1. National energy efficiency schemes
Energy efficiency is part of UK and devolved governments’ national energy strategies, which has the shared goals of reducing harmful emissions into the environment and tackling fuel poverty. It is widely accepted that the main cause of fuel poverty in the UK is a combination of low household incomes, high fuel costs and poor energy efficiency. More recently, in Scotland, a fourth driver of fuel poverty was recognised: how energy is used in the home, where a lack of knowledge on how to reduce consumption safely contributes to people’s fuel poverty.1Scottish Government, Draft Fuel Poverty Strategy for Scotland 2018, June 2018
Often people cannot afford to heat their homes to appropriate levels because their homes are not sufficiently insulated or in a poor state of repair, or because expensive or inefficient appliances are being used. Substantial savings in fuel bills can be achieved by introducing energy efficiency measures and adopting more energy efficient behaviours.
Successive governments have acknowledged that energy efficiency should play a central role in improving living conditions for the fuel poor in the UK. Fuel poverty is a devolved matter, with separate definitions, targets and strategies adopted by each nation.
An official overall UK figure for fuel poverty is no longer measured. However, fuel poverty charities estimate that fuel poverty currently affects over 7.5 million households. Despite the financial support from the UK government, it is widely expected that there will be no improvement from that estimate.2 There are now several officially accepted ways to define and measure fuel poverty in the UK. According to the original definition, a household is fuel poor if over 10 per cent of its disposable income is spent on fuel. This definition has been retained in Wales and Northern Ireland. England uses the ‘low-income high costs’ indicator to measure fuel poverty. This is a relative measure of fuel poverty, which also provides a measure of the ‘fuel poverty gap’ – the reduction in required spending in order for a household not to be considered fuel poor. In Scotland, a household is in fuel poverty if its fuel costs (necessary to meet the requisite temperature and number of hours as well as other reasonable fuel needs) are more than 10 per cent of the household’s adjusted net income and after deducting these fuel costs, benefits received for a care need or disability and childcare costs, the household’s remaining income is not enough to maintain an acceptable standard of living.3Fuel Poverty (Targets, Definition and Strategy) (Scotland) Act 2019 This chapter looks at what help, and support is available, how to access it and who is eligible. See also Chapter 13 for information on how you can exercise your rights against low-standard properties.
Energy Company Obligation
The Energy Company Obligation (ECO) is a UK government energy efficiency scheme designed to help reduce carbon emissions and tackle fuel poverty by placing legal obligations on larger energy suppliers to deliver energy efficiency measures to domestic premises. ECO is distributed via a grant and is paid for by a levy on all domestic electricity bills.
ECO4 is final phase of the ECO. It commenced on 1 April 2022 and will run until 31 March 2026. It is intended to provide more targeted support than previous iterations. It aims is to reduce the number of supported households through focusing on lowest-income households in the worst quality property. ECO4 is being delivered consistently across Great Britain.
Home Heating Cost Reduction Obligation
This is also known as the Affordable Warmth Obligation. This is the sole focus of ECO4 and provides free heating and hot water saving measures (eg, electric storage heaters), insulation (eg, cavity wall insulation), glazing and some micro-generation technologies to low-income and vulnerable households. Householders who receive specific benefits are referred to as the ‘help to heat group’.
You are eligible if you are an owner-occupier or live in a private rented property (although you will need the landlord’s permission) and a member of your household gets a qualifying benefit. At the time of writing, this included the following benefits (check for the latest information):4Sch 2 The Electricity and Gas (Energy Company Obligation) Order 2018
•pension credit guarantee credit;
•income-related employment and support allowance (ESA);
•income-based jobseeker’s allowance (JSA);
•tax credits (child tax credits and working tax credits);
•pension credit saving credit.
Suppliers can use up to 50 per cent of their HHCRO to install energy saving measures in premises that have been declared eligible by local authorities or the government in Scotland and Wales. This ‘flexible eligibility’, sometimes called ‘LA Flex’, can help if you are a ‘fuel poor’ owner-occupier or private tenant and are not in receipt of eligible benefits and are vulnerable to the effects of living in a cold home.5Department for Business, Energy and Industrial Strategy, Energy Company Obligation: ECO3, 2018-22 Flexible Eligibility Guidance, February 2019 In addition, some non-fuel-poor homes are eligible for solid wall insulation projects, as long as a proportion of the households in the project are in fuel poverty or living in the cold.
A supplier must deliver at least 15 per cent of its total HHCRO to domestic premises in rural areas (the rural sub-obligation).