new ways of doing things without any clear evidence that they are based on a full understanding of the nature of the problem they are designed to resolve. We welcome the Welsh Assembly Government s commitment to honouring its commitment to meeting its fuel poverty targets. But we note that there are still no clear milestones or pathways to meeting these targets. We expected the Welsh Assembly Government to provide an honest assessment of when and how the Welsh Assembly Government would meet its first target of eradicating fuel poverty among vulnerable groups. The First Minister has stated in plenary this target will not be met by 2010 as intended. It is of very little value to remain committed to meeting the target in 2010 at this stage, or to start planning milestones on how to meet a target for December 2010 by December Further, relying in the phrase as far as reasonably practicable is disingenuous and unhelpful. The strategy needs to be more honest in acknowledging that the 2010 target will not be met, and set out when WAG thinks it will be met and how it intends to get there. It also needs to provide an honest assessment as to when and how it will meet its 2012 and 2018 target. Q3: Have we identified all of the appropriate levers? We acknowledge that not all of the areas which impact on fuel poverty are currently within the jurisdiction of the Welsh Assembly Government. However, we believe the Welsh Assembly Government needs to be more proactive in seeking powers where it feels it would be beneficial. It has the ability to seek powers and competence and it needs to identify what it wants to, but cannot, do and what legislative options might be available. For example, based on our work in developing Affordable Warmth Action Plans in Wales NEA has argued that there is a need for the Welsh Assembly Government to place a statutory on local government to tackle fuel poverty. There also remain huge opportunities to work within devolved areas like health to promote energy efficiency and fuel poverty programmes and to develop smart indicators. We also think that there is scope for the strategy to be clearer on the more detailed levers it can use to encourage behavioural change to encourage people to maximise their income and take up energy efficiency improvements. Getting this kind of message across to people is quite complicated and requires the effective engagement of a range of local organisations. It is unclear how the Assembly Government will make best use of these local levers. Q4: Do you agree with the proposed approach to advice and support? Central Hub 2

4 We can see why the principle of a central hub is attractive, but remain unclear as to what the proposed central hub will do that is new or where it will add value for fuel-poor households in Wales. Figures from the Scottish Government 3 where the model was first introduced (and has had since to be improved because of problems with implementation) show that the main activity of the central hub involves energy efficiency advice; of around 26,000 people making enquiries about the programme some during the first six months around 19,000 received energy advice. In Wales, if people want energy efficiency advice they can already get it through the Energy Saving Trust (EST), direct from their energy supplier or through the supplier trade body the Energy Retail Association (ERA), at no additional cost to the Welsh Assembly Government. A new central hub would create a third or fourth source of such advice, and will fund activity that these organisations are already delivering in Wales. The EST is funded primarily through UK Government support and ERA activities are funded through consumer bills. The other key advice element of the hub is income maximisation and social tariffs. People can already get this advice from a range of sources, including CABx, local authorities, ERA and HEES. Whilst we welcome and support provision of this service we would query whether the benefits are sufficient to justify the costs of additional duplication in the form of a new advice hub. Data from Scotland suggest that the rate of success is actually quite low: around 1 in ten people provided with income advice actually increased their income, and around 1 in 14 given advice on social tariffs actually moved on to a social tariff. In total, over the first six months of the central hub model being introduced in Scotland, just 391 people increased their income as a result of the EAP and 427 moved on to a social tariff (7.5% of those advised on this issue). The reasons for such low take-up is not clear. Our suspicion is that the EAP is seen primarily as an energy efficiency helpline and therefore may not capture those fuel-poor households who perceive their problems as principally financial rather than energy related. This means any new advice line would need to be marketed as a fuel poverty advice line. However, even if it were marketed in this way, many vulnerable households would be unlikely to call the number as many do not identify themselves as fuel poor. More often, fuel poverty is identified by frontline workers who are in people s homes for other reasons and we believe the best way to help the most vulnerable is to support referral by workers such as these. One of the other proposed benefits is to improve links between the Welsh Assembly Government schemes and supplier-funded measures under CERT. However, it remains unclear how the central hub will do this and we would question whether a new level of bureaucracy is necessary to do this. Our understanding of the Scottish approach is that the EST filters callers on to the suppliers to pursue CERT measures. We would suggest that it would be more cost effective to encourage the EST, ERA, the HEES supplier and other advice providers to co-operate in promotion and take-up of CERT. The final key function of the hub will be gatekeeping : policing the eligibility for whatever scheme replaces HEES before referring onwards for further assessment. We would query whether there are any benefits from creating a new level of administration between the client and the provider. Evidence from work done on LEAN and Systems Thinking 4 approaches to Housing Benefit and Council Tax Benefit shows that complex processes that separate eligibility assessment from those doing the actual work creates waste and poorer service. In particular, it increases the likelihood of people being incorrectly assessed, asked the wrong questions, not being asked to provide all the required documents, and things getting lost as forms and data move around the system. 3 All figures referring to Scotland are taken from 4

5 This in turn causes delays, multiple phone calls to chase things up and increasingly frustrated clients. The end result is a service that spends more time dealing with failures than actually providing a good service to the clients. The most effective process is one that delivers value by providing what matters to the person calling in. Generally, what matters to people wanting to access HEES is a very quick answer to the questions am I eligible, what can I get and when can I get it? It is not clear how the central hub can help them get that answer more quickly. But it is possible to visualise how an additional layer of administration can make it slower and more complicated to get that information. In summary, we remain sceptical about the value of the proposed central hub. The evidence gathered from Scotland suggests its main activity will be energy efficiency advice, which is already funded in Wales. The figures also suggest that a good deal of that energy advice is provided to more affluent households who are not in fuel poverty. Its impact in terms of income maximisation and social tariffs is unlikely to be sufficient to justify any significant increased costs. It is unlikely to add anything new in terms of linking CERT to government-funded measures, and it is unclear where it will add value in terms of gatekeeping access. We understand the argument that the central hub may add value from bringing things together, rather than through the individual components. However, we do not think that this is true from the user s perspective. The experience of the Scottish approach suggests that the only definitive advice from the hub will be in relation to energy efficiency (which is already delivered by other sources in Wales): all other elements will require that the client be referred onwards for further assessment. So the person wanting advice on income matters would have been better going to, for example, the CAB in the first place. The person wanting to access CERT would have been better approaching their supplier, and the person seeking government measures could have accessed assistance through contacting the provider. Our view remains that the priority should be to get those bits of the system working together better, not introducing a new and potentially expensive layer of administration over them. Q5: Is there anything else that the Welsh Assembly Government should be doing to help make sure that organisations across Wales and the UK are working together effectively to tackle fuel poverty? The Welsh Assembly Government has acknowledged the need to work with partners to effectively take action on fuel poverty. However, we think that there is scope to develop a more consistent approach to working in partnership, based on the Results Based Accountability approach that is being used in other government policies 5. In particular, we think there is scope for clearer arrangements for all the key stakeholders to come together to agree a common outcome and for each party to agree how it will contribute towards that outcome and common measures of progress. We also think that there needs to be a greater recognition that different parts of the Welsh Assembly Government itself need to work together more effectively to contribute to eradicating fuel poverty. Fuel poverty cuts across many different Ministerial portfolios and departmental boundaries. We would like to see a Ministerial group dedicated to providing clear policy direction on fuel poverty and an internal WAG steering group dedicated to joining up action and strategies across WAG. We have specific comments about some key partners that the Assembly Government should be more working with strategically: 5 See Friedman, M (2006)Trying Hard is not Good Enough

6 The Welsh Assembly Members Cross-Party Group on Fuel Poverty 6. The remit of the Cross-Party Group includes: maintaining awareness in the Senedd of the problem of fuel poverty and the policies needed to eradicate it investigating the contribution needed from Government, local authorities, landlords, voluntary sector and the energy industry to enable people on low incomes to keep warm at a price they can afford monitoring the impact of the Government's Fuel Poverty Strategy and the main initiatives it has set in place to deliver the strategy identifying any changes needed to legislation or regulatory frameworks to ensure fuel poverty is eradicated in Wales by 2018 where any such gaps are identified, seeking to address these through the most appropriate and practicable parliamentary options. The Fuel Poverty Charter Coalition 7. The Coalition is led by NEA Cymru and Consumer Focus Wales. The Fuel Poverty Charter Coalition has received backing from 42 organisations and 21 UK and Wales politicians, and has a steering group of 13 cross representative organisations (Age Concern Cymru & Help the Aged in Wales, Care and Repair Cymru, Citizen s Advice Bureau, Children in Wales, Community Housing Cymru Disability Wales, Eco Centre, End Child Poverty Network, Macmillan Cancer and Oxfam Cymru and Shelter Cymru). The Coalition recently developed Wales first fuel poverty charter which has received widespread support across Wales and was welcomed by the Minister. The Fuel Poverty Coalition s mission is to drive forward the fuel poverty agenda in Wales and campaign for fuel poverty to be eradicated in Wales. Through: Raising awareness of fuel poverty in Wales, the extent of the problem and who this affects Gaining support for the coalition across the statutory, voluntary and community and private sector Developing a fuel poverty charter to provide a focus to our activity Seeking to influence the Welsh Assembly Government to develop a fuel poverty strategy which encompasses the principles of the coalition s charter and to implement this strategy across Wales Lobbying to achieve our policy calls both at WAG and UK Government level, as well as with other key agencies such as Ofgem and with individual energy providers Linking with the Cross Party Group on Fuel Poverty in the National Assembly. The Coalition plays a key in monitoring the progress of the Assembly Government in meeting its responsibilities to tackle fuel poverty in Wales. Local Government The only action proposed for local Government is to engage with a virtual advice line. However, some local authorities have their own community advice lines (e.g. Camarthenshire 8 ) and have direct contact with HEES. Asking them to interact with an extra advice line could cause delays in accessing support and confusion amongst local partners. The Strategy does not fully recognise the strategic role local government plays in this agenda. Local Government is the biggest service provider and employer in local

7 communities and can and does make a direct contribution to fuel poverty. The Minister 9 has called for local government to play a clearer role in tackling fuel poverty. We are disappointed that the strategy has failed to clearly define its role. Whilst we welcome guidance on fuel poverty to be included into Health Social Care and Wellbeing Plans we think that it needs to be seen as central to the responsibilities of all parts of local government, not just the parts responsible for HSCWB. So, for example it also needs to also be placed in the Children and Young People s Partnerships and that this needs to be clearly defined, resourced and monitored. To ensure that action on fuel poverty is embedded across local authorities activities, we call for a legal duty to be placed on local government to combat fuel poverty. At present, some local authorities in Wales are prioritising action on fuel poverty where others are not. We think the Welsh Assembly Government should establish a duty on local government to tackle fuel poverty, fully backed with resources and explore how it can be incorporated into the role of scrutiny committees and Local Service Boards. We also think that local authorities progress in tackling fuel poverty needs to be measured robustly and consistently. This is already the case in England. The National Performance Indicator NI Tackling fuel poverty, requires local authorities in England to report on progress in tackling fuel poverty through improved energy efficiency standards in dwellings occupied by households in receipt of means-tested benefits. Q6: Do you agree with the definition of vulnerable households set out in Annex 1? We would be grateful if respondents would provide evidence to support their response. As highlighted in our NEESP response we are concerned that there is not a thorough understanding of the nature of the problem. The data underpinning the fuel poverty statistics is seriously out of date. Since the data was gathered in 2004, fuel poverty has increased massively, to around 300,000 households in our estimation. But current figures are based on estimates and extrapolation. The Welsh Assembly Government does not have a clear understanding of the composition of these newly fuel-poor households or of any underlying trends. This evidence is important when defining who the most vulnerable are, or where action should be prioritised. High energy prices will have inevitably moved households from fuel poverty, spending more than 10% of income on energy, into severe fuel poverty, where they have to spend more than 20%. The current strategy does not provide any data on whether there has been a deepening as well as an expansion of fuel poverty. As a consequence, it offers nothing on whether the definition of vulnerable groups has expanded or on how the Assembly Government s approach should respond to such pressures. We are concerned that the Assembly Government is developing proposals to address a problem which is only partially understood on the basis of out-dated evidence and that such evidence simply will not become fully available until the Welsh Assembly Government undertakes a review on the composition of fuel poor households in Wales. In the meantime, we do know, as highlighted in our NEESP response that evidence gathered by Macmillan Cancer Support, Barnados and the New Policy Institute indicates there has been a widening of the level of support needed. Examples of vulnerable households in fuel poverty not covered by the current definition of vulnerable groups include: carers, families with children over 16, looked after children, cancer patients and the working fuel poor. The definition of vulnerable groups in the strategy is used specifically in terms of eligibility for a partial grant. As highlighted in our response to NEESP, partial grants are 9 pvs1hll15qj0yff13ydd6! ?cr=5&lang=en

8 of little use to fuel poor households who are unlikely to be able to access the additional funds needed to meet the remainder of costs of work needed. Therefore, these partial grants will only help the more affluent and will do little to tackle fuel poverty. With a limited budget and so few households likely to be helped, it seems counter-intuitive to plough money into households who are not in fuel poverty. Instead, we believe these vulnerable households would benefit far more from a crisis fund to offer help to those in desperate need who fall just outside the eligibility criteria for a whole house approach. Q7: Is our proposed approach to all-wales and area-based programmes clear? Do you think this combination of approaches is appropriate? NEA agrees with the approach of combining a demand led national scheme with area based approaches. However, we are very concerned at the proposals to reduce the number of households helped by home improvement measures by around 80% from current levels under HEES. Our detailed comments are set out below. All Wales approach Level of support Our review of budgets shows the Scottish model to be an expensive one. It is our view that if, the Assembly Government wants an expensive model, it must recognise that this will require additional funding and make the requisite additional investment. The Scottish EAP has an annual budget of 60 million. It has a guarantee to provide measures to a minimum of 10,000 households implying average expenditure of up to 6,000 per dwelling. Proposed expenditure on the Welsh programme is proportionately much lower. At 23 million, the current budget is equal to just over 18 per household in Wales. In Scotland the EAP budget equates to around 26 per household. We calculate that to deliver the Scottish model, the budget in Wales would need to increase to more than 32 million. We expect that under the Barnett formula Wales will consider ensuring the increases of Warm Front funding made by the Chancellor in the new pre budget statement 10 are secured and invested into the HEES scheme in Wales. We are particularly glad to see reference to a crisis support for heating. The need for an immediate response to broken down heating systems has been a practical concern for some time now. But there is no detail as to how this will operate in practice. We are assuming this will involve extra support as opposed to simply referring people to the Department of Work and Pensions discretionary Social Fund. Research undertaken by the Joseph Rowntree Foundation 11 indicates the fund only supports certain vulnerable groups, the rate of refusal is high and there is a relatively high rate of second time approval on appeal. On average a straight forward appeal takes 29 days before applicants receive a decision. This makes the review process too long for vulnerable groups who are in immediate need of help for warmth. It should also be noted that finance is not the only barrier to people making their homes more energy efficient. Anecdotally, a number of vulnerable people eligible for loft insulation have declined support because they aren t able to clear their lofts. Some have been left with heating systems they do not know how to use. Alternative technologies could take several days to install, and inevitably cause disruption which may prove difficult for the householder. Others may simply refuse them due to fear of the unknown and aversion to risk. These kinds of issues must be carefully considered in consultation with agencies who work directly with

9 vulnerable people and solutions must be sought to ensure the householder fully understands what is on offer and that we prevent the most vulnerable from any associated risks. Eligibility for the proposed all Wales Scheme to replace HEES We have some practical concerns about the proposals for the new scheme to replace HEES. These cover the eligibility criteria and the actual measures themselves. We are fully supportive of the principle of focusing on those most in need. We broadly support the changes to the qualifying benefits, although we would emphasise the need to ensure that other kinds of assistance are provided to those fuel-poor households that will no longer be eligible. Our support is qualified by the lack of detailed current evidence available on the characteristics of the households that are in greatest need. We would also like to add that according to the Department of Work and Pensions approximately 10 billion benefits go unclaimed every year 12. If the Welsh Assembly Government implements this approach more people will have to be made aware of their full entitlements through benefit take up campaigns. WAG in 2008 announced 3m of additional funding to help local authorities widen the focus of their take-up campaigns, targeting older people and families with children. NEA Cymru would like to see a joinedup approach to advising people on access to energy efficiency grants and measures, alongside advice on claiming social security benefits at a local level to help encourage take up. Although we initially welcomed the energy efficiency element of eligibility, having seen more detailed proposals, we are concerned as to whether this approach will prevent some people in need from accessing the grant. Where we have greater concerns is on the practicality of basing eligibility on the energy efficiency standards of the dwelling. Whilst this is very attractive in principle as it would enable the scheme to focus on the poorest housing stock we are concerned that it will prove complex and expensive in practice and may discourage take-up. We are also unconvinced of how robust a telephone assessment will be. Callers are not energy experts and there is a real risk that they will not be able to convey their circumstances accurately. As a result, there may be people who are eligible but don t get help because they have not given an accurate description over the telephone. It is hard to assess the scale of this risk. Figures from Scotland show that around a quarter of those referred on after an initial assessment are found not to be eligible, and most of these resulted from the fact that the dwelling was too energy efficient (SAP rating above 39). But, there is no available evidence on how many were incorrectly denied access to the scheme. In order to ensure that eligible households are not wrongly screened out, the service would need to have quite a broad contingency; properties initially assessed as above the maximum SAP would still need to be referred to be on the safe side. However, this would create additional work as those houses would need to be assessed by a qualified trained assessor, even though there is a strong possibility that they will not be eligible. This could create frustration among the public and contribute to disillusion with the scheme. Further, we question the cost effectiveness of the actual assessment processes. Doing a full energy assessment is not a cheap process. We question whether paying for thousands of assessments ultimately adds value for the fuel poor. We would much prefer to see the money spent on measures than assessing people s homes. We are also concerned that the new eligibility criteria and process will prove too complex and off-putting for fuel-poor households. Figures from Scotland show that there have been far fewer households than expected helped by government-funded measures. The 12

10 Scottish Government expected around 50,000 people to take up offers of support, and around 10,000 to take up Stage 4 measures. Over the first six months the total volume was on track with 25,000 people taking up offers of support. However, just 2,600 people were referred for Stage 4 and, of those, only 58% (1528) were eligible. Of these eligible households, only 443 had actually received practical measures. A further 923 were waiting while 122 had decided they did not want the measures installed and withdrew their application. These figures suggest that, over the year, fewer than 3,000 will be eligible and take up the measures, and even fewer will actually get the measures installed. Our colleagues in Scotland inform us that around 4,000 fuel poor households were turned down for measures because of the tight eligibility criteria. The Scottish Government has responded by amending the eligibility criteria to include houses with an E rating (maximum sap 54). Such a revision would probably be needed if this model were to be rolled-out in Wales. But, changing the maximum SAP rating does not deal with the problem of cost or the practical problems associated with assessments. Ultimately, there is little that can be done to increase the SAP rating of a property which already has a SAP above a certain level, without spending high amounts of money for little additional benefit. We would endorse that WAG only installs measures with a good cost-benefit ratio, which will automatically exclude those homes which are above a certain rating and would negate the requirement for proscriptive EPC based eligibility criteria for the scheme. Cost effectiveness of measures provided under the new scheme Finally, we would like to add some evidence on the types of measures that could be provided under the new scheme. As we outlined above, we are extremely concerned at the reduction in the number of households the scheme proposed to help ( ). We think that this primarily needs to be addressed through increased funding. But we also believe that WAG needs to carry out and publish a full cost-benefit analysis of the measures it intends to offer and develop an approach based on maximising impact within affordability. We have produced our own briefing (attached as appendix one) based on published figures and our own analysis of NEA projects. The first thing to note is that, although it is too early to state definitively, the Scottish approach does not point to a major change in the profile of measures. There, the bulk of measures agreed (some not yet installed) remain those traditionally offered through HEES or CERT; around 1,000 insulation measures (cavity wall or loft) and 419 gas central heating systems. Our colleagues inform us that EAP has now started to provide measures such as heat pumps and exterior cladding for homes that are off the mains gas network. Whilst we are fully supportive and welcome the all house approach our view is that insulation and installing energy efficient gas central heating are the most cost-effective measures in reducing fuel bills. Given that insulation is available through CERT, the primary focus of the limited resources should be on gas central heating. We recognise that there is a major issue with dwellings in rural areas that are not on the mains gas network. Our evaluation shows that the most cost-effective solution for those households is likely to be an air-source heat pump. However, this technology is currently expensive. We therefore think that, unless the Assembly Government is prepared to back its plans with the necessary additional funding, the number of such measures will be restricted to a significant degree. It is also worth pointing out that the way air-source heat pumps are considered for the purpose of an Energy Performance Certificate may result in an ostensibly poorer rating and that this may have a negative impact on the value of a property at the point of sale. Area Based Scheme

11 NEA is fully supportive of area based schemes and welcomes the combined approach to tackle fuel poverty proposed in the strategy. We were first to pioneer this approach through our subsidy company Warm Zones in England and Warm Wales has successfully delivered a similar approach in Wales. Nevertheless, the strategy announces nothing new on this issue. The 32m for the Heads of the Valleys low carbon zone and low carbon buildings are welcome, but are well established programmes, not a new approach to fuel poverty. These are also approaches focused on carbon reduction rather than fuel poverty. There is a complete lack of detail on how the proposed approach will be expanded and funded beyond the Heads of the Valleys, what kinds of measures will be provided and who will be eligible. We understand new plans are underway through Arbed (Strategic Energy Performance Investment Programme) which we welcome. However, it is essential at this stage to have much clearer idea of the extent to which these programmes will help eliminate fuel poverty. In particular, we would welcome a clear indication of the criteria for identifying which communities will be covered outside the strategic regeneration areas. Fuel poverty is a problem that is prevalent in rural areas that may not feature in indexes of the most deprived areas. CERT is not geared towards supporting these communities, and it is important that these new programmes are better geared towards helping fuel poor households living in rural areas. We are also concerned that in developing these programmes there needs to be a greater focus on fuel poverty and addressing all the causes of fuel poverty. We are concerned that the area based programmes are primarily focused on energy efficiency. Fuel Poverty exists in the context of high levels of income poverty and area based approaches also need to promote income maximisation, as has been done with Warm Zones and Warm Wales. The Department of Work and Pensions estimates that around 10 billion of benefit entitlements are not taken up each year; more people need to be reached though income maximisation campaigns to make sure they are aware of what they are entitled to. Q8: Do you think the proposals for encouraging landlords to improve the energy performance of their properties are appropriate? We do not think that these proposals go far enough and that offering advice to landlords is not a big enough incentive or penalty to change behaviour. We welcome the proposed guidance on the links between F and G rated properties and category 1 rated hazards under HHSRS but would go further in stating that all properties rated F or below should be deemed a Category 1 hazard and therefore it should be illegal to rent out any home with a rating of F or below. We support the Energy Efficiency Partnership for Homes 13 recommendations that government should ensure local authorities fulfil their legal duties on HHSRS and go beyond this to use HHSRS in a strategic way to tackle fuel poverty. We think clearer guidance is needed for local authorities on how to assess for Excess Cold; which measures it is appropriate to specify to remove an Excess Cold hazard; and the maximum timescale within which referrals or complaints should be acted on. We welcome the introduction of a referral system for landlords who refuse to have measures installed and proactive schemes to promote energy efficiency to landlords who are likely to be renting out energy inefficient homes. Although the strategy talks about advice for landlords, no mention is made of advice for tenants. It is crucial that people who privately rent their homes are made aware of their rights so that they know they can complain if a home is excessively cold. Otherwise, poorly heated homes with long- 13 Tackling fuel poverty using the Housing Health and Safety Rating System. Energy Efficiency Partnership for Homes/CIEH. April 2008.

12 term tenants will never be highlighted as in need of a HHSRS inspection. At the same time, WAG should work with local authorities to develop safeguards so that fear of eviction does not prevent tenants from complaining. WAG could also do more to incentivise landlords to ensure their properties are adequately warm by backing and promoting Landlord Accreditation Wales and making it a condition of membership that homes are affordable to heat. Similarly, promotion of the Landlord Energy Saving Allowance (LESA) could help motivate landlords to improve the energy efficiency of private rented housing. We feel it is a waste of scarce public resources to make grants such as HEES available to private sector tenants as this will increase the property s value to the landlord long after the eligible tenants have left. However, removal of government support to these tenants would only be fair with stronger penalties and better incentives for private sector landlords to meet a minimum warmth standard in their rental property at the landlord s own cost, Q9: Is there anything else you think the monitoring and evaluation plan should cover? Do you know of, or does your organisation hold, any data that can help us to monitor and evaluate our progress? We welcome the commitment made to ongoing monitoring and evaluation but feel this should have been undertaken as part of the review of the strategy. We seek reassurances that as soon as this becomes available the Welsh Assembly Government will be committed to developing a new approach. Also, we would advocate a more comprehensive approach to monitoring and evaluation of progress. The Assembly Government cannot eradicate fuel poverty on its own: it needs to work with a range of organisations. Therefore, the monitoring should be done collectively, with the Assembly Government and its key partners all monitoring and reporting their own contribution, using consistent measures of progress. We also think that the Assembly Government should benchmark its progress against other areas, within the UK and across Europe where possible. It should also introduce local performance measures to enable benchmarking between areas within Wales, so that we can identify which areas are doing best and which need to do more. NEA holds data on the number of fuel poor households based on our own analysis. We produce yearly Fuel Poverty Monitors looking at all parts of the UK and have key information which can support the monitoring and evaluation process. December 2009 NEA Cymru

13 Annex A Effective Deployment of Low Carbon Technologies in Wales to Help Alleviate Fuel Poverty 1. Introduction Historically, funding and measures for energy efficiency measures have primarily helped households in on-gas areas, with the provision of loft and cavity wall insulation and gas central heating. However, households in off gas areas have received limited assistance, as the measures necessary to improve their properties are often more complex and expensive. 14 The demographic and housing stock information for rural, off gas areas, demonstrates that these households are twice as likely to be in fuel poverty as those in urban areas. 15 In addition, the uninsulated walls and high carbon fuels mean their dwellings produce higher carbon emissions. For these reasons, it is suggested that a future HEES funding pot places some, though not exclusive, emphasis on rural areas. However, we also recognise that this would result in a significant reduction in the number of people being assisted, although this will be partly compensated for by other schemes such as CERT which will continue to stimulate the uptake of loft and cavity wall insulation. 2. Making the decision As requested, the following comments are based on the current context and do not make provision for feed-in tariffs. Ideally, low carbon measures would be targeted to the fuel poor and, particularly for solid wall, off gas properties, would incorporate a whole house solution including insulation and generation measures. However, with limited finances, this would severely limit the number of households that could be assisted. For off-gas areas, the decision on which measure to use should be straightforward subject to the structure of the dwelling and characteristics of the occupants. Where there is no efficient heating system present, the most cost-effective and environmentally friendly way of addressing this is set out below. These recommendations are based on NEA s experience and research. They take into account capital costs, savings and client circumstances. It is important to note that those measures that are more disruptive or require extensive behavioural change are less likely to be taken up and therefore less likely to make any impact on fuel poverty or carbon emissions. The need to mnimise disruption must therefore be an important element of the decision. The order of priority that we consider to be most cost effective and likely to result in take up and consequent savings is as follows: I. If the heat load of the house is appropriate, there is space for a hot water cylinder and the occupant can be put on an Economy 10 tariff, a heat pump is considered the best option. This will usually be appropriate for a 2-3 bedroom property. II. If the house is too big to be served by a heat pump but a sustainable source of logs is available and the occupant is capable of storing and loading the fuel, a biomass boiler should be chosen. 14 Centre for Sustainable Energy, Quantifying Rural Fuel Poverty, Aug NEA research, 2009

14 III. Solar thermal can make a meaningful impact in specific circumstances i.e. where there is a high hot water demand in the house, where the showers are also connected to the system and where routines can adapt to make the most of the solar hot water. Where these criteria are met and a heating system as outlined above cannot be fitted, solar thermal can assist in reducing fuel bills. IV. If neither is an option and planning permission is not required, external cladding is considered the next best measure. This is preferable in terms of insulation before generation and because it requires no behavioural change. However, savings can be made and wellbeing improved at a lower cost with heat pumps and biomass boilers. V. If none of the above is possible, internal insulation can be used. This is an effective solution but the level of disruption and higher costs makes this measure more difficult to deliver. 3. Making the Difference Whatever system is chosen, it is crucial that installers or some other accountable person fully explains how to make the most of the system, including how to use the controls and any behavioural change that is required. There should also be a simple instruction panel and a contact telephone number so that users can continue to get information after the installation. For people who may have multiple financial and wellbeing concerns, the heating system may not seem an immediate priority. Therefore, scheme managers must recognise that there is a difference between offering systems, their being taken up, being installed appropriately and finally being used effectively. Experience to date shows that more work on promoting take up and monitoring of ongoing effective use of the systems is needed, than may initially have been expected. Care must also be taken in assessing the effectiveness of these installations and other measures put in place. It should be noted that, at the time of writing, air-source heat pumps and biomass boilers have a negative impact on RDSAP ratings and therefore reduce EPC ratings. Therefore, if this energy-rating system is used in its current form, it will fail to reflect the actual value of the work and may be seen as a negative factor should the occupant subsequently wish to sell the house. A full SAP rating or other measure should therefore be used. 4. Cost benefit of measures 16 It should be noted that there are many variables involved in costing installations and figures can vary widely. Because of this, the relative savings and installation costs should be borne in mind more strongly that the actual numbers. In addition, the levels of disruption and behaviour change should also be considered, as these will impact on the extent to which the technologies are actually taken up, and how effectively they are used. The table below has been compiled from a combination of Energy Saving Trust research and NEA s practical experience of installations. Measure Cost (installed) annual saving CO 2 annual saving Disruption factors Cavity kg 2-3 hours; no internal access Loft* kg 1.5 hour install; Behaviour change No No 16 Based on EST website and NEA experience

15 Condensing gas boiler (A-G rated) External insulation Internal insulation ASHP and wet system** Biomass Boiler** internal access and loft clearance 1, ,300kg days Yes 10,500 14,500 5,500-8, tonnes Significant noise; weather dependent; no internal access needed 5-7 days to install tonnes Significant disruption; access and furniture removal; 2-4 days to install 6, tonnes 2-3 days to install 7,000 Up to tonnes 3-4 days Yes *270 mm installed where previously none ** when replacing solid fuel The table below shows results from a trial of ground and air-source heat pumps in Scotland. It demonstrates that, in this context, air-source heat pumps were the most cost effective solution to fuel poverty. No No Yes 5. Conclusion The answer to the question, how can we most effectively spend our budget to help alleviate fuel poverty? can be answered in three parts: I. Place an emphasis, though not exclusively, on rural fuel poverty II. Use information on housing structure, occupancy and system acceptability to shape the decision about the choice of system. III. Ensure that there is willingness on the part of the client to take up the measure, and open communication channels to ensure their ongoing effective use.