Domestic Energy and Affordable Warmth

T. Markus

• Publisher: Routledge
• Year: 2005
• eBook ISBN: 9781135821043
• Edition: 1
• Topic: Architettura
• Subtopic: Metodi e materiali in architettura

This report arises out of the Working Group set up by The Watt Committee on Energy to examine the issues relating to domestic use and affordable warmth. With contributions from both academia and industry, and also calling on the expertise of others deeply involved in the subject, this book provides the reader with an authoritative coverage of providing affordable warmth to those living on low means or in inadequate premises.

1: Overview and policy recommendations

Thomas A.Markus

1.1 Background and context of report

The Watt Committee on Energy was conceived in the mid 1970s as a channel for discussion of questions concerning energy in the professional institutions. In 1992 it set up a Working Group to examine the set of issues relating to domestic energy use, hard-to-heat houses, low income and fuel poverty. Since starting its work the problems facing low income households have been exacerbated by the imposition of VAT on domestic fuel. This document is the final report of the Working Group.

These issues have been the subject of numerous studies, parliamentary enquiries, academic research and publications in the last two decades. Government departments have been involved, as have suppliers of fuel, local authorities and housing associations; there are major agencies carrying out thermal improvements using government funding; and several voluntary organizations act as pressure and campaigning groups. Therefore it can legitimately be asked whether the Watt Committee can add anything new to this discussion, or formulate new policies to tackle the issue.

The answer is that the Watt Committee, as the result of its constitution, is in a uniquely independent position and thus able to attain a degree of objectivity that is diffficult for these other institutions, though many of them were represented on the Working Group or presented evidence to it. It has been able to review the evidence, establish a clear methodology for considering policy options and propose a range of solutions.

1.2 Nature and magnitude of the problem

The Group has accepted evidence that around 8 million British households, in receipt of one or more social security benefits, are unable to achieve the comfortable, safe and healthy temperatures which they require in their homes throughout the year. But the problem affects many more people than those classified by such official indices as being ‘poor’; the additional number form a second category which can be said to suffer from ‘fuel poverty’. There is a third category of the ‘nearly fuel poor’ who are only just able to obtain adequate warmth in normal winters. For them, any increase in fuel costs—such as that caused by a severe winter, or that caused by the imposition of VAT on domestic fuel without full compensation for low-income households— places them into the category of ‘fuel poverty’.

There can be a number of reasons why a household cannot afford adequate warmth:

• Cold climate or exceptionally severe weather.
• Low income.
• Lack of access to an economic fuel.
• A poorly insulated house and/or excessive air leakage.
• Absence of or inadequate heating system.
• Special heating needs, such as longer-than-normal heating periods or the need to meet continuous full comfort temperatures, as in the case of the chronically sick, the elderly, the disabled, young children and unemployed people.

The consequences of cold houses include:

• Discomfort.
• Cold-induced illness, or exacerbation of existing chronic illnesses.
• Excess winter or cold-weather mortality.
• Hypothermia.
• ‘Spatial shrink’, whereby only one heatable room is used for eating, entertainment, study, children's play and even sleeping.
• Disconnections and fuel indebtedness.
• Condensation on cold surfaces, with consequent mould growth, causing:
  • mould-spore induced illnesses;
  • emotional and psychological illness;
  • social deprivation resulting from a reluctance to invite visitors to the house
  • due to its discomfort, its appearance and its damp smell;
  • deterioration of furnishings, interior decorations, clothes, toys and household equipment;
  • deterioration of building fabric.

There is evidence that regions with much colder climates than that of the UK—e.g. the Scandinavian countries, Canada, the northern states of the USA and northern Germany—suffer to a much lesser degree from underheated houses with all the attendant consequences.

In an attempt to overcome their inability to heat houses adequately, low-income families in the UK spend a far greater proportion of their total household expenditure on fuel than the average. In 1991, for instance, their percentage fuel expenditure was between 2 and 2.5 times higher than the national average (4.7%), rising to as much as 13%. For low-income pensioners and single-parent families the figure was even higher.

There are two related groups of factors at work: the first concerns the housing stock; the second, social and economic conditions. The energy inefficiencies in the housing stock can be quantified by using a rating such as the National Home Energy Rating (NHER) obtained by calculation through an energy audit. The households at risk of fuel poverty, through social and economic conditions, include the unemployed, the elderly, those on low incomes—especially large and single-parent families—and the disabled and chronically sick. As a result of market forces and letting practices there is a strong association in both the public and the private sectors between energy inefficient houses and households at risk, with the consequence that those with the least resources find themselves, in general, in the most difficult-to-heat houses. By establishing the relationship between house condition data and socioeconomic data the strength of this association could be measured. Although it is believed that the necessary information for doing this is available within the English House Condition Survey, such analysis has not so far been carried out. Similar unpublished data may be available for Scotland.

Chapter 2 provides the evidence on the nature and magnitude of the problem.

1.3 Costs and benefits

In considering the allocation of resources to tackle underheating the Group has identified two models: cost effectiveness and cost benefit. The first model relates the cost of investment to quantifiable and measurable savings—mainly reductions in fuel expenditure—usually over a fixed term of years. Internal rate of return and payback period are but two commonly used measures of cost effectiveness. The second model evaluates all the costs and all the benefits of a policy, including the costs of not doing something, over the lifetime of the system. One of the problems associated with the cost benefit model is that of determining the scale of the system. For instance, should an attempt be made to evaluate the global environmental effects?

Whichever model is used, there is a basic question of system boundaries and externalities: cost effectiveness or cost benefit to whom? Is it the individual, the household, the local community, the local authority, the government, the fuel industries, or even the entire global community (if, for instance, climate change, pollution or reduction in fossil fuel stocks are considered)?

Many of the consequences of cold and damp houses are easy to see in terms of illness, suffering and loss in quality of life, but difficult to quantify in cash terms. The inefficient use of fuel contributes significantly to CO₂ emissions. The direct costs to the health services of treating condensation-related illnesses has been estimated at £800 million per annum; if cold-related illness is included the figure is nearer to £1000 million per annum. The costs in lost work and schooltime must be equally large but are difficult to estimate. The costs of repair, maintenance, insurance claims, replacement of damaged goods and the loss in capital value of housing property, are substantial and are borne by both the public and private purse.

There is an unspecified amount for fuel in Income Support but it certainly does not take into account the true cost of heating the types of house occupied by most recipients of the benefit. Only if it did so would progressive thermal improvements to such houses justify a reduction in Income Support. In reality what will happen is that such households will choose to take up all or some of the benefits resulting from energy improvements in achieving warmer conditions. Until such time as these take place, additional income will be needed.

Reducing the energy inefficiency of the UK housing stock also has employment implications, since insulation, draughtproofing and the installation or improvement of heating systems will have an impact on both manufacturing industry and the availability of semi-skilled and skilled labour opportunities in the building industry.

Attempts to quantify costs and benefits have foundered for lack of reliable data. There are few surveys of house temperatures. Systematic nationwide auditing has yet to take place, though a few local authorities and other agencies have made a start. There is some evidence from house condition surveys on building quality and heating, but it is not combined nor can it be related to household income. To date it has been impossible to establish the strength of the relationship between the worst quality housing and the lowest income households. It is crucial that the poorest people can purchase the cheapest warmth; therefore their houses require the highest energy efficiency. To achieve this will require a measure of positive discrimination. The lack of data concerning the costs of such action and of the resultant benefits means that estimates have to be used. To remedy this a full audit of fuel poverty is needed. The Group regards such an analysis as an essential component of action— whatever policies are pursued. But even before this is carried out it is evident that the true costs of capital investment and short-term cash support for fuel in low-income households are far smaller, if the benefits are evaluated, than is commonly said to be the case.

Chapter 8 explores methods for evaluating the costs and energy savings of different policies but policy evaluation cannot be restricted to such cost-effective analysis: it must be based on cost benefit.

1.4 Current policies and initiatives

A number of current government housing and energy policies have a bearing on the issue of affordable warmth, but there is no evidence of an integrated interdepartmental policy which addresses this specific issue, nor indeed of an integrated energy policy underpinning this. The most articulated policy is the commitment to reduce CO₂ emissions. This has an indirect effect in that it involves energy efficiency measures and switches of fuel. Some policies pursued by the Energy Savings Trust (EST) and the switch to more efficient lighting and domestic equipment will effect a direct reduction in CO₂ emissions (Chapter 4 discusses the energy performance of equipment). However, this policy's short-term impact on fuel consumption for space heating in low-income households, which contribute 24% of the total emissions from the domestic sector, is slight as any increase in energy efficiency here will be used to attain better house conditions rather than to reduce the amount of fuel used. Indeed there is evidence that there can even be a modest increase in consumption; for instance, an 18% increase in gas consumption was measured in DoE's Green House programme. In the longer term, of course, the effect on emissions will be more significant. Switching to cheaper heating fuels or lower tariffs for an existing fuel or increasing fuel allowances in Income Support would increase fuel consumption and CO₂ emissions. These considerations point to the need to develop special policies with respect to low-income households as part of the general strategy to reduce domestic CO₂ emissions.

If warmth is regarded as a benefit, then low-income households are the most effective policy target, as is the choice of tackling the least energy efficient stock.

The government's energy efficiency and housing policies have resulted in various programmes, which the Group has reviewed. Some of these are energy-specific; in others, energy is often only a minor part of general investment in new housing or refurbishment. The programmes include the Housing Investment Programme(HIP), Home Energy Efficiency Scheme(HEES), Green House Programme, Estate Action, various house improvement grants and the partnership with the gas and electricity industries in funding the EST. The Group has assessed the degree to which these can meet the demand for investment in thermal upgrading of houses occupied by low-income households and found that not only do they fall far short of meeting existing problems, but they will not even prevent further deterioration (Chapter 3).

In principle, it is widely agreed that energy auditing and rating of the UK's housing stock is an important method of targeting needs to form a part of any strategy in the energy upgrading of the stock. There is some debate about the most suitable rating method. Although the Group has accepted the NHER system as being the most reliable, a change to any other method does not invalidate the argument for rating. Rating would make it possible to allocate capital funds according to identified priorities based on energy efficiencies and to follow this by continuous monitoring of changes in the thermal efficiency of the stock. It would also enable social security and other benefits to be allocated on the basis of the energy performance and, hence, fuel demands of a given house. In other words it is a technical aid to a whole range of vital social and economic policies. On the one hand, the cost of auditing and rating individual houses is large and here there is room for collaboration between government, the fuel industries, private and public landlords, owner-occupiers and local authorities, all of whom stand to gain from energy rating. On the other hand, if intervention was initially limited to houses of very low rating (NHER≤2) the establishment of this point on the scale is a simple procedure and therefore less costly, but still requires most of the stock to be audited. This is basically what was proposed in the recently defeated Energy Conservation Bill 1994.

1.5 Some definitions

The title of the Working Group contains two terms—‘affordable’ and ‘warmth’—which are defined in detail in Chapter 2. Although, of course, there is room for debate about these, the principles underlying the policies recommended by the Group are not dependent on acceptance of the Group's specific definitions.

1.6 Possible solutions

The Group recognizes that there are both capital and revenue constraints on expenditure by government, the fuel industries and the private sector. Nevertheless the magnitude and urgency of the problem are such that substantial expenditure will be needed to remedy the situation in a reasonable timespan—say 16 years. Some measures, such as heating systems, have a limited lifetime and involve periodic expenditure. However, if savings on health cost, property values and indirect costs are taken into account, the net expen...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Members of the Watt Committee on Energy Working Group on Domestic Energy and Affordable Warmth
• Contributors
• Foreword
• 1: Overview and policy recommendations
• 2: Defining the problem
• 3: Existing and likely initiatives
• 4: Appliances and affordable warmth
• 5: Identifying policy objectives
• 6: Strategies for action
• 7: Administrative issues and mechanisms
• 8: Cost implications of a policy for affordable warmth
• Source material
• Appendix: The Watt Committee on Energy