The Fuel Poverty Landscape in Scotland

The Fuel Poverty Landscape in Scotland

Here is an overview of the key fuel poverty drivers in Scotland currently.

Fuel Poverty Target and Fuel Poverty Strategy

The Scottish Government is required to eradicate fuel poverty in Scotland as far as is reasonably practicable by November 2016, as detailed in the Housing (Scotland) Act 2001 which set a statutory duty on Ministers.

In June 2016, Kevin Stewart, Minster for Local Government and Housing, announced that the Government would not meet its target to eradicate fuel poverty by this date. He emphasised the amount of money spent by the Scottish Government on improving the energy efficiency of homes and attributed the failure to factors beyond the Government’s control, such as high energy prices[1].

Two short-life advisory groups, working alongside the Scottish Fuel Poverty Forum, were set up by the Government to advise on fuel poverty. The Scottish Rural Fuel Poverty Task Force’s remit was to explore the issues facing people in fuel poverty in rural, remote and off gas grid areas and to propose solutions. The Scottish Fuel Poverty Strategic Working Group focused on the fuel poverty strategy and on how the devolved powers coming through the Scotland Act 2016 will benefit those in fuel poverty. Their final reports were published on the Scottish Government website on 24 October.

National Infrastructure Priority and SEEP

The Heat Policy Statement was published by the Scottish Government in June 2015. It sets out the Scottish Government's framework for a resilient heat system which will lead to affordable low carbon heat for households. A key initiative emerging from it is the designation of energy efficiency as a National Infrastructure Priority. The cornerstone of this will be Scotland's Energy Efficiency Programme (SEEP) which will offer support to improve the energy efficiency ratings of all domestic and non-domestic buildings in Scotland. SEEP will be launched in 2017-2018 and will be supported by over £500 million of public funding.

One of the first actions coming from SEEP is the launch of the Pathfinder Fund, which is being directed at businesses, community groups and individuals working and living in areas with particularly high levels of fuel poverty. Applicants were invited to devise pilot projects in the local areas which would tackle fuel poverty.

These pilots will help shape the wider work that will be delivered when SEEP is rolled out further from 2018. 11 local authorities[2] received funding through this scheme starting in 2016. A total of £14 million was made available for SEEP projects, with £9.1 million of funding being allocated to successful applicants, and the remaining funding being allocated to other energy efficiency projects across Scotland.

In her speech for the Programme for Government 2017 – 2018, the First Minister Nicola Sturgeon announced that a Warm Homes Bill will be brought forward later in the Parliamentary session. There has been no detail released as yet as to the contents of this Bill, however in a Written Question[3] in the Scottish Parliament in September 2016, Roseanna Cunningham, Cabinet Secretary for Environment, Climate Change and Land Reform said that the Scottish Government would introduce a Warm Homes Bill to support accelerated deployment of renewable and district heating.

Energy Efficiency and Energy

The Energy Efficiency Standard for Social Housing (EESSH) aims to improve the energy efficiency of social housing in Scotland. It will help to reduce energy consumption, fuel poverty and the emission of greenhouse gases. Social housing providers have to meet targets by 2020.  However, there will be a review of EESSH by the Scottish Government in 2017.

The Regulation for Energy Efficiency for Private Sector Homes (REEPS) was an initiative first mooted in the Climate Change Act 2009 and then as part of the Sustainable Housing Strategy in 2013. It was announced in the Scottish Government’s legislative programme for 2016 – 2017 that the long-awaited consultation will take place within the next year.

The Scottish Government will also consult on a new overarching energy strategy. This was first announced by Fergus Ewing, former Minister for Energy, Enterprise and Tourism, in March 2016 as a new holistic approach to energy by integrating power, transport and heat. The draft energy strategy will be published for consultation at the end of 2016 as was affirmed in the Scottish Government’s Programme for Government 2016 – 2017[4]. The energy strategy is intended to work in conjunction with the Government’s climate change plans (the draft 3rd report on policies and proposals RPP3 which is required by the Climate Change (Scotland) Act 2009) and these together will steer decisions on issues such as heating and powering homes and businesses and improving building standards.

New Devolved Powers

As part of the Scotland Act 2016, new powers will come to Scotland over Winter Fuel Payments (WFPs), Cold Weather Payments (CWPs), Warm Home Discount and the Energy Company Obligation.

The Scottish Government is running a social security consultation ending 28 October which has suggestions of what can be changed with regards to WFPs and CWPs. Some of their suggestions are: to extend WFPs to families with disabled children on the higher rate of DLA; and to make early payments to households who live off the gas grid. The Government want to understand how these payments can be used to tackle fuel poverty more effectively. In terms of CWPs, the Government is aware that the current temperature threshold does not recognise weather conditions in certain parts of Scotland, for example wind chill factor. The Scottish Government indicates that it is willing to work with rural stakeholders and the Met Office to identify trigger points more suitable to Scottish conditions.

The Government notes, in the consultation document, that both of the short-life fuel poverty working groups have considered how these payments could be used to better tackle fuel poverty in Scotland.

Also in the Scotland Act are obligations such as the Warm Home Discount and the Energy Company Obligation (ECO). Plans are underway to develop a ‘Scottish ECO’. Further details about this are yet to be released.

Competition and Markets Authority Investigation into the Energy Market

The Competition and Markets Authority (CMA) produced its report and recommendations to reform the energy market in June 2016, after a 2-year investigation. The CMA intended its report to help drive down costs by increasing competition between suppliers and helping more customers switch to better deals, while protecting those less able to benefit from competition. The CMA notes in its executive summary that energy costs are a major burden on domestic customers, reaching almost 10% of overall expenditure for the poorest households.[5] It was hoped that the CMA investigation and report would lead to customers trusting energy companies again.

The investigation has uncovered problems in the energy market which the CMA feels necessitates intervention. Some of these problems are that customers are failing to engage in the energy market; that on the supply side, there are many technical regulations which restrict competition, such as Ofgem’s RMR rules; and that the way the energy sector is regulated hinders the development of policies and regulations which would be advantageous for customers. In addition, several problems were identified affecting customers on prepayment meters (approx. 16% of all domestic customers).

The CMA has therefore devised a comprehensive set of remedies, the most recent of which is the proposed price cap for prepayment customers for an interim period until the remedies come into their full effect and, in particular, the rollout of smart meters has been completed.

October 2016

For further information on this briefing or on fuel poverty in Scotland, please contact Helen Melone, Research, Information and Project Officer, Energy Action Scotland at helen.melone@eas.org.uk or call 0141 226 3064.