With sub-zero temperatures focusing everyone’s attention on keeping warm and safe this week, the coalition announced a new requirement on energy companies to up their efforts helping their most vulnerable customers.
The new coalition initiative should benefit older, poorer pensioners and give them up to £130 off their electricity bill per year. Other groups such as low income families and those with long term illnesses and disabilities may also receive this discount.
In total up to 1.1 billion over four years will be available from April through the Warm Home Discount, helping around 2 million households per year.
Despite the rhetoric of the last government the numbers of people in fuel poverty - people who need to pay more than 10% of their income to heat their homes to a reasonable level - have risen every year, with the latest estimate put at 4.1 million in 2009 for England. But with energy companies putting up their prices this winter and the cold weather gripping Britain, it is clear more than ever that tinkering with the system is not an option.
We need a radical new approach to deliver warmer homes that are cheaper to heat. We need to take action to help people with their bills and we need to improve the very fabric of our homes.
In the immediate term, we don’t want people to be afraid to turn up the heat to keep warm this winter. This is why, despite the deficit we inherited, Winter Fuel Payments are being paid out to help pensioners with their bills. And already more than four million households have received the Cold Weather Payment, which kicked in during the latest freeze.
But these are not long term solutions. We also need to permanently improve the energy efficiency of homes. We know one of the main reasons people fall into fuel poverty is because their homes leak heat. Sweden is colder than our country, yet they spend less on heating their homes -because their homes are more energy efficient. There is no quick fix when it comes to helping those most at risk in cold weather, and simply throwing money at the problem year after year won’t solve it.
So the coalition will be bringing in legislation to create the Green Deal. This is our game-changing plan to insulate the nation’s homes. It will allow many people to pay back the upfront costs of home insulation work through the lower bills that will result. The finance will come from the private sector, not government, and will be marketed by organisations people are already familiar with - the likes of M&S, B&Q, energy companies, even local councils.
But we recognise extra financial help will be required to provide more of the lower income and vulnerable households with the basic heating and insulation measures needed to keep their homes warm at an affordable cost. So, energy companies will be required, under the proposed Energy Company Obligation, to focus their assistance on those who need it most, as well as those in hard to treat properties who cannot save money without some measure of support.
In short, we still have millions of people left in unacceptably cold homes. We can help them with the high bills, but we can’t fix the underlying problems overnight. However, at last we have a credible plan to bring billions of pounds of new private sector investment into play to deal with this problem once and for all.