Archived press release

Budget: Government must insulate fuel poor homes

10 March 2008

• Comprehensive programme of energy efficiency is only permanent solution to fuel poverty and would simultaneously tackle climate change

• Windfall tax on energy companies in Budget needed to kick-start programme to super-insulate the fuel poor

The Government must massively expand its efforts to increase levels of energy efficiency in the homes of the fuel poor, Friends of the Earth said today. The green group warned that Government efforts to boost the income or lower the bills of the fuel poor would neither provide a permanent solution to fuel poverty in the face of rising energy costs or tackle climate change.

Friends of the Earth is calling for a £5 billion windfall tax on energy companies' excessive profits in the Budget this week.[1] This money should be used to kick-start a programme of low carbon home zones across the UK to provide super insulation and low or zero carbon energy for all households in fuel poverty. The environmental campaign group is also urging the Chancellor to put climate change at the heart of Wednesday's Budget, and has published a blueprint for a green budget [2].

Friends of the Earth is still waiting for the Government's formal response to its earlier legal letter challenging the failure of its fuel poverty strategy.

Ed Matthew, Friends of the Earth's Low Carbon Homes Campaigner, said:

"The Government's strategy on fuel poverty has comprehensively failed. Not only have the most vulnerable in society not been protected, a key opportunity to reduce the UK's household carbon emissions has been lost. Capping the bills of the fuel poor isn't enough. The only permanent solution to fuel poverty is high levels of energy efficiency."

"The Government must use this week's budget to prioritise urgent action on climate change and help the poorest members of society to keep warm. It must fulfil its promise to end fuel poverty for vulnerable groups by 2010."

Fuel poverty occurs when a household has to spend more than 10 per cent of income on heat and electricity. There are now over 4 million households suffering from fuel poverty in the UK, doubling from 2 million in 2004.

The increase in the numbers suffering has occurred despite a legal duty on the Government under the Warm Homes and Energy Conservation Act 2000 (which Friends of the Earth campaigned to introduce) to take all necessary steps to implement its Fuel Poverty Strategy. This requires it to eliminate fuel poverty in England - in vulnerable groups by 2010 and in all households by 2016.

Friends of the Earth estimates that only half the money from the key Government programmes to tackle fuel poverty - Warm Front, the Energy Efficiency Commitment and Decent Homes - reaches the homes of the fuel poor. It also estimates that due to the failure to adopt high energy efficiency measures these programmes have only lifted a quarter of a million out of fuel poverty since 2000 when the Act was passed. This number has been far outstripped by the numbers entering fuel poverty as energy prices soar.

Friends of the Earth believes that the Government's plan for tackling fuel poverty is now fatally flawed.

• It has failed to accurately identify which households are in fuel poverty and as a result the Government's schemes to tackle the problem are often not reaching the right people.

• It has failed to set a minimum standard of energy efficiency for treating all affected households. As a result the energy efficiency measures that have been rolled out by Government and energy companies often fail to remove households from fuel poverty or to protect them from future fuel poverty as a result of rising energy prices.

• It has failed to take the steps necessary to deal with harder-to-treat households;

• Crucially, it has failed to allocate the sums that are necessary to deal with fuel poverty and meet its legally binding targets for eliminating fuel poverty.

The result is that the UK has one of the worst insulation records in Europe. The carbon emissions from UK homes represent over a quarter of the UK's total emissions and have risen since New Labour came to power in 1997.

The Government has been repeatedly criticised by the Fuel Poverty Advisory Group, the independent fuel poverty expert group advising Government on its strategy, for consistently failing to spend enough money tackling fuel poverty. The Government has also failed to spend its money wisely. Of the £2 billion spent each year on Winter Fuel Payments it is estimated by Friends of the Earth that only 1 to 2 percent is spent on paying the fuel bills of the fuel poor.

Friends of the Earth is calling on the Government to:

• Set out clearly how it will meet its legal obligations to eliminate fuel poverty, what the costs will be and how its plans will be funded.

• Establish a clear mechanism for accurately identifying all those households suffering from fuel poverty.

• Set a minimum standard of energy efficiency to be achieved in all these households which will insulate them from further energy price rises.

• Set up low carbon home zones in every local authority in the UK in areas where fuel poverty is concentrated. The fuel poor households in these zones should be treated street by street, house by house to the requisite energy efficiency standard.

• Announce in the Budget on Wednesday a windfall tax of £5 billion on the excessive profits of the energy supply companies to help kick start this programme. Further long term finance for this programme must also be secured.

Friends of the Earth sent a letter before action to the Government on 15^th February 2008 stating that it believes the Government has unlawfully failed to meet its duties under the Warm Homes and Energy Conservation Act 2000 and that unless it could demonstrate otherwise, the campaign group intends to take the Government to the High Court.

Although the Government was expected to give its response by 29 February (as required by the pre-action protocol for judicial review), it asked for one week's extension. Friends of the Earth agreed to this request. The Government then contacted Friends of the Earth on Friday 7^th March to say that its response would be delayed again and would not be available until Friday 14^th March. Once Friends of the Earth has received the Government's response to its legal letter before action it will decide whether to initiate judicial review proceedings.

Notes

[1] Energy companies have benefited from receiving free carbon emissions permits under the first phases of the European Emissions Trading Scheme. The companies have however passed on the nominal cost of these permits to consumers. The value of these free permits is estimated by Ofgem to total £9bn over the next 4 years. From 2012 onwards, permits will be auctioned.

Friends of the Earth believes a windfall tax on these unearned profits is justified because of the unique time bound nature of the profits which are entirely due to government policy and not due to company business models or investment decisions.

[2] Chancellor must keep promise to put sustainability at the heart of next months budget

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Published by Friends of the Earth Trust