Fuel Poverty in the Private Rented and Off-Grid Sectors

House of Commons Energy and Climate Change Committee Fuel poverty in the private rented and off-grid sectors

Written evidence

Ordered by The House of Commons to be published 20 December 2011, 11, 24 January and 31 January 2012

Published on 4 July 2012 by authority of the House of Commons London: The Stationery Office Limited £0.00

The Energy and Climate Change Committee

The Energy and Climate Change Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of the Department of Energy and Climate Change and associated public bodies.

Current membership Mr Tim Yeo MP (Conservative, South Suffolk) (Chair) Dan Byles MP (Conservative, North Warwickshire) Barry Gardiner MP (Labour, Brent North) Ian Lavery MP (Labour, Wansbeck) Dr Phillip Lee MP (Conservative, Bracknell) Albert Owen MP (Labour, Ynys Môn) Christopher Pincher MP (Conservative, Tamworth) John Robertson MP (Labour, Glasgow North West) Laura Sandys MP (Conservative, South Thanet) Sir Robert Smith MP (Liberal Democrat, West Aberdeenshire and Kincardine) Dr Alan Whitehead MP (Labour, Southampton Test)

Powers The Committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the Internet via www.parliament.uk.

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The Report of the Committee, the formal minutes relating to that report, oral evidence taken and some or all written evidence are available in a printed volume. Additional written evidence may be published on the internet only.

Committee staff The current staff of the Committee are Sarah Hartwell-Naguib (Clerk), Jenny Bird (Senior Committee Specialist), Katie Phelan-Molloy (Senior Committee Assistant), Jonathan Olivier Wright (Committee Assistant), Julie Evans (Committee Support Assistant) and Nick Davies (Media Officer).

Contacts All correspondence should be addressed to the Clerk of the Energy and Climate Change Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 2569; the Committee’s email address is [email protected]

List of unprinted written evidence

1 Department of Energy and Climate Change Ev w1 2 North Warwickshire Borough Council Ev w5 3 Civil Service Pensioners’ Alliance Ev w6 4 Federation of Private Residents Associations Ev w7 5 Chartered Institute of Environmental Health Ev w11 6 Mears Group PLC Ev w14 7 SSE Ev w16 8 County Durham Fuel Poverty Partnership Ev w18 9 EDF Energy Ev w18 10 West Sussex Local Authorities Ev w21 11 Islington Council Ev w22 12 Carillion Energy Services Ev w23 13 National Grid Ev w28 14 Fuel Poverty Advisory Group Ev w30 15 Oil Firing Technical Association Ev w34 16 Humshaugh Community Ventures Ltd Ev w37 17 National Right to Fuel Campaign Ev w38

Oral and written evidence

Oral and written evidence (submitted by witnesses who gave oral evidence) has been printed as House of Commons paper HC 1744-i and -ii, and is available in electronic format at www.parliament/eccpublications.

Wednesday 11 January 2012 Page

Mary Starks, and James MacBeth, Office of Fair Trading, Mark Askew, and David Todd, Federation of Petroleum Suppliers, Paul Blacklock, Calor Gas, and Rob Shuttleworth, UKLPG Ev 1

Lauren Langton, Co-ordinator, Allen Valleys Oil Buying Co-operative, and Mike Murray, Co-ordinator, North Tyne Fuel Buying Group Ev 11

Ron Campbell, National Energy Association, and William Baker, Consumer Focus Ev 14

Tuesday 7 February 2012

David Timms, Friends of the Earth, Jenny Holland, Association for the Conservation of Energy, and Teresa Perchard, Citizens Advice Ev 18

Dave Princep, Residential Landlords Association, Robert Taylor, National Private Tenants Organisation, Sue Walker, London Borough of Newham, and Tony Jemmott, London Borough of Haringey Ev 26

List of written evidence from witnesses

Calor Gas Ltd Ev 37 Citizens Advice Ev 43 National Energy Action Ev 46 Office of Fair Trading Ev 53; Ev 55 Residential Landlords Association Ev 56 Consumer Focus Ev 63 London Borough of Newham Ev 65 Friends of the Earth Ev 68; Ev 75 Association for the Conservation of Energy Ev 79; Ev 86 Allen Valleys Oil Buying Co-operative Ev 87; Ev 88 Federation of Petroleum Suppliers Ev 88 North Tyne Fuel Buying Group Ev 90; Ev 92 National Private Tenants Organisation Ev 93

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Written evidence

Written evidence submitted by the Department of Energy and Climate Change (DECC) Executive Summary 1. A household is considered to be in fuel poverty if it needs to spend more than 10% of its income to achieve an adequate level of warmth (21 degrees for the main living area, and 18 degrees for other occupied rooms). The main contributing factors to a household being in fuel poverty are: (a) A household’s total income. (b) The cost of energy. (c) The energy efficiency of the property. 2. The latest statistics on the number of households living in fuel poverty were published by Government on 14 July 2011. The statistics indicated that in 2009, there were 4 million households in England living in fuel poverty, of these 0.8 million were homes not connected to gas grid and 0.7 million households were living in privately rented properties. 3. The Coalition Government is committed to doing all that is reasonably practicable to end fuel poverty in England by 2016. A combination of rising wholesale energy prices and poor quality housing stock in England has meant that despite significant investment there are still a large number of households in fuel poverty. We are committed to helping people, especially low income vulnerable households, heat their homes more affordably. We recognise the need to help more of the most vulnerable to keep their homes warm at an affordable cost. 4. A number of policies and programmes are in place or being introduced to provide support for low income and vulnerable households, including households who may be off the gas grid or in privately rented accommodation. 5. The Green Deal framework will be launched from October 2012. The coalition proposals published on 23 November 2011 outlines the benefits of the scheme. Every home will be able to install packages of energy- saving technologies at no upfront cost with repayments made over time out of the energy savings. In addition, there will be a new requirement on energy companies to provide £1.3 billion a year to ensure everyone is able to benefit from Green Deal—no matter their income or the type of home they live in. Additional help will be available to ensure the fuel poor get better boilers and insulation, while subsidy will also be provided to help tackle homes that are hard to treat, including those with solid walls. 6. Currently, one of the key fuel poverty policies is the Warm Front scheme which provides a grant of up to £3,500 to provide energy efficient heating and insulation measures for those on income related benefit and living in energy inefficient properties. The scheme is open to eligible households living in private rented accommodating with permission from the landlord. In addition, where the property is not connected to the gas grid, a grant of up £6,000 is available to install oil central heating. 7. Other current schemes providing energy efficiency measures include the Carbon Emissions Reduction Target (CERT) and the Community Energy Saving Programme (CESP), which are obligations on suppliers to provide energy efficiency measures to reduce carbon. Government has extended the CERT programme to the end of 2012, and introduced a new Super Priority Group of low income households on income related benefits to which a proportion of the measures must be directed. The extension and introduction of the Super Priority Group will have a positive impact on fuel poverty, with approximately 185,000 households expected to be provided with measures which can provide a long term solution to fuel poverty. Many more households will receive measures which will protect them from falling into fuel poverty. 8. In addition to energy efficiency schemes, the mandatory Warm Home Discount scheme, which came into force on 1 April 2011 this year and replaces the previous Voluntary Agreement, requires energy suppliers to provide up to £1.1 billion in funding over four years to assist vulnerable, low income households. The scheme will assist around 2 million households each year, including over 600,000 pensioners, in receipt of Pension Credit Guarantee Credit, who will receive an automatic payment of £120 on their electricity bill—ensuring those off the gas grid are able access assistance. 9. The Independent Review of Fuel Poverty was established in March 2011. This Review, which is being led by Professor John Hills, was set up to consider evidence on whether fuel poverty is a distinct problem from income poverty, how well the current definition reflects the problems involved and the effectiveness of policies to counter it. The Review published its interim report in October and a final report is expected early in the New Year.

What are the barriers to tackling fuel poverty in the private rented sector? 10. Where properties are owned by a landlord and lived in by tenants, the cost of installation of energy efficiency measures traditionally falls on the landlord, with the benefits of lower energy use and bills commonly falling to tenants. In situations in which rents do not fully reflect differences in the thermal efficiency of properties there is little incentive for landlords to improve the energy efficiency of their properties. cobber Pack: U PL: COE1 [E] Processed: [03-07-2012 14:53] Job: 020359 Unit: PG01 Source: /MILES/PKU/INPUT/020359/020359_w021_michelle_FP 29 - National Right to Fuel Campaign.xml

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11. Tenants often expect to stay in rented properties for short periods of time. This means that some of the bill savings will accrue to future tenants, rather than those who will bear the brunt of any disruption costs. This magnifies the problems of high discount rates that commonly affect the investment behaviour of individuals. 12. The Warm Front scheme provides energy efficiency measures, based on the eligibility of the tenant and with permission from the landlord, providing assistance to those low income and vulnerable households in private rented accommodation. In addition to the landlord’s consent to the improvements and in return for an upgrade of their property they must agree to not increase the rent for two years. Since 2005, Warm Front has assisted 202,467 households living in privately rented accommodation. 13. The new Green Deal financial proposals will overcome some of the issues in this sector by affording landlords the opportunity to improve the energy efficiency of the property at no upfront cost, placing the payments for measures on tenants’ bills who will also enjoy the benefits of living in warmer, more energy efficient properties. However, the short-term nature of much of the rental market may mean that in the absence of regulation to improve standards, many cost-effective abatement opportunities could remain untapped. 14. Take up and impact of non-regulatory options, such as CERT, does not seem to have made a substantial impact in terms of insulating lofts and cavities in the private rented sector. This unresponsiveness may have been in part caused by the barriers associated with split incentives which may be overcome by Green Deal finance. Although in a sector with relatively high tenant turnover the benefits may still be spread thinly leaving no one party sufficient incentive to ensure installations are made. It is therefore considered that regulation may be required to secure the benefits of energy efficiency improvements in the PRS.

To what extent will the recent measures in the Energy Act 2011 (to introduce minimum energy efficiency standards in the private rented sector) help the problem? 15. The Energy Act 2011 includes provisions for a minimum energy efficiency standard to come into force no later than 1 April 2018. This standard set at energy performance certificate band “E” will lead to approximately 682,000 homes having to be improved. The prospect of the minimum standard will give landlords a strong incentive to act. Landlords will be able to make the required improvements over the coming years and plan around their tenancy changes. And in 2018 these regulations will mop up those few remaining landlords who have yet to change. Inaction will not be a viable option. 16. Landlords will not be permitted to let properties unless they reach this standard or they have done the maximum package of measures under the Green Deal or Energy Company Obligation (even if that still does not take them above F). 17. This requirement is subject to there being no upfront financial cost to landlords. Therefore, landlords will have fulfilled the requirement if they have either reached “E” or carried out the maximum package of measures funded under the Green Deal and/or ECO (even if this does not take them up to an “E” rating). Local Authorities will enforce the domestic minimum standard regulations, with the ability to impose a civil fine of up to £5000. A Local Weights and Measures Authority will enforce the non-domestic minimum standard regulations; the level of civil penalty will be defined in secondary legislation. 18. DECC will consult on these standards ahead of the introduction of secondary legislation between 2016 and 2018 and will continue to monitor take up of the scheme in these sectors.

To what extent is fuel poverty in rural areas driven by a lack of access to the gas grid and to what extent are other factors (such as housing condition and income levels) responsible? 19. Fuel poverty is driven by three factors: household incomes, energy prices and energy efﬁciency. The likelihood of a household being in fuel poverty will depend on the interaction between each of these factors. 20. Households that are off the gas grid tend to face higher costs than households that are attached to the grid. Table 1 shows the propensity of fuel poverty amongst rural, off-gas households in England in 2009. The data suggests that there is a high propensity to fuel poverty amongst this group—34% of rural households that are not attached to the gas grid are in fuel poverty. However, it is clear that the majority of off grid, rural households are not fuel poor. Clearly there are other factors that are important in determining whether these households are fuel poor. cobber Pack: U PL: COE1 [O] Processed: [03-07-2012 14:53] Job: 020359 Unit: PG01 Source: /MILES/PKU/INPUT/020359/020359_w021_michelle_FP 29 - National Right to Fuel Campaign.xml

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Table 1 FUEL POVERTY AMONGST ENGLISH HOUSEHOLDS THAT ARE NOT ATTACHED TO THE GAS GRID IN 2009 Proportion of households Not fuel poor Fuel poor Urban 78% 22% Rural 66% 34%

Source: EHS. 21. Income is a signiﬁcant predictor of whether a household is likely to be in fuel poverty. Table 2 shows the level of fuel poverty across different income groups. It is clear that household income has a very signiﬁcant impact on whether a household is fuel poor—over 85% of the bottom income decile group are fuel poor.

Table 2 FUEL POVERTY AMONGST ENGLISH HOUSEHOLDS BY INCOME GROUP IN 2009 Proportion of households Household income decile Not fuel poor Fuel poor 1st decile—lowest income 14.8% 85.2% 2nd decile 50.0% 50% 3rd decile 74.1% 25.9% 4th decile 85.9% 14.1% 5th decile 95.0% 5% 6th—10th decile 99.0% 1%

Source: EHS. 22. The thermal efficiency of a dwelling is also an important driver. Table 3 shows the level of fuel poverty in England split according to the thermal efficiency of the dwelling (measured by household SAP rating). The figures show that households that cost more to heat are more likely to be in fuel poverty than those in more efficient dwellings—almost 64% of the households in the lowest SAP band are fuel poor. It is important to note, however, that type of fuel used is one of the drivers of household SAP rating. As such, off grid households will tend to have lower SAP ratings than households that are attached to the grid. However, there are other important factors that impact on SAP (eg the level of insulation in the dwelling) that are not related to whether the household is on or off the grid.

Table 3 FUEL POVERTY AMONGST ENGLISH HOUSEHOLDS BY SAP RATING OF DWELLING IN 2009 Proportion of households Banded SAP Not fuel poor Fuel poor <20 36.1% 63.9% >20 and <30 53.8% 46.2% >30 and <40 70.7% 29.3% >40 and <50 79.4% 20.6% >50 and <65 85.2% 14.8% >65 92.7% 7.3%

Source: EHS.

Given that the OFT found no evidence of a competition problem in the heating oil market, what (if anything) can be done to prevent a repeat of the situation in December 2010 when households were faced with high energy costs during a spell of particularly cold weather? 23. Heating oil distributers worked in hugely challenging conditions in December 2010 with 20% of annual heating oil demand being delivered in three working weeks of that month when snow/ice disrupted the road network. 24. Last winter DECC worked with industry associations to extend drivers’ hours and to develop a code of practice for the Federation of Petroleum Suppliers (FPS) concerning the prioritisation of deliveries during periods of abnormal weather. 25. Individual heating oil suppliers can offer additional support to customers, but this may vary by supplier and on a case by case basis by customer, such as identifying and prioritising vulnerable customers during cobber Pack: U PL: COE1 [E] Processed: [03-07-2012 14:53] Job: 020359 Unit: PG01 Source: /MILES/PKU/INPUT/020359/020359_w021_michelle_FP 29 - National Right to Fuel Campaign.xml

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delivery backlogs, or offering a range of payment options such as prepayment, instalments, stamps and direct debits. 26. This year, DECC has been working with FPS and Citizen’s Advice, Consumer Focus Scotland and Wales and Action for Communities in Rural England (ACRE), in a national campaign launched in mid-September, to encourage heating oil customers to order early and ensure they are well prepared for winter. Early findings indicate that the uptake of heating oil was 10% higher in 2011, compared to the same period in 2010. 27. Information about the campaign has been sent, via the Cabinet Office Resilience Network, to Local Resilience Fora for local authorities and the voluntary sector and it is hoped that the campaign can be expanded for future years. 28. We have also reminded fuel terminal/depot operators to ensure they have sufficient salt stocks to maintain on-site vehicle access. Overall, work by the Department of Transport this year has ensured that the country will enter the winter better prepared. This includes having a national, strategic salt reserve as well as making sure that local highway authorities make best use of their salt supplies. 29. Preparedness planning is ongoing more widely across government, with officials from UK government departments, the devolved administrations and the Local Government Association meeting regularly to review the situation with regard to winter, including heating oil availability and address cross-cutting issues.

How could DECC’s policies for tackling fuel poverty in the private rented sector be improved? 30. It is estimated that 20% of the households in the private rented sector in England are fuel poor and that around 17% of those in fuel poverty live in private rented accommodation. Improving energy efficiency in the buildings in this sector can make an important contribution to the reduction of the number of people in fuel poverty and the adverse health consequences that are associated with living in cold, damp homes. 31. As stated above, Warm Front provides grants to improve the energy efficiency of properties that are either privately owned or privately rented. After consultation in 2010, the eligibility for Warm Front was refocused to target those households most likely to be in fuel poverty, by ensuring applicants are on a low income, vulnerable and living in an energy inefficient property. The new criteria ensure that the scheme is targeting those households with the highest propensity to be in fuel poverty. 32. From next year, the Green Deal and Energy Company Obligation (ECO) will provide the mechanism for landlords to make energy efficiency improvements to their properties at no upfront cost. In particular, the ECO will provide additional support for those households where Green Deal finance may not be sufficient. The Affordable Warmth element of ECO will provide basic heating and insulation measures for the poorest and most vulnerable households, including those who face the highest health risks from cold housing—the elderly, families with children and those with long term disabilities and serious illness. Lower income and vulnerable groups will be able to benefit from all aspects of the ECO—but the Affordable Warm strand, which we see to be worth around £350 million a year, will be reserved specifically for them alone, helping tackle the risk of fuel poverty. 33. From April 2016 landlords of residential properties will not be able to unreasonably refuse requests from their tenants for consent to make energy efficiency improvements, where financial support is available. 34. Following this, from April 2018, private rented properties must be brought up to a minimum energy efficiency rating of “E”. This provision will make it unlawful to rent out a house or business premise that does not reach this minimum standard.

How could DECC’s policies for tackling fuel poverty among off-grid consumers be improved? 35. The current fuel poverty policies are aimed at all low income and vulnerable households regardless of their main heating source. When developing polices those households not connected to the gas network are a large consideration. Those eligible for a rebate under the Warm Home Discount scheme will receive the rebate on their electricity bill. A key reason for this is to ensure that the vast majority of consumers have access to the scheme, if they meet the eligibility criteria. In particular, this ensures that those living off the gas grid, including those in rural areas, can receive the same help with their fuel costs as households on the grid. 36. In addition, where eligible households for the Warm Front scheme are not connected to the gas grid, the scheme manager will aim to access funding to connect the household to the gas grid where possible. Where a household cannot be connected to the gas grid, Warm Front provides an uplifted grant of up to £6,000 to install an oil heating system. Since 2005, Warm Front has assisted 537,445 households not connected to the gas grid. 37. Looking to the future, the Renewable Heat Premium Payment (RHPP) and the Renewable Heat Incentive are ﬁnancial support schemes to promote renewable heat technology. One of the objectives of the Renewable Heat Premium Payment (RHPP) scheme is to make some contribution to tackling fuel poverty. In order to meet that objective, DECC launched a competition among social housing providers to compete for a share of a pot of money (around £4 million) for the installation of renewable heating systems. When assessing bids, the contribution towards tackling fuel poverty and the number of installations off the gas grid were considered. All of the winning bids focused on properties off the gas grid; and most of the winning bids indicated how the cobber Pack: U PL: COE1 [O] Processed: [03-07-2012 14:53] Job: 020359 Unit: PG01 Source: /MILES/PKU/INPUT/020359/020359_w021_michelle_FP 29 - National Right to Fuel Campaign.xml

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monies granted under this scheme would form part of their strategy for affordable warmth or tackling fuel poverty. Most of the winning bids have been announced: registered social housing providers will be installing these new renewable heating systems between now and the end of the ﬁnancial year.

38. DECC has been carrying out a strategic analysis of heat, which is now almost complete. The analysis has been examining what the Government should do now and through the next decade, in order to ensure low carbon, secure and affordable heating (and cooling) supply for homes, businesses and industry, and to enable the UK to meet its carbon reduction and renewables targets. This suggests that one of our ﬁrst priorities for decarbonising heating in homes should be to tackle consumers off the gas grid. We anticipate that we will be publishing the heat strategy in early 2012. December 2011

Written evidence submitted by North Warwickshire Borough Council

I would like to offer the following contribution to your inquiry into fuel poverty in the private rented sector. I have arranged it in sections relating to your speciﬁc questions.

As an Executive Summary—the actual cost of fuel is by far the biggest factor in fuel poverty, far more so than household income or the energy efﬁciency of a property. Private rented property should have to meet the legal minimum standard (absence of category 1 hazards under the 2004 housing Act), but much does not because of the nature of the relationships between landlords and tenants. It is regrettable that in the UK a person needs to have a license to board dogs (and pay a fee, and submit information, and pass and inspection— annually), but not to rent out death-trap housing to board people. Landlords do not even have to tell their local housing authority that they are doing so. The present enforcement system is far too weak and ineffective as it relies on tenant complaints rather than on up front compliance. If a car rental company hired out a vehicle with dangerous defects, it could be automatically prosecuted. If a landlord rents out a house with hazards causing ill health or risking death, it is not illegal until after a tenant complaint, then an enforcement notice, then non compliance with that notice.

EPCs should be provided to housing authorities as a rule.

Band F and G rated properties should not be rented out and should receive no housing beneﬁt or other rent support. Transitional provisions to protect existing tenants without the risk of retaliatory eviction are required.

Winter fuel and cold weather payments should be in kind (offset fuel bills), not in money, and should not be paid for band F and G properties but substituted for contributions to insulation measures. — To what extent will the recent measures in the Energy Act 2011 (to introduce minimum energy efficiency standards in the private rented sector) help the problem?—the provision to permit private sector tenants to request landlords to improve domestic energy efficiency rely on tenants knowledge of that facility and ignore the threat of retaliatory eviction and/or rent increases. Tenants can already request their landlord reduce hazards in the house, but many do not. Tenants could fear losing their homes whilst landlords recycle less demanding tenants into them, or else may fear increased rents to cover any increased costs to the landlord. The system is too passive and reactive rather than being proactive and permissive—there should be a positive obligation to improve prior to the commencement of a new tenancy and a transitional phase for ongoing tenancies. Landlords should be obliged to provide EPCs to local housing authorities. The provision for 2018 does not appear to address existing or ongoing tenancies. What protection, if any, would be available to those tenants? — To what extent is fuel poverty in rural areas driven by a lack of access to the gas grid and to what extent are other factors (such as housing condition and income levels) responsible?—the cost of fuel is estimated to be seven times more significant a lever in the fuel poverty triangle than energy efficiency or income. Being off the gas grid obviously restricts fuel choice with the remaining options more expensive. Properties off the gas grid are also more likely to be older, larger and have more exposed surfaces and solid walls, making them less energy efficient to begin with. People living in such properties are not, in my experience, wealthy in terms of income despite sometimes having a capital asset (the house), many being retired or on low wages and benefits. — Given that the OFT found no evidence of a competition problem in the heating oil market, what (if anything) can be done to prevent a repeat of the situation in December 2010 when households were faced with high energy costs during a spell of particularly cold weather?— Cap prices and challenge any excesses with punitive sanctions, or else provide fuel directly in lieu of winter fuel payment. cobber Pack: U PL: COE1 [E] Processed: [03-07-2012 14:53] Job: 020359 Unit: PG01 Source: /MILES/PKU/INPUT/020359/020359_w021_michelle_FP 29 - National Right to Fuel Campaign.xml

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— How could DECC’s policies for tackling fuel poverty in the private rented sector be improved?—mandatory provision of EPCs to Councils, restriction on renting properties in bands worse than E (F and G) from a date to be agreed, and for ongoing tenancies 12 months after that date. Prohibition on payment of benefits for rent (HB or LHA) in such properties from a date to be agreed. Prohibition on winter fuel and cold weather payments as cash (should be credit on fuel bill), and at all on properties in bands E and F where the money could be used to make reasonable insulation or heating system improvements. Properties found with category 1 Hazards under the Housing Health & Safety Rating System should have any housing related benefit suspended until those hazards are rectified, with automatic tenancy protection against retaliatory eviction. — How could DECC’s policies for tackling fuel poverty among off-grid consumers be improved?— I am unaware that DECC has any policies covering this issue. November 2011

Written evidence submitted by the Civil Service Pensioners’ Alliance (CSPA) 1. The Civil Service Pensioners’ Alliance (CSPA) is a campaigning organisation that is recognised by the Cabinet Office for the purposes of representing the views and interests of retired civil servants. 2. The CSPA has an active membership in excess of 60,000 who are organised into two separate Branches covering Northern Ireland and Scotland, and approximately 100 local groups covering England and Wales. In addition to promoting the interests of retired civil servants, the Alliance takes an active part in representing the interests of pensioners on a more general basis through affiliations to the National Pensioners Convention (NPC) and the Public Sector Pensioners’ Council. Although the CSPA campaigns on political issues affecting its members and pensioners, the CSPA is not politically aligned or affiliated to any political party.

Excessive Costs To “Off Grid” Customers 3. The issue of excessive costs in the supply of Oil and LPG to “Off Grid” customers was brought to the attention of the CSPA Annual General Meeting, held in October at which the following resolution was adopted: This AGM recognises that many of our members are not on mains gas and thus are at the mercy of heating oil and LPG suppliers. Some of these companies, which often have a local monopoly, have raised prices well above the costs of the raw material. This AGM believes, therefore, that the domestic supplies of such companies should be brought within the remit of a regulator so that their prices can be monitored. 4. Although we have not responded to all of the questions posed in the terms of reference we have commented on those questions that clearly come within the terms of the above resolution.

To what extent is fuel poverty in rural areas driven by a lack of access to the gas grid and to what extent are other factors (such as housing condition and income levels) responsible? Based upon the evidence provided to us by our members who proposed the terms of the above resolution, the causes of fuel poverty in rural areas with a lack of access to the grid is as much likely to be due to the population being a captive market because an apparent lack of competition and inadequate regulation, rather than just housing condition or income levels. This conclusion was highlighted by a report published in the Sunday Times newspaper, earlier on in 2011when they reported on a oil supply company, DCC Energy, that had been buying up smaller heating oil supplying companies. In the process the purchasing company did not change the name of the recently acquired smaller companies thus leading said smaller companies’ customers into believing they were dealing with the same organisations. This change only subsequently became apparent when said customers were hit with signiﬁcantly increased heating oil bills. This problem arose due to a lack of transparency in the change of ownership of the supplying company and the fact that customers were not made aware of the information which in turn led the customers to believe they were still dealing with a trusted local supplier.

Given that the OFT found no evidence of a competition problem in the heating oil market, what (if anything) can be done to prevent a repeat of the situation in December 2010 when households were faced with high energy costs during a spell of particularly cold weather? Although the OFT may not have found evidence of a competition problem in the heating oil market, the above example published in the Sunday Times newspaper does show that although on the surface there may appear to be adequate competition, if a company such as DCC Energy is able to purchase sufﬁcient number of smaller previously independent suppliers, which it is alleged means they now own some 14% of the oil distribution market in Britain, then the true market position has been perverted. As exampled by the DCC Energy case, there should be a requirement for them to notify the customers of any company that they have purchased of the change of ownership and whether or not this will have any impact on oil costs to the customers affected, and also to notify the OFT of the change in ownership. This would at least provide a ﬁrst step towards cobber Pack: U PL: COE1 [O] Processed: [03-07-2012 14:53] Job: 020359 Unit: PG01 Source: /MILES/PKU/INPUT/020359/020359_w021_michelle_FP 29 - National Right to Fuel Campaign.xml

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transparency in the heating oil market. It would also potentially provide the OFT with some indication as to whether such acquisitions should be further investigated from a market competition viewpoint.

How could the DECC’s policies for tackling fuel poverty among off-grid consumers be improved?

As has been exampled above, fuel poverty may not simply arise due to poor housing or low household incomes, but where an off-grid gas supplier holds a monopoly position. This can arise on private housing estates where there is no mains gas available but the private developer has built in the provision for LPG gas provision across the whole housing development rather than on a basis of supplying properties on an individual basis. This can lead to much higher charges being levied since there is no provision for competition. This can effectively lead to fuel poverty even though the general level of income and the housing condition would not otherwise be designated as coming within the traditional deﬁnitions of fuel poverty.

Summary and Conclusion 5. Although we have only pointed to a couple of examples of difﬁculties facing households in the “off-grid” sector of the UK oil and LPG market, we do believe that they show the importance of the need for transparency in this sector of the energy supply market. This is required to maintain competition but perhaps more importantly adequate regulation to assist not only those households that fall within the traditional deﬁnition of fuel poverty, but also those households that would not otherwise be regarded as being in fuel poverty except that they are, due to excessive fuel prices being levied as a consequence of the lack of competition and inadequate regulation. November 2011

Written evidence submitted by the Federation of Private Residents Associations (FPRA)

The Federation of Private Residents Associations (FPRA) are members of the End Fuel Poverty Coalition and a non-political, not-for-profit advice, support and lobbying organisation for our members who include private residential leaseholders, tenants’ and residents’ associations and residential management companies as well as those companies where the leaseholders together own the freehold of their own residential block and we have long been concerned about the issue of energy efficiency for long- leaseholders living within blocks of flats, due to the complex nature of most leases.

For very good reasons most leases don’t allow for “improvements” to be carried out as part of the service charge but this means consensus for works to be done must be sought from residents and this can stall improvements before they have started. Research by our legal advisor Dr Nick Roberts, published last year in the New Law Journal, proposed a few simple changes to existing leasehold regulations which would go some way to removing particular barriers (a copy is available on request), one of the biggest barriers is the co- ordination of all the flats in a block to reach a common consensus and we consider one of the most difficult challenges in insulating blocks of flats, far more so than just funding.

The Attitude of Utility Companies to Resident Management Companies The FPRA estimate that for about 60% of blocks of ﬂats in England and Wales the effective landlord for supplies to common parts is a resident management company of which the vast majority are run by volunteer Directors often with little support from an experienced property manager advising them. Utility companies have taken in recent years a tougher and tougher stance with these companies. Under Landlord and tenant law landlords including resident management companies have to collect and spend service charges as trustees (S42 of 1987 L&T Act). The company acts as a trustee but the service charge monies do not belong to the company. This means that these companies generally have no assets and many ﬁle as dormant at Companies House.

In recent years utility companies have run credit checks on resident management companies and some have refused to supply all together again effectively stiﬂing competition and any search for best value for long-leaseholders.

Others will only supply if large deposits are made; this is not practical for most of these companies as they do not hold any reserves (or the lease may not allow it). Others demand direct debit payments; a trustee or its managing agent cannot do this (again excluding leaseholders from many discount schemes available to other tenures).

For example it is against RICS Service Charge code of practice approved by Government to set up a direct debit on a client or trust account.

In the interest of providing effective competition for resident management companies all supplies of gas and electricity to common parts of blocks of ﬂats should be made as residential supplies and not commercial as at present. cobber Pack: U PL: COE1 [E] Processed: [03-07-2012 14:53] Job: 020359 Unit: PG01 Source: /MILES/PKU/INPUT/020359/020359_w021_michelle_FP 29 - National Right to Fuel Campaign.xml

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Other Forms of Tenure Ofgem only refers to flats. OFGEM is missing other forms of tenure that also have communal supplies. There are many developments of freehold houses either solely of houses or mixed with flats on the same development. It is entirely possible, and with the current move to more shared equity and mixed development arrangements that those properties will pay an amenity charge for gas and electricity to some form of specialist company or landlord. OFGEM needs to consider how freehold houses which are part of communal supplies can be brought within any change of licensing conditions. The “Green Deal” would not on its own provide the much needed incentive for leaseholders to insulate their homes. To be cost-effective, such improvements which need to be carried out to a block as a whole would involve very complex arrangements and negotiations especially in mixed tenure developments and where there are a number of parties to the lease. Many leases for instance are tripartite leases with a “Head” Freeholder and Residential Management Company with responsibility for the management (often run by volunteers), as well as leaseholders who vary from being reasonably well off occupiers to those in dire fuel poverty struggling to pay their bills. Who should fund works in such a situation? Flat owners need help in making their blocks more energy efficient. But the Government’s Green Deal— designed to do just that—isn’t likely to work for flat owners without providing incentives. As highlighted by the Arun District Council Energy Efficiency officer Jo Brooks recently in a recent thesis for an MSc Architecture: AEES Graduate School for the Environment in July 2011 presented to the DECC working group set up following the committee stage of the Energy Bill. (Full copy and recommendations from the thesis available on request). It has been well researched and modelled that in medium to high rise buildings, the energy & carbon savings that could be seen in top floor flats are different to those on middle floors and significantly different to those on the ground floor within the same building, even when the same measures are offered. Therefore it would seem wrong to me to install a measure for the whole building and then, based on carbon savings, divide the cost up equally among the number of dwellings in the block, even if this lease allows this. But this is precisely the basis on which the government is trying to promote the Green Deal to flat owners. Most blocks of flats in the private sector are co-owned and a number of parties are involved with each building including freeholder-landlords, leaseholder-landlords, leaseholder-owner-occupiers and short hold tenants, not to mention residential management companies and letting and managing agents too. In some circumstances the freeholder can even be a social landlord and the tenants private. Leases vary from flat to flat and block to block and the whole sector struggles from a lack of national regulation. The responsibilities of the various parties can also vary significantly, which makes improvements to these buildings very difficult to implement. For all these reasons, the FPRA has been lobbying Government to treat blocks of flats/apartments in the private sector, especially those where works would need to be done to common parts, as a separate entity under the Green Deal so that these issues are correctly and fairly addressed: 1. Leaseholders of flats are used to sharing expenses equally through service charges and therefore any scheme that require a detailed cost benefit analysis, distinguishing flats with one or two external walls or on the ground or top floor are, in our view, doomed to failure. My view is that the key barrier to delivery of the Green Deal to blocks of flats and other multi-occupancy properties will be consent to the “Green Deal” charge from multiple bill payers (both lessees and sub-tenants). 2. We suggest that in order to deliver energy improvements to the structure and common parts of blocks of leasehold flats other funding programmes will be required such as the one in West Sussex in partnership with all the local authorities that has just come to an end due to the short term nature of the funding. (Details available on request). These issues may be particularly acute for measures such as cavity or solid wall insulation which may impact on multiple units within a building and may require a Green Deal charge to be attached to two or more individual meter. The most significant problems are likely to be those in multiple occupancy buildings were one or a minority of flat owners or tenants could prevent a Green Deal from going ahead on the block or row of properties, to the actual or perceived disadvantage of other occupants. In the presentation to the Government working group we focused on potential barriers to the wider uptake of the Green Deal related to freeholder, leaseholder and bill payer consents and we would be happy to share that with the committee if that would helpful: — VAT on supplies to common parts. cobber Pack: U PL: COE1 [O] Processed: [03-07-2012 14:53] Job: 020359 Unit: PG01 Source: /MILES/PKU/INPUT/020359/020359_w021_michelle_FP 29 - National Right to Fuel Campaign.xml

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— Failure of utility companies to appreciate that resident management companies cannot be assessed like other commercial businesses. There is a lack of open competition for supplies to common parts and RMCos are being charged unreasonable tariffs. — Disconnection protocol for supplies to common parts. There have been cases where supplies have been disconnected when this means no fire alarm or emergency lighting in blocks. We would also ask your Committee members to consider the supply of gas and electricity to the common parts of blocks of flats which will impact on the flat owners and tenants ability to keep up with rising fuel prices. Some RMC or RTM Companies classified as “dormant” will not even be considered by Scottish and Southern or Eon for a quotation for supply. EDF would only supply on a 14 day direct debit basis. There has been an increase in the requests for direct debits and security deposits. Not always possible for small Flat Management Companies who are non trading companies. The problem of credit vetting has been an issue for some time with an increase in the suppliers’ credit procedures and the fact that service charges are no longer dealt with in the “company” accounts. The suppliers carry out a credit check and ascertain the company is dormant. (Not uncommon for block of flats). The supplier then says they no longer wish to supply and are placing the block on “out of contract” rates until they transfer out or They will supply but the RMC will need a three month deposit and payment by direct debit. not always possible from a service charge account. Suppliers often refuse to quote for this type of business because they cannot secure a good credit rating on the resident management company. Even if they have provided both company and service charge accounts that show a healthy reserve balance and a positive net worth, apparently not sufficient to overcome concerns over the credit worthiness of the RMC client.

The Contradiction between Licensing Conditions and VAT Regulations The VAT regulations concerning the supply of gas and electricity to common supplies to blocks of flats by landlords have been clear for many years. But they conflict with licensing conditions and managing agents, resident management companies and other landlords have constant battles with utility companies who incorrectly class the supplies as commercial for VAT purposes. Here are the key extracts from the VAT regulations available from HMRC: The VAT Act 1994, Schedule 4, Paragraph 3 defines any supply of heat, power, refrigeration or ventilation as a supply of goods. Supplies of fuel and power are subject to the standard rate of VAT unless there is a provision for a reduced rate for a qualifying use. Qualifying use means: “domestic use”; or “charity non-business use”. The legal provisions for the reduced rate are in the VAT Act 1994, Section 29A. The following supplies are charged at the reduced rate: fuel and power for domestic use. The following are treated as domestic use if they are part of the same residential unit: Subsidiary buildings situated a short distance away, such as a garage in a block located away from a house; and corridors, lifts, hallways and stairways in a residential unit. Item 3.2 of Fuel and power leaflet produced by HMRC, which defines what is Domestic use. “3.2.2 Other supplies that are for domestic use: Supplies of fuel and power that exceed the de minimis limits are for domestic use only if they are for use in a dwelling or certain types of residential accommodation (excluding hospitals, prisons or similar institutions, hotels or inns or similar establishments). Examples are: — armed forces residential accommodation; — caravans; — children’s homes; — homes providing care for: (a) the elderly or disabled; (b) people with a past or present dependence on alcohol or drugs; or (c) people with a past or present mental disorder; — houseboats; — houses, flats or other dwellings; cobber Pack: U PL: COE1 [E] Processed: [03-07-2012 14:53] Job: 020359 Unit: PG01 Source: /MILES/PKU/INPUT/020359/020359_w021_michelle_FP 29 - National Right to Fuel Campaign.xml

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— hospices; — institutions that are the sole or main residence of at least 90% of their residents; — monasteries, nunneries and similar religious communities; — school and university residential accommodation for students or pupils; and — self catering holiday accommodation. The following are treated as part of the same residential unit: — buildings such as garages used with houses; — subsidiary buildings situated a short distance away, such as a garage in a block located away from a house; and — corridors, lifts, hallways and stairways in a residential unit.” Item 5 of the same VAT Publication states: 5. Electricity 5.1 What supplies are taxed at the reduced rate? Electricity supplied for a qualifying use (see Section 3) is subject to the reduced rate (as explained above). 5.2 Supplies of small—de minimis—quantities Supplies of not more than an average rate of 33 kilowatt hours per day—1,000 kilowatt hours per month—of electricity to one customer at any one of the customer’s premises are subject to VAT at the reduced rate. This applies whether the bill is based on a meter reading—by either you or your customer—or on an estimate. Item 2.2 of the Reliefs and special treatments for taxable supplies speciﬁcally relates to Carbon Change Levy but defers to the VAT guidance as a parent document. There is a clear contradiction in the approach to common supplies to blocks of ﬂats between VAT rules and the current interpretation of licence conditions of some, not all, utility companies. It would make sense to clarify the licence conditions such they are in accord with VAT rules. To do this the current proposal from Ofgem does not go far enough to provide the same competition for energy suppliers to long-leaseholders as it does for those living in a freehold premises which put simply means leaseholders are much more likely to pay more for energy supplies than those living in other tenure properties and it therefore follows are more likely to be in Fuel Poverty.

The Lack of a Disconnection Protocol for Blocks of Flats The current confusion about supplies to common parts of flats means that protocols adopted to protect domestic customers from disconnection do not apply to blocks of flats. So because the landlord’s supply may be treated as a commercial supply it is possible for utility companies to disconnect supply to common parts or to communal heating systems without regard to protecting vulnerable customers and those in fuel poverty. Even if the landlord’s supply is limited to light and power in communal areas there can be grave consequences of disconnection. Disconnection can lead to no fire alarm and emergency lighting, no lifts, no pumped water and sewerage in tower blocks. To ensure that utility companies adopt sensible measures before disconnection to common parts of supplies of blocks of flats the licence conditions should be quite clear that all such supplies should be classed as residential.

The FPRA believe the Protocol should include: — Recognition that supplies to common parts to blocks of flats are “domestic” and retail supplies, not commercial. — Any paperwork regarding disconnection must be served on the correct party not a communal building. It is not good enough to address it to the block of flats where it will be left on the floor of the hallway. — If the block of flats is a new development the supplier should track down the responsible party. It will be the developer; if the developer is in receivership or administration it will be the insolvency practitioner. — The supplier should establish whether disconnection will affect any vulnerable persons living in the block. — The suppler should establish whether disconnection will prevent the supply of water and sewerage services to the block. — The suppler should establish whether disconnection will mean that the fire alarm, emergency lighting and smoke detection systems will cease to operate and so put the occupants’ lives at risk in case of fire. — The supplier should inform the local authority before any disconnection. cobber Pack: U PL: COE1 [O] Processed: [03-07-2012 14:53] Job: 020359 Unit: PG01 Source: /MILES/PKU/INPUT/020359/020359_w021_michelle_FP 29 - National Right to Fuel Campaign.xml

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— The supplier should inform the ﬁre service before any disconnection. We are currently waiting for a response from The Department of Energy and Climate Change on this point.

The Current Proposal to Alter Licence Conditions 1. It is not clear whether Ofgem are considering supplies of gas and electricity or just gas. Surely it is intended that any changes should apply to electricity supplies as well. To not do so would seem strange and not be even handed to consumers as well as utilities. 2. Ofgem state that there must be a “legal entity acting on behalf of individual residents”. This seems to imply that the change would only apply to resident management companies. But some resident management companies do not have all residents as members of that company. Would these qualify? Then what about the other blocks of ﬂats which do not have a resident management company as the landlord. There may be an individual or a company that provides services.

Does that landlord act on behalf of individual residents? Ofgem seem to imply there is a difference here which will produce different results in supply in adjacent blocks dependent on the history of those blocks. These will produce even more confusion. In addition there are the general issues listed above to consider.

What if the resident management company delegates its functions to another legal entity (very common for most volunteer Directors to appoint a managing agent? Would that qualify)? 3. Is a resident management company that is registered at Companies House supplying commercial services? Usually not as the lease will often be very specific about the remit: — What if the resident management company appoints a managing agent who calculates and charges for the supply of gas and charges an administration fee to the company for doing so? (Very common indeed and what would be a reasonable fee to charge?) — What about newer developments that use combined heat and power plants. Many of these schemes typically outsource the supply of light and power to others and there are also specialist companies that handle the complex billing processes involved. The current proposal from OFGEM would appear to discriminate against the use of CHP and other new ways to promote energy efficiency (surely this is in conflict with current Government policy?) I apologise for the length of our submission but as you can see this is a very complex area with competing pieces of legislation that long-leaseholders and those that mange their properties have to consider. We will of course be happy to provide further information or clarification to the committee and I am sure the technical team at the Association of Residential Managing Agents (ARMA) will be able to assist the committee too. December 2012

Written evidence submitted by the Chartered Institute of Environmental Health (CIEH) 1. Executive Summary 1.1 The Chartered Institute of Environmental Health (CIEH) speaks for over 10,000 members across the UK. Many work in local authorities including local authority housing officers. 1.2 The Housing Health and Safety Rating System (HHSRS), introduced by the Housing Act 2004, provides a robust and effectives means of tackling Category 1 Hazards to human health created by poor housing conditions, including excess cold. 1.3 The CIEH approves of public policies which address fuel poverty in terms of downward pressure on fuel costs and additional support for those on low incomes. However, addressing the conditions of properties, particularly in respect of energy efficiency measures is an equally important component of a coherent strategy for tackling fuel poverty. 1.4 Local authority housing officers should be given full political backing (nationally as well as locally) to tackle excess cold hazards, especially in respect of the homes of tenants in the private rented sector. There are a number of carrots, sticks and tools recommended by the CIEH to make public policy more effective in tackling fuel poverty. cobber Pack: U PL: COE1 [E] Processed: [03-07-2012 14:53] Job: 020359 Unit: PG01 Source: /MILES/PKU/INPUT/020359/020359_w021_michelle_FP 29 - National Right to Fuel Campaign.xml

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2. The Health Impacts of Fuel Poverty 2.1 The CIEH approaches the issue of fuel poverty from a concern about the health hazards affecting those affected. The health effects of excess cold hazards include cardiovascular and respiratory disease, especially in older people.1 The increased cost of heating homes can cause stress and anxiety to the occupiers, especially if they are in fuel poverty.

2.2 Approximately 2 million homes in England have a Category 1 hazard for excess cold under the HHSRS (see English Housing Survey, Headline report 2009–10, page 41).2 The CIEH has worked with the Building Research Establishment to develop a “cost calculator” to assess the impact on the NHS of not dealing with Category 1 hazards.3

2.3 According to the CIEH’s toolkit “Good housing leads to good health 2008”4 the cost to the NHS of dealing with cold-related illnesses and conditions was then approximately £1 billion per year. The HHSRS cost calculator shows that excess cold and falls hazards are the most cost effective hazards to deal with in terms of savings to the NHS.

2.4 In research commissioned by Friends of the Earth, the CIEH and BRE provided an estimate that the costs to the NHS in England of treating patients who are tenants in the private sector, living in properties with an energy rating of F or G, is currently £145 million a year.5

2.5 For households in, or at risk of, fuel poverty, energy costs are too high. In helping to tackle this problem, Governments need to work to keep those costs down, help the poorest households by supplementing their incomes and help reduce consumption (and therefore total cost) of fuel by targeting the properties they live in for energy efﬁciency measures.

3. Environmental Health and the Private Rented Sector 3.1 The private rented sector includes some of the country’s worst housing stock and is home to many of society’s most hard-to-reach and vulnerable groups and where some of the most deprived communities live. Approximately 1 million homes in this sector contain serious hazards under the HHSRS, the majority being excess cold.

3.2 Local authority housing ofﬁcers have powers under Part 1 of the Housing Act 2004 to tackle the hazard of excess cold in privately rented homes. The CIEH urges local authorities to address this and other health hazards (for example from falls) in the private rented sector strategically, rather than limiting their activity merely to responding to complaints.

3.3 Environmental Health Practitioners (working for local authorities and also for private landlords) work with landlord forums to impress on them the problems associated with excess cold, warning that unless landlords improve energy efﬁciency in properties, they could lose money as well as face enforcement action under the HHSRS.

4. The Barriers to Tackling Fuel Poverty in the Private Rented Sector 4.1 Usually local authority housing ofﬁcers only resort to enforcement action under the HHSRS in the event that informal resolution has failed. However, Government-imposed cuts in local authority spending have severely restricted their ability to be proactive in protecting the most vulnerable tenants.

4.2 The restriction on enforcement action created by budget cuts has been compounded by the Government’s decision to cut funding for private sector housing renewal. This funding has in the past enabled local authority housing ofﬁcers to “bring to the table” the prospect of grants and loans to assist in achieving voluntary action to remove hazards to health. The budget was ﬁrst introduced in 1949 to support the renovation and conversion of tenanted property. In 1983–84 the expenditure was £1.1 billion with most of the money going to support the 90% repair grant programme. In 2010 the budget was £317 million. In 2011, it is NIL.

4.3 A further barrier is the Government’s reluctance to intervene as was demonstrated during the passage of the Energy Act 2011. The Government ﬁrst opposed the campaign by over 40 organisations, the CIEH included, led by Friends of the Earth and the Association for the Conservation of Energy, for a minimum energy efﬁciency standard for private rented properties. When the campaign was strongly supported by legislators in Parliament, the Government put back the start date for this legislative requirement from 2016 to 2018. 1 For more details see the HHSRS Operating Guidance page 60 http://www.communities.gov.uk/publications/housing/ hhsrsoperatingguidance and the Review of Health and Safety Risk Drivers pages 24–31 http://www.communities.gov.uk/documents/planningandbuilding/ pdf/reviewhealthsafety.pdf 2 http://www.communities.gov.uk/documents/statistics/pdf/1937212.pdf 3 http://www.cieh.org/policy/good_housing_good_health.html?terms=cost+calculator 4 http://www.cieh.org/policy/Good_Housing_Leads_to_Good_Health.html?terms=good+housing+leads+health (p39). 5 http://www.cieh.org/policy/the-health-costs-of-cold-dwellings.html?terms=The+health+costs+of+cold+dwellings cobber Pack: U PL: COE1 [O] Processed: [03-07-2012 14:53] Job: 020359 Unit: PG01 Source: /MILES/PKU/INPUT/020359/020359_w021_michelle_FP 29 - National Right to Fuel Campaign.xml

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5. The Energy Act 2011 5.1 The Energy Act does not affect the HHSRS and generally, the enforcement powers of local authority housing officers under the HHSRS are adequate. The CIEH has provided the Department of Communities and Local Government with suggestions where some minor technical changes would be helpful. 5.2 The CIEH supported the Rugg report’s recommendation6 for landlord registration and at the last General Election called on the next Government to act to ensure all dwellings in the private rented sector meet the decent homes standard and that effective action should be taken against rogue landlords. The Energy Act has not taken any steps in this direction. 5.3 Energy Performance Certificates are not required for Houses in Multiple Occupation (HMOs) and unfortunately the Energy Act did not address this omission. It gives the unfortunate signal to landlords and their tenants that energy efficiency is not a priority in HMOs, which represent an important stock of more affordable housing for many hard-to-reach groups. 5.4 The CIEH has some evidence of the seriousness of the issue of “retaliatory evictions”, namely landlords suddenly terminating tenancies in situation where the tenants have made complaints, including complaints to local authorities of health hazards in their homes. The CIEH fears that tenants who request Green Deal measures from their landlord will similarly be at risk of retaliatory evictions. The Government was asked to include a provision in the Energy Bill to protect tenants from such evictions, but the Government declined to do so. The CIEH has provided the Department of Communities and Local Government with a dossier of cases and a copy accompanies this submission.

6. Fuel Poverty in Rural Areas 6.1 The South West Public Health Observatory report “Fighting Winter Cold in the South West” (2008) underlines7 the strong link between excess winter deaths/fuel poverty and rural areas, where many smaller authorities are located. 6.2 Rural housing is often harder to treat and the population often suffers from higher food, transport and fuel costs.

7. Proposals for Improvement 7.1 The CIEH supports the introduction of the Green Deal and wishes it to be an attractive and effective offer in the private rented sector, where there are large numbers of properties requiring higher Decent Homes and energy efficiency standards. A number of carrots and sticks ought to be applied to ensure this outcome is achieved. 7.2 Carrots should include: access to the ECO for energy efficiency measures where tenants are in fuel poverty; focus the Landlords Energy Saving Allowance on these works and make claims easier; reduce VAT to 5% for a wider range of energy efficiency works; re-introduce the private housing sector renewal budget. 7.3 Sticks should include: adequate resources for local authorities to enforce the HHSRS; protection from eviction of tenants who complain to local authorities of excess cold or who ask their landlords for Green Deal works; reinstate 2016 as the start date for a minimum energy efficiency standard for private rented properties. 7.4 In addition to these carrots and sticks, additional tools required by local authority housing officers include: political support (national and local) for effective enforcement of the HHSRS; the requirement of Energy Performance Certificates for HMOs; flexible application of registration requirements for landlords; closer working with landlords’ representative organisations on the further development of accreditation schemes for landlords.

8. About the CIEH 8.1 As a Chartered professional body, we set standards and accredit courses and qualiﬁcations for the education of our professional members and other environmental health practitioners. 8.2 As a knowledge centre, we provide information, evidence and policy advice to local and national government, environmental and public health practitioners, industry and other stakeholders. We publish books and magazines; run educational events and commission research. 8.3 As an awarding body, we provide qualiﬁcations, events, and trainer and candidate support materials on topics relevant to health, wellbeing and safety to develop workplace skills and best practice in volunteers, employees, business managers and business owners. 8.4 As a campaigning organisation, we work to push environmental health further up the public agenda and to promote improvements in environmental and public health policy. 6 http://www.york.ac.uk/inst/chp/publications/PDF/prsreviewweb.pdf 7 http://www.swpho.nhs.uk/resource/item.aspx?RID=48852 cobber Pack: U PL: COE1 [E] Processed: [03-07-2012 14:53] Job: 020359 Unit: PG01 Source: /MILES/PKU/INPUT/020359/020359_w021_michelle_FP 29 - National Right to Fuel Campaign.xml

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8.5 We are a registered charity with over 10,500 members across England, Wales and Northern Ireland. December 2011

Written evidence submitted by Mears Group PLC Executive Summary — A typical annual bill for homes that do not have mains gas connection is around £250 higher than those that do. — There is a suite of heating options available to people living in off-grid social housing. — Air Source Heat Pumps can be a cost effective and unobtrusive solution for people living in off grid, individual dwellings. — Air Source Heat Pumps are not currently funded by the Renewable Heat Incentive and should be included within the range of options. — Social Landlords can only leverage the Renewable Heat Incentive for communal stock. — Some social landlords were redirecting the revenue generated by Solar PV Feed in Tariffs to address issues of fuel poverty in harder to reach groups such as those living in off-grid properties. — The lack of available funding options open to social landlords means that many off-grid tenants remain reliant on electricity which is the most expensive form of heating. — The Affordable Warmth fund should be extended to include people living in off grid properties in social housing.

I. Introduction 1.1 Mears are the UK’s largest provider of social housing maintenance and domiciliary care services. We also run 12 home improvement agencies, which provide advice and support to older private home owners. Mears works across a stock of 500,000 social homes and provides domiciliary care for 20,000 people. We support some of the most marginalised people within the UK, many of which would be defined as being fuel poor. 1.2 We have a long standing commitment to supporting the communities where we work and by working in partnership with Housing Associations and Local Authorities we are able to offer a range of initiatives which are aimed at lifting people out of fuel poverty. 1.3 We have micro generation accreditation and our work has been recognised with awards such as the Sustainable Housing Award (2011) for the “Sustainable Larger Housing Retrofit Project of the Year” and the 2009 award for “Low Energy Social Housing Project of the Year”. The judges were impressed by the range of solutions and products used in the project to deliver an 85% saving in the energy consumed in the house, a 1930’s terrace, a potential saving of £600 on annual energy bills. Judges commented “It is a great example of what can be applied to the social housing sector, addressing fuel poverty and CO2 emission targets”. 1.4 For the purpose of this submission we will concentrate our answers to our work with customers who live in off-grid properties. Mears currently services over 3,000 off-grid properties. We are currently developing our services for off-grid homes by investing in new technology to help us collate information and support tenants and landlords. Our aim is to review all off-grid social housing stock and provide priced options that detail the life cost of the proposals. We plan to illustrate the benefits to the social landlord and the resident and explain what funding is available to cover the costs of the work. We also provide energy awareness training. Mears works with social landlords to find the right option for individuals or a combination of options. 1.5 There are a suite of options available to people living in social housing which is off grid. These include, air source heat pumps, ground source heat pumps, solar thermal and solar PV. LPG and heating oil are rarely used in social housing stock. 1.6 When working across stock with differing levels of efficiency we and our partners have leveraged available funding to rebalance and help those who are most likely to live in fuel poverty such as those tenants in off-grid properties.

II. What are the barriers to tackling fuel poverty among off-grid consumers? 2.1 A typical social house heating and insulation package costs around £9,000. Social landlords have leveraged a number of different sources of funding to cover the works. CESP, CERT and RHI funding allowed social landlords to claim back approximately £1,200. Funding could also be leveraged through the Solar PV feed in tariffs scheme. The electricity generated from the FIT was around £836 per annum tax free. After the work was completed the improvements would reduce annual electricity costs for tenants living in the property from £450 to £300. The whole installation would pay for itself within an average eight years. cobber Pack: U PL: COE1 [O] Processed: [03-07-2012 14:53] Job: 020359 Unit: PG01 Source: /MILES/PKU/INPUT/020359/020359_w021_michelle_FP 29 - National Right to Fuel Campaign.xml

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2.2 However, Renewable Heat Incentive only applies to communal properties and cannot be leveraged for individual dwellings and CESP funding was rarely used in areas of mixed tenure. This means there are few funding sources for social landlords looking to improve fuel efﬁciency and lower costs for their off grid tenants. 2.3 Social landlords looking for innovative ways to support off grid tenants redirected the funding received from Solar PV installation. The Feed-in Tariff Scheme became a valuable funding source for Registered Social Landlords looking to address fuel poverty issues. 2.4 Revenue generated by the feed in tariffs could be ploughed straight back into alleviating fuel poverty for other harder to reach tenants such as those in off grid properties. 2.5 The Government’s decision to reduce FIT rates across the board has made solar PV installation unviable for social landlords. This combined with the lack of alternative funding schemes for individual social house dwellings is a major barrier to tackling fuel poverty.

III. To what extent is fuel poverty in rural areas driven by a lack of access to the gas grid and to what extent are other factors (such as housing condition and income levels) responsible? 3.1 A typical annual bill for homes that do not have mains gas connection is around £250 higher than those that do. Lack of access to the gas grid is a signiﬁcant cause of fuel poverty among off-grid tenants. While access to the grid is not easily remedied the barriers to social landlords providing more cost effective heating solutions can and should be addressed. 3.2 DECC should address the lack of funding for the purchasing and installation of Air Source Heat Pumps for off grid social housing. These can be one of the most cost effective solutions for people without access to the gas-grid. RHI should be extended to cover air source heat pumps and individual social house dwellings. The current situation means that most tenants are reliant on electric heating which is one of the most expensive forms of heating. 3.3 Reliance on electric heating often creates a double whammy for off-grid tenants. Many are on the cheapest plans which heat a property at off peak times (through the night.) Given that many of our older or unemployed customers may be in their property throughout the day or may require hot water and heating in the afternoon—they can be reliant on additional plug in heaters to top up. This pushes their heating costs even higher. 3.4 Housing Condition is also a factor among individual social house dwellings, as they can miss out on the regular inspections and cyclical works that communal estates are subject to. On many estates there are weekly inspections to identify and correct damage at the earliest possible stage. With fewer inspections, housing conditions in individual dwellings may not be at the same high standards of larger estates. 3.5 Individual dwellings are also not eligible for funding streams that social landlords leverage for communal areas. This means that improvement works on these isolated properties are often reliant on wider funding programmes such as the decent homes standard. While the Decent Homes Programme has enabled social landlords to improve the overall condition of housing stock the funding did not cover the installation of alternative heating sources for off grid tenants.

IV. Given that the OFT found no evidence of a competition problem in the heating oil market, what (if anything) can be done to prevent a repeat of the situation in December 2010 when households were faced with high energy costs during a spell of particularly cold weather? 4.1 Social housing tenants are typically among the poorest people in the UK. Fluctuations in oil prices can result in severe ﬁnancial hardship or going without heating. It is important to remove the dependence on oil. Air Source Heat Pumps are the most cost effective long term solutions for individuals with no access to the grid. About the size of an air-conditioning unit, they are relatively easy to install, less intrusive than other measures and ﬁx to the outside of any property.

V. How could DECC’s policies for tackling fuel poverty among off-grid consumers be improved? 5.1 DECC could improve its policies for tackling fuel poverty by recognising that social landlords redirected funding leveraged from the FIT to tackle fuel poverty across the wider housing stock including off grid properties. A dual tariff should be created which distinguishes between not for proﬁt schemes (such as those run by Local Authorities, Housing Associations, ALMO’s and charities) which require the higher tariff to incentivise solar installation but plough any revenue back into reducing fuel poverty and private schemes which have no impact on tackling fuel poverty. 5.2 Renewable Heat Incentive should be extended to cover Air Source Heat Pumps and should be available to fund installations in individual social house dwellings. 5.3 ECO has a critical role to play in tackling fuel poverty through helping households to improve the energy efﬁciency of their homes and reduce heating costs. The Affordable Warmth element of ECO is designed to provide support to those low income and vulnerable households least able to heat their homes to an adequate standard. As the Green Deal and ECO consultation document states “It is clearly crucial that this ring-fenced cobber Pack: U PL: COE1 [E] Processed: [03-07-2012 14:53] Job: 020359 Unit: PG01 Source: /MILES/PKU/INPUT/020359/020359_w021_michelle_FP 29 - National Right to Fuel Campaign.xml

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element of the overall obligation is targeted at those households where it can make the most difference, and will form a key part of the Government’s programme to tackle fuel poverty”. 5.4 However, The Green Deal and ECO consultation makes it clear that the intention is to restrict Affordable Warmth eligibility to properties in private tenures. The question asked within this consultation is: Do you agree that eligibility for Affordable Warmth measures should be restricted to households who are in receipt of the beneﬁts and tax credits similar to the CERT Super Priority Group and who are in private housing tenures?A restriction in this way would prevent social housing tenants in off grid properties from gaining access to ECO Affordable Warmth funding—which seems unfair and unreasonable. As a minimum, off-grid social housing should be able to access Affordable Warmth Funding and should not be disadvantaged. December 2011

Written evidence submitted by SSE

1. About SSE 1.1 SSE is one of two UK based major utilities involved in the generation and supply of energy. Through its supply brands it is the UK’s second largest retail supplier of electricity and gas with over nine million customers, having been the ﬁfth largest in 2005.

1.2 SSE takes very seriously its responsibility towards vulnerable customers who live in private rented housing or in homes in rural areas without access to the grid. SSE encourages any customer with concerns about their energy to contact their supplier who can often offer a range of practical assistance.

1.3 Evidence in this response is grouped around the key themes identiﬁed in the inquiry.

2. Fuel Poverty in the Private Rented Sector 2.1 There are several factors which may lead to customers living in privately rented housing being deﬁned as fuel poor. These factors can include energy inefﬁcient housing with a lack of insulation, energy prices and societal factors such as lower than average incomes.

2.2 Improving the energy efﬁciency of private rented properties is the fastest and most cost effective way of helping vulnerable tenants by reducing their energy bills in the long-term.

2.3 However, helping vulnerable customers in private rented housing has often been seen as difﬁcult due to the split incentives between the landlord, who owns the building, and the tenant, who usually pays the energy bill and therefore stands to gain from any savings.

2.4 To address this, it is essential that more is done to incentivise private landlords to improve the energy efﬁciency of the homes that they rent out. This should be mandated sooner than the proposed date of 2018.

2.4 Furthermore, the Government and industry should stipulate a trajectory for landlords to comply with, exceeding the initial standards that are introduced. In doing so, the Government would encourage landlords to go beyond the minimum standard when they are undertaking works on their property in the knowledge that they would be future-proofing their asset. This may also bring wider benefits to the property market as properties with above the minimum standard of efficiency would be more attractive for those looking for buy- to-let properties.

2.6 The split financial incentive between the tenant, who benefits from reduced bills over time, and the landlord, who makes the improvements to the building, are not the only obstacle to the take-up of energy efficiency measures. There are also significant non-financial barriers such as the associated inconveniences and lack of understanding. SSE notes that suppliers continue to offer vulnerable customers free or heavily discounted insulation to properties’ loft or cavity walls, however the level of take-up has been limited, implying that the obstacles are not exclusively financial.

2.7 SSE believes that the provisions in the Energy Act 2011, such as the Green Deal and the ECO, and particularly the introduction of minimum standards for rented houses, to support customers in private rented housing are broadly focused on the right priorities. However, consideration must be given to the transition from the current CERT and CESP schemes and to ensuring that these customers are able to access these improvements as soon as possible, which may require the implementation of the measures in the Energy Act to be introduced sooner, where possible.

2.8 In terms of private tenants’ access to the available ﬁnancial assistance, from SSE’s experience there have been instances in which vulnerable customers have not readily accessed the assistance they may be entitled to. In a handful of instances customers whose tenancies include their energy bills alongside their rent are not accessing the Warm Home Discount rebate that they are entitled to as they are not the account holder and are therefore unable to claim. cobber Pack: U PL: COE1 [O] Processed: [03-07-2012 14:53] Job: 020359 Unit: PG01 Source: /MILES/PKU/INPUT/020359/020359_w021_michelle_FP 29 - National Right to Fuel Campaign.xml

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3. Fuel Poverty in Rural Areas 3.1 As a large energy supplier with customers living across the UK, a significant number of SSE’s customers live in rural areas, some of whom live in properties that are not connected to the mains gas grid. These households are therefore reliant on other fuel sources for their heating. 3.2 Rural fuel poverty is often very different from urban fuel poverty, both in its causes and solutions. Many of those customers living in homes off the grid meet the fuel poverty definition due to several factors including the inefficiency of their housing and lack of insulation, they may be single or elderly people living in large, hard to heat homes and they face the rising costs of fuels such as Liquefied Petroleum Gas (LPG) and heating oil. 3.3 SSE welcomes the OFT’s conclusion, in their 2011 investigation into the market for the supply of energy to customers who are not connected to the mains gas grid, that competition exists between suppliers for these customers and that this is not an impediment to these customer’s energy needs. 3.4 With sufficient competition existing, consideration must progress onto how these customers living off the mains gas grid can access energy efficiency and insulation improvements to considerably reduce their energy costs. The potential cost savings are large because off-grid customers need to be able to have a better understanding of their energy use and how to reduce it. With improved energy efficiency and insulation these customers will purchase fewer tanks per year thereby limiting the prospect that their purchases occur at a time of peak demand, and consequently peak costs. 3.5 The provisions in the Energy Act 2011 to introduce the Green Deal and the ECO should help off-grid customers make essential energy efficiency improvements. SSE would make the following observations about how off-grid customers could be specifically helped through these mechanisms. 3.6 The inclusion of microgeneration as an eligible measure within the Green Deal is to be welcomed and will assist off-grid customers, however financial incentives, Feed-in Tariffs (FIT) and Renewable Heat Incentive (RHI), will not count towards the Golden Rule or be eligible for Green Deal financing. SSE believes that by making the Renewable Heat Incentive available to Green Deal financing this could help to displace heating oil and LPG, as well as boost the uptake of the Green Deal and encourage customers to take a ‘whole house approach’ to retrofitting. The cost implications of such an approach would need to be considered, SSE has complied evidence on thecost implications that can be provided at the Committee’s request. 3.7 There is significant potential for reductions in carbon emissions and energy costs from upgrading old electric storage heating systems with more advanced versions. These will have lower standing losses and will therefore offer better control and improved comfort to consumers. It is therefore vital for off-grid customers that advanced electric heating solutions are made available through the Green Deal and the ECO. 3.8 The ECO presents an opportunity to provide assistance to those customers living in off-grid properties. SSE would advise that the ECO should identify vulnerable households using a maximum SAP score alongside other benefits criteria. Such an approach was suggested for the Warm Front eligibility criteria. Were it to be carried forward into the ECO this approach would more adequately identify vulnerable households. If the eligibility of the Affordable Warmth part of the ECO was ascertained through a maximum SAP threshold then it will likely help off grid properties as these properties tend to have lower SAP scores. 3.9 SSE also suggests introducing an area-based targeting approach in parallel to the approaches suggested in the Green Deal and ECO consultation. Certain areas, a bit like CESP zones, would be identified by Government and any activity in these areas would count towards the ECO affordable warmth target. These areas would be identified based on certain characteristics such as prevalence of inefficient housing and fuel poverty. This could include an indication of rurality or lack of access to the gas grid. Unlike CESP, activity outside these areas would also be eligible provided the other criteria were met.

4. A Fuel Poverty Agency—Improved Targeting and Tailored Assistance 4.1 The greatest flaw about the current policy approach to tackling fuel poverty is that although a target was set up, Governments have failed to actually find a mechanism for finding people within the existing fuel poverty definition. 4.2 This has meant that while Government has focussed on measures designed to tackle the causes of fuel poverty, no single body has co-ordinated a holistic response to find and help the fuel poor. Suppliers have a growing number of obligations placed upon them however they do not have the necessary tools to identify customers in need. 4.3 SSE therefore advocates that a more effective system is found to address fuel poverty that gets help to those in need by targeting the vulnerable and assisting them in a more tailored way than at present. To do this requires the introduction of a single agency which has the function of matching the limited amount of data held by suppliers with data that is held by DWP on who is claiming what assistance and what they are entitled to. Using this data, potentially at a local level, the agency would then be able to co-ordinate assistance accordingly. December 2011 cobber Pack: U PL: COE1 [E] Processed: [03-07-2012 14:53] Job: 020359 Unit: PG01 Source: /MILES/PKU/INPUT/020359/020359_w021_michelle_FP 29 - National Right to Fuel Campaign.xml

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Written evidence submitted by County Durham Fuel Poverty Partnership The County Durham Fuel Poverty Partnership is a multi agency partnership formed to provide strategic direction to tackle fuel poverty and domestic energy conservation issues in County Durham. More information is available on the following web page: http://www.durham.gov.uk/Pages/Service.aspx?ServiceId=8130 In 2009–10 Durham County Council participated in a national rural fuel poverty partnership scheme alongside the Commission for Rural Communities and the Rural Services Network. The aims of this pilot was to understand fuel poverty and energy efficiency issues that related in particular to rural off gas communities. The findings of this pilot have been embedded into the County Durham Fuel Poverty Action Plan with specific issues such as the establishment of an oil purchase consortium to allow residents to benefit from heating oil bulk purchase schemes. The pilot also assisted with the development of whole stock SAP targeting and reporting energy database. This allows strategic targeting of off gas properties for schemes such as Warm Front, CERT and CESP. More information is available on the following web page: http://www.durham.gov.uk/Pages/ Service.aspx?ServiceId=7743 As a result of these strategic interventions the uptake of Warm Front Measures in County Durham is £14.4 million over the past two years.

How could DECC’s policies for tackling fuel poverty in the private rented sector be improved? By encouraging and allowing Local Authority Beneﬁts Managers to share data on private rented properties to allow direct targeting of these properties for fuel poverty and energy conservation schemes.

How could DECC’s policies for tackling fuel poverty among off-grid consumers be improved? By utilising the existing Home Energy Conservation Act to require Local Authorities to produce strategies to tackle the issues of rural fuel poverty.

Written evidence submitted by EDF Energy Introduction 1. EDF Energy is one of the UK’s largest energy companies with activities throughout the energy chain. Our interests include nuclear, renewable, coal and gas-ﬁred electricity generation, combined heat and power, electricity networks and energy supply to end users. We have over ﬁve million electricity and gas customer accounts in the UK, including both residential and business users. 2. EDF Energy welcomes the opportunity to submit written evidence to support the Committee’s examination of the extent of fuel poverty in the private rented and off grid sectors and options for dealing with the problem.

SummaryPoints 3. Managing energy consumption levels in the private rented sector is a key influence on the ability to tackle fuel poverty. It has proven difficult to provide energy efficiency improvements to households in the private rented sector for a range of reasons, primarily due to both the limited influence a tenant has and the limited incentive for a landlord in relation to energy efficiency management. 4. An important factor regarding fuel poverty in rural areas is that there are consumers who have limited control over their choice of heating solution, in particular those with no access to the gas grid who are subject to higher fuel costs. 5. Alternative low carbon heating technologies could make a significant contribution to a large proportion of households unable to access the gas grid in rural areas. Heat pumps can present an adaptable and more cost effective solution in comparison to where there is no gas connection and alternative expensive heating fuels cobber Pack: U PL: COE1 [O] Processed: [03-07-2012 14:53] Job: 020359 Unit: PG01 Source: /MILES/PKU/INPUT/020359/020359_w021_michelle_FP 29 - National Right to Fuel Campaign.xml

Energy and Climate and Change Committee: Evidence Ev w19

such as oil and LPG are used. Heat pumps can reduce heating and hot water bills and household carbon emissions in comparison to oil. 6. EDF Energy believes that an affectively designed Energy Company Obligation (ECO) can provide valuable support to vulnerable householders to access efﬁcient and low carbon heating, in addition to increasing levels of installation of higher cost measures such as solid wall insulation. We believe the ECO should enable assistance through providing affordable warmth using a range of heating solutions on an equitable basis. Some households could beneﬁt from subsidies to deploy heating solutions, including those off the gas grid that would result in lower or similar heating costs to those with gas heating. 7. It is important that the ECO seeks to meet policy objectives in the most cost effective way, to ensure that the Government’s policies are implemented with least impact on all consumers’ bills including those in fuel poverty.

Response to SpecificQuestions (a) What are the barriers to tackling fuel poverty in the private rented sector? 8. EDF Energy recognises the three key facets to fuel poverty: household income, energy consumption levels and energy costs. In relation to the private rented sector energy consumption levels can be a key influence on the ability to tackle fuel poverty for a range of reasons. It has proven difficult to provide energy efficiency improvements to households in the private rented sector for a variety of reasons, including the limited influence that tenants have over improving the housing stock and managing their energy costs. The landlord also has a limited incentive to install energy efficiency measures as it is the tenant who pays the energy bills and would see the benefit of reduced costs. The transient nature of tenants in the private rented sector can also impact on how rented stock is managed by the landlord which can on occasion reduce the responsibility taken by the landlord.

(b) To what extent will the recent measures in the Energy Act 2011 (to introduce minimum energy efficiency standards in the private rented sector) help the problem? 9. EDF Energy welcomes the inclusion of minimum energy efficiency standards in the private rented sector in the Energy Act 2011. However, these will have to be enforced and implemented in a way which encourages all landlords to improve the energy efficiency standard of their property stock without penalising either tenants or landlords who live in properties which are difficult to improve due to technical reasons. EDF Energy fully supports the aims of Government’s Green Deal policy and believes, if implemented successfully, this could help provide greater access to energy efficiency improvements for all private sector landlords and tenants.

(c) To what extent is fuel poverty in rural areas driven by a lack of access to the gas grid and to what extent are other factors (such as housing condition and income levels) responsible? 10. An important factor with regard to fuel poverty in rural areas, is that there are consumers who have limited control over their choice of heating solution, in particular those living off the gas grid, and as a result are subject to higher costs from fuels such as heating oil. This is a key factor of fuel poverty alongside those who live in hard to treat homes and/or on low incomes. Effective support should be provided for those in the deepest fuel poverty through providing free or subsidised heating measures to these households, including those off gas properties through the affordable warmth aspect within ECO. 11. For the significant proportion of households unable to access the gas grid in rural areas, alternative low carbon heating technologies could make a significant contribution. As part of the solution, alternative technologies and measures can be considered in order to help reduce energy costs if households are provided with support to access efficient and low carbon heating. Heat pumps in particular can present an adaptable and more cost effective solution in comparison to where there is no gas connection and expensive heating fuels such as oil and LPG are used. Air Source Heat Pumps extract heat from the outside air to deliver heating and hot water efficiently and cost effectively. In comparison to oil, heat pumps could reduce heating and hot water bills by up to £350 a year and household carbon emissions by up to 27% a year.8 Experience in international markets such as Sweden and France demonstrate that heat pumps can be deployed at scale and this has been demonstrated by rapid growth in sales. In 2008, 130,000 heat pumps were sold in France alone.9 12. Figure 1 below also demonstrates an average case comparison of heating between an air source heat pump and an oil boiler. The scenario, applying Energy Saving Trust assumptions, demonstrates the costs benefits of heating homes with air source heat pumps and the reduced payback times for householders with no 8 Saving of £350 is based on information provided by the Energy Saving Trust for a typical three-bedroom house heated by oil. Comparison is made using an oil boiler with an efficiency rating of 82% and an Air Source Heat Pump with an efficiency rating of 300%. CO2 saving of 27% based on1.6 tonnes (average UK household energy related carbon emissions is 5.9 tonnes) is based on a comparison made using an oil boiler from Energy Saving Trust figures. Actual savings for a particular household will vary depending on the size and construction of the house, and the way the occupants use the heating system and appliances. Figures based on the EDF Energy Standard Tariff average regional electricity price of 13.2p per unit (including VAT) and do not include any allowance for future price increases. 9 P 172—Meeting Carbon Budgets—the need for a step change—Progress report to Parliament Committee on Climate Change, October 2009 cobber Pack: U PL: COE1 [E] Processed: [03-07-2012 14:53] Job: 020359 Unit: PG01 Source: /MILES/PKU/INPUT/020359/020359_w021_michelle_FP 29 - National Right to Fuel Campaign.xml

Ev w20 Energy and Climate and Change Committee: Evidence

access to the gas grid compared to other types of properties. In some scenarios, where efficiencies of performance are even greater, the benefits are even more significant, not withstanding the advantage of reducing carbon dioxide emissions. The capital costs of installing a low carbon heating, such as heat pumps, are higher than for conventional solutions such as oil heating. The introduction of the Renewable Heat Incentive Premium Payments mitigates this by providing a £850 initial grant for those who install an air source heat pump. However, this grant initiative is due to end soon and there is not yet agreed detail on how the renewable heat incentive for domestic households will be implemented to provide longer term support. For the private rented sector, it is important that any support incentives such as the RHI are available to landlords as the initial capital outlay will be their responsibility, with the tenant receiving the benefits of lower fuel costs. Figure 1

COMPARISON ON HEATING AND CAPITAL COSTS, HEAT PUMP VS OIL Comparison using conservative EST assumptions ASHP Oil Boiler Installed costs (3) 8,500 2,000 Fuel Electricity Heating Oil Efﬁciency 300% 82% Fuel Price (£/kWh) 0.132 0.0587 Typical heat demand 12,870 12,870 Cost to heat home (£) 566 921 Simple Payback 18

13. EDF Energy believes that the ECO and can be designed so that assistance is provided to vulnerable householders, in addition to increasing the levels of installation of higher cost measures such as solid wall insulation. It is important that the ECO seeks to meet policy objectives in the most cost effective way, while considering the wider distribution of impacts of providing high cost measures to a few, with the costs borne by all. As all consumers carry the costs of the ECO then all demographic and geographic groups should have the ability to benefit from the resultant measures. Therefore, providing support to vulnerable householders who can not access the gas grid is a key aspect of delivering affordable warmth and an important tool to help tackle fuel poverty in rural areas and should be considered in the policy design of the ECO. As the ECO will provide free or subsidised heating measures to households, then it should be a policy requirement that heating solutions are provided to off gas properties on an equitable basis. 14. We fully support Government’s aspirations to improve energy efficiency and reduce customers’ carbon emissions. This is something that both EDF Energy in the UK and EDF Group are working on in many countries and is an important part of building a low carbon economy. Building a commercially robust Green Deal to promote the provision of energy efficiency will be a key policy in this regard. Ensuring the low carbon transition is achieved at lowest cost is important to ensure that any cost impacts on energy bills is minimised. 15. EDF Energy also recognises a co-ordinated approach between energy efficiency and reducing demand and low carbon heating solutions is required.

(d) Given that the OFT found no evidence of a competition problem in the heating oil market, what (if anything) can be done to prevent a repeat of the situation in December 2010 when households were faced with high energy costs during a spell of particularly cold weather?

16. EDF Energy recommends that the heating oil market should be regulated by Ofgem. Heating oil is a key resource and requires independent management and regulation as per other key fuel resources used in the domestic market.

(e) How could DECC’s policies for tackling fuel poverty in the private rented sector be improved?

17. EDF Energy believes that DECC’s polices for tackling fuel poverty in the private rented sector will work effectively through the widespread and successful implementation of the Green Deal and ECO programmes. These policies should be designed a manner which ensures that the private rented sector beneﬁt equitably from any interventions.

(f) How could DECC’s policies for tackling fuel poverty among off-grid consumers be improved?

18. As outlined in our response above to point c, we believe that the ECO can provide valuable support to vulnerable householders. It should enable assistance through providing affordable warmth using a range of heating solutions on an equitable basis. Therefore, the higher capital costs of heat pumps compared to gas boilers should be recognised in the policy design to ensure that non gas heating solutions for those householders off the gas grid and more vulnerable to higher fuel costs are able to beneﬁt from such measures. Some households could beneﬁt from subsidies available to deploy renewable heating solutions, including those off cobber Pack: U PL: COE1 [O] Processed: [03-07-2012 14:53] Job: 020359 Unit: PG01 Source: /MILES/PKU/INPUT/020359/020359_w021_michelle_FP 29 - National Right to Fuel Campaign.xml

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the gas grid and result in lower or similar heating costs for these households to those with gas heating. This will allow a fairer allocation of costs across all customers. December 2011

Written evidence submitted by West Sussex Local Authorities 1. What are the barriers to tackling fuel poverty in the private rented sector? — Insulation measures for private sector flats have to be carried out to the whole block which often involves complex issues and can discourage works, resulting in persistent fuel poverty amongst tenants. These issues include arranging access and gaining permission from the different occupiers and owners with varying lease agreements. Also blocks of flats are at a disadvantage because they are treated as commercial by energy suppliers, therefore commercial rates for VAT are applied, which may contribute further to fuel poverty. — The benefits of whole block measures can vary depending on the position of the flat within the block, and the size of the flat. This effectively means that some residents will be less able to benefit from the same measure than others, potentially resulting in them remaining in fuel poverty despite this measure being installed. — Attitude of landlords can be a particular problem to installing insulation and other energy efficiency in private rented properties. The only means of doing this from a local authority perspective is through talks at landlord forums and other proactive targeting where resources allow. — Knowledge amongst private rented tenants of how to improve energy efficiency and the benefits of these measures, and lack of enablement to take action for themselves to reduce fuel poverty and make their home warmer and healthier. — Lack of knowledge amongst both private rented tenants and landlords of tools to help combat poor energy performance such as Energy Performance Certificates that must legally be provided. Local authorities have limited communication avenues with private rented residents, which is a barrier to educating on energy and facilitating access to measures which can alleviate fuel poverty. — Knowledge amongst private rented tenants of their rights to request measures and protection, or lack of, for them as a private tenant. — Park homes and Houses of Multiple Occupation (HMO’s) are especially vulnerable to fuel poverty, due to these dwellings not having individual energy accounts. These types of properties are to be excluded from Government assistance, such as the Warm Home Discount, and it is yet to be seen how this will addressed as part of the Green Deal and Energy Company Obligation. A recent West Sussex flats project led by Arun District Council threw up some of these issues, including difficulties around leases, and different views to having insulation works completed. Jo Brooks, the Energy Efficiency Officer at Arun DC, recently completed a thesis researching the barriers and solutions to improving the thermal efficiency of private sector blocks of flats through insulation.

2. To what extent will the recent measures in the Energy Act 2011 (to introduce minimum energy efﬁciency standards in the private rented sector) help the problem? — The extent to which this standard will help the problem will depend largely on the response from private landlords, and level of information available to private rented tenants. Landlords will ﬁrstly need to acknowledge this law, show want to abide by it and therefore actively arrange for the necessary works to be carried out. Prospective tenants should be equipped with the knowledge to expect a minimum standard when considering a tenancy, and to ask for evidence of this from the landlord. — The level to which this helps the problem will also depend on the capacity within the local authorities to enforce this standard. If this is resourced adequately there is potential for this to work well. There is also unfortunately potential for illegal marketing networks of un-decent private rented properties.

3. To what extent is fuel poverty in rural areas driven by a lack of access to the gas grid and to what extent are other factors (such as housing condition and income levels) responsible? — Lack of access to mains gas is a huge issue in rural areas, as other sources of fuel and alternative technologies are all ultimately more expensive. Even if a rural household is able to source biomass as heating fuel, the efficiency of using this in an open fire can be up to 70% less efficient than a condensing wet central heating system. The way forward with rural households may not necessarily be to connect them to the gas network however, but to assist them with capitol cost and running of alternative and renewable source heating systems. — Housing condition and income both have a part to play, however one could argue these aspects are changeable and could result in transient fuel poverty, unlike lack of gas which contributes to persistent fuel poverty. cobber Pack: U PL: COE1 [E] Processed: [03-07-2012 14:53] Job: 020359 Unit: PG01 Source: /MILES/PKU/INPUT/020359/020359_w021_michelle_FP 29 - National Right to Fuel Campaign.xml

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4. How could DECC’s policies for tackling fuel poverty in the private rented sector be improved? — Future policies would beneﬁt from taking into account the practical “on-the-ground” issues that front-line organisations are experiencing and raising as part of the Green Deal and ECO consultation. If these issues are investigated now, this would remove barriers that would otherwise reoccur within future and related policies. — National regulation for blocks of ﬂats and lease agreements in general, in order to allow for ease of related Government schemes such as the upcoming Green Deal and Energy Company Obligation. — Include policies for how non-traditional builds and uncommon set-ups (ie. Park home sites) can be alleviated from fuel poverty, as they should have a right to be included in any schemes that offer assistance no matter how large or small (ie Warm Home Discount).

5. How could DECC’s policies for tackling fuel poverty among off-grid consumers be improved? — Regulation of oil and LPG markets for domestic heating fuel. — Facilitation of information to off-gas households to enable them to make informed decisions on what fuel type to use. Education and enable them to make informed decisions. — Provision of ﬁnancial assistance to enable fuel poor rural households to consider alternative technologies for heating. — National regulation for uncommon set ups such as off-gas park home sites, in order to allow for ease of related Government schemes such as the upcoming Green Deal and Energy Company Obligation. December 2011

Written evidence submitted by Islington Council

Fuel poverty is a council priority and we have dedicated signiﬁcant resource to tackling this problem in our borough. More than one in four homes are privately rented in Islington and the most recent local statistics, from 2008, suggest that 33% of private tenants in our borough are in fuel poverty.

1. What are the barriers to tackling fuel poverty in the private rented sector?

1.1 Many homes in the private rented sector in Islington are older properties with solid walls and these are expensive to treat.

1.2 Compared to the social housing stock we have relatively little information on private sector tenants and the transient nature of the population makes them difﬁcult to engage. Tenants may be more likely to move than confront their landlord about poor energy efﬁciency standards.

1.3 Signiﬁcant number of private tenants in the borough are prepayment meter customers and unable to take advantage of direct debit discounts.

2. To what extent will the recent measures in the Energy Act 2011 (to introduce minimum energy efﬁciency standards in the private rented sector) help the problem?

2.1 Any minimum standards that are introduced will help to improve overall standards in the sector but it is important that it is properly enforced otherwise the landlords renting the poorest properties may be able to ﬁnd ways around the system. Adequate funding must be available to local authorities to enforce standards.

2.2 Any improvement in the efﬁciency of a property will lead to occupiers having more conﬁdence that bills will be lower. This will have a knock on effect that a higher average temperature will be maintained.

2.3 We are concerned that energy efﬁciency improvements to private rented homes will lead to rent increases. Since we take into account the cost of housing in calculating levels of fuel poverty we are concerned that such rent increases will keep or plunge tenants into fuel poverty. Even small increases in the average London rent will offset savings from energy efﬁciency improvements.

3. To what extent is fuel poverty in rural areas driven by a lack of access to the gas grid and to what extent are other factors (such as housing condition and income levels) responsible?

3.1 Fuel availability is a factor but housing conditions can also be poor. More attention needs to be directed at “alternative” properties such as mobile homes. cobber Pack: U PL: COE1 [O] Processed: [03-07-2012 14:53] Job: 020359 Unit: PG01 Source: /MILES/PKU/INPUT/020359/020359_w021_michelle_FP 29 - National Right to Fuel Campaign.xml

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5. How could DECC’s policies for tackling fuel poverty in the private rented sector be improved? 5.1 Energy inefﬁcient homes should be removed from the market sooner than the 2018 deadline given in the Energy Act. 5.2 Either improve enforcement of EPCs through the minimum standards outlined in the Energy Act or create minimum standards for heating and insulation that have to be met. ie all heating (whether gas or electric) has to have a thermostat and programmer. 5.3 Any strategy has to focus on ﬁnding the most vulnerable and improving their properties. Links between the NHS and local authorities are essential to stop the cycle of vulnerable people returning to poor properties. 5.4 The number of properties that failed the decent homes standard due to category 1 HHSRS hazards is high (excess cold is likely to have played a large part in this). More of these properties need inspecting and enforcement action taken to bring them up to acceptable standards. December 2011

Written evidence submitted by Carillion Energy Services (CES) Carillion Energy Services (CES) welcome the opportunity to respond to this call for evidence in the private rented and off-grid sector. In order to put our comments into context, it may be helpful to outline briefly our role in the provision of energy services across the UK and Ireland. Carillion Energy Services was formerly Eaga plc prior to its acquisition by Carillion in April 2011. Carillion is one of the UK’s leading support services companies with a substantial portfolio of Public Private Partnership projects and extensive construction capabilities. The Group has annual revenue of over £5 billion, employs around 46,000 people and operates across the UK, in the Middle East, Canada and the Caribbean. Carillion Energy Services, a division of the group are a leading independent energy services provider and one of the largest installers of renewable technologies and domestic heating services in the UK. We currently manage Warm Front on behalf of Department of Energy and Climate Change and we also have experience of working for the Welsh Assembly Government on the Home Energy Efficiency Scheme, the Warm Homes initiative in Northern Ireland and the Central Heating and Warm Deal programme in Scotland. We also worked closely with Utilities and Local Authorities in managing the delivery of energy efficiency programmes. Carillion Energy Services are committed to helping the environment and combating climate change; we provide renewable energy solutions to private housing, specifically through the installation of solar thermal panels and air/ground source heat pumps. Our Clean Energy Programme works in conjunction with the Government’s Feed-in-Tariff to install solar photovoltaic panels on social housing properties, we are working with a number of social landlords to provide free electricity to social tenants and have completed over one thousand installs to date. Over 1,000 properties have benefited from the Clean Energy Programme due to our partnership with social housing properties. Within our Carbon Services team, we support the largest number of area-based programmes in the UK, leveraging multiple funding sources to accelerate delivery against policy objectives and drive the Government’s climate change and carbon reduction agendas. Our work with the UK’s major utilities and energy suppliers allowed us to deliver a carbon saving of 11.9 million tonnes of Carbon Dioxide and 1.7 million innovative energy saving products in the financial year 2009–10. For further information on Carillion Energy Services and our work across the principal market sectors of Defence, Education, Health, Facilities Management & Services, Rail, Roads, Building, Civil Engineering and Utilities Services please visit—http://www.carillionplc.com/

1. What are the barriers to tackling fuel poverty in the private rented sector? 1. Carillion Energy Services recognise multiple barriers to tackling fuel poverty in the private rented sector, including average tenure lengths, high demand for rental properties, high costs faced by landlords to enact improvements, and lack of tenant and landlord awareness and engagement. cobber Pack: U PL: COE1 [E] Processed: [03-07-2012 14:53] Job: 020359 Unit: PG01 Source: /MILES/PKU/INPUT/020359/020359_w021_michelle_FP 29 - National Right to Fuel Campaign.xml

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2. Firstly there are reduced incentives for private tenants and landlords to install energy efficiency measures compared to other tenure types. Tenants may be unwilling to pay for upgrades where the landlord gains from value added to the property and landlords may be reluctant to install measures that initially benefits only the tenant (though measures may allow the landlord to command a higher rental price in future). On the part of tenants, the average duration of a tenancy demonstrates that private rental accommodation is viewed in a less permanent manner than other tenures—The average duration of private sector tenancies is only 1.7 years, compared with eight years in the social housing sector and an average of 12 years in the same property for owner occupiers.10 As the benefits of most energy improvements are measured over a long period of time, tenants are less likely to see the long-term rewards of a more efficient property and are more likely to utilise the flexibility and mobility of the market to move to another property if they are concerned about fuel costs. 3. DECC research has shown that domestic private sector tenants generally have a very short-term attitude to their property and feel little attachment to it compared with those in other tenures.11 The Green Deal has the potential to overcome this, as the Green Deal charge should, assuming similar levels of usage, be at worst cost neutral on bills—the overall bill would be no different but the composition of the bill will change as the fall in energy use would be offset by the Green Deal charge. 4. On the other hand, increased demand for rental property has pushed up prices for tenants who may consequently have low expectations for landlords to maintain or upgrade the property. As a Guardian case study of a family living in a damp home in a poor state of repair illustrates: “We did ask about repairs to this house and the landlord is paying for paint, but she has been told she could rent the house out to students for £1,650 a month and already thinks she’s doing us a favour.”12 Indeed, in areas of acute housing shortage such as Lambeth, Environmental Health Officers acknowledge that enforcing higher energy efficiency standards becomes difficult as “any home is better than no home.”13 Referring specifically to rural private rented properties, NEA report that many tenants, on private estates for example, pay nominal “peppercorn” rents and are averse to asking their landlord for improvements in case rents increase.14 5. Evidence suggests that landlords are also unaware of measures available to help them upgrade their properties; according to research conducted by the Energy Efficiency Partnership for Homes only 2% of landlords were aware of the Landlord Energy Saving Allowance (LESA).15 Similarly both landlords and tenants may be unaware of their duties and rights regarding housing conditions, particularly regarding Excess Cold Hazards. 6. Furthermore those tenants who do pursue their rights via the enforcement process may risk higher rents or retaliatory eviction—a pilot study on implementation of the Housing Health and Safety Rating System (HHSRS) in Cumbria estimated that around 25% of tenants who had taken enforcement action through a Residential Property Tribunal had faced retaliatory eviction.16 7. A further barrier to improving energy efficiency in private sector housing is the higher initial cost faced by landlords relative to the average spend required across tenure types. Across tenures, 80% of F and G rated homes can reach the a band E rating of SAP 39 by spending around £3,000, with the remaining 20% needing to spend between £5,000–£10,000. However, as a higher proportion of the most inefficient F and G rated stock is in the private rented sector; landlords are proportionally affected, with 40% needing to spend between £5,000 and £10,000 to reach SAP 39.17

2. To what extent will the recent measures in the Energy Act 2011 (to introduce minimum energy efficiency standards in the private rented sector) help the problem? 8. Carillion Energy Services welcomes the decision to introduce a mandatory minimum energy efficiency standard for privately rented homes; however, we would echo other stakeholders’ comments regarding the application date of 1 April 2018. We would have preferred a commencement date of 1 April 2016, with the date from which landlords must grant permission for Green Deal and ECO financeable measures also being brought forward. An earlier date would have stimulated demand for the Green Deal and the seven year period before regulation takes effect could negate some of what Friends of the Earth, the Association for Conservation of Energy (ACE) and the Citizens Advice Bureau (CAB) term “the announcement effect”18 whereby landlords are encouraged to take voluntary action through coverage of the proposals. Given that the cost to the NHS of 10 “The UK private rented sector as a source of affordable accommodation” Ball, M 2010. University of Reading and The Joseph Rowntree Foundation. 11 “Green Deal and the private rented sector :consumer research among tenants and landlords” Quadrangle, 2011. 12 http://www.guardian.co.uk/money/2011/oct/13/families-unable-to-afford-rents 13 “Tackling fuel poverty in the private rented sector using the Housing Health and Safety Rating System (HHSRS)” Impetus Consult, 2011. NEA and Eaga Charitable Trust. 14 http://www.nea.org.uk/free-case-studies/ 15 Tackling fuel poverty in the private rented sector using the Housing Health and Safety Rating System (HHSRS)’ Impetus Consult, 2011. NEA and Eaga Charitable Trust. 16 Tackling fuel poverty in the private rented sector using the Housing Health and Safety Rating System (HHSRS)’ Impetus Consult, 2011. NEA and Eaga Charitable Trust. 17 Tackling fuel poverty in the private rented sector using the Housing Health and Safety Rating System (HHSRS)’ Impetus Consult, 2011. NEA and Eaga Charitable Trust. 18 “Minimum energy efficiency standard for private rented homes.” 2011, Friends of the Earth, ACE, CAB joint briefing. cobber Pack: U PL: COE1 [O] Processed: [03-07-2012 14:53] Job: 020359 Unit: PG01 Source: /MILES/PKU/INPUT/020359/020359_w021_michelle_FP 29 - National Right to Fuel Campaign.xml

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private tenants living in cold homes is calculated at £35 million annually19 bringing the standard forward could benefit the Exchequer in addition to offering a vital boost to jobs. 9. A commencement date of 2016 would necessitate earlier installation of energy efficiency measures which would have a positive effect on reducing fuel poverty, assisting Government to meet its statutory obligation to eradicate fuel poverty by 2016. 10. Having a static threshold of SAP 39 also fails to future-proof the legislation. If the Government’s Green Deal programme is successful and the average SAP rating of a property rises significantly, it would be logical to raise the standard private rented property must meet to ensure the sector is improving in line with the other types of housing.

3. To what extent is fuel poverty in rural areas driven by a lack of access to the gas grid and to what extent are other factors (such as housing condition and income levels) responsible? 11. Lack of access to the mains gas is undoubtedly an important driver of rural fuel poverty; however, a number of other factors must be taken into account. 12. Firstly, households in rural areas face increased costs compared with their urban counterparts and consequently they have less income with which to heat their homes. The Joseph Rowntree Foundation reported in 2010 that a working couple with two children living in a hamlet required an additional £12,550 annual income to achieve an acceptable minimum standard of living than an urban family of the same composition. This figure decreased to £10,346 for the same household living in a village and £8,114 if the household lived in a rural town, however, the level of difference remains stark.20 13. This poses further difficulties in identifying the rural fuel poor using the current fuel poverty measurement, as there is no recognition made of the additional costs faced by rural dwellers therefore they may be under-reported in fuel poverty statistics. This is in much the same way that fuel poor households in London may be under-reported due to failure to account for their high housing costs. 14. According to the Commission for Rural Communities (CRC) State of the Countryside 2010 report households in rural areas enjoy a slighter higher household income on aggregate than urban dwellers, though households living in rural areas in the most sparsely populated parts of England such as Northumberland, Cumbria, Norfolk, Devon and Cornwall, have a median household income below both urban dwellers and rural dwellers living in more densely populated areas of the country.21 In addition to sparse rural dwellers being more susceptible to fuel poverty as a result of lower incomes, they are also the most “hard to reach” households as they are insufficient in number and proximity to one another to benefit from area based approaches which are unlikely to be cost effective. 15. Rural households often face the dual disadvantage of being both “hard to reach” and “hard to treat.” Of 9.2 million dwellings in England that are classed as “hard to treat” the largest component are off the gas network and have solid walls, representing 72% of the total.22 In addition to the higher costs of more complex measures, such as solid wall insulation, rural hard to treat properties are more likely to face aesthetic restrictions or covenants, if situated in a National Park, conservation area, or on a private estate for example. Unfortunately the higher cost of installing specialist products to overcome such barriers is likely to be prohibitive to most households, especially the fuel poor. 16. There is some evidence to suggest that rural pensioners may also be excluded from fuel poverty interventions such as the Warm Homes Discount that automatically matches benefit data with the DWP to identify the core group that receive Guaranteed Pension Credit. This is because take-up of Pension Credit among eligible households is lower in villages, hamlets, and isolated dwellings with up to 54% of eligible pensioners classed as non-recipients compared with 35% in urban areas.23 It is unclear, however, whether this is due to less awareness of benefit entitlement, stigma associated with Government assistance, or that rural dwellers have specific characteristics that mean they do not need to claim additional benefits. 17. In addition to the fuel poverty drivers discussed above, reliance on alternative heating fuels does of course present a challenge, not only in higher unit costs, seasonal and daily price fluctuations but in a number of other unique ways that can be disadvantageous to fuel poor households. 18. Action with Communities in Rural England (ACRE) reports that households reliant on oil often receive a discounted price when ordering more 1,000l of oil; however, such large orders are likely to be vastly beyond the means of low-income households when the current price of oil is around 60p per litre (GB average 2 December 2011). Additionally, ACRE cites an example of more modest properties in rural West Durham, such as terraced housing in former mining villages, which are unable to accommodate a larger oil tank to take advantage of high volume orders even if the obstacle of high upfront cost was removed.24 Heating oil suppliers 19 “The Health Costs of Cold Dwellings” BRE and CIEH, 2011. 20 “A Minimum Income Standard for Rural Life” Smith N, Davis, A, Hirsch, D 2010. Published by the Joseph Rowntree Foundation. 21 “State of the Countryside 2010” 2010 Commission for Rural Communities. 22 “Understanding the real depth and impact of fuel poverty in rural England” Rural Services Network 2010. 23 “Pension Credit take up in rural areas” Commission for Rural Communities 2007. 24 Off-grid energy market study—OFT consultation response ACRE 2011. cobber Pack: U PL: COE1 [E] Processed: [03-07-2012 14:53] Job: 020359 Unit: PG01 Source: /MILES/PKU/INPUT/020359/020359_w021_michelle_FP 29 - National Right to Fuel Campaign.xml

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generally have payment plans in place to allow customers to pay for oil in monthly instalments, however, they often charge interest for this payment method, again disadvantaging customers who are unable to make payment in full. This is in contrast to the on-grid sector where payment via monthly direct debit attracts a discount. 19. In the LPG market, customers should in theory benefit from changes introduced by the Competition Commission, effective from 2008 and 2009, limiting the maximum contract term to be tied to a specific supplier to two years and by preventing suppliers and amending tank transfer rules. In practice, however, the OFT accepts that it remains difficult for bulk LPG customers to switch supplier. For the 91% of the market with an individual tank, this is largely due to new suppliers refusing to take on non-compliant tanks and costs to consumers of re-siting such tanks (if possible) are higher than any benefits to be gained from switching. For the 9% of the market that is part of a metered estate, switching is almost impossible as all households within the estate must agree to switch to the same supplier and coordinating a switch can be difficult if different residents are all at different stages of a standard two year exclusivity of supply contract. This difficulty perhaps reflects why only 0.5% of metered LPG customers switched supplier in 2010–2011.25 Though these problems are undoubtedly experienced across the bulk LPG customer base, consumers’ inability to reject high prices by sourcing a cheaper supplier will have the most detrimental effect on lower income fuel poor households. 20. Finally, some 200,000 households in Great Britain rely on cylinder LPG; many of these people are park home residents in rural areas. These residents are charged a higher price per litre for cylinder supply versus bulk supply, and face similar limitations switching due to paying deposits on cylinders and suppliers refusing to collect empty cylinders if a customer intends to switch. Residents often also have few other fuel options due to space constraints for siting tanks. These issues are compounded by park homes being notoriously hard to treat, as NEA notes, and they risk exclusion from the fuel poverty dialogue due to not being classed as dwellings by the English House Condition Survey.26

4. Given that the OFT found no evidence of a competition problem in the heating oil market, what (if anything) can be done to prevent a repeat of the situation in December 2010 when households were faced with high energy costs during a spell of particularly cold weather? 21. We appreciate the reasoning behind the OFT’s judgement on competition within the heating oil market, which notes that the market is working reasonably well over the longer term and that seasonal price fluctuations have long been a market feature as suppliers take around a 10–15% profit margin in winter to offset very low or negative margins in the summer months of low demand. 22. The response will, however, do little to address the concerns of oil consumers affected by last December’s price increases, shortages, and failure of some suppliers to adhere to consumer law. 23. Whilst the OFT explains it would not be appropriate for off-grid fuels to be price-regulated by Ofgem as competition in these markets is not constrained by the “natural monopolies” of the mains gas and electricity transmission networks, it seems somewhat unjust that customers are afforded a lesser degree of consumer protection simply by virtue of living off the gas grid. This is a concern for vulnerable customers especially as respondents to the OFT criticised suppliers’ responses to priority cases. 24. It is encouraging that the Federation of Petroleum Suppliers (FPS) has drawn up a voluntary code of practice for abnormal weather conditions which indicates how suppliers can prioritise deliveries and also recommends referring vulnerable customers to local authorities for further assistance. It would be welcome, however, for this incipient recognition of consumer safeguards to be implemented on a statutory basis with penalties for non-compliance from suppliers. 25. Though important for suppliers to react better to high-demand scenarios, they must also be encouraged to work proactively with stakeholders to prevent high-demand situations escalating to become unmanageable. In the bulk LPG sector, Calor are leading the way in this respect by writing to customers in winter advising them to re-fill theirs tank when they remain 60% full to avoid running out of gas if deliveries cannot be made in adverse weather conditions. Oil suppliers could learn from this example. Oil suppliers also appear to be generally less engaged with consumers and stakeholders compared to LPG providers, such as Calor, who run a rural energy advisorship campaign with NEA and ACRE called the Future of Rural Energy in Europe (FREE). Whilst we accept that oil suppliers are unlikely to engage in activity to reduce carbon emissions given their position as suppliers of a relatively high emission fuel, they could work much more proactively with their vulnerable customers to offer more payment flexibility and to raise awareness of fuel poverty initiatives such as Warm Front. 26. Following the supply problems, communities appear to be implementing their own proactive solutions, primarily in the form of oil buying cooperatives such as Oxfordshire Rural Community Council (OCCR)’s county wide cooperative. In addition to the syndicated approach reducing congestion on rural roads and lowering the carbon footprint of the average delivery, members save an average of around £50 on a 1,000l delivery.27 25 Off-grid Energy: An OFT Market Study, 2011. 26 http://www.nea.org.uk/park-homes-campaign 27 Off-grid energy market study—OFT consultation response ACRE 2011. cobber Pack: U PL: COE1 [O] Processed: [03-07-2012 14:53] Job: 020359 Unit: PG01 Source: /MILES/PKU/INPUT/020359/020359_w021_michelle_FP 29 - National Right to Fuel Campaign.xml

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27. In the longer term, off-grid customers should be encouraged to consider microgeneration renewable heating sources which would reduce overall energy costs for off-grid consumers but would crucially offer a secondary source of supply during periods of abnormally high demand. This should be targeted through the Renewable Heat Incentive and Green Deal, though the relatively high install costs may not initially be Green Deal ﬁnanceable without additional subsidy. Consumers may also be reluctant to take up such measures in the absence of consistent policy from DECC having witnessed the impacts of the sudden changes to the feed-in tariff programme for solar PV.

5. How could DECC’s policies for tackling fuel poverty in the private rented sector be improved? 28. From 2013 the current DECC suite of polices of CERT. CESP and Warm Front will be replaced by the Green Deal and ECO, which will be the only policy for improving energy efficiency in the private and private rented sectors. 29. The introduction of Green Deal and ECO should stimulate demand for improving private rental sector properties, provided the golden rule can be met reliably and the default risk remains low, as anticipated. However, as discussed in question 1, the high percentage of privately rented homes requiring a high level of investment may mean that not all of these measures are financeable through Green Deal alone. If the affordable warmth element of the ECO is set to deliver mainly heating systems and basic insulation measures only, as currently envisaged, many fuel poor households in private rented properties could miss out based on their need for more expensive measures like solid wall insulation and double glazing. 30. In order to really engage private landlords and tenants, as discussed in Question 2, we also believe it would be beneficial for DECC to reconsider bringing forward the 2018 deadline and to investigate introducing a stair-casing minimum efficiency standard that increases in line with improvements to the housing stock generally. 31. We welcome DECC’s proposal to make Energy Performance Certificates (EPCs) available to the public from 2012, unless the holder chooses not to disclose this information. If the holder is classed as the landlord rather than the tenant, landlords could be disinclined to publish the information on the energy efficiency of their stock if the results are unfavourable. DECC could avoid this by placing a mandatory requirement for landlords to disclose EPCs to select groups, like local authorities, who can then focus their awareness campaigns and HHSRS activity on the most inefficient properties. 32. It is our belief that a higher proportion of the ECO funding should be directed to the alleviation of fuel poverty, to avoid the bulk of additional funding being utilised for solid wall installations for households who can potentially fund any Green Deal shortfall themselves. As ECO funding will be recovered through all customers’ energy bills, it would be regressive for the fuel poor to fund improvements for those who are able to pay. 33. Finally, we would re-affirm our belief that the only practical long term solution to the eradication of fuel poverty is to invest in the improvement of the housing stock. We do not argue against the fact that for some low income households, the Winter Fuel Payment and Warm Home Discount will make the difference between that household being able to turn the heating on or sitting in a cold home. However these payments, whilst potentially making a difference to a household for one year, do not address the most important underlying cause of fuel poverty; the poor energy efficiency of the housing stock where occupants lack the capacity to invest in energy efficiency measures to deliver permanent solutions.

6. How could DECC’s policies for tackling fuel poverty among off-grid consumers be improved? 34. Although the OFT appear to suggest there is limited scope to reduce costs for off-grid heating oil customers, there may be scope for DECC to work with the off-grid fuels industry to draw up mandatory protections for vulnerable customers building on the current voluntary provisions. Additionally, DECC could directly engage with heating oil suppliers to raise awareness of wider energy efficiency and fuel poverty policies that could benefit their customers with a view to developing supplier led projects in a similar vein to the Calor FREE project. Currently, however, there may be limited incentives for oil suppliers to participate in similar schemes. 35. Benefit Entitlement Checks (BECs) for rural pensioner households could be reintroduced on a smaller scale targeted basis during a range of interventions such as through the Warm Front Scheme. This would potentially increase take-up of Pension Credit among eligible rural groups meaning they would receive the Warm Homes Discount and would become eligible for Warm Front, and potentially ECO in the future. Particularly as BECs can be a passport to receiving assistance for installing energy efficiency measures, as well as to receiving rebates such as the Warm Homes Discount, we would recommend that this service is incorporated into future programmes to target hard to reach customers. Carillion Energy Services’ previous experience offering BECs found that average weekly incomes among pensioner households were increased by an average of £40.55 a week. 36. The carbon saving element of the ECO has the potential to benefit rural properties that are more likely to have solid walls, however, as with the private rented sector we have concerns that the funding will be utilised by households that could afford to fund any Green Deal shortfall. Instead, the funding should be cobber Pack: U PL: COE1 [E] Processed: [03-07-2012 14:53] Job: 020359 Unit: PG01 Source: /MILES/PKU/INPUT/020359/020359_w021_michelle_FP 29 - National Right to Fuel Campaign.xml

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prioritised on the basis of need and we would reiterate that we would like a higher proportion of ECO funding to be reserved for tackling fuel poverty, with a wider variety of measures to be offered under the affordable warmth element. 37. If it could be demonstrated that signiﬁcant savings and greater thermal comfort could be achieved by installation of micro-generation technologies then these measures could be particularly targeted towards rural off-grid households as a means of protecting them from both massive cost ﬂuctuations and from running out of fuel during periods of peak demand. December 2011

Written evidence submitted by National Grid Key Points — We have considered the questions posed by the committee and whilst recognising the issues of Fuel Poverty in the private rented sector we limit our evidence and comments to the specific questions relating to Fuel Poverty in the “off grid” sector. — National Grid manages gas distribution in the heart of England, delivering gas to 11 million homes, businesses and schools. — We estimate there are around 2.5 to 3 million “non-gas” homes within our gas distribution area. Of these we believe up to 1.5 million may be fuel poor. The precise demographics of these households are not known, however our network areas include five of the largest 10 UK cities (population) in the country. This means it is likely that a large proportion of fuel poor households (up to 80–85%) live in high rise flat developments that may not be suitable for individual gas connections. Therefore we believe innovation is essential. — As part of our price control process for gas distribution (RIIO GD-1) the majority of our customers and stakeholders told us to continue to focus on supporting Government’s targets with respect to reducing fuel poverty. In line with this we have included a target of connecting 35,000 more fuel poor households to gas alongside exploring innovative solutions around heat networks.

About Us National Grid owns and manages the grids to which many different energy sources are connected. In Britain we run systems that deliver gas and electricity across the entire country. In the North East US, we provide power directly to millions of customers. We hold a vital position at the centre of the energy system. We join everything up. We all rely on having energy at our finger tips; our society is built on it. From the warmth and light we rely on at home, and the power which keeps our factories and offices going, to the mobile communications and other infrastructure technologies that are essential parts of our modern lifestyle. We at National Grid have a role to connect people economically to their fuel of choice. That puts National Grid at the heart of one of the greatest challenges facing our society; supporting the creation of new sustainable energy solutions for the future and developing an energy system that can underpin our economic prosperity in the 21st century. We fully embrace the opportunity to support changes in the energy industry that will be needed to achieve our climate change targets by 2050. We believe that gas is likely to have a significant role to play in meeting these targets in a cost effective way by continuing to provide adequate heating to millions of customers in the long term. We welcome the opportunity to provide evidence to the Energy and Climate Change Committee.

DECC’s policies for tackling fuel poverty for those off-grid The current Ofgem “Fuel Poor Mains Gas Extension Scheme” is largely an effective way of helping to remove some of the causes of fuel poverty (both local and rural). We believe that scheme plays an important role in ensuring appropriate gas heating systems and other energy efﬁcient services are delivered as a result of upstream investment by Gas Distribution companies (GDNs). We believe through our partnership with Affordable Warmth Solutions Community Interest Company (see later), we have developed an industry leading fuel poor delivery model. This has enabled a signiﬁcant number of off gas community schemes to be connected through mains extension and subsequent service connections. In 2009 as part of Ofgem’s publicly stated objective of connecting 20,000 fuel poor households to the gas network by 2013, National Grid agreed a target with Ofgem of providing new gas connections to 5,000 qualifying homes. Having met that target some three years ahead of schedule we have now reset the “bar” and are now aiming for 17,150 fuel poor connections by April 2013. cobber Pack: U PL: COE1 [O] Processed: [03-07-2012 14:53] Job: 020359 Unit: PG01 Source: /MILES/PKU/INPUT/020359/020359_w021_michelle_FP 29 - National Right to Fuel Campaign.xml

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This remains a challenging target but we are confident that with the continued support of our strategic partners we will deliver on our commitment and provide an efficient and economic solution to these energy inefficient and vulnerable homes.

Future DECC Policies Connecting heat and power Given National Grid’s demographic challenge with flatted properties we have been exploring whether we can fund and connect heat networks and/or Combined Heat and Power plants to the gas grid through the Ofgem fuel poor gas connections scheme. We believe the current scheme does not allow these “heat networks” to be adequately funded even though they are considered in most cases to be the most efficient and appropriate solution to multi occupancy dwellings. We would encourage DECC and Ofgem to support network companies who develop proposals to include such schemes into their charging methodologies, which would enable these fuel poor and vulnerable customers to benefit from the availability of gas. To further facilitate this initiative we would request DECC support proposals that allow third parties to own assets funded by GDN’s (eg downstream heat networks).

Green Deal To help remove homes from fuel poverty and particularly rural fuel poverty we believe it is vitally important that fuel poor schemes are aligned with other Government initiatives in this area. With this in mind, it will be important to consider for the RIIO-GD1 review period how the Green Deal and Energy Company Obligation (ECO) proposals could be used to support the fuel poor to connect to gas. For example if Green Deal measures were to include gas connections, this might deliver a route for the GDNs to support delivery of a whole house efﬁciency arrangement by facilitating connection to gas to add to in house measures on heating and insulation.

Innovation With regard to incentives for GDNs to invest in future schemes, we believe these should encourage network companies, and their in-house partners, to deliver them efﬁciently and allow for innovation. We believe that there are a number of technologies where fuel poor customers could beneﬁt from lower fuel prices, which may not be directly connected to the gas supply network. National Grid supports the continued role for Ofgem’s Discretionary Reward Scheme where such innovative solutions would be appropriately rewarded.

Reviewing Eligibility On a more detailed point we have identified a number of potential schemes in England where we believe homes would benefit from a network extension however because they fall outside the Index of Multiple Deprivation top 20% (IMD score 34.42) criteria they fail to qualify for support from a GDN. We accept that additional criteria could apply, however collecting this data is a time consuming and costly exercise that consequently increases the duration and cost of a project. National Grid would propose that the eligibility criterion (IMD) for schemes should be changed to include a home or community with an IMD score of 25 or greater (this was the criteria adopted for the original pilot programme delivered by the DTI Design and Demonstration Unit). In addition, we would encourage Ofgem to consider whether a GDN’s “economic test” should be broadened to take into account the wider environmental benefits, such as reduction in “carbon emissions” or accrued “lifetime energy savings”—both we believe are accepted criteria for other industry schemes eg Carbon Emissions Reduction Target (CERT).

Concessionary Fuel Scheme The National Concessionary Fuel Ofﬁce (NCFO) administers the Concessionary Fuel Scheme on behalf of DECC. This scheme allows ex-employees of British Coal Corporation (BCC) and their dependants to receive an entitlement of solid fuel or a cash allowance providing that they meet the criteria of the qualifying agreement. The majority of the recipients are believed to be over 70 years of age and no longer in full term employment. Recipients of the scheme are able to receive “cash in lieu” of coal however National Grid’s experience is that this incentive has not kept pace with the rise in alternative energy sources. We suggest that an increased cash payment or one off switching allowance would help those in receipt of concessionary coal to switch to an alternative less carbon intensive fuel. This initiative would also help reduce the administrative burden of government departments.

National Grid support for energy efﬁciency initiatives Working with a number of organisations across the UK National Grid contributes to the policy debate on fuel poverty and is actively involved in supporting energy efﬁciency initiatives. cobber Pack: U PL: COE1 [E] Processed: [03-07-2012 14:53] Job: 020359 Unit: PG01 Source: /MILES/PKU/INPUT/020359/020359_w021_michelle_FP 29 - National Right to Fuel Campaign.xml

Ev w30 Energy and Climate and Change Committee: Evidence

In Scotland, National Grid is an established member of Energy Action Scotland Business Supporters Group. Through this network National Grid is a regular sponsor and supporter of “Keeping Scotland Warm” which aims to bring the issue of fuel poverty before the Scottish parliament and highlight solutions. National Grid also sponsor the annual SCARF (Save Cash and Reduce Fuel) school calendar campaign, which aims to encourage pupils to demonstrate ways to save energy at home and their awareness of gas safety. This year the event was supported by members of the Scottish Executive including First Minister Alex Salmond.

In Wales, National Grid is on the Board of a regulated Community Interest Company, Warm Wales-Cymru Gynnes, which aims to bring a community centred approach to economic, social and environmental sustainability. Set up in 2004 by National Grid, Warm Wales has successfully offered support to individuals, local authorities and housing associations in Wales to reduce their energy bills through the introduction of renewable energy technology to homes and buildings.

Warm Wales has delivered over £26 million of investment into Wales, with funding obtained from a range of areas including CERT and the Community Energy Saving Programme (CESP), creating energy savings in excess of £52 million. Looking ahead Warm Wales has recently announced the development of “Co-Cymru” a new community interest company focused on community regeneration services to customers, based on employment, training and community friendly procurement.

Across England, National Grid plays an active role in helping to ﬁnd solutions to tackle fuel poverty. In 2009 National Grid set up an independent Community Interest Company (CIC), Affordable Warmth Solutions. The company is chaired by the Rt. Hon Malcolm Wicks MP, with the aim of supporting the installation of new gas connections, gas heating systems and other energy efﬁciency measures to some of the most deprived areas of our gas distribution network area.

The Affordable Warmth Solutions approach is based on a “whole community, whole house” package of affordable warmth measures. At the 31 October 2011, on behalf of National Grid it has delivered 86 community schemes and connected 11,683 vulnerable homes to our gas distribution network.

The scheme is not simply about providing new gas connections. In order to make a real difference to people’s lives there also needs to be investment in new highly efﬁcient gas heating systems. For community schemes alone the partnership between National Grid and Affordable Warmth Solutions has secured over £8.1 million in investment for such heating systems.

The Environmental and Social Impact

Affordable Warmth Solutions measure the impact of their work on the environment. To 31 October 2011 they estimate to have helped reduce the lifetime environmental impact from old inefﬁcient heating systems by some 950,000 tonnes carbon dioxide. In terms of potential ﬁnancial savings for householders this generates some £38 million lifetime energy savings.

Customers are also recognising the impact that the work of Affordable Warmth Solutions is making on their lives with an increase in customer satisfaction levels, and 97% of customers saying their houses are now warmer and more comfortable following the installation of a new gas heating system. December 2011

Written evidence submitted by the Fuel Poverty Advisory Group (FPAG)

The Fuel Poverty Advisory Group is a non-departmental advisory body, which consists of a chairman and senior representatives from the energy industry, charities and consumer bodies. Each member represents their organisation, but is expected to take an impartial view. The role of the Group is to: — Consider and report on the effectiveness of current policies aiming to reduce fuel poverty; — Consider and report on the case for greater co-ordination; — Identify barriers to reducing fuel poverty and to developing effective partnerships and to propose solutions; — Consider and report on any additional policies needed to achieve the Government’s targets; — Encourage key organisations to tackle fuel poverty, and to consider and report on the results of work to monitor fuel poverty.

Note

The diverse nature of the Group’s membership may, on some occasions, prevent unanimity on some of the following points. cobber Pack: U PL: COE1 [O] Processed: [03-07-2012 14:53] Job: 020359 Unit: PG01 Source: /MILES/PKU/INPUT/020359/020359_w021_michelle_FP 29 - National Right to Fuel Campaign.xml

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Executive Summary The Government’s own estimate indicates that in 2011 there are 4.1 million households in England in fuel poverty; however some members of FPAG have estimated that with recent price rises this could now be as high as 5 million.28 Almost 50% are pensioners and overall some 80% can be categorised as vulnerable. High energy prices have been the biggest driver in the increase in fuel poverty and the long term trend is for prices to continue rising. With every one per cent increase in energy prices, another 60–70,000 households are added to the number of homes in fuel poverty.29 The recent Marmot Review Team report30 presented evidence on how cold homes lead to multiple health problems. Cold homes and fuel poverty contribute to excess winter deaths, respiratory health problems and mental health problems as well as an increased likelihood of poor educational attainment among children. The recession, unemployment plus the industries investment plans estimated at c. £200 billion to 202031 and uncertainty over new generating capacity and energy prices will exacerbate the problem. FPAG remains deeply concerned that the costs and implication of the UK’s transition to a low carbon economy, has yet to be sufficiently explored. Meanwhile, the regressive means of collecting costs added to fuel bills to fund a range of related environmental and energy costs creates consumer inequity should these costs continue to be recovered in this way and not funded via general taxation. A more equitable attribution would be for recovery on a per kWh basis and not per customer as some are at present. Initial research undertaken by FPAG reveal that 85% of fuel poor consumers would benefit from a move to consumption-based cost recovery mechanism. The attribution of these and other costs on consumers bills to fund decarbonisation of energy production and its end use requires much greater exploration and transparency. The drastic reduction in funding for Warm Front, and the scheme’s complete termination in 2013, is particularly disappointing given that heating and insulation improvements represent the most rational and sustainable approach in addressing fuel poverty. It is, therefore, essential that the government implement alternative programmes to meet the target of eradicating fuel poverty by 2016. Without Treasury funding, the provision of capital to fund such improvements is the most elusive element in the battle to eradicate fuel poverty. The proposed scale of the new Energy Company Obligation (ECO) will not provide sufficient assistance for the fuel poor. It is imperative that a proper assessment of the required capital costs to significantly improve the housing stock of the fuel poor is undertaken by Government and then an assessment of how much of the required revenue should come from ECO, and what should come from other sources to be specified. In addition, partnerships between local authorities, energy suppliers, and charities with a door-by-door, street-by-street approach to improving the homes of households at risk of fuel poverty will be crucial to making more rapid progress. The Green Deal and ECO offer a new opportunity to assist both those in the private rented sector and households off the gas grid. However, most FPAG members believe that ECO must be dedicated to the alleviation of fuel poverty and not used to subsidise expensive measures on behalf of “Able-to-Pay” households whilst so many fuel poor household still require measures to be fully funded upfront.ousehold house

1. What are the barriers to tackling fuel poverty in the private rented sector? 1.1 In 2009, 21% of those living in privately rented accommodation were in fuel poverty.32 It is also estimated that 17% of all fuel poor households live in privately rented accommodation.33 1.2 The current Government energy efficiency schemes such as Warm Front, Carbon Emissions Reduction Target and the Community Energy Saving Programme, have found it difficult to engage when tackling energy efficiency and reducing fuel poverty in the private rented sector. One of the main reasons is the high turnover in the private rented sector is such that energy efficiency is unlikely to be a high priority if a person is only renting a property temporarily. 1.3 Most importantly, there has been a long standing battle for those that do wish to improve the energy efficiency of the property in seeking agreement from the Landlord. As has been seen under the Warm Front scheme, even where the tenants are eligible to receive a grant for the property to be improved, landlords are often reluctant to agree to the work being carried out. In addition, where landlords are agreeable, some tenants are reluctant in fear of a rent rise once the property is improved. 1.4 It is also often the case that properties in the private rented sector are particularly hard to treat, either because they are a block of flats where it is difficult to insulate or they are older housing stock with solid walls that are also a challenge and more expensive to insulate. Furthermore, these same properties are also most 28 NEA estimate November 2011 29 DECC fuel poverty impact assessments 2010 30 The Health Impacts of Cold Homes and Fuel Poverty, written by the Marmot Review Team for Friends of the Earth, published in May 2011 31 Ofgem Project Discovery 32 http://www.decc.gov.uk/en/content/cms/statistics/fuelpov_stats/fuelpov_stats.aspx 33 http://www.decc.gov.uk/en/content/cms/statistics/fuelpov_stats/fuelpov_stats.aspx cobber Pack: U PL: COE1 [E] Processed: [03-07-2012 14:53] Job: 020359 Unit: PG01 Source: /MILES/PKU/INPUT/020359/020359_w021_michelle_FP 29 - National Right to Fuel Campaign.xml

Ev w32 Energy and Climate and Change Committee: Evidence

likely to be off the gas network so that tenants are faced with the much higher heating costs associated with alternative heating fuels, thus increasing their propensity to be living in fuel poverty. 1.5 FPAG has long considered that this area will only be sufficiently rectified with legislation and regulation of the private rented sector to create a greater incentive for private landlords to improve the thermal efficiency of their properties. We believe that without this, this section of the housing stock will fall further and further behind housing standards and continue to be financial drain on tenants trying to keep warm.

2. To what extent will the recent measures in the Energy Act 2011 (to introduce minimum energy efficiency standards in the private rented sector) help the problem? 2.1 In light of our analysis above, FPAG welcomes the amendment to the Energy Act 2011 that from April 2016 residential landlords will not be able to unreasonably refuse requests from tenants for consent to energy efficiency improvements and from 2018, all private rented properties must be brought up to a minimum energy efficiency standard rating, making it unlawful to rent out a house or business premise that does not reach this minimum standard. However, FPAG find it regrettable that the start date is seven years in the future, when the people in the least energy efficient housing stock need help to keep warm much sooner. 2.2 Whilst it is hoped that landlords will take advantage of the Green Deal to upgrade their properties without incurring this cost, it is feared that without Regulation or additional incentive, this will be a missed opportunity. FPAG see no reason why the provision in the Energy Act which starts in 2016 cannot be implemented alongside the launch of the Green Deal and ECO. Such a provision would then enable the minimum energy efficiency standard target to be brought forward to 2016 in line with the fuel poverty target.

3. To what extent is fuel poverty in rural areas driven by a lack of access to the gas grid and to what extent are other factors (such as housing condition and income levels) responsible? 3.1 The Government estimates that 2.86 million households in England were off the gas grid in 2009 and of these 800,000 households (28%) were in fuel poverty34. Fuel Poverty is driven by a number of factors; the household’s income, the energy efﬁciency of the property, and cost of the energy to heat the property. 3.2 There is strong evidence that if a household is not connected to the gas-grid, whichever fuel type they choose, they will be at a higher risk of fuel poverty. The table below shows a much higher percentage of fuel poor households where they are not connected to the gas grid in all instances except communal heating.

Table 1 FUEL POVERTY PERCENTAGES BY HEATING SOURCE Presence of Central Heating by Main Fuel % Households in Group Central Heating Type of Boiler Year Not Fuel Poor Fuel Poor Central heating present Gas 2009 84.0 16.0 Oil 2009 70.1 29.9 Solid fuel 2009 50.1 49.9 Electricity 2009 75.4 24.6 Communal 2009 88.0 12.0 Total 2009 82.6 17.4

No central heating present Gas 2009 49.2 50.8 Oil 2009 0.0 0.0 Solid 2009 26.8 73.2 Electricity 2009 47.4 52.6 Total 2009 47.1 52.9

Source: Trends in Fuel Poverty 2003–09 DECC 2011. 3.3 For those households in rural areas living off the gas grid, the higher cost of fuel can often also be exacerbated by the poor energy efﬁciency of the property, resulting in a much higher propensity to be in fuel poverty. In 2009, households off the gas grid spent an average of £1,580 on fuel costs, compared to an average fuel spend of £1,300 amongst households on the gas grid.35 In addition, households off the gas grid have an average SAP rating of 41, compared to an average of 55 amongst households on the gas grid.36 It can therefore be concluded that those households off the gas grid with the highest fuel costs also live in the least thermally efﬁcient buildings, resulting in a higher risk of experiencing fuel poverty. 34 http://www.decc.gov.uk/en/content/cms/statistics/fuelpov_stats/fuelpov_stats.aspx 35 http://www.decc.gov.uk/en/content/cms/statistics/fuelpov_stats/fuelpov_stats.aspx 36 http://www.decc.gov.uk/en/content/cms/statistics/fuelpov_stats/fuelpov_stats.aspx cobber Pack: U PL: COE1 [O] Processed: [03-07-2012 14:53] Job: 020359 Unit: PG01 Source: /MILES/PKU/INPUT/020359/020359_w021_michelle_FP 29 - National Right to Fuel Campaign.xml

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3.4 FPAG has long argued that best method to tackle to fuel poverty is to improve the efﬁciency of the nations’ housing stock, which would at least reduce the amount of fuel needing to be consumed if little can be done about the price.

5. How could DECC’s policies for tackling fuel poverty in the private rented sector be improved? 5.1 It is hoped that the new Green Deal and Energy Company Obligation will be able to have a greater impact than previous policies in assisting the private rented sector. However, the current proposals do not provide any new incentive for landlords to take up this scheme and in fact where there tenants would previously have qualified for Warm Front and could have made the application, the onus will now be on the landlord to organise the Green Deal finance package, which is likely to stifle take up in this sector. 5.2 There is concern that if the majority of resources under ECO are to be used to reduce carbon, the resources may not be adequate to assist the fuel poor in the private rented sector. In addition, ECO will be funded through costs added to customer’s bills; this is not an equitable replacement for Warm Front. 5.3 FPAG continues to argue that a Treasury funded energy efficiency programme is necessary to reduce fuel poverty. Once the Warm Front programme ends in 2013, it will be the first time since 1978 there will be no taxpayer-funded scheme to install energy efficiency measures in dwellings occupied by vulnerable and low- income households. Meanwhile, higher energy prices increase VAT receipts to the Treasury by circa £210 million per annum. Similarly, the carbon price floor, an intervention by Government to help facilitate the construction of low carbon energy sources, could potentially deliver the Treasury an additional £1.45 billion per annum when fully introduced. Therefore, there are choices for Government in this context as opposed to only the deficit reduction. 5.4 In order to ensure that the private rented sector are more adequately captured by DECC policies; it is vital that these programmes establish partnerships between local authorities, energy suppliers, and charities. Only with a door-by-door, street-by-street model will energy efficiency make rapid progress in the private rented sector.

6. How could DECC’s policies for tackling fuel poverty among off-grid consumers be improved? 6.1 FPAG is concerned that current energy efficiency schemes provide a limited range of support for households occupying a number types of property, including those not connected to the mains gas network. 6.2 The Green Deal and ECO Consultation states that around 75% of the resources available for ECO will be used to reduce carbon in hard to treat homes. Most FPAG members believe that ECO must be dedicated to the alleviation of fuel poverty and not used to subsidise expensive measures on behalf of “Able-to-Pay” households. If the Government were to allow this practice, action on fuel poverty would be seriously diminished and we would face the prospect of financially disadvantaged households subsidising, through a levy on their energy bills, expensive works carried out on behalf of more affluent households. It should be considered that those fuel poor households off the gas grid should be given priority over the “able-to-pay” market to ensure those hardest to reach in the hardest to treat homes receive the assistance they need. cobber Pack: U PL: COE1 [E] Processed: [03-07-2012 14:53] Job: 020359 Unit: PG01 Source: /MILES/PKU/INPUT/020359/020359_w021_michelle_FP 29 - National Right to Fuel Campaign.xml

Ev w34 Energy and Climate and Change Committee: Evidence

6.3 DECC’s recent Carbon Plan conﬁrms the intention to replace fossil fuels with low carbon technologies to provide heating to those not connected to the gas grid. However, these low carbon technologies must be made more accessible to fuel poor households, who are not able to afford the upfront cost of such measures. 6.4 National Energy Action (NEA), both through Warm Front and separately, has been involved in a number of alternative and renewable technology solutions including air-source heat pumps, solar thermal systems, biomass heating and photovoltaic systems. These have highlighted, for example, how air source heat pumps installed correctly and with the right support to low income households can provide an effective solution to households without access to the gas network to heat their homes cheaper than other alternative expensive heating fuels such as oil and LPG. It is therefore extremely disappointing that the current ECO proposals rule out the use of such technologies within the affordable warmth part of the scheme, and we would urge DECC to reconsider this position in order to offer the greatest level of support to those households off the gas network. 6.5 NEA has also tested state of the art internal insulation products that may prove commercially viable. FPAG looks to Government to demonstrate its commitment and political will for the widespread promotion of these projects to further establish market knowledge, skills and conﬁdence. December 2011

Written evidence submitted by the Oil Firing Technical Association (OFTEC) The Oil Firing Technical Association (OFTEC) is a trade association representing companies that manufacture equipment for the oil ﬁred heating and cooking sector, heating oil distributors and training centres. Also it administers a Competent Persons Scheme for oil heating technicians under Licence from the Department of Communities and Local Government, and currently there are 10,000 persons on this register. Members of OFTEC include Aga Rangemaster, Kingspan Environmental, Watsons Petroleum, and Worcester Bosch. OFTEC is co-ordinating the development of new bio-liquid fuels that will substantially reduce the carbon footprint of current users of oil heating fuels. OFTEC thanks the Select committee for this opportunity to respond to their Enquiry into Fuel Poverty.

Introduction It has long been recognised that there are three main influencers of fuel poverty; the price of fuel, energy efficiency (house and heating appliance) and consumer income. While it is often very easy to blame the problem on the cost of the fuel, the reality is that without a combined approach to all the factors the issue will continue. The recent Hills Report has recognised that the objective within the Warm Homes and Energy Conservation Act 2000 is still robust—ie that a person in fuel poverty is one who is “a member of a household living on a lower income in a home which is cannot be kept warm at a reasonable cost”. OFTEC recognises that the Warm Front Scheme has been an extremely successful and beneficial programme assisting over 2.3 million households. This taxpayer funded scheme is being phased out and is being replaced with the Green Deal and Energy Company Obligation. This is part of the Energy Act 2011 which proposes a step change in the provision of energy efficiency services. OFTEC shares the concern of many that the measures proposed may not be as effective as is Warm Front. Like many organisations, OFTEC is in agreement that energy efficiency is the most sustainable, cost-effective long-term solution to fuel poverty. Therefore any definition of fuel poverty must be sensitive to changes in energy efficiency and must not act to disincentive energy efficiency solutions.

Cost of Fuel This is outside of the control of the UK downstream heating oil sector. In a recent OFT report it states, “The primary driver of price increases is the crude oil price, which accounts for over 90% of the variation in the retail price of heating oil”. Also exchange rates can have a substantial impact on oil prices. Oil distributors respond to international prices which move daily and have no control over the wholesale prices that they have to pay. There are measures that Government can take to reduce the cost of kerosene for those deemed to be in fuel poverty. This product currently attracts VAT at the rate of 5% in the UK and a proposal to Treasury that this could be removed for vulnerable/elderly consumers could be initiated.

Income Consumer income is not a matter that the heating oil sector has any control over. Government needs to review the state pension, winter fuel payments and other measures to assist fuel poor clients whose incomes have not moved with inﬂation over recent years. A combination of advice on spending habits/prioritising of bills and grant aid towards insulation and heating measures will be required. cobber Pack: U PL: COE1 [O] Processed: [03-07-2012 14:53] Job: 020359 Unit: PG01 Source: /MILES/PKU/INPUT/020359/020359_w021_michelle_FP 29 - National Right to Fuel Campaign.xml

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Efficiency In recent years the Warm Front Scheme has been an extremely successful and beneficial programme and has improved energy efficiency within the fuel poor sector. As part of the move towards energy efficiency OFTEC and the oil manufacturing sector has introduced and promoted condensing boilers that offer annual oil savings of up to18% over standard efficiency boilers. This combined with other efficiency measures (Including loft, cavity wall insulation and heating controls) can substantially reduce the households annual energy spend. OFTEC actively promotes the use of condensing boilers and recent UK legislation has mandated the requirement for condensing appliances which is good news for consumers seeking to reduce their energy bills. Looking at the specific questions asked in the submission:

What are the barriers to tackling fuel poverty in the private rented sector? It is generally accepted that many properties in the private rented sector (PRS) have elderly heating (space and water) systems that are often old, inefficient, and poorly maintained. This leads to higher operating costs. Legislation relating to standards of PRS properties is often not enforced due to lack of local authority resources and the tenant’s fear of retaliatory eviction or rental increase by landlords. OFTEC would suggest that an educational programme to landlords and tenants is required to promote the benefits of the Green Deal to ensure that properties in this sector receive full insulation measures and have a condensing boiler installed. This could lift many PRS families out of fuel poverty. Furthermore we would suggest that certain provisions in the Energy Act 2011 (eg for powers to ensure that from April 2018 it will be unlawful to rent out residential or business premises that do not reach a minimum energy efficiency standard) are brought forward for implementation by 2014.

To what extent will the recent measures in the Energy Act 2011 (to introduce minimum energy efficiency standards in the private rented sector) help the problem? The Government’s 2011 Annual Report on fuel poverty contains the important statistic: “In 2009, around 4.5 million vulnerable households in the UK were fuel poor, an increase from around 3.75 million the previous year”. This number is set to increase as incomes remain the same or decrease in the current economic climate and general energy costs increase. The Warm Homes Scheme not only saw the installation of more efficient heating appliances and insulation measures, but also offered a Benefit Entitlement Check (BEC). This service had been very effective in identifying over £1,600 per year in additional income for participants which has been used to bring people out of fuel poverty. However it is set to be phased out along with the capital funding. OFTEC would suggest that the removal of the BEC is a retrospective step and serious consideration should be given to retaining this service. The Warm Homes Scheme is being phased out and is being replaced with the Green Deal and Energy Company Obligation. This is part of the Energy Act 2011 which proposes a real step change in the provision of energy efficiency services. The Green Deal has the potential to make energy efficiency and renewable energy improvements happen in millions of UK homes and buildings. However, the Green Deal legislators’ need to reflect that the cost of improvements needed in rural homes may exceed the “Golden Rule” and so some amendment of this Rule may be needed to take into account the higher costs of retrofitting hard to treat homes. Otherwise it is unlikely there will be significant take up of the Green Deal in rural areas. The Green Deal will also need to recognise that fuel poor households suffering from financial exclusion may be unwilling to take on higher electricity charges. The ECO is set to provide assistance for both the hardest to reach and the hardest to treat properties (estimated to include over 10 million such properties in England alone), and to provide grants for more expensive measures such as solid wall and non-standard cavity wall insulation. OFTEC would suggest that this scheme must focus support initially on the fuel poor as the priority. For this to happen there will need to be a weighting to ensure that the eradication of fuel poverty is the main target, rather than overall carbon savings. On the positive side, the introduction of changes to the criteria that gives access to the scheme may help to allow the very limited monies to be directed at some of the people on the lowest incomes in the least thermally efficient properties. Even so, at this rate, it would be towards the end of the century before every relevant household is living in a truly fuel poverty proof home. OFTEC has serious concerns at the level of uptake for energy efficiency measures as provided by the Green Deal. Any proposal for mandatory energy efficiency improvements, otherwise known as consequential works would be a negative step because this will act as a serious disincentive to adopt the Green Deal. Clearly, it is important homeowners are not discouraged from getting essential repair work done but forcing householders to upgrade their properties as part of any scheme will encourage the use of non registered tradesmen and drive energy efficiency measures to the “black market”. cobber Pack: U PL: COE1 [E] Processed: [03-07-2012 14:53] Job: 020359 Unit: PG01 Source: /MILES/PKU/INPUT/020359/020359_w021_michelle_FP 29 - National Right to Fuel Campaign.xml

Ev w36 Energy and Climate and Change Committee: Evidence

To what extent is fuel poverty in rural areas driven by a lack of access to the gas grid and to what extent are other factors (such as housing condition and income levels) responsible?

Rural households can be pushed into fuel poverty because of the higher costs to heat their energy inefﬁcient homes. They are often forced to spend a larger proportion of their disposable income to pay heating bills due to certain structural characteristics (solid walls, no loft space) which makes them less thermally efﬁcient than their urban neighbours.

There have been claims that Government programmes to address fuel poverty have not delivered equitable benefits for rural communities. Warm Front, for example has focused on loft and cavity wall insulation which is more effective in urban homes. Some rural homes cannot accommodate typical modern energy efficiency measures. While the Green Deal will address some of these issues in rural homes the “Golden Rule” must be considered given the higher costs of retrofitting hard to treat homes.

The argument has been made that areas where natural gas is not available the incidence of fuel poverty will be higher. The price of heating oil has increased over the last few years, driven by global markets, although in more recent years gas prices have also proved volatile, and the pricing landscape is complex. One of the differences that mains/network fuels have over oil is the ability to pay as you go (PAYG). This concept is currently being developed for oil homes by an OFTEC member company and testing of an oil PAYG meter is scheduled for January 2012 in Northern Ireland. If this concept proves successful it can be rolled out across the UK and offers oil users the same beneﬁts of pay as you go as the mains fuels currently enjoy.

The winter of 2010 was one of the worst for 100 years and the conditions endured by consumers and oil distributors were severe. This was examined by the Office of Fair Trading who specifically looked at why some heating oil customers experienced high prices during last winter. It found that a sudden increase in demand (up 40% on the previous year), at the same time as deliveries were hampered by the severe weather, led to a short lived “price spike”. However, with 97% of off-grid households living in an area served by at least four suppliers, the OFT found that competition has constrained prices over the year as a whole and that profit margins have not been excessive.

OFTEC advises consumers to ensure they order early and well in advance of oil tanks getting to a critical low level. Unfortunately due to economic constraints many users now wait until the tank is empty before reordering. This puts undue strain on the supply network at a busy time and can leave consumers without heat. OFTEC would welcome the provision of budgeting advice—consumers in general are very poor at budgeting for energy bills. Advice should be offered at all levels to enable consumers to budget for an oil ﬁll using the numerous options available.

Concluding Comments

In conclusion, there is little doubt that the impact of fuel poverty is felt right across the UK. The problem has been exacerbated by the recent economic downturn and increasing energy costs. However, heating and insulation measures alone are not enough to move low-income families out of fuel poverty. The move to a non Government funded programme for energy efﬁciency measures is contentious and OFTEC has real concerns that the uptake of Green Deal and the operation of the ECO will be much lower than expected.

OFTEC would make the following suggestions to complement the answers above: — We would advocate a means tested approach to the winter fuel payment with the less well off benefiting. In addition we would suggest that the winter fuel payment should only be paid in the form of a fuel voucher redeemable against oil, gas or electricity and not paid in cash. — The industry would welcome a more robust approach to enforcement of existing legislation to ensure that heating systems are installed and commissioned correctly thus maximising the efficiency of the appliance. — OFTEC would support a gradual move to green technology and the introduction of bio-liquids and the potential this offers for a reduction in demand for fossil fuel and the carbon savings that result. — OFTEC would welcome the inclusion of mandatory servicing for oil-fired appliances in PRS properties (similar to Gas Safe) to ensure appliances are safe and efficient. December 2011 cobber Pack: U PL: COE1 [O] Processed: [03-07-2012 14:53] Job: 020359 Unit: PG01 Source: /MILES/PKU/INPUT/020359/020359_w021_michelle_FP 29 - National Right to Fuel Campaign.xml

Energy and Climate and Change Committee: Evidence Ev w37

Written evidence submitted by Humshaugh Community Ventures Ltd

In November and December 2010, during the very cold spell, oil supplies to the village were in short supply. Prices paid by villagers varied from a little over 60p per litre to 80p per litre. Some ran out of oil and were charged £1 a litre to collect from the supplier in containers.

In light of this we decided to provide a price comparison service for the village. We rang eight oil suppliers on Monday mornings and posted the prices on the shop notice board, printed leaﬂets for collection in the shop, and posted the prices on our shop website humshaughshop.co.uk. A copy of our 31 January 2011 price comparison is attached, and there was a spread of 10p per litre (£100 for a 1,000 litre delivery!!). This service was greatly appreciated by villagers as most did not have the time or inclination to ring around for competitive quotes. Our initiative was picked up by the local newspaper the Hexham Courant.

We were open with the suppliers, explaining that we would be publishing the prices and would explain to villagers that this was just a snapshot of prices as of Monday morning, and that prices would change.

However, the suppliers were not happy with our price comparison and most soon refused to quote. They stated that as we had no intention of buying they would not quote, but would quote individuals if they contacted them. Finally only two companies would quote.

We believe that a major reason for their unwillingness to quote is that several of their customers were locked into supply agreements. Some paid monthly by direct debit and others used a “signalman” system. The “signalman” sends a message via the telephone line to tell the supplier the oil level in the tank. The supplier then tops up the tank without the customer placing an order or knowing the price before delivery. Our price comparison showed these customers how much extra they were paying and was embarrassing for the oil companies.

We believe that the refusal to quote is unfair. At that time, price comparison sites were available on the internet but they were owned and operated by the oil companies. Boilerjuice for example was owned by DCC, who also owned ﬁve of the eight companies we asked to quote initially. It was OK for them to them to pretend to compare prices but not for us to actually do so.

We have now decided to run our own oil buying group. We set it up in November 2011 and have over 70 members already. We placed our ﬁrst order in December 2011 for 17,000 litres. We compare prices with the North Tyne and Allendale buying groups. We purchased from Wallace Oil, part of Carrs Billington. North Tyne and Allendale bought from GB Fuels. Both of these are independent oil suppliers.

One member of the buying group used the price comparison to work out that they would have saved more than £100 on their last delivery if they had used a different supplier. January 2012

Annex A

HUMSHAUGH VILLAGE SHOP

This Week’s Oil Price Indicator Week commencing Monday 31 January 2011 WALLACE OILS 51.95 pence per litre GB FUELS LTD 52.00 pence per litre PAR PETROLEUM 53.00 pence per litre * F PEART &CO 54.95 pence per litre WCF 59.95 pence per litre * BRETTS FUELS 62.25 pence per litre * JAMES D JOHNSON 62.50 pence per litre * BAYFORDS 62.45 pence per litre

Please Note: — Prices were supplied at 11.45 am on Monday 31 January. — Prices apply to a minimum order of 500 litres. — VAT is not included. — Prices do ﬂuctuate daily, so you must recheck before ordering. — The companies asterisked * are all part of the same group DCC. — The web sites www.boilerjuice.com and www.fueloildirect.co.uk are also part of the DCC group. cobber Pack: U PL: COE1 [E] Processed: [03-07-2012 14:53] Job: 020359 Unit: PG01 Source: /MILES/PKU/INPUT/020359/020359_w021_michelle_FP 29 - National Right to Fuel Campaign.xml

Ev w38 Energy and Climate and Change Committee: Evidence

Written evidence submitted by the National Right to Fuel Campaign (NRFC)

From its foundation in 1975 the National Right to Fuel Campaign (NRFC) has campaigned tirelessly to ensure a warm, dry, well lit home for all, regardless of income or location and has taken a leading role in putting Fuel Poverty high on the political agenda.

The NRFC welcomes the Energy and Climate Change Select Committee’s inquiry into the causes and extent of Fuel Poverty in the Off Grid and Private Rented Sectors.

Many of our members (for example, National Energy Action and Islington Borough Council) and partners (in particular, Consumer Focus and Calor Gas) have commented on fuel poverty in the private rented sector and we would commend to you and support their responses to date.

Our submission sets out our additional thoughts in relation to the off-grid sector, in particular: — To what extent fuel poverty in rural areas is driven by a lack of access to the gas grid? — How could the Department for Energy and Climate Change (DECC) improve its policies to respond to fuel poverty among off-grid consumers? — Given that the OFT found no evidence of a competition problem in the heating oil market, what (if anything) can be done to prevent a repeat of the situation in December 2010 when households were faced with high energy costs during a spell of particularly cold weather?

1. What are the barriers to tackling fuel poverty in the private rented sector?

No additional comment.

2. To what extent will the recent measures in the Energy Act 2011 (to introduce minimum energy efﬁciency standards in the private rented sector) help the problem?

No additional comment.

3. To what extent is Fuel Poverty in rural areas driven by a lack of access to the gas grid and to what extent are other factors (such as housing conditions and income levels) responsible?

This is an area that has been of particular concern to the NRFC since December 2010. All of the available evidence demonstrates that the proportion of households in fuel poverty is much higher in rural communities. DECC statistics show that 15.2% of heating oil users live in fuel poverty compared to 6.9% of other energy users.

Reliance on heating oils is not the only cause of increased levels of fuel poverty, and to some extent the causes of fuel poverty are related to the building quality and type. Rural households are more likely to be pre 1920 homes, and there is, therefore, a much higher incidence in rural areas of solid wall properties. Income levels are also on average lower in rural communities than in more urban areas, making insulation and other energy efﬁciency measures inappropriate and unaffordable.

4. Given that OFT found no evidence of a competition problem in the heating oil market, what (if anything) can be done to prevent a repeat of the situation in December 2010 when households were faced with high energy costs during a spell of particularly cold weather?

We welcome the OFT’s inquiry and conclusions. We agree with both the OFT and Consumer Focus that there are significant practical difficulties in introducing formal price regulation in the off-grid market. Liquid oil prices are inextricably linked to the global market in crude oil and we would expect to see increasing price spikes during winter months caused by global supply and demand constraints. Because of this, the National Right to Fuel Campaign believe that much more work is needed around educating and enabling consumers to respond to the difficulties associated with a highly competitive global energy market (please see our further responses in section 6, below).

Through our conversations with a number of suppliers the NRFC have observed that there is generally an active level of competition. We note that there are examples of excellent practice around the country, for example Calor’s Future Rural Energy (FREE) programme, and we would urge DECC to work with these industry leaders to put in place a voluntary code of conduct that would standardise good practice across all rural communities (please see our further responses in section 6, below).

We also note the work of Calor, National Grid and others to stimulate innovation in the off grid energy sector through the introduction of Micro-CHP and district heating systems. cobber Pack: U PL: COE1 [O] Processed: [03-07-2012 14:53] Job: 020359 Unit: PG01 Source: /MILES/PKU/INPUT/020359/020359_w021_michelle_FP 29 - National Right to Fuel Campaign.xml

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5. Given that the OFT found no evidence of a competition problem in the heating oil market, what (if anything) can be done to prevent a repeat of the situation in December 2010 when households were faced with high energy costs during a spell of particularly cold weather? 5.1 Price transparency We would recommend the introduction of a code of conduct for suppliers to the off-grid sector which includes: — Improving the quality and reporting of price information. — Increasing transparency around prices (eg separating delivery costs from unit costs). — Introducing alternative payment methods for low income consumers to facilitate greater household budgeting and planning.

5.2 Renewable Heat Incentive and CHP We would like to highlight that there is a substantial and increasing body of evidence which shows that renewable heating apparatus such as heat pumps can only provide an affordable energy option if they are installed alongside additional insulation measures, which for many rural off-gas homes will require signiﬁcant amounts of ﬁnancial investment in solid wall insulation. In this respect we feel close examination should be made to the considerable amount of work that has been done by Calor and other organisations in the sector to develop micro-CHP units which could provide a lower cost alternative with considerable carbon as well as energy unit cost savings. In order to ensure fair distribution across all households, NRFC believes that DECC should work closely with the off-grid sector to ensure that the Green Deal and Energy Company Obligation assist low income rural homes to install renewable heat measures. This would mean that many rural homes could have renewable heat measures installed which, in combination with insulation measures, would ensure long term affordable and low carbon warmth.

5.3 District Heating systems We strongly support Ofgem’s work to promote the development of small-scale district heating systems in off grid rural areas. The availability of land for boiler rooms and farm waste for biomass makes CHP and district heating in rural areas a particularly attractive option. We would suggest that the Green Investment Bank works with National Grid and others to bring forward projects to develop local district heating infrastructure in off grid communities.

5.4 Collective Purchasing We note the OFT’s comments in respect to the role of communal buying, and understand that the Department for Business Innovation and Skills is already in the process of investigating opportunities for collective energy purchasing. As outlined by the OFT (see paragraph 4.70 and following of OFT report) there are already a number of very promising collective purchasing models in the UK which demonstrate that aggregating purchasers can assist in increasing consumer conﬁdence and affordability.

6. How could DECC’s policies for tackling fuel poverty in the private rented sector be improved? No additional comment. January 2012

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