Fuel Poverty Strategy

Everyone should be protected against the cold in their own home.

It’s shocking that today a lot households in South Tyneside are living in fuel poverty – people that are on a low income and struggle to heat their home for a reasonable cost.

Low incomes and affordability concerns have been worsened by the pandemic and the cost-of-living crisis; the need to take effective action to reduce fuel poverty has never been more important; more people are being forced into difficult decisions about whether to prioritise ‘heating or eating’.

Warmer homes are healthier homes and reducing fuel poverty will protect the health and wellbeing of our most vulnerable residents, which in turn will reduce the strain on local health and social care services.

Fuel poor households are more likely to live in energy inefficient homes and this is a problem across all tenures - social housing, private rented, and owner-occupied homes.

Improving the energy efficiency of homes has lots of benefits, not just improving health and wellbeing. These include reduced energy costs and carbon emissions, higher asset values, local job creation opportunities, improved and a more energy efficient housing stock, increased educational attainment and employability, fewer winter deaths and reduced pressure and costs for the NHS. Plus, if people aren’t spending as much on their energy bills, they will also have more money to spend on other things, further supporting local jobs and the local economy.

There is a lot we can do locally to help prevent and alleviate fuel poverty. The objectives and actions in this Strategy will help improve the lives of the borough’s residents, helping South Tyneside to become a place where people live healthy, happy, and fulfilled lives.

The purpose of this strategy is to highlight the issue of fuel poverty and its impact on residents in South Tyneside, plus identify actions to tackle fuel poverty in the borough. This Strategy covers homes in the owner occupied, privately rented, and socially rented sectors in South Tyneside.

This Strategy will cover the period 2023-2026. The accompanying action plan will be regularly monitored and evaluated by the Housing Strategy Team.

This Strategy was developed following extensive consultation, including with Officers from across the Council, South Tyneside Homes, the general public (through an online survey) and other stakeholders including Age Concern Tyneside South, Citizens Advice and Inspire South Tyneside (including their HealthNet Group - a collective voice representing the people of South Tyneside to debate, influence and shape local health and wellbeing policies and services).

To reduce fuel poverty in South Tyneside and support vulnerable groups in tackling fuel poverty.

A household is fuel poor if it cannot afford to keep its home adequately warm at a reasonable cost, given its income. Fuel poverty is usually caused by a combination of low household income, high energy requirements and high energy costs, with energy-inefficient housing being a key driver.

Government has updated the way fuel poverty is measured ^[1]. The updated measure, Low Income Low Energy Efficiency (LILEE), finds a household to be fuel poor if it:

• Has a residual income^* below the poverty line^† (after accounting for required fuel costs) and
• Lives in a home that has an energy rating below Band C

Government targets around tackling fuel poverty have been set to ensure:

• As many fuel poor homes as is reasonably practicable achieve a minimum energy efficiency rating of Band C, by 2030^[2].
• Fuel poor homes are upgraded to Band D by 2025.^[3]
• All homes are upgraded by 2035 to EPC band C where practical, cost-effective, and affordable.^[4]††

These targets are based on Energy Performance Certificates for fuel poor homes rather than a specific fuel poverty level. An Energy Performance Certificate (EPC) is a rating of how energy efficient a home is. The certificates are banded on a scale of A (most efficient) to G (least efficient). An EPC is a legal requirement when a home is bought, sold, or rented.

In England a household in a home with an energy efficiency rating of C or better (around half of all homes) cannot be defined as being in fuel poverty, regardless of their income or the level of energy prices. Around 44% of homes in South Tyneside have EPC ratings above band C.

^* _{Residual income is defined as equivalised income after housing costs, tax and National Insurance. Equivalisation reflects that households have different spending requirements depending on who lives in the property.}

^† _{The poverty line (income poverty) is defined as an equivalised disposable income of less than 60% of the national median.}

^†† _{The Climate Change Committee has recommended that all rented homes meet EPC band C by 2028. The Government published proposals^[5] in September 2020 to require all private rented homes to get to EPC C by 2028. This would apply to all new lettings from 2025.}

Tackling fuel poverty can have impacts on several policy areas. For example, cold homes can have negative impacts on both mental and physical health, potentially adding demand to the NHS and social care providers, plus directly contributing towards excess winter deaths.

Transforming the housing stock so that homes are warm, healthy, and fit for the future will help protect the health of those most vulnerable and reduce the strain on our NHS, whilst complementing the approach to more preventative healthcare.

Health impacts of cold homes include increased risk of heart attack or stroke, respiratory illnesses, poor diet due to ‘eat or heat’ choices, mental health issues, and worsening or slow recovery from existing conditions.

Older people and people with certain health conditions, such as heart problems, asthma, depression, or chronic obstructive pulmonary disease, can see their symptoms improve or even have their life extended by living in a warmer home.

Tackling fuel poverty also helps to reduce carbon emissions and keeps household bills down.

In addition, living in a fuel poor household affects children’s wellbeing and life chances.

Research by Shelter^[6] found that that children in poor housing are at greater risk of:

• Severe ill-health, disability, and mental health problems.
• Respiratory problems such as asthma, infections such as meningitis and tuberculosis, and slow growth, which is linked to later coronary heart disease.
• Absences from school.

Fuel poverty is linked to lower educational attainment and a greater likelihood of future unemployment, low-paid employment, and poverty. Therefore, it is identified as a key issue in South Tyneside’s 2020 Economic Recovery Plan^[7].

This strategy complements several national policies including:

In 2014, the Government introduced a fuel poverty target for England to improve as many fuel poor homes as is reasonably practicable to a minimum energy efficiency rating of Band C, by the end of 2030. The 2015 Fuel Poverty Strategy^[8],“Cutting the Cost of Keeping Warm”, set out Government’s plan to meet this target. In February 2021, the UK Government released an updated Fuel Poverty Strategy for England titled Sustainable Warmth: Protecting Vulnerable Households in England^[9]. It sets out how the government will tackle fuel poverty, while at the same time decarbonising buildings, so that those in fuel poverty are not left behind on the move to net zero, and, where possible, can be some of the earliest to benefit.

The Clean Growth Strategy^[10] sets out proposals for decarbonising all sectors of the UK economy through the 2020s, including tackling fuel poverty and improving the energy efficiency of homes.

The Energy White Paper^[11] addresses the transformation of the UK’s energy system, promoting high-skilled jobs and clean, resilient economic growth, delivering net-zero emissions by 2050. It also commits to consulting on regulatory measures to improve the energy performance of owner-occupied homes. Government is consulting on how mortgage lenders could support homeowners in making these improvements.

The government will change Building Regulations so that from 2025 the Future Homes Standard^[12] will deliver homes that are zero-carbon ready. Homes will be fitted with low carbon forms of heating. A full technical specification for the Future Homes Standard will be consulted on in 2023. Legislation will be introduced in 2024, ahead of implementation in 2025.

The aim of the Future Buildings Standard^[13] is to further amend Building Regulations to improve the energy efficiency and sustainability of new and renovated buildings. It proposes to create a new requirement aimed at reducing the risk of overheating in homes, plus proposes more stringent requirements for ventilation and energy efficiency when existing homes are renovated or when doors, windows or heating appliances are replaced.

The Department for Levelling Up, Housing & Communities (DLUHC) are reviewing the Housing Health and Safety Rating System(HHSRS)^[14]. It is the risk assessment tool used by local authorities to assess hazards in residential properties, including excess cold. The Department for Business, Energy & Industrial Strategy (BEIS) and DLUHC will work together to ensure the HHSRS review takes account of the most up to date evidence on cold homes and aligns with wider Government aims on energy efficiency and fuel poverty.

The DomesticMinimum Energy Efficiency Standard (MEES)^[15]Regulations set a minimum energy efficiency level for domestic private rented properties.

The Climate Change Committee (who advise the Government on decarbonisation) said in their Net zero report that ‘addressing fuel poverty should continue to be a priority’^[16].

The Commons Business, Energy and Industrial Strategy Committee’s report on Energy efficiency: building towards net zero^[17] provided some estimates of the impact of energy efficiency on various sectors:

• Energy savings: total energy use could be reduced by an estimated 25% by 2035 through cost-effective investments in energy efficiency and low carbon heat.
• Cutting energy bills: Energy efficiency measures have already saved households around £290 per year since 2008. Reducing total energy use by 25% by 2035 would result in average energy savings for consumers of roughly £270 per household per year.
• Jobs: Similar scenarios suggest that between 66,000 to 86,000 new jobs could be sustained annually across all UK regions.
• Economic Growth: This ‘cost-effective’ approach would require an estimated £85.2 billion investment but would deliver benefits (reduced energy use, reduced carbon emissions, improved air quality and comfort) totalling £92.7 billion - a net present value of £7.5 billion.
• Optimises infrastructure investment: Energy efficiency can prevent expensive investments in generation, transmission and distribution infrastructure and reduce reliance on fuel imports - with a present value of avoided electricity network investment of £4.3 billion.
• Competitiveness: The UK is a net exporter of insulation and energy efficiency retrofit goods and services.
• NHS savings: Reduced NHS costs of roughly £1.4 billion each year in England alone. The health service is estimated to save £0.42 for every £1 spent on retrofitting fuel poor homes.
• Air quality: The present value of avoided harm to health is calculated at £4.1 billion in accordance with HM Treasury guidance.

Plan for Jobs^[18] outlines how the government will boost job creation to secure economic recovery from coronavirus, including supporting and creating jobs that facilitate making homes greener, warmer, and cheaper to heat.

The ten-point plan for a green industrial revolution^[19]sets out the approach government will take to support green jobs and accelerate the nation’s path to net zero.

The Social Housing (Regulation) Bill^[20] includes a review of the Decent Homes Standard^[21]. The review will consider how the standard can work to better support energy efficiency and the decarbonisation of social homes. In addition, the Bill may seek to include improving energy efficiency as part of new regulatory standards for registered social landlords.

Mitigating and adapting to climate change is expected to present economic challenges and opportunities as the UK seeks to pursue ‘green growth’. The Government sees green finance as central to this transition. This is discussed further in the Government’s 2019 Green Finance Strategy^[22].

New guidance for landlords of Houses in Multiple Occupation (HMO) may be published to clarify when an EPC is required and when the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 ^[23] apply to HMO.

The House of Commons Environmental Audit Committee^[24] has said that the UK’s legally binding climate change targets will not be met without the near-complete elimination of greenhouse gas emissions from UK building stock by 2050. The retrofit of the existing housing sector needs much greater focus and is at risk of letting the rest of the economy down on decarbonisation. Several recommendations for policy changes are made including that the Government should bring forward the allocation of the £3.8bn of funding (Social Housing Decarbonisation Fund) pledged before the 2019 general election. This would deliver cost savings at scale. This funding should be frontloaded to reap the benefits of cumulative emissions savings towards net zero.

The Heat and Buildings Strategy^[25] sets out how the UK will decarbonise homes, commercial, industrial, and public sector buildings, as part of setting a path to net zero by 2050. This builds on the commitments made in Clean growth: transforming heating, the Energy white paper and the Prime Minister’s 10 point plan.

The government published their Net Zero Strategy: Build Back Greener^[26] in October 2021; it sets out policies and proposals for decarbonising all sectors of the UK economy to meet the net zero target by 2050.

The Committee on Fuel Poverty (CFP) is an advisory Non-Departmental Public Body sponsored by the Department for Business, Energy & Industrial Strategy (BEIS). They monitor and provide independent, expert advice on the government’s strategy to improve the energy efficiency of fuel poor homes in England to make them more affordable to heat. Their 2021 annual report^[27] explains the need to:

• Approve long term funding for government’s proposed energy efficiency programmes and focus them on the fuel poor.
• Develop and implement additional programmes to meet the 2025 Band D milestone.
• Ensure a fair transition to net zero for households who are vulnerable and in fuel poverty
• Ensure that low-income households are protected against the impact of unaffordable increases in energy costs.

In 2022, DLUHC published A fairer private rented sector^[28] – a landmark white paper for the private rented sector – which set out the government’s commitment to introduce a legally binding Decent Homes Standard to the private rented sector. DLUHC launched A Decent Homes Standard in the private rented sector: consultation^[29] in late 2022. The proposed Standard introduces further requirements on landlords regarding energy efficiency.

An Energy Bill^[30] is currently progressing through Parliament. The Bill includes provisions about energy production and security and the regulation of the energy market, plus about heat networks and about energy smart appliances and load control.

In addition, a range of measures are currently available to help alleviate fuel poverty including:

• At the time of writing the government are operating a Green Homes Grant Local Authority Delivery (LAD) scheme; local authorities can bid for funding under this scheme to improve the energy efficiency of low-income households in their area.
• The Energy Companies Obligation (ECO) scheme involves obligated energy suppliers installing energy efficiency measures such as insulation and boiler replacement or repair in eligible homes (those of low income, fuel poor, and vulnerable households). The scheme is paid for by a levy on all consumers bills though recipients may need to contribute to the cost of their installation which may not be fully covered by their energy supplier. Local authorities are also able to refer fuel poor and vulnerable residents in their areas to obligated energy suppliers so that they can be offered support under the scheme.
• The Social Housing Decarbonisation Fund (SHDF) covers a 10-year period and has been designed to improve the energy performance of social rented homes, on the pathway to Net Zero 2050. The SHDF aims to deliver warm, energy-efficient homes, reduce carbon emissions and fuel bills, tackle fuel poverty, and support green jobs. The SHDF supports the aims of the Prime Minister’s Ten Point Plan for a Green Industrial Revolution.
• The Warm Homes Discount scheme. Under the scheme, medium and larger energy suppliers support people who are living in fuel poverty or a fuel poverty risk group. Some smaller suppliers also voluntarily participate in part of the scheme. The scheme targets fuel poor households, through a rebate of £140. The Energy White Paper committed to extending the scheme until at least 2025/26 and government will consult on reforms to the scheme to better target fuel poverty.
• The ten-point plan for a green industrial revolution announced the introduction of the Home Upgrade Grant. Government have committed money to help some of the poorest homes become more energy efficient and cheaper to heat with low-carbon energy. The Home Upgrade Grant will support low-income households with upgrades to the worst-performing off-gas-grid homes in England. These upgrades will create warmer homes at lower cost and will support low-income families with the switch to low-carbon heating, contributing to both fuel poverty and net zero targets.

Many activities are now coordinated by the Department for Energy Security & Net Zero.

The Committee on Fuel Poverty have published Understanding the challenges faced by fuel poor households^[31]. The research provides a detailed understanding of the challenges faced by fuel poor households during the winter of 2022 to 2023 when making decisions around fuel consumption.

In the latest year for which statistics are available, an estimated 3,162,752 households in England were defined as fuel poor under the government’s fuel poverty definition. This was 13.1% of households. However, within South Tyneside 9,690 (13.9%) of 69,876 households were estimated to be living in fuel poverty. This is lower than the North East proportion (14.0%) but slightly higher than the national figure.

We know that some fuel poor households are more at risk from the impacts of living in a cold home than others, even if they are not necessarily the most severely fuel poor.

In tackling fuel poverty, low income, vulnerable residents that are living in homes rated below EPC Band C will be targeted. Based on information presented in the latest version of the Fuel Poverty Strategy for England, we consider the following low-income households to be particularly vulnerable if at least one member of the household is:

• 65 or older.
• Younger than school age.
• Living with a long-term health condition which makes them more likely to spend most of their time at home, such as mobility conditions which further reduce ability to stay warm.
• Living with a long-term health condition which puts them at higher risk of experiencing cold-related illness – for example, a health condition which affects their breathing, heart, or mental health.

We also need to target fuel poor households that are on prepayment meters. Prepayment or ‘pay-as-you-go’ meters are a type of gas and electricity meter that require you to pay for your energy before you use it. They are used with a smartcard, token or key that can be topped up at a shop or via a smartphone app; customers put credit on their account before using energy rather than receiving bills for their usage (it’s the same principle as a pay-as-you-go mobile phone).

In addition to covering the standing charge and per unit charge, the meter can be set up to pay off arrears on an energy debt. For this reason, prepayment meters are popular and have frequently been installed in households with energy debt. Some households will request a prepayment meter as an aid to budgeting, whilst some rented properties also have prepayment meters installed to avoid fuel debts being ‘left behind’ by former residents.

Unfortunately, this means that many low-income households are therefore forced to pay more for their gas and electricity; prepayment meters tend to charge above average rates for gas and electricity, plus, the best energy deals on the market usually aren’t available to prepayment meter customers. In addition, energy prepayment can be inconvenient because customers must often go out to ‘top up’ their prepayment meter keys and smartcards. If they can’t afford it or can’t reach a shop to top up their meter, energy supply to their home may be disconnected, leaving them in a cold home and potentially without cooking facilities.

To help combat fuel poverty, tackling digital exclusion in these households is also important; access to the internet is becoming essential – it should not be considered a luxury. For example, it is needed to shop around for the best energy deals, plus new benefits applications, like Universal Credit, must be completed online. Approximately 60% of benefit claimants in the borough are on Universal Credit - claimants need phones and laptops to access their on-line journals.

Being able to go online means you can see your energy bills and estimates, check your tariff, see how competitive it is and whether you should switch.

Most of the best energy deals are only available online too. That’s not just in terms of price; often better contract terms are available e.g. fixed term contracts.

Applying for energy efficiency schemes and grants often requires internet access too.

As well having to make tough ‘heating or eating’ decisions, many families have to worry about the scarcity of electricity to power laptops, tablets, and smart phones.

Even if they do have electricity and access to the web, many households lack the basic digital skills to realise the benefits of the internet too. The importance of tackling fuel poverty and digital inclusion is addressed in theSouth Tyneside Economic Recovery Plan^[32].

We will use knowledge of areas of high fuel poverty, wider deprivation, and poor housing, to target delivery at groups that are in most need.

South Tyneside Council cannot tackle fuel poverty alone and we will work in partnership to find solutions to the problem of fuel poverty. Partners include:

• Government bodies/departments.
• Local authority departments (e.g. Housing, Environmental Health).
• South Tyneside Homes and other registered providers in the borough.
• NHS.
• Voluntary sector (e.g. Citizens Advice).
• Community groups/organisations.
• Energy companies.
• Businesses (e.g. contractors who install energy measures).
• Private Landlord Forums.
• Credit Unions/other regulated financial bodies.

Fuel poverty is usually a result of three interacting factors - low household income, low energy efficiency standard of a property and high energy prices. Our focus is on supporting people to improve the energy efficiency of homes and providing advice and support. The three objectives are as follows:

1. Maximise household income and reduce household costs where possible.
2. Improve the energy efficiency of homes.
3. Reduce household energy consumption.

Maximise household income and reduce household costs where possible

Low income affects the quality of housing you can afford. This increases the chances of an individual on a low-income being fuel poor.

Part of the long-term solution to fuel poverty lies in ensuring that families and individuals are as financially secure as possible and receiving all the benefits and tax credits to which they are entitled.

Reducing household expenditure and maximising incomes can lift households out of fuel poverty and reduce the risk of them falling into fuel poverty.

Residents will be supported to maximise their household income, manage their money, and reduce excessive bills.

Improve the energy efficiency of homes

Improving the energy efficiency of homes is the most cost-effective and long-term solution to tackling fuel poverty. Improving home energy efficiency not only reduces the rate and risk of fuel poverty it can also:

• Reduce carbon emissions helping to meet the UK’s carbon reduction targets.
• Improve health and wellbeing.
• Reduce excess winter deaths.
• Lower NHS and social care costs.
• Generate economic growth.

Reduce household energy consumption

Energy consumption is determined mainly by the way people use energy in their home. These energy use behaviours are often habits which are hard to alter (e.g. leaving lights on and appliances on standby, or leaving electronic devices ‘plugged in’ and switched on at the wall, and not using heating and hot water controls to optimise efficiency). Behavioural change is the most effective and cheapest way to reduce energy consumption and carbon emissions.

Actions were developed for each objective:

• Maximise household income and reduce household costs where possible
• Improve the energy efficiency of homes
• Reduce household energy consumptions

Objective 1: Maximise household income and reduce household costs where possible

Objective 2: Improve the energy efficency of homes

Objective 3: Reduce household energy consumption