Energy blog

Why the Green Deal will not reduce fuel poverty

Published by Sam Page on 17 January 2013

The Green Deal is due to come into force at the end of this month.  People in both rented and private properties will be invited to make energy-saving improvements to their homes or businesses without having to pay all the costs up front. This depends on the Golden Rule that says: 

'You should not have to pay back any more than the savings you'll make on your energy bill as a result of the energy-saving improvementments you've installed'. 

In most cases, repayment levels will be based on heating bills for the property or the typical energy bills of a similar property. The Green Deal is designed to try to save the customer at least as much money as they will have to repay. However, the actual level of savings will depend on how much energy is used (e.g. to heat your home) and the future cost of energy. 

Since up to £10,000 may need to be spent on 'hard to treat' homes, such as those without cavity walls, in listed buildings or off the gas-grid, the big loan repayments may not fit the Golden Rule.  This will be particulary true if families that are in fuel poverty have been 'under-consuming' in order to save on heating bills.

In order to deal with this problem, the government has tasked the Energy Sector with providing grants to cover hard-to-treat homes, known as ECO (Energy Company Obligations).  The big Energy Companies will have 2 obligations:

  1. To make carbon emission savings in line with the Kyoto Protocol.
  2. To ensure 'affordable warmth' by making SAP-based energy cost reductions, by installing loft, wall and floor insulation and repair, but not replace, boilers.

The funds that will be disperced by ECO will be paid for by increasing energy prices to all consumers.

However, ECO has been criticised by both Professor Hills (the goverment's expert in fuel poverty) and the Chartered Institute of Housing for directing only 25%, rather than 50% of this funding towards the fuel poor. Hills says that rather than reducing fuel poverty, it is more likely that, as the better-off take advantage of the Green Deal and average heating bills fall, the most vulnerable will be left behind with increasingly unaffordable bills and even more families will fall into fuel poverty.

Persuading the government to use carbon taxes to end fuel poverty

In recognition of the on-going problem of fuel poverty, more than 120 health, old age, child poverty and green energy charities, also power companies, local councils and 180 M.P.s are calling on the government to use the funds raised from carbon taxes to treat 600,000 fuel poor households every year, providing each of them with a grant worth on average £6,500 to install energy efficiency measures. This would reduce their energy bills by an average £310 a year.  This could could bring 9 out of 10 homes out of fuel poverty. It could also be used to quadruple savings in carbon emissions compared to the Government’s new energy efficiency schemes and create up to 200,000 jobs.

Join the campaign and sign the Energy Bill Revolution petition, here...

Find out more about fuel poverty in the Marlborough Area, here...