Damning research from the right-wing think tank Policy Exchange, reveals how the Government is spending less than half of the £1.2 billion needed to tackle fuel poverty in England.
The government is currently investing £490 million a year to move all fuel poor homes in England to a ‘Band C’ energy efficiency rating by 2030. However, Policy Exchange has estimated the true cost to be £1.2 billion a year, leaving a £700 million per year funding gap.
‘Despite some recent improvement, the UK’s housing stock remains woefully inefficient compared to other European countries’, says Policy Exchange.
Policy Exchange calculates that fuel poor households would need to spend up to £1,700 extra a year to heat their homes to a suitable level (between 18 and 20 degrees Celsius).
Just over 1.1 million working households in England are classed as ‘fuel poor’, with 10% of all households in England now living in fuel poverty. The problem is most severe in rural communities, where many homes are off the gas grid.
The findings may play into the hands of the Labour Party, who have pledged to freeze energy prices for 20 months if they win the next general election. Labour claim the move could save average households £120, but cost energy companies around £4.5 billion.The research also shows that fuel poverty has been made worse by rising energy bills, with gas prices rising by 128% over the last 10 years.
Policy Exchange suggests three ways to meet the gap in current Government funding:
- Energy efficiency subsidies should be more focused on fuel poor households. At present, only 33% of fuel poverty funding actually benefits the fuel poor. Refocusing the Energy Company Obligation (ECO) scheme on fuel poor households would raise £375million a year to allocate to fuel poor households.
- Only 10% of Winter Fuel Payment recipients are actually in fuel poverty. Introducing an ‘opt-in’ for the Winter Fuel Payment could save £400million a year which could be reallocated into energy efficiency measures for the fuel poor.
- Energy efficiency should be viewed as a ‘Top 40’ national infrastructure priority – utilising some of the government’s £100billion infrastructure budget over the next five years.
Author of the report, Richard Howard, said: “The facts paint a startling picture. There are over one million working households struggling to afford their energy bills, and living in under-heated homes.”
A government spokesperson said: “Fuel poverty has fallen year on year under this government, and we’re spending more than ever before to ensure more people stay warm this winter”.