ECO Help To Heat Consultation Government Response

On 30th January 2017 the Government released the results of a consultation into the future of the Energy Company Obligation: ECO Help to Heat.  The proposals contained in the document are due to be laid before Parliament shortly for approval.

In short, it is proposed that the current ECO Scheme, which was due to end on 31^st March 2017, will continue in an amended form for a further 18 months.  During this time there will be a further consultation on a longer ECO Scheme intended to run from September 2018 to 2022.  The central theme to the revised ECO Scheme will be a greater focus on tackling fuel poverty for working families and ECO qualifying criteria will be changed to reflect this policy.

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Overview of the Current ECO Scheme

1. The current Energy Company Obligation was launched in January 2013 and by November 2016 had delivered energy efficiency measures to 1.6 million households in Great Britain. It is due to end on 31^st March 2017.
2. The Government’s 2015 Spending review announced plans for a new household energy efficiency scheme to run for 5 years from April 2017 at a cost of £640 million per year, rising with inflation. The new version of the ECO Scheme is the primary vehicle by which the Government has committed to insulate more than a million more homes over this Parliament in its fight against fuel poverty.  The Scheme will also save 9 million tonnes of carbon emissions.
3. The Department of Energy and Climate Change (changed after Mrs May became Prime Minister to The Department for Business, Energy and Industrial Strategy) published this consultation on the future of the ECO Scheme. DECC proposed a one year extension to the current ECO Scheme to provide time to finalise details of the longer scheme.  The intention is to simplify the scheme’s qualifying criteria and to target funding more directly towards low income working families.

Key Policy Decisions for the Revised ECO Scheme

These amended ECO Scheme policy decisions only relate to the 18 month extension period.  A new consultation will be carried out to take views on a new energy efficiency scheme scheduled to run to from September 2018 to 2022.

1. ECO Scheme will be extended for 18 months at a cost of £640 million per annum from 1^st April 2017 but will be better targeted to deal with fuel poverty and helping low income families.
2. The Affordable Warmth part of ECO will have funding increased from 36% of ECO funding to 70%.
3. Qualifying criteria for the Affordable Warmth Scheme will be simplified, with the additional criteria for some means-tested benefits removed. Householders in receipt of Income Support, Income-based Job Seeker’s Allowance, and Income-related Employment and Support Allowance will satisfy Affordable Warmth Scheme qualifying criteria without the need for meeting additional sub-criteria required up to 31^st March 2017 this sub-criteria.
4. Qualifying income thresholds for Child Tax Credit, Working Tax Credit and Universal Credit will be amended to take account of the number of occupants and better reflect disposable household income (see below).
5. Some householders who currently qualify for Affordable Warmth Scheme assistance will not qualify under the proposed new rules. These include pensioners in receipt of Savings Credit and no other qualifying benefits, as only Guaranteed Pension Credit will count towards eligibility.  Householders who receive only Savings Credit may qualify under Local Authority ‘flexible eligibility’ rules (see below).
6. Some ECO insulation measures will be extended to social housing in Energy Performance Certificate (EPC) Bands E, F and G but the installation of boilers and other heating system replacements or repairs will not be permitted, unless it is a ‘first time’ central heating system in the property.
7. Local Authorities will be able to determine eligible households (up to 10% of Affordable Warmth Scheme funding) under a new ‘flexible eligibility’ rules.
8. Changes to Affordable Warmth Scheme qualifying criteria should increase the number of eligible households from 4 million to 4.7 million.
9. The number of gas boiler installations funded by the Affordable warmth Scheme will be limited to 25,000 per year.
10. It is proposed to deliver up to 21,000 solid wall insulation installations per year.
11. The method of assessing energy bill savings, carbon savings and hence the amount of an individual grant will change from being based on and EPC to ‘Deemed Scores’. Under the Deemed Scores system, each household is assessed according to property type, number of bedrooms, number of external walls and heating system type.ECO Help to Heat Consultation Government Response and proposals for the ECO Affordable Warmth Scheme from April 2017 to September 2018