Housing association bodies warn energy price protection for tenants will be put at risk when UK Government energy support ends
The bodies that represent housing associations in England, Scotland and Wales have today warned that the social housing sector's ability to protect tenants from extreme energy costs will be put at significant risk when UK Government support ends in April 2023.
Speaking on behalf of housing associations across England, Scotland and Wales, National Housing Federation (NHF), Scottish Federation of Housing Associations (SFHA) and Community Housing Cymru (CHC) are collectively asking the UK Government to ensure social housing providers continue to be supported through the Energy Bills Relief Scheme beyond April 2023, including for non-domestic contracts, which are used to supply energy to domestic properties.
The UK Government’s autumn 2022 budget detailed how it will finance pre-existing energy relief schemes to March 2023, and made announcements for further plans to support households beyond April 2023.
This statement came at a critical time in the cost of living crisis, when many people were already experiencing significant hardship or expected to fall into significant hardship in the following months.
While the support was welcome, it further exposed a concern that housing associations across the UK have warned of for some time. Housing associations as organisations are not immune to the cost of living crisis. They too are facing increased fuel and energy costs which have to be paid for out of an ultimately finite pot.
The existing energy relief schemes somewhat protect housing associations from extreme energy costs until the new financial year, but there are deep concerns about what will happen if or when government support ends beyond this point.
The autumn statement confirmed that energy bills support will become less generous from April 2023, and the UK Government recognised that some businesses may continue to require support via the energy bills relief scheme (EBRS) - but noted at the time that this will be targeted support. This week (19 December 2022), it was reported that a decision on extending energy bill support for businesses would be delayed until the new year.
Working together, the three representative bodies recently submitted evidence to the Department for Business, Energy and Industrial Strategy to form part of the Treasury-led review of the scheme, and called for continued and further ongoing support for housing associations.
This evidence shows that without reduced energy costs and/or government support, housing associations will no longer be able to absorb costs to protect their tenants. Social housing tenants are among those who have been hit hardest by the cost of living crisis and many are already being forced to make tough decisions on a daily basis. They will not be able to take on added financial strain.
Today, the bodies that represent housing associations in England, Scotland and Wales - National Housing Federation, Scottish Federation of Housing Associations and Community Housing Cymru - are joining together to warn that despite current energy bills support, housing associations are facing longer-term financial uncertainty, and will likely be unable to continue protecting the most vulnerable in society from the impacts of the energy crisis, this winter and beyond.
In Wales, without any EBRS support, housing associations are predicting an increase of up to 1055.4% in gas prices per week per tenant by April 2023 (compared to April 2022). With EBRS accounted for, although still extortionately high, this decreases to 559.4%.
Pressures are increasingly acute in care homes, extra care and sheltered accommodation settings. On average, tenants in sheltered accommodation are predicted to pay £32.69 for electricity cost per week by April 2023 without any EBRS support, or £20.38 per week with EBRS accounted for.
Stuart Ropke, chief executive, Community Housing Cymru says:
“Housing associations in Wales have been working continuously with their communities and partners in the housing, voluntary and public sectors to stop the cost of living crisis from becoming a catastrophe.
“The support offered by UK Government so far has been welcome. However, even with the EBRS, housing associations are still having to absorb significant costs to protect vulnerable tenants in care and support settings. Take this away and the impacts will be unprecedented. It is vital that UK Government confirms that the EBRS will continue for housing associations into the next financial year.
“Our members are also being increasingly contacted by tenants who do not have a domestic electricity meter or a direct relationship with an energy supplier about how they can receive the equivalent energy bills relief scheme £400 energy discount. Urgent clarity is needed on how and when equivalent financial support will be received, particularly where tenants that fall into this category tend to be living in supported or sheltered housing schemes and hence are more vulnerable.”
Further information about how housing associations across Wales are supporting their tenants and our priorities as a sector can be found here.
In England there are approximately 228,000 social housing residents who are on heat networks and therefore are relying on the Energy Bill Relief Scheme to provide support with their energy bills. Nearly three quarters (72%) are older people over the age of 55.
Before the Energy Bill Relief Scheme was announced, housing associations were expecting to pay up to 500% more for their commercial electricity and gas contracts, leading to service charge increases of up to £68 per week for low usage homes. Even with the Energy Bill Relief Scheme now in place, housing associations are still seeing price increases of up to 233%.
Many housing associations are actively looking at whether they can cover some of the cost from other funds, rather than pass on the full increases to residents. However, since housing associations are not-for-profit, this would mean cutting back on other services for residents, or reducing investment in their homes.
Will Jeffwitz, head of policy at National Housing Federation, says:
“In England, housing associations have been actively looking at ways to avoid passing on rising energy costs to their residents via service charges, to protect vulnerable, low income households from the rising cost of living.
"We welcome the various government support packages to help housing associations and their residents with the rising cost of energy. However, we now need urgent clarity on whether housing associations will continue to receive support for their commercial energy contracts beyond March 2023 under the EBRS. We are also calling on the government to announce details of support for heat network customers, including how they will receive the £400 energy bills rebate and how these customers will be supported from March 2023 onwards.”
In Scotland, latest estimates suggest that even with the Energy Price Guarantee and other support mechanisms already in place, between 52% and 57% of households living in the social sector are facing fuel poverty and this is reflected in the experiences of SFHA members. Particular concerns have been raised around heat networks and ‘heat with rent’ schemes which are common in sheltered and supported housing in Scotland. Price hikes for these schemes have been significant with up to five fold increases reported and even where procurement frameworks are being used, in one example costs are expected to jump by 120% in April 2023.
However, the ‘commercial’ classification of communal energy contracts means that these tenants are not being offered equivalent protections to domestic energy consumers. Several of our members have been told that they do not qualify for any discount through the Energy Bills Relief Scheme and that no further protections will be offered through public procurement frameworks beyond April. Even where current costs fall below the government’s Supported Wholesale Price, the cumulative increases over the last 18 months now undermine the initial intention of providing tenants with a more affordable option than a conventional heating system.
Sally Thomas, Scottish Federation of Housing Associations chief executive, says:
“Our members are going to great lengths to shield tenants from the worst impact of the cost of living crisis, but this is becoming almost impossible. In the context of rising prices across the housing sector, and a lack of competition in the energy market, our members, and their tenants, are facing a hugely difficult winter, and it’s essential that the UK Government acts now to provide certainty beyond March 2023.”