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Cold-home casualties

An end to fuel poverty is affordable and achievable, but the opportunity is being lost in the continuing clamour for cuts, writes Alan Simpson

January 19, 2014
7 min read

The current ‘energy debate’ is in danger of descending into little more than an unsavoury slanging match. Ed Miliband’s price freeze proposal was a brilliant opening ploy. But in the vacuum that followed, it looked more like a policy space the Labour Party didn’t know how to fill.

The moment called out for a radically different plan of what tomorrow’s energy market must look like. All it triggered, however, was a debate dominated by the political crazies.

Egged on by the Tabloid Tories, David Cameron’s resurgent right are blaming everything on ‘green’ taxes, and demanding their repeal. Behind a rallying cry of ‘Only pollution can save the poor’, Cameron’s crazies are calling for the deregulation of everything that might make a dirty industry clean up its act. The sad thing is they are getting away with it. Decarbonisation targets are being abandoned, zero-carbon homes are off the agenda, renewable energy is under attack, ‘Warm Home’ grants are replaced by Mickey Mouse ‘Green Deal’ loans… And now they even want to abandon their legal duty to end fuel poverty.

Annual cull

Britain has some of the poorest housing stock in Europe. Around five million households live in government-defined fuel poverty. Every 1 per cent increase in energy bills throws another 40,000 households over the fuel-poverty line. When this year’s figures are published, we will again see ‘excess winter deaths’ of 20,000–30,000 people.

This has become an annual cull: the cold-homes casualties that Britain tolerates because we lack a decent housing renewal policy. It is a scandal dressed up as a statistic.

At one point, it was a scandal the last Labour government looked set to tackle. The Warm Homes and Energy Conservation Act 2000 placed a duty on government to ‘eradicate fuel poverty by 2016’. Unfortunately, it also contained the loophole phrase of ‘as far as reasonably possible’. Labour ministers were soon having to retreat behind this phrase as Gordon Brown salami sliced the budget that supported the programme. Even before the economic crash it was clear that the 2016 target date would not be met.

Ministers had not descended to the ‘wear a woolly jumper’ level of policy making, but they did begin to talk about the numbers being helped who were ‘in’ fuel poverty rather than the numbers helped out of it. This parliament was always going to have to come up with a different target date, and more measurable outcomes. What we didn’t anticipate was that the coalition government might want to ditch the duty altogether.

With very little notice, the government slipped in an amendment during the Lords stage of the energy bill debates to remove both the statutory duty and the 2016 target date. In its place will be a new definition of fuel poverty – a movable target that can never be reached – and new duties on ministers to introduce ‘regulations’ that ‘address the situation’ of those living in fuel poverty, and which specify a target date for ‘achieving the objective’.

What objective? What does ‘addressing the situation’ mean? What exactly will the fuel poor get? Woolly jumpers all round? This is waffle of the highest order.

Some 70 per cent of Britain’s fuel poor live in properties with ‘bottom of the barrel’ energy efficiency ratings of E, F or G. A genuine ‘fuel poverty’ strategy would commit to lifting all these properties to band D standards by 2020, and raising the rest of our housing stock to today’s ‘new build’ standards by 2030.

This is precisely what the End Fuel Poverty Coalition of NGOs is pushing for. They want the Lords to move amendments to set new minimum housing standards. The question is, will anyone back them?

Labour’s energy spokeswoman Caroline Flint has already proved to be the most combative of shadow secretaries of state, but the messages from the two Eds’ offices (Miliband and shadow chancellor Ed Balls) are becoming much more ambiguous. So far, Labour peers have been reluctant to commit Labour to anything with ‘targets’ in it. A game-changing opportunity is being lost in the continuing clamour for cuts.

Energy transformations

The travesty is that coalition ministers aren’t opposed to public subsidies per se. Their energy bill is about to shovel more than £100 billion of new subsidies into the pockets of big energy in the misguided belief that it will deliver UK energy security. In doing so the UK will cut itself off from all the most exciting energy market transformations already happening around us, especially those that begin from the interests of the poor rather than the rich.

In Hamburg, citizens have just voted to take the local grid off the energy companies and bring it into social ownership. Their starting point will be to sell themselves energy saving (improved housing conditions) before new energy consumption. Generating their own energy, and distributing it locally, may also allow them to cut existing energy bills in half.

The new partners in Germany’s ‘energy transition’ are no longer the energy companies. They are the producers of low energy technologies, decentralised generation and smart communication systems. For them, the eradication of cold homes is the beginning of the clean energy journey rather than something to be dropped from it.

In Britain, the same process would not even be difficult to finance. The crocodile pleadings of energy company executives to ‘lift the burden of green taxation from their shoulders’ should be turned on its head. It may be sensible to take the £500 million Energy Companies Obligation (ECO) budget supporting the installation of energy efficiency measures away from energy companies altogether. But instead of scrapping it, why not take a more creative approach to their responsibilities?

At nil public cost, we could turn the obligation into a duty to buy the same amount of bonds from the Green Investment Bank (GIB). Energy companies could then allocate the bonds as dividend or executive bonus payments. As tradeable assets that still belonged to the company, these would not even count as taxation. This could produce a loan fund for the GIB similar to that operated by the German KfW Development Bank. This is used to drive Germany’s energy efficiency programme, which currently takes more than 350,000 homes a year out of fuel poverty and has created more than 360,000 jobs.

Moreover, if the British government wanted to close the ‘Eurobond exemption’ tax loophole, used by energy companies to avoid paying tax, the money could double the size of a fuel poverty fund. It would provide a platform that could take some 500,000 UK households out of fuel poverty each year, until we reach the 2020 target. The mechanisms of supporting such a programme are not difficult to devise. It is the will and the vision that is lacking.

Of course the Big Six have been milking the public on energy charges and the taxpayer on public subsidies. But cutting green taxes won’t change any of this, and it won’t end the scandal of cold homes. Standing up against the Big Six is not enough. It is the whole wretched game that has to be changed.

Alan Simpson was MP for Nottingham South and a member of the Socialist Campaign Group in parliament from 1992 until he stepped down in 2010

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