Tackling fuel poverty 2021 to 2035

In October, I published proposals in a draft plan to tackle fuel poverty in Wales. The consultation ended on 31 December, by which time 57 individual responses were received. Additionally, more than 75 stakeholders from across Wales attended virtual workshops, hosted by National Energy Action Wales, to discuss our proposals.  

Taken together with the Landscape Report on Fuel Poverty in Wales published in October 2019 by Audit Wales and the Senedd’s Committee on Climate Change, Environment and Rural Affairs (CEERA) inquiry into fuel poverty report tabled in April 2020, the plan has been informed by a wealth of knowledge and experience from stakeholders working to tackle poverty on a daily basis. The plan I am presenting is designed to build on the excellent progress made over the past ten years and to provide even better support to our partners across the third, public and private sectors in Wales. 

The immediate path ahead is shrouded with uncertainty but the Welsh Government is committed to its course. The swift rollout of the coronavirus vaccine is being delivered as part of the world-leading fight back against this terrible pandemic, which has blighted too many families over the past twelve months. As we emerge from the pandemic, our efforts to tackle fuel poverty must be firmly rooted in supporting a clean, green and sustainable economic recovery, fulfilling our obligations to decarbonise housing in Wales as we work towards achieving net zero by 2050. This Plan has a part to play in delivering this Government’s priorities on the foundational economy, protection of our natural environment and social partnership but at its heart it will ensure Welsh households can afford to maintain a sustainable, safe and comfortable home environment.  

Lesley Griffiths AC/AM

Minister for Environment, Energy and Rural Affairs  

1. This plan should be read in conjunction with the consultation outcome report and integrated impact assessment published in support of this plan. 
2. This plan sets targets for tackling fuel poverty, together with ten short term actions, to be delivered by the Welsh Government in partnership with key stakeholders over the next two years. 
3.  A review of the actions will be undertaken as part of the Welsh Government’s biennial review and report on fuel poverty. The first review will be undertaken in 2023. The action plan will be amended as appropriate and in consultation with stakeholders.

4.    For the purpose of this plan and as defined in the Warm Homes and Energy Conservation Act 2000, a household is to be regarded as living “in fuel poverty” if a member of a household is living on a “lower income” in a home which cannot be kept “warm” at “reasonable cost”. 

5.    Our fuel poverty plan has clear targets, which meet our obligations under the Warm Homes and Energy Conservation Act 2000. While noting the Welsh Government cannot influence all of the wider determinants of fuel poverty, our plan includes meaningful but still stretching targets, taking account of the lessons learned over the past ten years and the representations submitted to us during the public engagement exercise, which ended on 31 December 2020.  

6.    By 2035: 

• No households are estimated to be living in severe or persistent [1] fuel poverty as far as reasonable practicable;  
• Not more than 5% of households are estimated to be living in fuel poverty at any one time as far as reasonably practicable; 
• The number of all households “at risk” of falling into fuel poverty will be more than halved based on the 2018 estimate [2]

7.    These three targets will be used to determine how successful the Welsh Government has been at achieving the statutory objective. The Welsh Government is undertaking further research into potential interim targets to be introduced as part of the first periodic review to be undertaken in 2023. 

Delivering the plan: How we are going to meet our objective

8.    To achieve our objective to further reduce fuel poverty, across 2021-2035 we will take action across four policy goals within the control of the Welsh Government: 

Goal 1: Identify

Proactively identify people who are in, or at risk of being in, fuel poverty to ensure our support will benefit people living on lower incomes.

Goal 2: Prioritise and protect

Worst first: Ensure people in most need receive the most appropriate package of support so they can always continue to heat their homes

Goal 3: Decarbonise

Fabric first: Improve the thermal and energy efficiency of lower income homes in the owner occupier and private rented sector, reducing energy bills and harmful carbon emissions.

Goal 4: Influence

Use our influence to ensure that the UK Government, Energy Regulator and energy companies consider and meet the needs of people living in Wales.

Definitions   

9.    Lower income – The Households Below Average Income [3]  (HBAI) report presents information on living standards in the UK based on household income measures. Estimates are provided for average incomes, income inequality, and for the number and percentage of people living in low income households.  For the purpose of this plan, lower income is defined as being less than 60% of the average relative median household income before housing costs as published annually in the HBAI report.  

10.    Satisfactory heating regime – a “satisfactory heating regime” is 23°c in the living room and 18°c in other rooms achieved for 16 hours in a 24 hour period in households with older or disabled people. For other households, a temperature of 21°c in the living room and 18°c in other rooms for nine hours in every 24 hour period on weekdays, and 16 hours in a 24 hours period on weekends is considered satisfactory [4] . The Welsh Government will, however, commission advice to determine whether the current definition is appropriate to ensure people can be kept comfortable and safe, especially in light of some changed working patterns as a result of the pandemic. 

11.    Vulnerable households are households where the occupants include one or more of the following:

•    a person aged 60 [5]  and over, 
•    a dependent child or children under the age of 16, 
•    a single person aged under 25,  
•    a person living with a long term illness or who is disabled. 

12.    Severe fuel poverty – Households needing to pay more than 20% of their full household income to maintain a satisfactory heating regime.

13.    Fuel poverty – Households needing to pay more than 10% of their full household income to maintain a satisfactory heating regime.

14.    At risk of fuel poverty – Households needing to pay more than 8%, but less than 10% of their full household income to maintain a satisfactory heating regime.

15.    Persistent fuel poverty – Households needing to pay more than 10% of their full household income to maintain a satisfactory heating regime in two out of the three preceding years [6] . 

16.    In Wales, estimated levels of fuel poverty will continue to be reported based on the definitions above using the full income methodology. Full Income comprises:

• The Primary Benefit Unit (PBU) income, which is calculated by totalling the personal incomes of everyone in the household (aged 16 and over), plus any benefit or other income source payments that the household receives (from earned income, state benefits and savings etc.). 
• Income from other benefits
• The Winter Fuel Payment (WFP), if applicable, 
• Housing related income, including: housing related benefits (HB), Council Tax Benefit (CTB), and the deduction of Council Tax payable.

17.    The Welsh Government will also report fuel poverty estimates based on the Low Income High Cost (LIHC) or Low Income Low Energy Efficiency (LILEE) Measures, the methodology used by the UK Government. Welsh Government reporting of fuel poverty estimates will also include analysis on the fuel poverty gap, or depth of fuel poverty, which is the average cost difference for people to pay less than 10% of their income for their home energy costs. 

18.    Fuel Poverty estimates will be prepared and published for all households, disaggregated in line with the definitions above and below the low income threshold. 

19.    Energy Efficiency Energy Performance Certificates (EPC) – The Standard Assessment Procedure (SAP) is the methodology used by the UK Government to assess and compare the energy and environmental performance of homes. Its purpose is to provide an accurate and reliable assessment of home energy performance. This assessment process underpins energy and environmental policy initiatives. Using the SAP methodology, homes are given an energy performance certificate (EPC). The SAP methodology will continue to provide the basis of the Welsh Housing Conditions Survey (WHCS) and for the setting of domestic energy efficiency targets within the Warm Homes Programme. 

20.    Kilowatt Hours (KWh) A kilowatt hour (kWh) is a measure of how much energy is used. It is simply a unit of measurement that equals the amount of energy used if a 1,000 watt appliance is kept running for an hour. Welsh Government investment in the next iteration of the Warm Homes Programme, designed to tackle fuel poverty by improving home energy efficiency, will aim to achieve a 21% , and not less than a 15%  reduction in household energy needed to maintain a satisfactory heating regime in the target population. In cases where there is evidence of energy self-disconnection or self-rationing, improvements will be measured against modelled typical consumption levels for the beneficiary household.   

[1] Persistent Fuel poverty:  being in Fuel poverty  in two of the preceding three years

[2] An estimated 144,504 households at risk of being in Fuel poverty in Wales, spending between 8% and 10% of their household income on fuel costs. This is equivalent to 11% of households in Wales.  

[3] https://www.gov.uk/government/statistics/households-below-average-income-199495-to-201819

[4] As recommended in “Understanding the characteristics of low income households most at risk from living in a cold home” published 11 July 2016 SRN/41/2016

[5] A person aged 60 years and older is defined as an older person for the purpose of this plan

[6] Persistent poverty is defined by the Social Metrics Commission as being in poverty two out of the past three years.

[7] https://www.theccc.org.uk/wp-content/uploads/2019/05/Net-Zero-Technical-report-CCC.pdf - page 79

[8] Based on UKCCC report recommendation Homes Fit for the Future? Published February 2019

[9] Committee for Climate Change, Environment and Rural Affairs Inquiry into Fuel Poverty published 24 April 2020       

BRE                 Building Research Establishment 
DAF                 Discretionary Assistance Fund 
ECO                 Energy Company Obligation
EPC                 Energy Performance Certificate 
EUP                 Energy Using Products  
EWI                 External Wall Insulation 
HBAI                 Households Below Average Income 
KWh                 Kilowatt Hours 
LHA                 Local Housing Authority 
LIHC                 Low Income High Cost 
LILEE             Low Income Low Energy Efficiency 
LSVT                 Large Scale Voluntary Transfer 
MRA                 Major Repairs Allowance
PAS                 Publicly Available Specification (PAS2035/2030)  
PRS                 Private Rented Sector 
RdSAP             Reduced Standard Assessment Procedure 
RSL                 Registered Social Landlord
SAP                 Standard Assessment Procedure 
SBRI                 Small Business Research Initiative
SMC                 Social Metrics Commission 
UKCCC             United Kingdom Committee on Climate Change 
WAO                 Wales Audit Office  
WHCS             Welsh Housing Conditions Survey 
WHD                 Warm Homes Discount 
WHP                 Warm Homes Programme 
WHQS             Welsh Housing Quality Standards