Fuel Poverty Social Impact Bonds: Their Potential Role and Associated Challenges

Author:
Organisation:
Centre for Sustainable Energy
Date: 2013

Rationale

Alleviating fuel poverty requires considerable financial investment, whether from central government, local authorities, landlords or homeowners. However, the ending of various state-sponsored retrofit and grant schemes and the general squeeze on the public purse since 2010 have reduced the support available through such routes. The most vulnerable households are invariably the least able to self-finance measures to address fuel poverty and continue to face rising energy prices and cost increases across essential areas such as food and transport. Levels of fuel poverty remain a challenge and continue to contribute to negative outcomes in health and other areas, resulting in serious pressure on services such as the NHS, which are undergoing their own transformations and cost saving programmes. Consequently, there is a pressing need to consider alternative methods of financing schemes.  





Key research Question

The research investigated the potential use of Social Impact Bonds (SIBs) as a mechanism to generate funding to pay for fuel poverty alleviation activity in the health sector. In doing so, it sought to understand the most effective ways of developing this option with a view to establishing a recommended model outlining the necessary financial, technical and institutional arrangements.  



Summary of activity

Data were generated through semi-structured interviews with 16 stakeholders working in the health, finance, energy and housing sectors. 





Findings

The research concluded that there was a viable case for an SIB-funded approach. Stakeholders indicated interest in the concept, but the implementation would require multi-agency commitment (for example, around contracts and data sharing) and possibly pooled budgets. 

Assembling the evidence base would be a complex procedure, and demonstrating causality would be challenging and require sophisticated evaluation protocols. 



Recommendations

A full economic appraisal of the health benefits of fuel poverty-based interventions should be conducted by a specialist health economist. Once such evidence is gathered, a pilot SIB project can be rolled out to test it in the field. The planning and monitoring of the pilot must involve NHS services (for example, a representative of the Clinical Commissioning Group or local health authority public health team) so that technical health data management systems can be integrated into the project from the start. 

Other research into fuel poverty and health should ensure that data are collected on the impact of alleviation measures on households’ use of health services and the cost benefit, and not simply the health improvements accruing to individual residents. 



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