ECO3 & Fuel Poverty Issues

May

7

HouseWrapped have been working in the ECO industry for many years now and we've seen several different schemes delivered by the government, Ofgem and utility companies. However, this latest scheme called ECO3 which runs until October 2022 has a serious flaw in it.

Firstly, it's important to fully understand both aspects to ECO3 funding which are, lowering carbon emissions and helping those on low income who are classed as being in fuel poverty.

ECO3 & Lowering Carbon Emissions

ECO3 is the most recent update to the Energy Company Obligation scheme and runs from October 2018 to October 2022. One of its objectives is to lower carbon emissions to help towards to UK government's commitment to making the UK Net 0% carbon neutral by the year 2050.

ECO3 & Fuel Poverty

When ECO3 was first introduced in October 2018 it was decided that ALL funding must be dedicated solely to those people classed as being in fuel poverty whereas the previous ECO schemes were open to everybody as long as they qualified. The UK government along with other bodies decided that the best way to determine if somebody was classed as being in fuel poverty was if they were in receipt of a state benefit. they then increased the number of qualifying benefits and rolled the scheme out.

Fuel Poverty & Carbon Emissions at Odds

So, the two main aspects to ECO3 are saving on carbon emissions and helping those on low income and classed as being in fuel poverty. When you look at this it seems a sensible approach to help those deemed as most in need whilst helping the environment. However, when you look into this in a bit more detail you can clearly see a glaring mismatch and one in our opinion which should have been noticed before ECO3 was rolled out.

Here's the big mismatch, basically, the larger the property the more funding becomes available based on the fact that larger properties can save more carbon being emitted into the atmosphere. This is obviously true but under current ECO3 rules it certainly does not help those who live in smaller properies because of current funding levels. Basically those people living in terraced houses or flats and even some semi-detached properties can expect to have to pay a contribution towards the work because less carbon can be saved which leads to less funding for that property being available.

Without wanting to totally generalise the UK population we think you'll agree that most people who are in receipt of a state benefit and as such classed as possibly being in fuel poverty according to ECO3 funding rules tend to live in smaller properties.

A good example of how current ECO3 funding is at odds with itself is shown below :

A four bed detached house wanting loft, cavity wall insulation or even a boiler replacement can expect to have to pay nothing at all towards the full works simply because more carbon can be saved. Compare this to somebody living in a two bed mid-terrced property, they can expect to pay towards all three of these measures. From our experience approximately £200+ for the loft, £100+ for the cavity wall insulation and at least £500+ for the boiler replacement.

Conclusion

You can clearly see just how unfair the current scheme is. What generally tends to happen with cases like this is, is that the four bed detached property gets everything installed because there is no contribution required and the two bed mid-terraced house does not get installed because the client simply cannot afford the contribution. We have seen this happen many times under ECO3 and it will simply continue to happen until current funding rules are changed to reflect the genuine needs of those truly in need of help.

Adverse Results of ECO3 Inequality

So, firstly you end up with people on low incomes not having their insulation or heating works carried out which then leads to them paying higher fuel bills which in turn could lead to a downward spiral sending them deeper and deeper into fuel poverty. Also, as a result of this inequality with ECO3 funding levels there are currently many thousands of properties in the UK with inefficient insulation and heating systems which continue to pump out greater levels of carbon into the atmosphere which then makes the UK's commitments to becoming Net 0% carbon neutral by 2050 more and more unlikely.

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