Bridging the Welsh fuel poverty divide

John Osmond unpicks a debate on targets being addressed at a national conference in Cardiff today

In the background notes for today’s conference Bridging the Divide: tackling fuel poverty in Wales I was struck by a reference to people experiencing severe fuel poverty, rather than people living in a state of fuel poverty. It is the severity dimension that I think we should focus on. That is what goes to the heart of the problem, the scandal if you like, and presents the real challenge to policy makers.

One in five households in Wales are classed as living in severe fuel poverty – defined as having to spend more than 20 per cent of their income on keeping warm. That one in five represents 20 per cent, or 66,400 of the 332,000 households in Wales classified as being in fuel poverty.

This is what I suggest we should be concentrating on. But, of course, we don’t because people living in severe fuel poverty are really hard to reach. By comparison it is relatively easy to lift households which are just below the line of what constitutes fuel poverty to just above it, and so satisfy our craving for reaching targets.

Equally, however, if the downturn and recession get worse, compounded by the public sector spending cuts, then a lot more households could fall below the fuel poverty line. We’re told that 530,000 households are on the brink of being unable to afford their energy bills.

These are staggering statistics. If you put together 332,000 with 530,000, you get 862,000 households ether in fuel poverty or very close to being in fuel poverty. That is two-thirds of the households in Wales, far too high a proportion to build an effective campaign on. The numbers are unrealistic and dilute the message. We would be more effective if we concentrated our efforts on those who really need help, the people who are experiencing severe fule poverty.

There is also a problem with the terminology. The phrase ‘fuel poverty’ is hardly calculated to capture the engagement of people who are told that they are suffering from it. It’s like telling people they live in a slum. In this territory words and the way we transmit our message is critical in getting it across. In the poverty debate the language we use can be a form of abuse. Saying this is much easier than coming up with a solution, but I suggest campaigners in the field should think harder about how they frame the messages they want to get across.

In answer to the question, how realistic is the target for eradicating fuel poverty, I would say the Welsh Government has no chance at all of eradicating fuel poverty by 2018, its declared intention.

But I come back to those 66,400 households which are in severe fuel poverty, the 20 per cent of the total in fuel poverty. There is a very close correlation between that statistic and the number of children in Wales living in severe poverty.

It is calculated that around 200,000 children in Wales are living in poverty. But 20 per cent of them, around 60,000, are living in severe poverty. There must be a very close link with the 66,400 households living with severe fuel poverty. You can bet your life that many if not most of those 66,400 households have children inside them living in severe poverty.

What does severe poverty mean? It means living on less than half the average income. For a couple with one child it means living on less than £12,220 a year – which leaves them around £113 a week short of what they need to cover basic necessities like food, clothes, phones, transport, activities for children – and, of course, gas and electricity.

Why are children living in severe poverty? By and large because their parents don’t have jobs, or jobs that pay well enough.

It is the Welsh Government’s objective to support the UK Government in eradicating child poverty by 2020. So they’ve got two more years to achieve it than with fuel poverty. But I don’t think they are going to achieve the eradication of child poverty either, certainly not by 2020.

What we are seeing with all forms of poverty – whether it be fuel or child poverty – is residualisation. That is to say, as time goes on, higher and higher proportions of the total in poverty are becoming categorised as living in extreme or severe poverty.

For these groups, any targets the Government may have for ending poverty are meaningless. We can be sure that as the problem becomes ever more residualised the tougher it will be to tackle.

So what can be done? The UK Government, which has the main social policy levers – over tax and benefits – could do a lot more. And we should continue to press them to do so. But at the moment, at the behest of the Conservative Liberal Democrat coalition government in London, taxes are going up  – the VAT rise is the latest regressive example – and benefits are being cut.

There’s absolutely nothing the Welsh Government can do about that. So what can it do? If it has the courage it can plan for some long-term interventions that offer hope for regenerating the economy, thereby bringing more people into work.

I want to suggest two rather big ideas which, if carried through over the next 20 years, could have a big impact on our two most disadvantaged regions – the Valleys and larges swathes of rural Wales.

The Valleys contain our most intractable social problems including, of course, a large concentration of fuel poverty. The answer is to create more and better jobs that are accessible for people living in the Valleys, and especially the Heads of the Valleys.

A few weeks the IWA published a report A Metro for the Capital City Region that offers a game-changing solution to meeting this need. If we could improve the connectivity between the Valleys and the coast, through investing in a Metro system for south-east Wales, we could bring people to where the work is, rather than relying on the failed hopes of bringing work to where the people are in the Heads of the Valleys.

A light rail electrified system could bring the top end of the Valleys within 40 minutes of Cardiff with trams running every fifteen minutes. Think of the transformative power of this idea. The £3 billion that would be needed could be raised on the bond market by local authorities in the region, supported by the Welsh Government, and the debt serviced over a 30-year period by a combination of income from the fares, a congestion charge on traffic coming into Cardiff, and an increase in the business rates in the region.

The other big idea is to bring in some much more focused strategic planning for rural Wales, so that resources can be concentrated on a small number of key urban settlements where economic development can be made to flourish. The essential approach was set out by Professor Gareth Wyn Jones and Einir Young at Bangor University in their proposals some years ago for development domains across rural Wales (click map to enlarge). They argue that all parts of rural Wales should have a special relationship with a nearby urban settlement where a critical mass of service provision and job creation can be mobilised. In their study A Bright Future for Rural Wales they identified a dozen such urban centres across rural Wales.

My argument is that if the Welsh Government was to concentrate its limited resources on a handful of visionary projects such as these, they would have a much bigger impact on the underlying causes of severe poverty – the lack of job opportunities – than any number of targets for reducing the numbers of people who cannot afford to heat their homes.

This is John Osmond’s presentation to today’s National Energy Action Cymru conference Bridging the Divide.

John Osmond is Director of the IWA.

One thought on “Bridging the Welsh fuel poverty divide

  1. The first half of this piece makes for depressing reading. At the risk of over-simplifying or misrepresenting John’s argument, he suggested that governments seeking to achieve reductions in the level of fuel and child poverty will find that the greatest impact for the lowest cost will be on those for whom the least needs to be done to lift them out of poverty, and thus that any reduction in numbers in poverty will be because the most marginally poor have been helped rather then the most severely poor.

    I found it a compelling argument, and I agree with his conclusions that the governments in Cardiff and London are unlikely to achieve their targets, and that the result of any success in reducing the numbers in poverty is likely to be that those left in poverty will be those who are in the most severe poverty today.

    John goes on to talk about two particular initiatives which he thinks would do more to help. Both are aimed at economic development leading to the provision of jobs which would enable families and individuals to escape from poverty. I certainly don’t disagree that people with decent jobs are less likely to be in poverty than those without; and any actions which increase the supply of well-paid jobs will undoubtedly help to address the problem. (I’m not going to comment on the detail of the proposals here, although I do have some reservations about the idea of the Cardiff City Region.)

    Whilst economic growth would certainly have been seen as the answer in traditional economics, I’m not convinced that it is a sufficiently comprehensive answer to the problem in a world where we have to accept finite limits on resources and therefore on growth itself. We cannot avoid considering how the benefits of economic activity (and thus access to, or lack of access to, resources – which in a sense is what wealth and poverty are) are shared.

    If resources are infinite, it is easy to see how increasing total wealth can lift everyone out of poverty; but once they are recognised as not only finite, but also already over-exploited, then excessive wealth for some will almost inevitably lead to poverty for others, particularly on any relative, rather than absolute, definition. Serious action on poverty must, at some point, address the disparities of wealth within society.

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