Green energy help for poor: Poorest targeted with energy-saving schemes

· Ministers aim to speed up home insulation plans · Winter fuel payments for elderly may be changed
Patrick Wintour, political editor
The Guardian,
Monday August 4 2008

Cert scheme would direct savings towards low-income families. Photo: PA/Kirsty Wigglesworth
Ministers are examining a raft of green energy measures, including bringing forward a £2.75bn home insulation programme funded by energy companies, to protect Britain's poorest from the impact of rising gas and electricity prices.
They are looking at the idea of front-loading a scheme known as the carbon emissions reduction target (Cert) so that more money is spent sooner by energy companies, with a greater proportion of the funding going to the fuel-poor.
The three-year programme promotes reductions in carbon emissions for households by installing energy efficiency measures such as cavity wall and loft insulation in the homes of people on low incomes and the elderly. It is designed to raise more than £2bn from the energy companies over three years, but could be front-loaded so that more is spent this year and next.
Under Cert, suppliers are set carbon savings targets and must direct at least 40% of savings to a priority group of low-income and elderly customers. The scheme runs between 2008-2011, but ministers are arguing in discussions with the energy companies that they can bring forward their spending in view of their huge profits.
Ministers may also publish a general consultation paper on windfall taxes on the profits of the energy utility companies, but that is not the preferred option of the chancellor, Alistair Darling, or of the Department of Business and Enterprise and Regulatory Reform (Berr) led by John Hutton.
Last week Centrica, the parent company of British Gas announced a 35% price increase, sending shudders through Whitehall. The average British household now faces annual gas and electricity bills of more than £1,200, driving tens of thousands into fuel poverty.
Ministers are also looking at restoring cuts in the Warm Front programme, a package of measures worth up to £2,700 for vulnerable homeowners or for those on benefits. Funding for the programme, designed to cover insulation and central heating, has been cut by 16% from £350m in 2007-8 to £295m in 2008-9, a cut already criticised by the Berr select committee and one that Gordon Brown has already hinted he may reverse.
An option described as the middle of the pack by ministers is to increase the proportion of EU emission trading permits that must be auctioned for money from the proposed 7% to the maximum permissible of 10% - so raising an extra £500m in the next 12 months.
Ministers are also examining whether it is possible to switch the £2bn winter fuel poverty payment so that it is not targeted solely at pensioners, but also at the poor. The annual tax-free payment of between £100 and £300, depending on age and circumstances, only goes to those over 60, roughly 11.7 million people. The 2008 budget announced that this winter there would be an additional payment of £50 for households with someone aged between 60 and 79 and £100 for someone aged over 80. Ministers are doubtful that it would be wise to tamper with the universal winter fuel payment unless they were sure how the money could be better targeted at the fuel poor. The fuel poverty advisory group has told the government that discontinuing winter fuel payments for higher-rate taxpayers would raise £200m.
The government defines the fuel-poor as anyone that spends more than 10% of their income on fuel.
Cabinet ministers, such as the skills secretary, John Denham, argued yesterday that by using the state to protect the poor, Labour would send a stronger signal than the Conservatives, who, he said, have little to say about the economy, and are reluctant to use levers of the state in pursuit of fairness.
Labour party pressure to impose a windfall tax is meeting fierce resistance from the CBI and business ministers, who warn that it would mean the profits required to invest in renewable energy would be eaten up in protecting the poor from rising fuel prices.