Fuel poverty scheme “failing poorest and most vulnerable”

July 25, 2009 at 5:18 pm Leave a comment

warmfront
A committee of MPs has produced a report which criticises a government scheme supposed to reduce fuel poverty.

The Public Accounts Committee said the Warm Front Scheme is failing many of the poorest and most vulnerable households.

“It is unclear whether the primary aim of the Scheme is to improve the energy efficiency of homes or to reduce fuel poverty,” said Edward Leigh, committee chairman.

“If the latter, then the Scheme is certainly still missing the mark a lot of the time, with only about a third of the genuinely fuel poor qualifying for help.

“And a full three-quarters of households who benefit from the Scheme are not in fuel poverty.”

The Warm Front Scheme was set up to provide assistance to eligible households with the installation of heating and insulation measures in order to improve household energy efficiency and to reduce fuel poverty.

Until the formation of the Department of Energy and Climate Change in 2008, the Scheme was the responsibility of the Department for Environment, Food and Rural Affairs.

Between June 2005 and March 2008, the Scheme assisted over 635,000 households at a cost of £852 million, and by 2010-11, cumulative Scheme funding is expected to reach £1,811 million.

In 2007, over three million households were estimated to be in fuel poverty, and increases in domestic gas and electricity prices may have added a further 1.5 million households, the committee said.

A household is defined as ‘fuel poor’ when it needs to spend more than 10% of its net income on fuel to maintain an adequate heating regime.

Nearly 75% of households entitled to a grant are unlikely to be in fuel poverty, whilst the Scheme is only available to 35% of all those households likely to be in fuel poverty, partly because the eligibility criteria include receipt of non-means tested benefits.

In addition, the Scheme does not prioritise those with the most energy inefficient accommodation.

Between June 2005 and March 2008, £34 million was paid to households whose properties were already energy efficient, representing about 18% of those assisted in that period.

Some £15.4 million was spent on providing energy efficient light bulbs, tank jackets and draught proofing, which have limited impact on overall energy efficiency, and are also unlikely on their own to lift households out of fuel poverty.

“As more families sink into fuel poverty, the Warm Front Scheme must be focused much more sharply on those households genuinely needing help,” said Mr Leigh.

“One in four applicants, in 2007-08, had to fund the difference between the Warm Front grant and the actual cost of the heating and insulation measures carried out.

“It is worrying that over 6,000 households, possibly among the most vulnerable, withdrew from the Scheme as a result.”

The committee concluded that DEFRA failed to put in place adequate management arrangements in respect of its contract with eaga plc, which runs the Scheme on its behalf.

The absence of such arrangements contributed to the delay of over two years in clarifying some contractual terms and the extent of VAT payable on materials.

The Department for Energy and Climate Change will undertake a mid-term review of the contract.

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