Fuel Poverty (Hansard, 6 April 2000)

§ Mr. Meacher

This Government are committed to tackling fuel poverty, particularly among those households most at risk to ill health due to cold homes; the old, children, the disabled and the chronically sick. The two main causes of fuel poverty are low income and poor energy efficiency in the home.

The Government's main measures to help households more easily meet their heating costs are as follows. Winter Fuel Payments were introduced in the winter of 1997. They provide help to eligible older households towards their winter fuel costs. The total expenditure allocated is as follows.

Winter Fuel Payments
Financial year	£million
1997–98	200
1998–99	200
1999–2000	760
2000–01¹	1,400
2001–02¹	1,200
¹ Estimated

Cold Weather Payments provide help towards additional heating costs to eligible people when there is a spell of cold weather in their local area. Since 1997 to date the amount spent on Cold Weather Payments is estimated to be around £1.7 million. As the amount spent is purely dependent on the weather it is not possible to provide an estimate of future expenditure.

Reduction in the level of VAT on domestic fuel to 5 per cent. from September 1997. The estimated cost of this measure is £450 million a year, so that by 2002 the total cost is likely to be about £2,025 million. The benefit to a typical customer is a reduction in their energy bills of £16.50 a year.

In addition the measures taken to liberalise energy markets have contributed to reduced energy prices for households, and are expected to continue to do so. Electricity prices paid by domestic consumers fell, in real terms, by 14 per cent. between the 2nd quarter of 1997 and the last quarter of 1999, while gas prices fell, in real terms, by 12 per cent. over the same period. Lower energy prices have significantly helped low income households with the cost of keeping warm. However it is not possible to quantify the resources used in this work.

The energy efficiency of homes is improved through both specific programmes such as the Home Energy Efficiency Scheme, and also as part of wider housing programmes. The details of each programme are as shown.

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Specific energy efficiency programmes

The Home Energy Efficiency Scheme (HEES) provides energy efficiency improvements to the homes of eligible households. The scheme was devolved to the Scottish Executive on 1 July 1999 and to the Welsh Executive from 1 April 2000. The scheme in England is due to be radically overhauled from I June, with New HEES providing packages of heating and insulation improvements to households and focusing on the private sector where nearly 70 per cent. of the fuel poor in England are found. The total gross budget for HEES, after allowing for moneys to the devolved administrations, is as shown.

Home Energy Efficiency Scheme
Financial year	£ million
1997–98	76.1
1998–99	76.2
1999–2000	¹75.3
2000–01⁴	²122.8
2001–02⁴	³153.8
¹ This includes about £1.5 million spent under the scheme in Scotland from I April to 30 June 1999. It excludes the further £4.4 million transferred to the Scottish Executive in respect of the period 1 July 1999 to 31 March 2000.
² In addition, £9.6 million and £6.3 million have been transferred to the Scottish and Welsh Executives.
³ In addition, £13.3 million and £8.9 million have been transferred to the Scottish and Welsh Executives.
⁴ Allocated

Government funded programmes operated by the Energy Saving Trust also improve the energy efficiency of both fuel poor households and others. The expenditure on such programmes is as shown.

DETR funded programmes operated by the Energy Saving Trust
Financial year	£ million
1997–98	12.0
1998–99	10.6
1999–2000	12.5
2000–01¹	15.1
2001–02	²—
¹ Allocated
² Under consideration

Main housing programmes

The Government have also substantially increased the resources available to local authorities over the lifetime of this Parliament, reversing the reductions planned by previous government. The extra resources in the first three years, 1997–98 to 1999–2000, were allocated through the Capital Receipts Initiative (CRI). Information collected to monitor the impact of the CRI found that around a quarter to a third of the work on local authorities' own stock financed from this initiative lead either directly or indirectly to improvements in energy efficiency. If this were replicated across all local authority housing capital expenditure on its own stock this would equate to around £400-500 million per annum. The total housing capital allocations to local authorities through the Housing Investment Programme (HIP) and Capital Receipts Initiative, are as shown.

Housing capital allocations to local authorities
Financial year	£ million
1997–98	¹1,050
1998–99	²1,338
1999–2000	³1,408
2000–01	2,090
2001–02⁵	⁴2,300
¹ This includes £174 million through the Capital Receipts Initiative.
²This includes £569 million through the Capital Receipts Initiative.

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³ This includes £570 million through the Capital Receipts Initiative.

⁴ This is planned credit approvals total announced in the CSR in July 1998. Resources for 2001–02 will be allocated in December 2000.

⁵ Allocated

HIP allocations are the aggregate of housing annual capital guidelines and allocations for Private Sector Renewal and Disabled Facilities Grants.

The energy efficiency of low income households is also likely to be improved through some of the regeneration schemes funded by DETR. These cover a wide range of activities depending on local need, and it is not possible to quantify the precise expenditure on energy efficiency improvements.

To support the installation of energy efficiency measures, the Government also reduced the level of VAT from 1 July 1998 on work carried out on low income households through eligible schemes such as HEES. The revenue cost of the reduction was £8.5 million a year. This year's Budget extended the reduced rate at a total cost of £35 million a year. By 2002, the total cost is estimated at £85 million.

The Government are also introducing provisions to enable lessors to claim capital allowances on their investment in boilers, radiators and controls installed in residential properties under the Affordable Warmth Programme. The Programme will operate from 2000 to 2007, with the aim of helping up to one million low income households benefit from improved energy efficiency. Estimate that Government assistance from this measure up to April 2002 will be approximately £10 million.

In addition to Government energy efficiency programmes, the Director General for Electricity, and now Director General of the Office of Gas and Electricity Markets, has, since 1994, set Energy Efficiency Standards of Performance requiring the public energy suppliers to encourage and assist customers with energy efficiency measures. Around two thirds of this help has gone to pensioner and low income families. From this year the total size of the programme has been doubled to £50 million a year with the obligation placed on both the public gas and electricity suppliers.