Blog: We need a new vehicle for ECO to ensure more money is spent on alleviating fuel poverty
By Sean McLaughlin, managing director of Matilda’s Planet
The UK government is currently consulting on the future shape of the Energy Company Obligation (ECO) for 2017-18 in England, Scotland and Wales ahead of a longer-term rethink of the scheme. ECO was designed to reduce carbon emissions and tackle fuel poverty.
This consultation closes just as DECC is incorporated into the revamped Business department so it’s an opportunity to see Greg Clark’s approach to this important part of energy strategy. As we all pay for ECO through our energy bills I urge as many people as possible to respond to the consultation. Beware the document is heavy going and therein, I believe, lies the problem; ECO has become a bureaucratic monster.
Since ECO was created in October 2012 more than 1.8m energy efficiency measures have been installed in more than 1.4m households across the UK with more than of these 200,000 in Scotland. That’s around 350,000 homes a year across the UK and 50,000 a year in Scotland. Impressive stats but do they really tell the story?
If ECO were a car it would probably be an old Rover; big, lumbering and turns some heads but from a practical perspective; difficult to get going, not very manoeuvrable and doesn’t really fit today’s world.
From 2017, the government plans to introduce reforms to better target the scheme and make it simpler and more cost-effective to deliver. They intend to reduce the overall spend from £870m to £640m, lowering energy bills for all households, yet increase the element focused on fuel poverty from £310m to £450m. To achieve all of these things requires a fresh start – put the old Rover in the museum and get a completely new vehicle.
It is astonishing that over the past four years we have only been spending 35.6 per cent of the ECO money on installing measures to lift people out of fuel poverty.
The latest fuel poverty statistics released in June showed that in 2014, the number of households in fuel poverty in England alone was estimated at 2.38 million that’s just over 10 per cent of English households.
It may be heartening that from 2018 ECO is to be re-named the Fuel Poverty Obligation (FPO). However, I am already concerned as to whether all the money will be spent helping those most in need.
The consultation acknowledges that poor building fabric is at the heart of fuel poverty.
It is widely acknowledged that Solid Wall properties lose the most heat and are therefore the coldest and most energy inefficient homes for people to live in. In England alone about 29 per cent of homes have solid walls but 46 per cent of homes in fuel poverty are solid wall.
As only 5 per cent of solid wall properties are insulated these buildings have to be a target in the transition period. We welcome this. That isn’t based on self-interest, it makes sense. The document acknowledges the positive impact that Solid Wall Insulation (SWI) has on the underlying problems of fuel poverty.
Unfortunately, the consultation document then goes on to suggest that this emphasis on solid wall properties should be reduced in the Fuel Poverty Obligation scheme to allow other measures such as new boilers to be delivered. If a lack of SWI is at the heart of the problem then why should it be at the heart of the solution for only 12 months?
Switching from solid wall properties to easier insulation targets in order to meet this Government’s arbitrary manifesto commitment to insulate 1 million more homes illustrates that the FPO, like ECO, could be more focussed on achieving headline grabbing statistics than helping those most in need.
This desire to try to tick boxes was part of the problem with DECC. In business you focus your efforts on addressing the root cause first and perhaps the new Department for Business, Energy and Industry can adopt the same approach. Replacing boilers may be attractive to British Gas (one of the biggest players in the boiler replacement market) but should it be a big part of this sort of scheme? We should focus on improving the fabric of homes first as the cheapest fuel is that which you don’t use.
The other big opportunity offered by a fresh start is to take the delivery mechanisms away from the Utilities. I can’t see anything in their core competencies which suggest that they should be delivering this sort of scheme. For some reason DECC thought that because they generate and distribute energy they should be experts in not using it! Create a new market and give a task to an organisation that is measured on delivering points on an artificial scale and they will naturally focus on finding the cheapest points to deliver.
Surely corporate landlords including housing associations and local authorities should lead the work on the assets they manage? Give them the money and measure their performance against the core objectives not against an imaginary currency of carbon certificates.
Thankfully the new scheme will see all social housing with energy ratings of E or below automatically eligible for help. Local authorities may also be given the power to award eligibility to the most vulnerable households. Perhaps some notice is being taken of the Scottish Home Energy Efficiency Programme (HEEPs) scheme?
This process provides an opportunity for Greg Clark to show that these matters are still at the heart of policy and will now be delivered in a more business-like manner.