Tuesday, May 01, 2012

Warm Front fiasco: This Government doesn't care about the fuel poor

The Government has betrayed thousands of people who suffer in fuel poverty by deliberately not spending £50.6 million of its budget last year allocated to help them and then refusing to give it back, and is betraying millions more by cutting its future budget.

The £50.6 million, being unspent, has returned immediately to the Treasury general coffers.

The figure came out of a Parliamentary answer by Greg Barker this week to questioning by opposition Energy Minister Caroline Flint, who has been persistently badgering the government to do more about fuel poverty.

The end result of the fiasco is that 22,000 households remain in fuel poverty that could have been helped.

Four million people

Four million of the most vulnerable people in the country are unable to pay their energy bills and suffer ill-health, days off work and poor quality of life as well as having less to spend on other necessities as a result, according to the latest figures.

The underspend happened despite the rejection of nearly 30,000 families who applied for help with insulation, because they didn't qualify under the new, stricter, eligibility criteria.

Ron Campbell, the policy officer for National Energy Action, calls the situation “a cock-up".

“The low take-up of Warm Front help, is due partly to the stringent eligibility requirements," he told me, "but mostly to the fact that a decision was taken not to promote the help available, because it was felt that with a reduced level of funding it would run out too quickly.

“The installers, such as Carillion, haven't been promoting it on the assumption that existing referrals from councils and Citizens Advice Bureaux would ensure uptake, but it just hasn't happened partly because of the stringent requirements."

“The Government thought that 57,000 households would be helped, but in it the event there was a 22,000 shortfall."

Warm Front is the main measure directly funded by the government to support those in fuel poverty and is ending next year.

The last report of the Fuel Poverty Advisory Group said it was a matter of “serious concern" that the government is ending this scheme.

Under the Warm Homes and Energy Conservation Act 2000 the government is legally obliged to eradicate fuel poverty by 2016.

At this rate it is going in exactly the wrong direction and will fail spectacularly.

Carillion's failure

The company with the contract to deliver Warm Front is construction giant Carillion. It is among the 22 companies first in the queue of providers of Green Deal energy efficiency installations.

Its failure to fulfill its Warm Front duty casts doubt on its ability to deliver Green Deal measures successfully.

As a result of its underspend last year, DECC forced it to repay £14 million of the money was given to fulfill his contract.

I tried repeatedly to get a statement from Carillion on how much money it did receive and how the £14 million figure was arrived at.

It refused to give this transparency and would not answer the question. It also refused to say why it did not promote the scheme especially when it knew that there was to be an underspend, referring all questions back to DECC.

A spokesman did provide a statement saying "Following changes to the funding and the qualifying criteria, take up of Warm Front has been lower than in previous years, and this has resulted in an under-spend for the latest financial year."

It called this “clearly disappointing and naturally we would encourage anyone who feels they may qualify to apply".

"Funding for Warm Front and the rules of the scheme, including expenditure on publicity, are all managed by Government and therefore these are not issues we can comment on," it added.

DECC did respond, and its statement is at the bottom of this piece, but adds little and certainly does not contain an apology for its incompetence.

How the money is drying up

In 2011-12, 43,585 applications were accepted for a Warm Front grant; a further 28,789 applications were turned down for assistance. 8,297 further applications are still awaiting a survey.

The total budget of £143 million for Warm Front consisted of £110 million allocated through the spending review 2010. Of this, £108 million was directly allocated to Warm Front measures.

In addition, DECC allocated £25 million to support the completion of outstanding work from 2010-11 with a further £10 million allocated to Warm Front in 2011-12 from the Department of Health.

Next year, the funds allocated to Warm Front will be reduced even further, to £100 million. Mr Campbell says he believes that the Treasury thinks the level of support should be more like £30m.

When Warm Front ceases in 2013, for the first time since 1978 there will be no taxpayer-funded scheme to install energy efficiency measures in dwellings occupied by vulnerable and low-income households.

This is where the Coalition's public spending cuts really hit home.

It is nothing short of scandalous.

But how many are in fuel poverty?

Official figures on fuel poverty lag considerably behind real-time increases in fuel prices, meaning that officials have no chance of keeping up with the situation on the ground.

The latest fuel poverty statistics, published on 14th July 2011, only relate to 2009, when four million were found to be in fuel poverty.

But energy prices have risen considerably since then. In the last year alone the Big Six energy companies have raised average domestic gas and electricity bills by £183, and uSwitch research says that up to 4 million households may be in debt to their energy suppliers.

The figure for those who do pay but are still cold due to poor insulation in their homes may be higher.

Under the government’s Warm Home Discount Scheme, 800,000 of the poorest families qualify for a £120 fuel bills rebate. But Save the Children says that just 3% of eligible families were receiving it last year, another chronic underspend.

Data on the final number of households assisted under the Warm Front scheme from 1 April 2011 to 31 March 2012 will not be known until Ofgem have conducted a review of suppliers’ spending in that year.

The most recent report of DECC's Fuel Poverty Advisory Group covers 2010.

No wonder the Government cannot get on top of the situation when it is so hard to get up-to-date figures.

150,000 are out of 2.9 million

Professor John Hills’s Fuel Poverty Review, published last month, shows the extent of the scandal yet to be caused by the cuts: the policies the Coalition has put in place are so ineffectual that they will reduce the number of fuel poor households by just 150,000 by 2016. And that is including the Green Deal.

A staggering 8.5 million individuals within 2.9 million households will still be in fuel poverty, with an aggregate fuel poverty gap of over £1.7 billion, compared to a gap of £1.1 billion in 2009.

Prof. Hill says fuel poverty contributes "not just to the excess winter deaths that occur each year (a total of 27,000 each year over the last decade in England and Wales), but to a much larger number of incidents of ill-health and demands on the National Health Service and a wider range of problems of social isolation and poor outcomes for young people".


This Government incompetence has already been condemned by the Association for the Conservation of Energy.

It said the Government's reaction to the Hill report, that it will spend nine months deciding on a new definition of fuel poverty, “beggars belief... instead they should spend that time agreeing a watertight plan to ensure that their statutory commitment to eradicate fuel poverty by 2016 is met in full.

"Without that, millions of fuel poor households will feel, quite rightly, that the Government has simply abandoned them.”

Caroline Flint has this week labelled the state of affairs "a shambles" and called for DECC ministers to come to the House of Commons and explain how they have left Warm Front in such a state.

The Speaker remarked that this was unlikely.

Further funding reductions

Here is more evidence of how Government funding cuts to the fuel poverty budget are biting.

The Deputy Prime Minister recently announced “at least £540m to fund energy saving improvements in the worst-off homes”.

This sounded impressive, but masks a reduction of 47% in Government help to tackle fuel poverty, from the 2010/11 figure of £1.15bn.

The Conservation of Energy (ACE) calculates it this way. In 2010-11, the budget for Warm Front was £345m and for CERT as a whole (the measure by which energy companies are supposed to assist households with bills), £1.3bn.

According to DECC, half of the CERT budget (53%) is spent on fuel poverty Priority Groups: £689m. Adding the whole of the £116.7m Community Energy Saving Programme (CESP) you reach a total on fuel poverty and priority groups of vulnerable households of £1,150.7m.

New money of £540m is therefore only 47% of the previous year's total expenditure.

ACE asserts that Clegg’s £540m figure was in fact only an increase in the share of the Affordable Warmth part of the new Energy Company Obligation (ECO) budget. The £1.3bn ECO budget for home energy efficiency and the Green Deal stays the same.

Instead of handing it back the £50.6m Warm Front underspend to the Treasury, as has happened, the Deputy Prime Minister should announce that it will be carried over to this year’s budget.

Without this help those in fuel poverty will have to wait until hell freezes over before the last one of them is given assistance.

Or maybe this Government thinks that's where they ought to go to stay warm.

Appendix 1: What is Warm Front?

The Warm Front scheme provides some heating and insulation improvements to households.

Qualifying households can get improvements worth up to £3,500 (£6,000 where oil central heating and other alternative technologies are recommended).

But the eligibility criteria are very stringent; for instance households must at least contain someone who has a pensioner premium, a disability premium, a disabled child or a child under the age of five, as well as being on other benefits and living in a poorly insulated house and/or without central heating.

To date, around £2.8 billion has been spent through the Scheme, which has resulted in around 2.3 million households receiving assistance, at an average of some £1,200 per household, according to the Hill Review.

Appendix 2: The figures behind the underspend

According to Hansard (Citation: HC Deb, 23 April 2012, c620W) the energy minister, Greg Barker, confirmed that the original budget for Warm Front and associated fuel poverty expenditure for 2011-12 was £110m.

During 2011-12 total expenditure was almost £108 million with a further £0.6
million committed but not yet paid. Therefore, of the original Warm Front
budget £1.4 million was unspent.

But, the budget was increased by £35 million during the year as a result of £25 million allocated to support the completion of outstanding works from 2010-11, with a further £10 million provided by the Department of Health.

The Department of Energy and Climate Change (DECC) also received agreed rebates from Carillion Energy Services of nearly £14 million.

These rebates were used to offset expenditure in 2011-12 bringing a total reported expenditure for the year to £94.4 million. Against the new budget of £145 million for 2011-12, £50.6 million was unspent.

DECC’s statement

When asked to explain this, DECC issued the following statement:

"Money is allocated to Carillion at the start of each month based on the projected spend for the month, taken from the overall budget.

"In 2011/12 total expenditure on Warm Front and associated activities was £108.6 million.

"During 2011/12 Carillion was able to return £14 million to DECC as a result of rebates such as energy companies paying for the measures under CERT.

"These rebates were used to offset expenditure in 2011/12 bringing a total reported expenditure for the year to £94.4m.

"Out of a total budget of £145 million for 2011/12, £50.6 million was therefore not spent and was returned to the Treasury."

When asked why they did not promote the grants sufficiently, DECC provided the following response:

"Marketing of Warm Front through Carillion ceased in 2010/11 because the scheme was heavily oversubscribed. It was anticipated that demand would, as with previous years, exceed supply.

"We did a major marketing push earlier this year by contacting 675,000 homes in areas where we know there’s high levels of fuel poverty like Birmingham, Leeds, Bradford, County Durham and Sheffield to alert them about the Warm Front scheme.

"We also worked with the Citizens Advice Bureau, Consumer Focus, National Energy Action and energy companies to promote the scheme through their advice services."

This was clearly too little, too late. A "cock-up" for sure.

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