Rural Development Sub-Committee

Inquiry into Poverty and Deprivation in Rural Wales

Response from National Energy Action Cymru

Friday 7^th March 2008

Introduction

National Energy Action Cymru welcomes the opportunity to comment on the sub committee’s inquiry into poverty and deprivation in rural Wales. National Energy Action (NEA) is the national fuel poverty charity, with headquarters in Newcastle, and country representation in Wales (NEA Cymru) and Northern Ireland. NEA has been actively involved in the campaign to eradicate fuel poverty in the UK for over 25 years.

We advocate the development and promotion of energy efficiency services to tackle the heating and insulation problems of low-income households.

This consultation comes at a time when the numbers of Welsh households in fuel poverty have nearly doubled and are at the highest levels seen for a number of years as a consequence of increased energy costs.

Consultation Response

1. What are the poverty problems faced by rural areas? What are the specific needs of rural areas in relation to this issue?

The Assembly Government’s Living in Wales report shows there are 240,000 fuel poor households in Wales, spending more than 10 per cent of their household income on energy. Fuel poverty is a problem that affects all parts of Wales, but one of the factors that distinguish fuel poverty from other types of poverty in Wales is its concentration in rural parts of Wales. The Assembly Government’s figures show that Mid and North Wales have the highest concentration of fuel poor households.

It is widely accepted that three factors have an impact on the level of fuel poverty: income, energy prices and the energy efficiency of a dwelling. The Welsh Assembly Government can exert influence in two of these areas: improving the energy efficiency of homes and raising incomes through take-up of benefit entitlement.

1). Improving energy efficiency. 21% of all households in Wales do not currently have access to mains gas, the cheapest fuel for home heating, and many of these are in more isolated rural areas where connection to the mains gas network is unlikely to be viable. This can be exacerbated by the fact that many of these households live in older "hard-to-treat” houses, with solid walls that are difficult to insulate economically. The current heating options for many of these households - coal and oil, are both expensive and environmentally damaging. Micro-generation could potentially help combat fuel poverty in hard to treat homes, but without capital grant assistance these technologies will not be taken up by low-income households. The fact that rural poverty is dispersed rather than concentrated also creates problems for service delivery, limiting the extent to which energy efficiency programmes reach rural communities.

2). Accessing grants and advice. The Welsh Assembly recently announced £3m of additional funding, to help local authorities widen the focus of their take up campaigns, targeting the elderly and couples with children. The Assembly has also announced that a working group will be formed to research the obstacles people face in claiming benefits and it is important this group takes into account the obstacles hard to reach groups face in rural Wales. Anecdotal evidence suggests that traditions of self-sufficiency in rural areas lead to reluctance to claim welfare benefits and other forms of assistance, although this can be partially attributed to the absence or limitations of sources of advice and information services.

2. Are anti-poverty activities best dealt with by the Welsh Assembly Government or by the Local Authorities? Why?

In our view the Welsh Assembly Government and Local Authorities both have a key role to play in tackling fuel poverty. Further, both need to work closely with the UK Government and the European Union to develop a co-ordinated approach to the deep-seated problems that cause poverty. Fuel poverty is an area where all parts of government need to work together: some aspects, such as benefits and utility regulation, are within the remit of the UK Government; issues relating to energy efficiency and advice are areas funded and delivered by both the Assembly Government and local government. NEA Cymru has worked with all 22 local authorities in Wales to develop local affordable warmth action plans that link local action to tackle fuel poverty with national strategies and funding programmes. In our view, fuel poverty, and the underlying problems of income poverty, are best addressed by this kind of co-ordinated working, rather than a disparate approach to delivery and responsibility.

3 i) What anti-poverty initiatives (Welsh Assembly Government or Local Authority) are you aware of?

The Welsh Assembly Government does not have a single unified anti-poverty programme. It has targeted particular aspects of poverty, through its strategies for tackling child poverty and fuel poverty. Other strategic policies on economic development, regeneration and housing also impact on the causes and consequences of poverty. The Assembly Government’s Communities First scheme is also intended to help tackle poverty, although it is more focused on capacity building and participation than outright economic prosperity. Also, there are very few Communities First areas in the more rural parts of Wales.

In terms of fuel poverty, the Assembly Government has a Fuel Poverty Commitment, which includes the target that, as far as is reasonably practicable, no household in Wales should be living in fuel poverty by 2018, with interim targets to eradicate fuel poverty amongst vulnerable groups by 2010 and in social housing by 2012. The Home Energy Efficiency Scheme (HEES) is the Welsh Assembly Government’s main vehicle for tackling fuel poverty by increasing the energy efficiency of dwellings. HEES provides partial grants (£500) aimed at the over 60’s who do not otherwise qualify for HEES or HEES Plus, HEES (£2000) aimed at families with children under 16, HEES Plus (£3,600 to £5,000) aimed at lone parent families with children under 16, people who are 60 or over and those who are disabled or chronically sick. Householders who are over 80 automatically qualify for HEES Plus.

There is also a great deal of good work going on at a local level in tackling poverty, and in particular fuel poverty. Through their services, local authorities come into contact with some of the most vulnerable households and are seen as the face of "government” in the community. Local authorities also work with, and often fund, local community and voluntary organisations that provide the advice and support that vulnerable households rely on to access their entitlements, in terms of services, income and grants. The Welsh Assembly Government has given NEA funds to help develop Affordable Warmth Action Plans in the 22 local authorities, and most areas have now agreed their plans.

There is also support available to tackle fuel poverty through funding from the private sector through the Carbon Emissions Reduction Target (CERT). CERT is an obligation imposed on energy suppliers and involves them meeting carbon reduction targets imposed by Government. There is significant funding available; we estimate on a pro-rata basis Wales should get about £28 million in CERT funding for household energy efficiency improvements. However, the Welsh Audit Office reported that local authorities needed to do more to access this funding and we suspect that, at present, Wales is not getting its fair share of these funds.

3 ii) Do these anti-poverty policies adequately address the needs of rural areas?

In terms of fuel poverty in rural areas, there is more that the Assembly Government could do. In particular, by making HEES more focused on fuel poverty. NEA Cymru strongly supports HEES and acknowledges the profound impact the scheme has had on many thousands of households across Wales. However, as it stands, HEES expenditure does not reflect the geographical spread of fuel poverty, with higher take up in the south of the country, despite the higher concentration of fuel poverty in mid and north Wales. On a more general note, HEES is not adequately targeting fuel poor households - at present only one in three households benefiting from HEES is fuel poor. Furthermore, only 54% of fuel poor households are eligible for HEES.

In our view, there may be particular issues concerning eligibility for HEES in rural areas. There are recognised problems of low wage, seasonal and temporary employment In rural areas; research by the Welsh Consumer Council showed that some parts of rural Wales have amongst the lowest wage rates in the UK. Low wages, combined with higher energy costs and poor quality housing stock means that, in rural areas in particular, fuel poverty is likely to be a problem for the working poor. These households may be struggling to pay their bills, but do not receive any benefits and are therefore not entitled to access HEES.

In terms of local action, the process of developing Affordable Warmth Action Plans has demonstrated that there is a lot of commitment to tackle the problem. However, the reality is that there is no statutory obligation placed on Local Authorities to deliver on action to tackle poverty or fuel poverty and limited resources often means that these issues can be neglected.

4. What specific measures would you like to see implemented by the Welsh Assembly Government to deal with poverty issues in rural Wales?

We would like to see the Assembly Government take a more joined up approach to addressing poverty, including rural poverty and fuel poverty. One example of this could be by linking child poverty work explicitly to action on fuel poverty; similarly links could be made to work on financial inclusion. Although there are few rural Communities First partnerships, this is also a potential mechanism through which action on fuel poverty can be linked to other Assembly Government programmes.

In our view, there is an urgent need to identify the households in rural Wales that are fuel poor but not entitled to help and support from the HEES scheme. These are likely to be working poor households. The Assembly Government needs to find a way of expanding energy efficiency schemes so that they can offer support to such households.

The Assembly Government also needs to address the problem of affordability of energy for people who are not connected to mains gas. In particular, this needs to be done through wider roll-out of micro-generation technology for fuel poor households.

5. What examples of good practice are you aware of in Wales/other parts of the UK/ overseas?

There are examples of excellent schemes to tackle fuel poverty that have been developed locally in the rural local authorities in Wales. These include projects in Gwynedd, Flintshire and Ceredigion. In terms of providing support for all households in fuel poverty, regardless of the benefits they claim, projects such as Warm Wales, in Wrexham and Neath Port Talbot, and the Warm Zones in various parts of England offer a model whereby energy effiency measures are available to everybody, with the level of contribution to the cost of energy efficiency improvements based on income. Such schemes might help to address the problems of the working fuel poor in rural Wales.