Heating Oil Supplier News

On the 30th March the Energy and Climate Change Committee published its final report in relation to Fuel Poverty. The Labour Government committed itself to two targets in England:

• To seek an end to fuel poverty for vulnerable households by 2010; and
• By 22 November 2016 no person in England should have to live in fuel poverty.

The Committee notes that the first target is going to be missed and the second looks difficult to hit.

The Fuel Poverty Advisory Group gave evidence to the committee and it is interesting to note in the table below that not one member of this group has a expertise in the heating oil market:

At present there are 3 methods for assisting people in fuel poverty:

Winter fuel payments: households with someone between the ages of 60 and 79 (£250 payment); households with someone aged 80 or over (£400 payment);

Cold weather payments: people in receipt of Pension Credit or income-related Employment and Support Allowance that includes a work-related activity or support component; those in receipt of Income Support, Income-based Jobseeker’s Allowance or income-related Employment and Support Allowance in the assessment phase if they have a pensioner or disability premium included in their benefit or if they have a child who is disabled or under the age of five;

Warm Front: Householders aged 60 or over in receipt of one or more of the following benefits:

• Income Support
• Council Tax Benefit
• Housing Benefit
• Job Seekers Allowance (income-based)
• Pension Credit
• Income-related Employment and Support Allowance

Householders with a child under 16, or pregnant women with maternity certificate MAT-B1, in receipt of one or more of the following benefits:

• Income Support
• Council Tax Benefit
• Housing Benefit
• Job Seekers Allowance (income-based)
• Pension Credit
• Income-related Employment and Support Allowance

Householders in receipt of one or more of the following benefits:

• Working Tax Credit (with an income of less than £16,040, which must include a disability element)
• Disability Living Allowance
• Child Tax Credit (with an income of less than £16,040)
• Housing Benefit (which must include a disability premium)
• Income Support (which must include a disability premium)
• Council Tax Benefit (which must include a disability premium)
• War Disablement Pension (which must include a mobility supplement or Constant Attendance Allowance)
• Industrial Injuries Disablement Benefit (which must include Constant Attendance Allowance)
• Attendance Allowance

One issue that concerns WhichOilSupplier is the fact the heating oil users usually need to buy in bulk (minimum order is 500 litres). The Committee seems to recognise this by funding National Energy Action to study the role credit unions could have in helping people budget and save for heating oil.

According to the Committee, of the 925,000 households using heating oil (this figure seems a lot lower than the accepted number of 1.5-2 million), 214,000 are deemed as fuel poor ie 23%. This strikes us as a staggering number.

The Government notes that the modelled bill (modelled to meet the adequate standard of warmth used in fuel poverty estimation) for homes without a mains gas connection is around £250 higher annually than for those with a connection. DECC’s memorandum points out that, in addition to having to rely on more expensive fuels, homes off the gas grid tend to be larger - and therefore more expensive to heat - than those on it. This results in higher levels of fuel poverty.

Recommendation of the Committee:

“One modest but potentially helpful step the Government could take for people who rely on filling expensive oil or gas tanks concerns the timing of Winter Fuel Payments. We put it to the Minister that there might be benefits to bringing forward in the year the timing of payments to assist people who have to fill such tanks, when they could do so at a cheaper cost than in the middle of winter. He noted that it was the Treasury’s responsibility to determine the timing of such payments, but he did “think there was something” in the argument for making the payments earlier.”

The staggering of heating oil payments is now offered by many of the larger heating oil companies. WhichOilSuppplier welcomes this and encourages the industry as a whole to offer this as an option to vulnerable customers in fuel poverty.

We urge the Treasury and Dept of Energy & Climate Change to work together to bring forward winter fuel payments so that oil users can buy during the summer when prices are generally low.

We are concerned that the industry is increasingly moving to up front payment by credit or debit card. Whilst this make economic sense due to the cost of recovering bad debts, vulnerable households are likely to rely on cash or cheque payments only and we therefore urge credit unions to consider this issue and find a solution.