20 October 2011

The Tory Libdem government has decided that for this winter, 2011/12, the winter fuel payments to the elderly will be £200 and £300 for people over sixty and over eighty (see here for details). Since 2008/09 they have been one-off payments of £250 and £400. There is an argument that the higher levels for the last three years were temporary but I think most people will see what has happened as a de facto reduction. There are also cold weather payments if the temperature very much drops.

Is this reduction a wise policy at this time when fuel prices are very high?

An interim report Fuel poverty: its problem and its measurement on the question in England has just been published. The final report comes out in January 2012. This interim one looks at the evidence there is on questions like: Is fuel poverty a distinct problem or part of the problem of poverty generally? How many excess deaths are there in winter and how many of those are due to fuel poverty? Is the current definition of fuel poverty sound and can a better definition based on low income and high costs be had? The measurement of fuel poverty is problematic.

The interim report is a capital study and presents the evidence well.

Some snippets from the report: not having access to the gas grid increases energy costs – relevant to many in Cornwall; people on low incomes are least likely to be on the cheaper tariffs; fuel poverty and cold homes might adversely affect school attainment; largely preventable excess winter deaths in England run at around 25 000 each winter of which about a fifth may be due to cold homes (page 10) and an unsure number to fuel poverty. In Cornwall there are about 300 excess winter deaths each year.

It is important generally to look at the evidence and base policy on it, though evidence is not always clear cut. Fortunately the evidence here tells us very much about the nature and scope of the issue. How we should respond to it is a political judgement based on what we wish to achieve and how we are best likely to achieve it. I not think that the winter fuel payment in its present form is the right response. It is based on age and goes to some people who do not need it. If we wish to help people mitigate the known and suspected adverse effects of cold homes by indirectly subsidising their fuel costs, targeting those with the lowest incomes and the highest fuel costs strikes me as a better immediate approach; it would enable, within the overall cost of the present scheme, higher and more realistic payments to be made to those targeted households.

However, the Tory Libdem government is floundering on fuel costs and there is a danger that it will see a new way of measuring the problem as an end in itself and easier than tackling more difficult elements. The costs are increasing and will probably continue to increase and this will push more people into fuel poverty at a time of static wages, rising unemployment, high inflation, and little or no growth in the economy. We need to reduce fuel costs by ensuring there is a more extensive program to make all homes thermally efficient: the Tory Libdem government suspended the Warm Front scheme between December 2010 and April 2011 and then reintroduced it with less funds and more restricted eligibility. We should ensure by legislation if necessary that the poor can access the cheapest tariffs. We need also to explore the feasibility of regulating fuel costs ( we do it for fares on the private railways) but I don’t think the Tory-Libdems are up for that. More patches for policies, I suppose, and shiver quietly.

Here is a House of Commons debate on energy prices 19 October 2011