Mobile Navigation

Energy Efficiency And Fuel Poverty In England – Policy Priorities, Tackling Key Issues, And Minimising Delay And Disruption

A blog by the SEA's Chief Executive Jade Lewis, adapted from her speech at the Westminster Energy, Environment and Transport forum.

The Need For Action

The UK’s housing stock is amongst the worst in Europe leading to some of the highest levels of fuel poverty on the continent.

The Government’s latest fuel poverty statistics show that the number of fuel poor households in England in 2019 was estimated at 3.2 million, representing 13 per cent of all English households. The situation can only have been exacerbated during the Covid-19 crisis and, with fuel prices rapidly increasing due to the energy supply crisis, there are likely to be significant increases in the number of fuel poverty cases.

The industry has also been badly impacted by changing energy efficiency policy meaning that there has been a reduction in the number of energy efficiency measures being installed in recent years, and confidence in Government schemes is low.

It is astonishing to note that the effect of poor housing is costing the NHS a staggering £2.5billion per year, with the estimated social and economic cost of leaving people in poor housing in the region of £18billion per year.

The Royal College of Physicians warned that indoor air pollutants cause thousands of deaths per year, at a minimum, and are associated with healthcare costs in the order of ‘tens of millions of pounds’.

The Energy Saving Trust reported that around 1/3 people living in the UK report suffering from mould in their homes, which is known to be detrimental to health.

There were 8,500 estimated excess deaths in England and Wales in the winter of 2019 due to cold homes.

The Climate Change Committee recently published its 2021 Progress Report to Parliament on Reducing Emissions. In the report, decarbonisation of buildings is considered one of the indispensable elements to the transition to net zero. In 2019, buildings accounted for 18% of UK emissions.

These statistics demonstrate the need for change – we need to provide homes that are fit for the future, net zero carbon, energy efficient, warm and healthy for people. With increases in the number homes where the residents are unable to afford home improvements themselves, this means that the Government will need to do much more to address the current housing stock.

Policy Priorities

So, what are the policy priorities required to address this?

Firstly, and most importantly, we need long-term, joined up policy to provide confidence to the sector to deliver.  Industry needs confidence in the direction of travel to invest in the research and development, capacity, skills and training that are required if we are going to meet the significant challenge of retrofitting the existing building stock, address climate change and fuel poverty.

The SEA has been an avid campaigner on eradicating fuel poverty for many years and have been instrumental in achieving Minimum Energy Efficiency Standards for the Private Rented Sector. We have also been successful in securing the legally binding target to upgrade as many houses to EPC Band C by 2035 and for all fuel poor households, and as many rented homes as possible, to reach the same standard by 2030. This makes the energy efficiency retrofit of homes, particularly for those in fuel poverty, a necessity for Government and goes someway in providing industry confidence.

In February of this year, the Government published their revised fuel poverty strategy – the Sustainable Warmth strategy – aiming to ensure everyone can afford the energy required to keep their lights and heating on, especially during the winter.

Whilst the strategy is very much welcomed, it does not set out a defined pathway to the 2030 target. It would be great to see the Government address this in their next review of the fuel poverty strategy.

To help join up thinking within Government and deliver joined up policy, what is required is joined up leadership within Government, starting with a single Minister and Department responsible for delivering energy efficient, net zero carbon and healthy homes.

The SEA is a sponsor of the All Party Parliamentary group for Healthy Homes and Buildings which has advocated for a cross departmental committee to be set up for health and buildings for a number of years.

It would also be great to see the UK Government replicate legislation passed in Wales. Their Well-being of Future Generations Act requires public bodies to think about the long-term impact of their decisions to prevent persistent problems such as poverty, health inequalities and climate change.

We are really pleased that a fabric first approach is being taken by Government within their fuel poverty schemes. This should continue. A fabric first approach to improving energy efficiency has broader benefits in lowering energy demand, reducing carbon emissions, reducing homeowner exposure to volatile energy prices on the wholesale market, as well as addressing the root cause of fuel poverty. An additional benefit can also be improved thermal comfort, health and well-being for the occupant. But health and well-being is about more than just energy efficiency. Factors like air quality, lighting, outside views, and acoustics are also known to have a significant impact on health. Therefore, while taking a holistic approach to the design and retrofit of buildings to address fuel poverty, there is an opportunity to also include additional measures to aid health and wellbeing. In fact, taking a whole house approach is also required to prevent unintended consequences of making homes energy efficient, without paying due care and attention to these other factors. Overheating, poor air quality, mould and moisture are all known problems from poor quality approaches to energy efficiency schemes and safety should be foremost.

The Climate Change Committee have stressed that Government needs to take further action on adaptation. This means we will need to future proof homes from overheating, flooding, etc. Another priority should therefore be to maintain a fabric first, whole house approach to the fuel poverty strategy and zero carbon policy, that considers wider health and wellbeing aspects.

Tackling Key Issues

The main issue and barrier to addressing fuel poverty is the significant cost required to retrofit the existing building stock.

A report published this week by AgilityEco and Gemserv shows that £18 billion of additional funding will be needed if the 2030 fuel poverty target is to be achieved. (Interesting this is the same number that unhealthy homes are costing the NHS). Implementing Minimum Energy Efficiency Standards on private landlords and ensuring this is enforced could reduce the funding required by Government to £10billion. However, finding this £10 billion could result in a net benefit to the economy in the region of £16 billion.

To assist in managing the cost, the Government’s approach of targeting those who need it the most will help.However, identifying those in fuel poverty is extremely challenging. The Fuel Poverty Strategy states that “few people self-identify as living in fuel poverty”. This is backed by research which found that only 55% of people knew what fuel poverty meant. Benefits are often used as the primary proxy for fuel poverty, however BEIS estimates that only around half of fuel poor households are in receipt of benefits. Households that do not receive this support are therefore at risk of being missed and the cost of identifying them is much higher.

Currently within ECO, the success rate of targeting of fuel poor is around 29%. This means that only 29 fuel poor homes are actually addressed out of every 100 homes retrofitted. Better targeting of schemes is a must to minimize the costs involved.

We also need to stop building homes that are energy inefficient. This will prevent us having to spend on retrofitting them at a later date. The Government’s focus on new build has been on reaching their 300,000 homes per year target. The focus should be on building 300,000 energy efficient, low carbon and healthy homes per year. Modern methods of construction offer a solution to building at scale and reducing the cost of delivery. It also offers a solution to building energy efficient, healthy homes more cost effectively, but only if we aim for the right building performance levels and outcomes in the first place. Building more affordable, and affordable to run homes, will help reduce fuel poverty levels.

A further issue is the lack of skills and knowledge in the sector to deliver what is required, at the scale needed, and to high levels of quality and performance.

Progress has been slow in moving towards a holistic approach, but the introduction of PAS2030 and PAS2035, and growth in the number of trained Retrofit Coordinators will aid the transition and help ensure quality. Much more support is needed to rapidly increase numbers trained in the PAS and as Coordinators, and care needs to be taken that it delivers the desired impact without causing additional unnecessary cost and becoming a barrier to progress.

It is also important that money isn’t wasted on installing energy efficiency measures that do not deliver the expected results. Delivering guaranteed, in use performance will help ensure the cost effectiveness of fuel poverty schemes and desired outcomes.

Minimising Delay And Disruption

The Committee on Fuel Poverty has projected that the 2020 fuel poverty energy efficiency rating band E milestone has been missed. In 2019, 97% of fuel poor households were living in a property with an energy efficiency rating of band D or E, so in the two bands immediately below the Government’s target. We need to make rapid progress if we are going to address this shortfall, speed up delivery and address wider issues around health and wellbeing, delivering zero carbon, etc.

We need to develop a supply chain capable of designing and delivering holistic retrofit solutions covering low carbon heating, energy efficiency and improved health and wellbeing at scale. We still have a very fragmented industry, and this will not change, so effective policy, regulations, standards, and incentives are required to encourage collaborations and transform the sector.

The Construction Leadership Council, the SEA and others are calling for a National Retrofit Strategy to set out plans to retrofit the current UK building stock. With clear policy and confidence instilled in the industry it will scale up to meet the challenge.

Area-based schemes will help to deliver at scale and reduce cost.

Approaches need to reflect differences in housing stock, climatic conditions, local income levels, etc. Because local authorities are closer to the point of delivery, they have a greater understanding of their particular needs and can play a key role.

Involving residents in the whole process is also key to success. The ‘contagion affect’ of local projects should not be underestimated. Property owners and residents will learn of local campaigns and aspire for the same benefits of comfort and warmth. A new social norm for building energy efficiency will be driven by seeing and hearing real life examples of the benefits.

Disruption can be reduced for occupants by having a whole house plan that looks at the improvements required for that particular property and identifies the most cost effective and efficient way of installing the measures and the sequencing required. This will also reduce the overall costs of delivery.

Innovation will also help to reduce cost, improve delivery, overcome challenges, and assist in overcoming fuel poverty. It is vital that Government retrofit schemes allow for the rapid adoption of such innovation, balanced of course with protection for the homeowner.

Key Messages

Finally, I just want to leave you with a few key messages from me…

  • Significant additional Government funding is required to tackle fuel poverty, but the benefits outweigh the costs.
  • Long-term, joined up policy is necessary to provide confidence to the sector to deliver.
  • Take a fabric first, whole house approach to addressing fuel poverty and zero carbon that considers wider health and wellbeing aspects.
  • Build more affordable, and affordable to run, new homes.
  • Implement a National Retrofit Strategy and take a local approach.
Monday, October 25th, 2021