Fuel poverty is a fact of life for 2.5 million households across England. It is also an increasing problem, with the number of households in fuel poverty rising by just under 5 per cent from 2014 to 2015. The average fuel poverty gap – the amount by which a fuel-poor household’s energy bills exceed reasonable costs each year – was £353 in 2015. As a consequence, too many people are forced to make unacceptable choices between ‘heating or eating’. At its worst, fuel poverty can contribute to premature winter deaths – around 10,000 deaths in 2016–2017 were related to cold homes.
Fuel poverty and its consequences are largely preventable through the right policy interventions, including action on energy prices, direct financial support to relevant households and energy efficiency schemes. However, it is through improving energy efficiency that the most cost-effective and long-lasting difference could be made in reducing fuel poverty.
To that end, the government has set out its ambition to upgrade as many fuelpoor homes in England ‘as is reasonably practicable’ to band C of the Energy Performance Certificate (EPC) by 2030, which is a certificate giving the energy efficiency rating of a property. The main policy aimed at achieving this target is the government’s Energy Company Obligation (ECO), which is now the primary policy aimed at permanently alleviating fuel poverty in England.
However, despite some moderate progress in achieving its interim objectives, this report finds that ECO isn’t working. As currently construed, ECO will not deliver the step-change in improving the energy efficiency of the properties of fuel-poor households that England needs. The Committee on Fuel Poverty estimates that only 11 per cent of fuel-poor homes will have reached band C by 2017. According to IPPR analysis based on current rates of the installation of energy efficiency measures, elevating all fuel-poor households to EPC band C will not be achieved until 2091 at the very earliest.
If the 2030 target is to be realised for all 2.5 million households in fuel poverty, the scheme will need to undergo substantial changes. This report outlines the issues with the current policy. It then sets out how a new area-based approach led by local authorities could help tackle energy affordability for fuel-poor consumers by delivering improvements in the energy efficiency of their homes.