Presentation Transcript

1. Fuel poverty and consumer vulnerability – it’s the market ...

   Energy Action European Conference 11 and 12 March Jonathan Stearn Consumer Focus
2. Empowering consumers in vulnerable situations Consumer Focus, Citizens Advice and Citizens Advice Scotland were asked to: ‘Consider and advise on how they, local and central government and other organisations could help empower the very vulnerable as consumers.’ Tackling consumer vulnerability – an action plan for empowermentwas published on 20 Dec 2012. The BIS response (in its progress report) was also published the same day.
3. Groups of vulnerable consumers? Consumer Focus must have regard to the interests of consumers that are one or more of the following — (a)disabled or chronically sick individuals; (b)individuals of pensionable age; (c)individuals with low incomes; (d)individuals residing in rural areas. Section 6 (4)
4. Groups of vulnerable consumers? The risk of a person being in a vulnerable position may be multiple in nature and can include: Lack of self-confidence Low literacy, numeracy and/or financial capability Low/insecure income Being unemployed Being responsible for care for another person Having a physical impairment Having mental health problems Living in a lone parent household
5. Consumer vulnerability rather than vulnerable consumers AS Vulnerability can be long-term in effect or it can be a dynamic state – like unemployment, or bereavement IN REALITY Society is not simply divided into `vulnerable groups’ and the rest Vulnerability can be caused by external factors such as an organisation’s actions or the nature of certain markets
6. Consumer vulnerability Consumer Focus has defined consumers in vulnerable positions as: ‘People who cannot choose or access essential products and services which are suitable for their needs, or cannot do so without disproportionate effort/cost/time.’
7. Consumer vulnerability and the market – what’s the link? `The extent of vulnerability of an individual consumer depends on the interaction between the consumer’s individual combination of characteristics on the one hand and marketing practices on the other.’ Eurobarometer 342 Consumer empowerment
8. Vulnerability – essential to understand the role of the market BSi’s new British Standard on`inclusive service’ defines vulnerability as: ‘The condition in which a consumer is at greater risk of mis-selling, exploitation or being put at a disadvantage in terms of accessing or using a service, or in seeking redress.’ BS 18477
9. Removing barriersThird sector– empowering consumers Examples: My Home Finance social enterprise set up by the National Housing Federation in West Midlands aimed at those who can't access high street lending and rely on doorstep lenders Age UK Travel Insurance challenges the market by having no upper age limit and covers pre- existing medical conditions wherever possible Ebico, not for profit energy supplier, has developed an alternative pricing policy by charging the same tariff for different types of payment
10. Fuel poverty – the market is also key
11. Fuel poverty –is the market alone able to provide the solution?
12. Fuel poverty: who is responsible? In England the government bears primary responsibility to end fuel poverty but has moved ‘responsibility’ to the market and energy suppliers Energy suppliers have rapidly acquired responsibility to collect the money from consumer bills and deliver the policies to tackle fuel poverty But not doing that well. There are more than 6 million UK households in fuel poverty. The government is set to fail to meet the target of ending fuel poverty by 2016
13. Delivering energy efficiency:Programmes in England 2012 END: CARBON EMISSIONS REDUCTION TARGET Green Deal (GD) and Energy Company Obligation (ECO) 2013: END: WARM FRONT,CESP and GOVT spend No replacement for Decent Homes Reduced spend on fuel poor: £463m (ECO England only) Source: ACE (2012), National fuel poverty budgets, supplier obligation funds pro-rata for Eng only
14. Fuel poverty, energy bills and income Energy bill 2020 with climate change policies
15. Even if we accept ‘we are where we are’ is it a shining example of delivery? Warm Front – nearly half the funding left unspent last year. The scheme has now closed - £25m went into a local authority competition Carbon Emissions Reduction Target – At last count, energy suppliers had only completed 46% of the super priority group obligation Where does this leave the current energy efficient programme aimed at the fuel poor - Energy Company Obligation?
16. Fuel poverty: can’t just leave it to the market The government has already turned to local authorities to help with Warm Front Despite the cuts in the energy efficiency programme the Energy Company Obligation in 2013 will have £350m available plus £190m in the Energy Carbon Savings Community Obligation (CSCo) – it needs local authorities to be involved Investing in warm and energy efficient homes could provide cost benefits to the NHS. The Chief Medical Officer estimated that the NHS spends £859m each year treating cold related illnesses due to poorly insulated homes.
17. Fuel poverty: local authorities Local authorities can take a key role in all three drivers of fuel poverty – energy prices - collective switching, oil clubs income – living wage and benefit take up energy efficiency – locate/deliver to those eligible According to the research for Consumer Focus by Joanne Wade, 46 per cent of responding authorities gave a high priority to fuel poverty. But only 20 reported having fuel poverty targets The driver that could give a new impetus to local authorities is the new responsibility for public health
18. Fuel poverty: civil society The voluntary and community sector and the rest of civil society can play a key role. Consumer Focus, Age Uk, Citizens Advice and NCB have run two campaigns that have doubled Warm Front applications. Here is an example from Brighton: A Scottish Power Energy People Trust grant allowed Amaze to include energy audits in its work. It focused on helping parent/carers of children with special needs make their homes more affordable to run and pull families out of fuel poverty.
19. Removing barriers - The Poverty Premium and fuel poverty Consumer Focus has instigated a piece of work with the Joseph Rowntree Foundation to see how to develop a cross department/industry/regulator strategy to end the poverty premium linked to fuel pricing and other essential goods and services. But the role of the regulator in relation to fuel poverty is crucial. It is not just linked to prices, it also includes social tariffs and the delivery of energy efficiency programmes.
20. Removing barriers – types of regulator intervention REGULATOR Correct market failures Fair trading Competition Information Consumer vulnerability Fuel poverty See how operation of market affects consumers in vulnerable positions Strategy to improve outcomes Intervene in supply structure Tariff restructering Product type Strategy to improve outcomes Support consumers in vulnerable positions/fuel poverty Energy efficiency Social tariffs
21. Where could extra funds come from?- Energy Bill Revolution Recycle carbon tax: Over next 15 years Government will raise an average of £4 billion every year from Carbon Taxes energy efficiency programme focused on fuel poor ‘fuel poverty proof’ homes: ‘home built today’ standard almost all of fuel poor removed from fuel poverty www.energybillrevolution.org
22. Consumer Focus t 020 7799 7900Victoria House, f 020 7799 7901Southampton Row contact@consumerfocus.org.uk London www.consumerfocus.orgWC1B 4AD