Design of the Energy Company Obligation (ECO) 2023-2026 – consultation response

16 December 2022

The UK government is seeking views on proposals for the Energy Company Obligation Plus (ECO+) scheme to deliver energy efficiency measures in homes across Great Britain from 2023-2026. 

As an organisation and a sector, we are committed to tackling both the climate crisis and eradicating fuel poverty. As such, we broadly welcome the proposals outlined for a three-year additional scheme, ECO+, which would run alongside and complement ECO4 delivery. However, we would like to see further support for low income households, including those in social housing.

The NHF suggests the following proposals:

  • ECO+ should seek to prioritise low income households, including those in social housing.
  • All ECO+ measures should be expanded to apply to EPC D social homes.
  • Social housing should be eligible to receive heating controls through ECO+.
  • Local authority and supplier flex should be expanded to apply to social housing.

Overview of our response

We recognise the contribution ECO has made to the installation of energy efficiency measures in homes across the country since 2013, lowering energy costs for low income, vulnerable households while also contributing to the UK’s wider goals to eliminate carbon emissions and reach net zero by 2050. In the current energy crisis, we recognise the need to supplement ECO4, further supporting households and making our energy system more secure and resilient to future price shocks. This document contains our full responses to a number of the consultation questions.

In our response, we raise concerns regarding the way in which ECO+ funding is targeted. We recognise the need to target households who are not currently eligible for ECO4 funding or other government support. However, there is significant overlap between households living on the lowest incomes and those in the least efficient homes. As a result, these low income, vulnerable households are among those most likely to be experiencing fuel poverty and therefore are most in need of support through ECO+. We propose that for ECO+ to achieve its aim of reducing energy bills and fuel poverty, reaching the greatest number of households, the scheme should seek to prioritise low income households. This would ensure that support is targeted towards those who need it most, giving fuel poor households insurance against rising energy costs, while enabling the UK government to meet their net zero and fuel poverty targets.

We welcome the proposal for social housing residents to be eligible for both the low income and the general groups within ECO+. However, we would like to see the various social housing exemptions removed. Limiting social housing in both the general group and the low income group to EPC bands E, F and G, with EPC band D only able to receive Innovation Measures, will limit the number of social housing residents who are lifted from fuel poverty via ECO+. While social housing is the most energy efficient tenure with 64.3% housing association homes certified EPC C or above, the vast majority of housing association homes below EPC C are EPC D (31.2%). Due to the comparably low incomes of those living in social housing, 18.4% of all social households are in fuel poverty and the overwhelming majority of these households are living in EPC band D properties. Excluding social housing EPC band D properties from the mainstream measures may mean that many fuel-poor social housing residents will not benefit from ECO+ measures and will continue to experience fuel poverty.

In addition to the exemption of social homes with an EPC band D from mainstream measures, we also have concerns around social housing not being eligible for heating controls and being excluded from local authority and supplier flex. These exclusions applying to social housing on the basis of avoiding duplication with other support (such as the Social Housing Decarbonisation Fund) is inconsistent given that all other tenures are also able to access similar schemes (such as Home Upgrade Grant and Local Authority Delivery) and are not being excluded from these ECO+ measures.

If these exclusions for social housing remain then we believe it is important for the remainder of the Social Housing Decarbonisation Fund to be brought forward quickly and in full, and for ECO+ ECO4, the Social Housing Decarbonisation Fund and other funding streams available to social housing which support decarbonisation to be aligned as clearly as possible. This will enable the social housing sector to continue reduce carbon emissions and will contribute to the government’s ability to meet their legally binding target for the UK to reach net zero by 2050. Housing associations will continue to push forward with their work on decarbonisation, building on the progress they have already made, and putting residents at the heart of this work.

Who to speak to

Rory Hughes, Policy Officer