1. Fuel poverty Madrid, 10 December 2014 Brenda Boardman Emeritus Fellow
Brief intro to fuel poverty
Main challenge: how to raise capital without affecting running costs

2. Energy is an unusual commodity
Want energy services: warmth, cold food, lit rooms
Obtained by converting energy (gas or electricity) in a piece of capital equipment: central heating boiler, fridge, light bulb
Energy services are cheap if the equipment is energy efficient
Fuels cannot be substituted – cannot burn gas in a light bulb
New equipment and insulation require capital
Poor have no capital, no savings – it has to be someone else’s money
Electricity and gas are not like peas and carrots
Economists often get it wrong
The role of capital is crucial

3. Symptoms of fuel poverty – not the causes
High level of fuel debts
Supply of gas or electricity cut off by the utility (disconnection)
Cold homes, illness and deaths in winter
Only heating part of the home during the winter
In Europe, fuel poverty and energy poverty are the same thing
Do not confuse symptoms – to do with insufficient money for running costs - with causes
May 2, 2018
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4. } { Affordable warmth 10% of income for all energy services
Energy efficiency of the dwelling
24 hour mean internal temperature of 18°C
(+ other energy services)
Affordable warmth = opposite of fuel poverty
Really about ee – need poorest to be in most ee

5. Policy choices, fuel poverty and climate change
Three components of fuel poverty
Additional income enables the poor to use more energy in their energy inefficient homes. Good as quick
Fuel price rises cause greater deprivation, so make fuel poverty worse
Stress capital expenditure is the synergy, coincidence of need
= tackling the worst homes is vital for both
One-off expenditure and permanent = energy efficiency
EE is the solution
Not doing more on incomes, though can debate Winter Fuel Payments (£3bn pa going mainly to non-fuel poor)
NB Benefit Entitlement checks should not just ‘identify’ that a household is eligible for more grants, it should make sure they receive them (lots of forms are long and complicated. Help is required)
Winter Fuel Payments should be translated into pensions policy, as not fuel poverty policy

6. Identifying the fuel poor
Have low income AND energy inefficient home
Most proxies are inadequate;
Social characteristics (eg age)
Income level (receipt of means-tested welfare payments)
Energy efficiency of the home (audit)
Have to combine the last two, on an address-specific basis
What does not work (1)

7. Who are the vulnerable?
72% of UK households contain a vulnerable person
Young
Elderly
Sick
Disabled
Used in European definition of energy poverty
Unhelpful word, unless very tightly defined, eg only under 5 years, or over 75 years, even so -
Neither income nor energy efficiency included
What does not work (2)

8. Political choices
Different definitions of income favour pensioners OR families, unlikely to do both
Disposable income, after paying the rent, favours families
Adjusting income for the size of the household, favours families

9. Income + housing Low income High income Energy inefficient housing
Fuel poverty results from a combination of low income and energy inefficient housing.
Schematic, actual housing stock ie 25% most energy efficient are the top quartile of the stock, not some theoretical number
Colour = severity, red approx >20% of income
Those in most severe fp are in worst housing
Energy efficient housing

10. Defining fuel poverty vs identifying fuel poor
Fuel poor are the poorest people in the least energy efficient homes
Lot of options for definition
OK for modelling, often useless on the doorstep
Monitoring and delivery are two very different tasks
Start with how to identify, eg
Individual properties
Areas of deprivation
Who gets a 100% grant?
Need modelling to identify scale of the problem, but if cannot identify, so money is not spent / spent on the wrong people, that does not help.
May 2, 2018
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11. Minimum housing standards
Scale of upgrade needed, based on England.
Bands from the Energy Performance Certificate, G is worst, A best
From F or G to Band C/ B / A
SAP along X axis is from 0 (worst) to 100 (best) = Standard Assessment Procedure, Grey = approx distribution of the English housing stock
SAP 81 = level required to take 83% of fuel poor out of fuel poverty at 2009 fuel prices (Consumer Focus report)
Minimum standards essential to get worst housing improved

12. Effect of tenure and grant size
Are you giving grants to poor people, even when they have rich landlords?
Or are you making the rich landlord improve the property?
How do you protect the poor tenant from a rent increase?
Are you improving a few properties to a high standard?
Or are you improving more properties to a lower standard?

13. Raising the money for grants
Is this from general taxation, via The Treasury?
Progressive, as poor often pay no tax
Or is it being funded by the utilities, via all customers?
Regressive, as fuel poor have to contribute, whether or not they benefit
How quickly will you upgrade all fuel poor homes?
To what standard?
So, what is the budget?

14. Résumé Fuel poor are difficult to find
Need comprehensive policies on incomes and housing
Define
Budget
Timescale
Focus on delivery, rather than definition

15. Thank you