Welcome to the latest Fuel Debt Advice Bulletin. Comprehensive Spending Review Overview. Changes to benefits / tax credits.

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1 Welcome to the latest Fuel Debt Advice Bulletin In this issue, we provide an overview of the Comprehensive Spending Review (CSR) and the impact it may have on fuel poverty and debt. The changes to benefits and tax credits are of major concern as these will mean a significant reduction in income for many vulnerable groups and create thousands of newly fuel-poor households. One of the biggest disappointments of the CSR was the reduction in the Warm Front budget by 70% over the next two years as it is phased out in advance of the introduction of the Green Deal. Given the level of demand for Warm Front, NEA is concerned over the adverse effect this will have on thousands of vulnerable households. Winter Fuel payments remain following the CSR but it seems likely that payment levels will revert to the core amounts of 200/ 300. NEA was also disappointed that the Charity s recommendation that other vulnerable groups be included was not taken up. The increase in the value of Cold Weather Payments (from 8.50 to 25) has been made permanent and this must be considered a positive move. Seemingly Government has budgeted for expenditure of 50 million over this winter and expenditure has already exceeded this amount. Cold Weather Payment expenditure in the previous two winters totalled 210 million and 290 million. Comprehensive Spending Review Overview Changes to benefits / tax credits contributory employment and support allowance for claimants in the work-related activity group will be time-limited to one year total household benefit payments will be capped on the basis of average take-home pay for working households. They will be capped from 2013 at around 500 per week for couple and lone parent households and around 350 per week for single adult households. Disability Living Allowance claimants, war widows and families claiming Working Tax Credit will be exempt from the cap the maximum amount of Pension Credit Savings allowed will be frozen for four years from 2011/12 Child Benefit will be removed from families with a higher rate taxpayer from January 2013 Working Tax Credit: there will be a freeze in the basic and 30 hour elements for three years from 2011/12 Working Tax Credit: costs payable through the childcare element will be reduced from 80% to 70%, reverting to the 2006 rate Working Tax Credit: the working hours requirement for couples with children will be increased, so that they will have to work 24 hours a week between them, with one partner having to work at least 16 hours a week in order to qualify. Child Tax Credit and Working Tax Credit: real time information will be used the current system of means-tested working age benefits will be replaced with a new integrated benefit called Universal Credit; this will be introduced over the next two Parliaments. Warm Front Funding for Warm Front to be cut to 110 million in and to 100 million in in the run up to introduction of the Green Deal; taking the 345 million budget for as the baseline this represents a reduction of 68% and 71% respectively. It has been proposed that Warm Front will be better targeted on fuel poverty (see Warm Front

2 consultation) NEA had argued that adequate funding for Warm Front was needed to allow for a seamless transition to the fuel poverty element of the Green Deal. This would have ensured protection for vulnerable households for the period from April 2011 end of December Winter Fuel Payments Current rate is 250 per household where the person is aged years and standard rate of 400 for person aged 80 which remains. However, it seems likely that from next winter the Government will reduce the level of payment back to those specified in the regulations, which will be 200/ 300 respectively. Government chose not to extend eligibility to additional categories of vulnerable households. Cold Weather Payments It has been decided to retain the CWP permanently at the higher rate of 25. Government spending projections assumed that this would incur costs of 50 million from However actual expenditure can vary considerably with the scheme costing 210 million in and 290 million in and payments for this winter having already exceeded the nominal budget. Social Price Support It was announced in the Review that energy suppliers would provide additional assistance with the financial costs of energy bills to the most vulnerable fuel-poor households. The expenditure on SPS is to be 250 million in increasing to 310 million in The final shape of the Warm Home Discount scheme is currently open for consultation. Warm Home Discount consultation Fuel Poverty Targets It was announced that the government intends to initiate an independent review of the fuel poverty target and definition (possibly before the end of the year). npower Energy Trust npower has set up a new external trust fund called the npower Energy Trust, which launched on the 8 th of November The trust is to be managed independently by Charis Grants and is established with the aim of helping to alleviate fuel poverty by providing financial assistance to individuals and organisations. The npower Energy Trust will replace the company s First Step Programme, so any new applications for help with outstanding energy bills will now need to be directed to the npower Energy Trust and not the First Step Programme. More details are available online at the trust is one of a number of schemes npower has to help vulnerable customers and includes the Spreading Warmth Tariff and the Health Through Warmth Programme -

3 Scottish and Southern Electric (SSE) SSE has established a not-for-profit company (SSE Sustainable Interest Company) which will deliver SSE s energy-based initiatives in communities. The scheme is run on a trust fund basis and will continue as long as funds are available, providing A -rated energy efficient appliances to priority group customers (those on a low income or in receipt of income-related benefits). Applications must be made through an agency referral, however further information on the scheme can be obtained by telephoning Energy Price Increases Recent price increases from four of the big six energy suppliers (npower, ScottishPower, British Gas and Scottish and Southern Energy) are now in place or will be early in the new year. ScottishPower has announced that their price increases will not affect vulnerable customers on the Fresh Start tariff until March British Gas will not increase charges for its Essentials programme and Scottish and Southern will increase expenditure on support for vulnerable customers to 27 million in EDF Energy has indicated that it will retain standard gas /electric charges at current levels until March In response to the recent price increases OFGEM has announced an investigation into the retail energy market for further details go to; Market 26 November.pdf Electricity Prepayment Meter Users Following on from a previous Fuel Debt Advice Bulletin article, a press release on 24 November 2010 has highlighted the escalating and serious nature of a prepayment meter scam. Electricity scam spreads nationwide cases rise to 114,000 TOP 20 HOTSPOTS FOR PREPAYMENT METER FRAUD REVEALED IN NEW REPORT, AS POLICE UNCOVER THREATENING BEHAVIOUR FROM CRIMINAL GANGS Data from the leading energy companies British Gas, EDF Energy, E.ON, npower, Scottish Power and SSE show that the fraud, organised by criminal gangs, is hitting customers across the country: the worst affected areas range from big cities like London, Birmingham and Manchester to areas such as Thurrock and Southend-on-Sea. Customers are being urged to only buy their electricity meter top-ups from official PayPoint and Payzone retailers or the Post Office to avoid being scammed. Otherwise, the customer will end up paying twice: once to the criminal and then again, to their electricity supplier who can detect the fraud. The scam is of particular concern because to obtain the fake top-ups people must let the criminals into their homes to access their electricity meters. Reports of threatening behaviour from the perpetrators of the fraud have been received by some energy companies who are urging people to avoid those involved. Police have made arrests in connection with this activity. Further information is available from the Top-up Safe campaign press team. Please contact Faith Dawes or Lauren Garner on or , faith.dawes@threepipe.co.uk or lauren.garner@threepipe.co.uk. Leaflets and posters warning the public against illegal top-ups are available to download at

4 More on Prepayment Meters Ofgem has recently published quarterly statistics on consumer protection issues that includes levels of debt, debt recovery periods and numbers of disconnections. The statistics show an ongoing link between debt and installation of prepayment meters. Between April and June 2010, 63,000 of the 73,000 electricity prepayment meter installations were for debt recovery, figures for gas were similar with 58,000 out of 67,000 installations for debt recovery. The statistics seem to show that rather than being a lifestyle choice the actual choice is between prepayment installation or disconnection. For full details of the statistics follow the link Debt and disconnection data Green Deal Update The Energy Security and Green Economy Bill has now been published as the Energy Bill. The Bill can be found via this link: Energy Bill and supporting documentation via the DECC website. DECC has also published its Business Plan for setting out priorities: To save energy with the Green Deal and support vulnerable consumers through reducing household energy use and helping to protect the fuel poor. The timetable for the Green Deal includes; Consultation on the structure of a Social Price Support scheme to require energy companies to help vulnerable households with their bill costs - start December 2010 end January 2011 (see consultation link above). Lay regulations on Social Price Support scheme before Parliament start February 2011 end April 2011 Consult on improvements to Warm Front eligibility criteria to target available support at the most vulnerable in the period before the introduction of the Green Deal start December 2010 end March 2011 (see consultation link above). The Green Deal promises to provide energy efficiency improvements of up to 6,500 per home with the upfront cost met by the energy companies or high street suppliers such as Marks & Spencer and B&Q, which will then be paid back from savings accrued through lower energy bills. There are concerns in certain quarters that closer scrutiny of the information available indicates that the sums may not add up. In advance of the Government Bill DECC would only confirm that up to 14 million homes could be treated by 2020 and consumers would have between years to repay the costs. Spending per household was likely to be capped at 6500 and companies delivering the programme are looking at an interest rate of 7% to cover the borrowing of the capital. DECC recently published a leaflet suggesting what different measures would cost and save. One example suggested that customers with cavity walls could spend 500 having walls and loft insulated with a saving of 160 a year. This they say would mean customers recouping the cost of the works in less than 4 years. However taking another example where a property would require insulation of solid walls and loft, with a quote of 6,250 for the works and a predicted saving of 425 per year, the figures on this example show a different result. Based on an interest rate of 7% and initial finance of 6,250, the occupant of the dwelling would pay back around 875 a year over 10 years or 530 a year over 25 years. This would mean that customers would be paying interest of 2,500/ 7000 to service the agreement. What is apparently shown by the later example is that repayments are higher than the Government s estimated cost savings and this, by implication, suggests that such measures would not comply with the golden rule that fuel cost savings

5 ahould exceed the cost of repaying any charge. Home Heat Helpline ( ) According to a recent media release from the Home Heat Helpline, an estimated 5.2 million households could claim free insulation grants from their energy companies; the claim is based on based on research published by the New Policy Institute (NPI) on behalf of Home Help Heat Helpline. To date, only 12% of eligible households have claimed free help that could save around 260 a year on energy bills. The NPI research found one of the biggest barriers to be that while 70% of people believed you should claim help if you really need it, they don t think the help available is intended for them. Other main findings of the research indicated that: 47% of those surveyed who had not claimed thought that the assistance on offer was not meant for people like me. 64% of households definitely eligible didn t feel either they qualified for assistance or were not sure. 70% said you should only claim help if you really need it. For further findings on the survey visit: British Gas See below for a range of current initiatives from British Gas. Further information is available on the website: How green is my valley? British Gas has made 2m available as part of the Green Streets programme to invest in innovative energy projects in communities across Britain. Green Streets is focusing on the 14 communities around the UK that successfully challenged for the chance to compete for the title 'Britain's most innovative green community'. A 140,000 Green Streets donation is helping the Llangattock project in Wales to become carbon neutral by Llangattock Green Valleys is passionate about becoming sustainable and has engaged the whole community in the project. They are planning to use some of the funding to install hydro power systems which will generate electricity for Llangattock village. Part of the funding has already been invested in domestic solar PV installations and two biomass boiler systems. Residents will also benefit financially from the Government s Feed in Tariff (FiT) scheme. Other households have already benefited from cavity wall and loft insulation installed by BGNE (British Gas New Energy). Green Streets volunteers have helped the community by painting Llangattock school and have been involved in a range of other projects. In addition, Premier Energy has donated ten new computers and the school is planning to have solar panels installed later this year Just the job

6 CHI (Central Heating Installations) and S&R (Service and Repair) are working together with Defence Career Partnering part of the Ministry of Defence to provide work placements for recovering armed forces personnel. Most of the service people are recovering from either serious injury or illness and it is hoped this initiative will help their rehabilitation and provide opportunities for different careers. Rifleman Billy Brumfield from the 4 th Rifles is currently on a six-month placement with British Gas and is gaining valuable experience in a number of different roles in CHI and S&R. CHI managing director, Mike Ahearne, said: This is a fantastic opportunity for both the servicemen and women we find placements for, as well as our colleagues in British Gas. Foundations for the future The OM Foundation an Indian NGO supported by British Gas recently celebrated its 8 th birthday! The OM Foundation provides education for children living in deprived areas. One of its projects involves a secondary school at Noida (near Delhi), close to the offices of our offshore partner EXL and Centrica India, which was funded and is supported by British Gas. British Gas employees support the OM Foundation in other ways too, including fundraising more than 15,000, donating 2,000 books and taking part in the India Challenge for the last two years. Centrica and EXL employees also regularly volunteer at the school. NEA Update North West Fuel Debt Advice Group If you are a middle or senior manager in an organisation that provides fuel debt advice in the North West and would like more information about the Group, contact Jimmy Pugh at NEA at jimmy.pugh@nea.org.uk The next North West Fuel Debt Advice Group has been provisionally scheduled for Friday 4 th March Recent publications of interest Now Cast for Fuel Poverty in 2010: A Consumer Focus-commissioned report, using the latest available data from the 2007 English House Condition Survey, models the impact of changes in fuel prices, incomes and energy efficiency standards provide give up-to-date analysis of fuel poverty in The report also shows trends in fuel poverty between 2007 and This bulletin was sponsored by Produced December If you do not wish to receive future editions of the Fuel Debt Advice Bulletin, please let us know by ing us

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