Save Money, Save Energy: Government takes action on family fuel bills

The Government today announced a £1 billion package, which will enable households to take advantage of help that could save them over £300 every year on their energy bills.

The Home Energy Saving Programme provides assistance to householders to make their homes more energy efficient, and for households most vulnerable to fuel poverty, including all pensioner households, gives help with their bills this winter through the winter fuel payments and lower energy company tariffs.  In achieving this, the Government will comply with its legal obligation to engage with all interested parties.

The Government will propose legislation to require an estimated £910 million commitment from energy companies including, for the first time, electricity generating companies, to invest in making homes more energy efficient. This will be in addition to the existing obligation on companies to spend £2.8 billion over the next three years helping customers save energy.  Together with the Government's own spending programmes, this will create a £6.5 billion programme of improvement to the nation's housing stock - the largest since the introduction of North Sea gas.  The Government's aim is the insulation of all Britain's homes, where practical, by 2020. 

Around £560 million of this £910 million will add to the existing energy efficiency programme CERT (Carbon Emissions Reduction Target) - which  funds subsidised improvements such as loft and cavity wall insulation. Eleven million elderly and low income households qualify for these measures at no cost.  This extra funding could benefit up to two million households.

The remaining £350 million of the £910 million from energy suppliers and electricity generators will go towards a new Community Energy Saving Programme. Throughout the country, local councils, voluntary organisations and energy companies will carry out house-to-house calls to offer help in some of the most deprived areas of the UK. This could result in as many as 100 schemes across the country.

To make sure people get the most help the Government is launching a nationwide advertising campaign informing people about the support available. To further help them save money it will also encourage people to compare suppliers to get the best energy deals, use direct debit, and take advantage of money off deals on energy efficient products. Adverts will appear in national newspapers tomorrow, followed by television adverts later this month.  For advice on help available ring the helpline 0800 512 012.

In addition to measures announced previously in the Budget the package also includes further, new support for those most at risk of fuel poverty:

• We will increase Cold Weather Payments from £8.50 to £25 per week for winter 2008/09.
• Around 40,000 households could see their fuel bills reduce by £180 per year on average, thanks to an extra £74 million of public money over the next two years to the Government's Warm Front scheme. This offers up to £2,700 worth of central heating and energy efficiency measures to low income and pensioner households.
  

This is in addition to the measures announced in the Budget which were:

• For this winter, households with someone over 60 will receive an extra £50 on their Winter Fuel Payment (up from £200 to £250) with an extra £100 for over-80s households (up from £300 to £400).
  
• Around 600,000 customers' accounts could benefit from discounted tariffs by the end of the year and around three quarters of these will be benefiting from a price freeze this winter. 

• If analysis shows that pre-payment users face unjustifiably high charges and no solution is offered by the energy suppliers and the regulator, we will consult on legislation to reduce any unjustified tariff differentials.

Environment Secretary, Hilary Benn said:

"The Government has a longstanding commitment to help those living in fuel poverty, but recent price rises mean we are committed to do even more to assist people in reducing their bills where possible. And energy companies must do their bit too.

"This plan is about giving help, not only over weeks and months, but over the coming years by enabling householders to make their homes more energy efficient."

Business Secretary, John Hutton said:

"In a world where prices are likely to remain high, it's time for all of us to get more energy efficient. Thanks to Government and energy companies working closely together, an extra £1 billion will be available to spend on measures that will bring a lifetime of savings."

Notes

1. Proposed new money from the energy companies and generators:

• £910 million towards the National Home Energy Saving Programme - £560 million directly into the existing home insulation and energy efficiency programme (CERT) and £350 million for Community Energy Saving Programme.

New money from the Government:

• An extra £74 million for home insulation and central heating (Warm Front).
• An estimated £16 million for cold winter payments.
• In addition £800 million was announced as part of the Budget deal (£575 million in winter fuel payments and an additional £225 million from the energy companies to be spent on their social programmes) which will bring the total new spending this winter to £1.8 billion.

2.  £300 pounds is an approximate figure saved through installing loft and cavity wall insulation plus replacement of all ordinary lamps with low energy lightbulbs, as well as switching appliances off standby. Based on estimated benefits to people on an average  tariff rate  in a standard three-bedroom semi detached house with a standard heating pattern and a mixture of gas (dominant) and electric heating.

3. The Community Energy Saving Programme is a proposed new legal obligation on the energy companies on which the Government will consult to achieve further investment in energy efficiency measures targeted on area based activity, particularly in areas of high deprivation. The aim of the programme would be to raise the take-up and efficient delivery of energy efficiency measures through street-by-street approaches.    We envisage area-based schemes being carried out through partnerships for example between local authorities, community organisations and social enterprises:

• Some energy companies may wish to join or establish such partnerships; others may wish to sub-contract their obligation to them.  
• Warm Zones, EAGA and other organisations could be used.  In addition, suppliers could work through the Green Neighbourhoods Scheme.

4. The CERT (Carbon Emissions Reduction Target) scheme, which came into effect on 1 April 2008, doubled the previous obligation on energy companies to help people make their homes more energy efficient and reduce household carbon emissions.  Prior to today's announcement the total investment required by the energy companies was around £2.8 billion over three years to 2011.  Today's announcement about the intention to raise the CERT target by 20% increases this by £560 million.  On top of this the new Community Energy Saving Programme will require a further investment of around £350 million.  The total energy company contribution will therefore be more than £3.7 billion between now and March 2011.

5.  Those eligible to receive Cold Weather Payments are pensioners, disabled people and families with a child under five or a disabled child receiving Pension Credit, Income Support, income-based Jobseeker's Allowance, and income-related Employment and Support Allowance.

6.  The announcement today that the Government will increase spending on the Warm Front programme by £74 million takes it total spending on this programme to £873 million over the period to March 2011.  The Government is also spending around a net £2 billion on energy efficiency improvements in council homes under its Decent Homes programme.  This takes the Government's total spending to £2.8 million.  Combined with the £3.7 billion spending required by energy companies, the total national programme of energy efficiency investment will therefore come to around £6.5 billion over the next three years.

7. In achieving this, the Government will comply with its legal obligation to engage with all relevant stakeholders.

Further information

• If you want to find out more about cutting down on energy bills in your home, visit the Directgov website.