Don’t Be Shy (or To Live and Die in Clara)

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The Labour Party is proposing a Private Member’s Bill that would require the Government to draw up a national strategy to combat fuel poverty. Party spokesperson, Liz McManus, TD, said:

‘The strategy would require the Minister to specify a comprehensive set of measures to ensure the efficient use of energy and set a target date for achieving the objective of ensuring that, as far as practicable, persons do not live in fuel poverty. Action is now urgently required or this problem will get much worse over the coming years. I hope that the government will accept our Bill or that it will, at a minimum, prompt them into action of their own.’

Okay, then. The Fianna Fail Government doesn’t have a ‘fuel-poverty’ strategy. The Institute of Public Health (IPH) tells us that, ‘Data on fuel poverty is not routinely monitored by government in the Republic’. It’s not just that domestic fuel, along with shelter and food, is an absolute necessity; it is for thousands a matter of life and death.

This issue is right down the Left’s alley, so to speak, emphasising redistribution and social protection. So my question is: why are we so shy about putting forward our own proposals?

The first problem we face is that we don’t know the extent of the problem. Ms. McManus suggests that 220,000 suffer from intermittent or chronic fuel poverty, which seems reasonable. Sustainable Energy Ireland (SEI), in its ‘Review of Fuel Poverty and Low-Income Housing’, states that 4.7% of households endure fuel poverty while another 12.7% experience it intermittently. The IPH suggests that over 18% of households experience fuel poverty at some point during the year. However, these reports rely on data from 2001.

The 2006 EU Survey on Income and Living Conditions reports that 5.8% – over a quarter of a million people – report being without heating at some stage during the year – an increase on the 2004 figure. But the CSO measures deprivation, while fuel poverty is defined as spending more than 10% of disposable income on home energy.

But let’s go beyond percentages and affordability. The IPH estimates that 2,800 people die each year from fuel poverty throughout the island – of which the majority would be in the Republic. Now, I know there’s a school of thought that says, ‘Yes, we have poverty – but not real destitution-type poverty.’ Well, dying of poverty is about as destitute as it gets. And people are dying in Celtic Tiger Ireland of just that.

To put that annual death toll into perspective, it is the equivalent of the Taoiseach’s home town, Clara, dying every year.

If we don’t know how exactly many people experience fuel poverty, we do have a fair idea of who is at risk:

  • The elderly, especially those living on their own
  • Lone parents – which raises alarming questions of child deprivation
  • Private rented tenants – up to one in five experience fuel poverty
  • Those living in pre-1940 dwellings

So how do we provide relief to these groups? The conventional answer is to set up ‘targeted’ programmes. But this has severe limitations; primarily because it relegates ‘fuel poverty’ to a ghetto issue.

To put it bluntly, if the Left only addresses the issue of poverty to those who experience poverty, it will be poor policy because it is disconnected from the concerns of our wider constituency. The Right love ‘targeting’. ‘Targeting’ leaves profound systemic questions unanswered. Target some money, programmes, pilot schemes, and hey presto – mission accomplished. Such programmes do no integrate and resolve the concerns of low and average income groups; and, in the case of fuel, the environment. Therefore, they are last on the agenda and the first to go when the cutbacks sink in. And most people – those who are not impoverished – don’t notice because they are not involved. Is there a better way to confront fuel poverty to everyone’s benefit?

Shy_2 Households in the lowest decile spend over eight times the proportion of their income on energy as the wealthiest 10% households. Now, we could just give them more money – through the social welfare fuel allowance. But as SEI pointed out:

‘The eligibility criteria for the (Fuel) allowances do not take into consideration a person’s heating requirements or the energy efficiency of the dwellings in which they reside. The Fuel Allowances scheme is therefore not designed in order to address the issue of fuel poverty. It provides additional social welfare to low income households that may or may not be experiencing fuel poverty but it is likely that many people experiencing fuel poverty do not receive the allowance.’

We could look at the supply side. We know the electricity market is a basket case. The Energy Regulator manipulates ESB tariffs to incentivise private companies to enter the market. This increases electricity prices above what they should be. As low-income households spend more of their income on home fuel, this aggravates an already regressive situation (especially as a high proportion of those suffering from fuel poverty live in electrically-heated dwellings).

So we could reverse the Regulator’s policies. However, whatever about those whacky Regulator policies, energy prices are going to rise anyway – considerably. Cash-in-hand subsidies will always be playing catch up. So, given that the Regulator has already introduced the principle of ‘manipulating tariffs’, why not manipulate them another way?

Why not give each household an ‘free energy allowance’ from its energy provider (ESB, Bord Gais, etc.), similar to a tax-free allowance. Each household would receive the first x amount of electricity or gas free – or at a greatly reduced price – with the remainder charged at a higher tariff. Not only would this greatly benefit those on low incomes, it would incentivise energy conservation and investment.

Shy_2_2 A ‘free energy allowance’ regime – to the equivalent of €50 per month in either electricity or gas units – would represent a 7% boost in income for those in the lowest decile, while for the highest 10% it would come to less than half a percent. This is pretty progressive but, then, universal benefits usually are.

The second part of a fuel-poverty strategy would focus on thermal efficiency. While improved building regulations can ensure that all new-builds come up to best practice, the real problem is in older housing. Ms. McManus makes a relevant point here:

‘Recently the Minister announced the Home Energy Saving Scheme which is available in certain geographic areas like North Tipperary, Clare, Dundalk and Limerick. The reality is that those with disposable incomes will avail of this grant scheme as has clearly happened with the majority of existing grant schemes. Assisting the householder with a Porsche in the garage to install a solar panel is not a substitute for a targeted approach to support an old age pensioner to keep warm in a sustainable way.’

Indeed. Those who refurbish their houses can usually afford it. They benefit from the resulting reduced costs. And much of their costs are subsidised, through support grants, by those living in fuel poverty who don’t have the resources to refurbish.

Now it seems reasonable – from both an anti-poverty and environmental perspective – for the state to support upgrading. However, this would entail a considerable expenditure and constitute a substantial capital improvement for the owners or inheritors of such dwellings – a potentially regressive redistribution of resources. How can we square all this and still keep it progressive?

The Left could propose a new Home Energy Conservation Fund. Under this programme, all households could apply to have their home refurbished to certain energy conservation standards (double glazing, attic and floor insulation, gas heating installation and thermostat control retro-fitting). Such a programme would benefit everyone – rich and poor. In particular, it would benefit those who would be unable to avail of a targeted means-tested programme, yet wouldn’t be able to afford such an upgrade out of their own resources – the proverbial coping class.

The state would pay for this cost upfront, but would recoup the full amount through:

  • Payments linked to income: if you’re an income taxpayer, then repayments would be made through a 2% levy – which probably wouldn’t put most people out of pocket since they would be making it up in reduced energy costs.
  • Remaining payment made on the sale or disposal through inheritance of the property.

This programme could be rolled out – first targeting areas with a high density of older housing stock and vulnerable groups (lone parents, pensioners, disabled, etc.). Landlords would be required to upgrade through mandatory on-site inspections, but would have access to the programme. This would have a number of advantages:

  • Energy conservation upgrades would be accessible to all. regardless of income or employment status.
  • It would preserve older housing stock while making substantial cuts in our greenhouse emissions (a third of all emissions come from the housing sector)
  • It would increase the disposable income of those participating in the programme through reduced energy consumption.
  • It would ease the contraction in construction employment and related building and supplies sectors.

And how much would this cost the state? Nothing. The programme could be financed from monies in the National Pension Reserve Fund with the repayments being returned to the Fund with interest. This programme needn’t rely on Exchequer financing or debt.

We can readily see how this twin-strategy of providing (a) all households with a ‘free energy allowance’, and (b) access to home energy conservation refurbishment, can appeal to a wide section of the population, owing to its universal nature. Not only would this be popular – it would also make a considerable impact on fuel poverty.

This is not to ignore more conventional means of reducing fuel poverty – bringing people out of poverty through well-paying sustainable jobs and adequate social protection. Or a revamped Fuel Allowance that actually reaches those in need.

However, when addressing poverty, we should propose progressive strategies that benefit a much wider constituency than just those who are poor. In this way, the Left can unite the interests of low and average income groups and, so, create a much larger platform for change.

And by all means demand that the Government put forward a fuel poverty strategy. Embarrass them for not having one. Use it as a stick to beat them with – all those well-honed opposition tactics.

But, please, let’s not be shy about putting forward our own proposals. Ultimately, that’s how you win people to a new, more egalitarian politics.

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