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Tackling Fuel Poverty in Scotland: A Strategic Approach
Letter to Cabinet Secretary for Net Zero, Energy and Transport, 14 December 2021
Dear Cabinet Secretary,
Tackling Fuel Poverty in Scotland: A Strategic Approach
The Committee agreed to examine whether the Scottish Government’s approach in its proposed Tackling Fuel Poverty Strategy is sufficient to meet the needs of low income households especially taking into account the impact of recent increases in energy prices and the impact of the pandemic.
On 25 November 2021, the Committee held a formal evidence session to hear from stakeholders who work to support and assist individuals experiencing fuel poverty.
The Committee also met informally with people with lived experience of fuel poverty, where we explored issues relevant to disabled people, single parents and those living in rural and island communities. This has helped the Committee to gain insights into addressing fuel poverty. We heard compelling testimony from the participants about the impact of fuel poverty on their daily lives. A note reflecting their views is attached. In sharing these views, the Committee is keen to stress to the Scottish Government that participants wanted their views to make a difference, otherwise they feel that reliving the trauma they have experienced would be meaningless.
The Committee emphasises to the Scottish Government that lived experience of fuel poverty should be core to the Strategy’s design and implementation.
We have set our further comments below.
Development of the strategy
Thank you for your letter of 24 November, which advised the Scottish Government undertook recent engagement (September 2021) and consultation on the draft Strategy. Notwithstanding this, the Committee has some residual concerns about how the Strategy addresses the immediate twin stresses of the COVID-19 pandemic and the significant turbulence in the UK energy market. Additionally, one of the four drivers of fuel poverty is low incomes. All forecasters agree that the high inflation of the last few months will last well into the spring, projecting a significant increase in the cost of living.
The Committee would like to see the Scottish Government address these circumstances more clearly in the Strategy. Further to this, the Committee would like the Scottish Government to ensure the Strategy clearly defines activity beyond this winter, as these issues look unlikely to be fully resolved in the near future.
In addition, Citizen’s Advice Scotland (CAS) told us it is very concerned about “the quantum and quality of stakeholder engagement evidenced in the development of the Fuel Poverty Strategy since the draft Strategy was first published in 2018” as the external environment has moved on considerably in the intervening period. CAS believes that the Strategy in its current form falls considerably short of what is required to set us on a path to delivering the 2030, 2035 and 2040 fuel poverty targets, although consider this could be remedied if there was further engagement.
The Committee asks the Scottish Government what further engagement work it will undertake with its expert stakeholders following the final Strategy’s publication.
Measuring the effectiveness of the Strategy
The draft Strategy sets out several actions to address fuel poverty, however, witnesses are concerned not enough attention is paid to the interim targets in the Strategy. It is also noted progress would need to be seen across all local authority areas, given that the 2040 target must be met in each local authority, not just as a national average and so effective monitoring will need to be in place.
We were told that the Scottish Government is unlikely to meet the targets based on the Strategy. The Committee is concerned that the Strategy does not clearly provide a measure of how far the Strategy will contribute to addressing fuel poverty. A clear set of policies and programmes with expected outcomes and how those affect the fuel poverty rate should be provided in the Strategy. These, added together, should demonstrate how far it goes to meet the target.
The Committee asks the Scottish Government to draw from other precedents to address this issue, such as the Climate Change Plan. If there are shortfalls the Scottish Government should ensure the Fuel Poverty Strategy explains how these would be met with future policies and programmes.
The Committee would also welcome the Scottish Government’s view on how close to the 2030 interim target the Scottish Government expects to get with this Strategy, which we note is to be refreshed by 2026 at the latest.
Rural inequality
We heard evidence that beyond the place-based approach for energy efficiency, it is difficult to see how the Strategy is mapping out a comprehensive and coherent plan to tackle the depth of fuel poverty in rural, remote and island areas.
The Committee notes the evidence you provided to the Net Zero, Energy and Transport Committee on 30 November and asks the Scottish Government what plans it has to provide more detail on how it will engage with the scale of the challenge, as we know extreme fuel poverty is disproportionately higher in rural, remote and island areas.
Energy efficiency programmes
It was emphasised to us that improving energy performance to ‘fuel poverty proof’ our existing housing stock is critical.
The Committee also heard that current fuel poverty and energy efficiency programmes must grow in pace and scale, include support for repairs and improvements, and incorporate hand-holding from engagement through to advising how to use new technologies and checking that performance is meeting expectations. This should be done using trusted local organisations (working with and building on the existing Home Energy Scotland partnership network).
The Committee feels it is important to acknowledge that in the drive for Net Zero, many people with lived experience expressed their concern to us that they would be forced into fuel poverty by new technology. Local authorities and housing associations were putting in new heating systems or building affordable homes with new technologies, which could cost more to run.
The Committee would welcome the Scottish Government views on how the final Strategy will address these concerns.
Warm Homes Discount
Stakeholders are concerned about the replacement for the Warm Homes Discount (WHD) which could see Scotland get a poorer deal. There is a concern that time is running out to develop a scheme to provide help for the Spring. Scotland at present gets a greater than population share of WHD, but the Committee notes that individual awards are not large enough to lift people out of fuel poverty. Also, because there is a finite pot of money, awards are not made to the majority of households who qualify. There is also uncertainty around the WHD as it applies to the energy obligation, with energy companies unclear about what to do for customers next year.
We acknowledge that these issues are reserved to some extent, and the Committee notes that the Scottish Government has already pledged to lobby the UK Government in the Strategy, nevertheless the Committee would wish to see these issues prioritised and a concerted effort made to resolve these matters quickly.
The Committee also considers it would be useful if during these discussions the Scottish Government could explore the potential for payments to be more responsive or scaled to customers’ needs, for example, if a household relies solely on electric heating and cooking facilities, customers with the very lowest incomes or living in the lowest quality of housing.
Winter Fuel Payment
Although the draft Strategy recognises that disabled people, regardless of age or rate of disability benefit, may need to spend more money on fuel bills there is a discrepancy in terms of the winter fuel payments. The Committee heard the winter fuel payment is not well targeted, “because it does not target fuel-poor households”, but we understand there is no change proposed to this payment.
Given the fact that responsibility for that payment is coming to Scotland, the Committee asks the Scottish Government to explain the difference in approach to fuel poverty households and whether it will address this discrepancy in the final Strategy.
Pre-payment customers
Pre-payment customers are often the most vulnerable and likely to be in fuel poverty but are the first to face price increases for energy, and face paying higher rates than credit customers.
The Committee considers the Scottish Government could do more to strengthen the proposed Strategy to ensure the rollout of ‘smart’ prepayment meters. These provide economic benefits to energy companies as well as consumers and can also help to reduce the prepayment ‘premium’.
Social security
The proposed Strategy highlights that particular households are more likely to experience fuel poverty. It would be helpful if the Strategy could use all the tools available to support vulnerable households. For example, this could be through additional financial support with heating bills to households containing disabled parents or children, perhaps by extending entitlement to the Winter Heating Payment to adults in receipt of the enhanced daily living component of the proposed Adult Disability Payment and to disabled children in receipt of middle rate care. The report from the Strategic Working Group on Fuel Poverty made some useful recommendations.
The Committee asks the Scottish Government to make use of its devolved powers to the full extent to make sure that social security benefits are used for maximum impact on tackling fuel poverty, particularly for disabled children and adults who face higher costs to meet their needs.
We look forward to seeing how the Committee’s views are incorporated into the final Strategy.
A copy of this letter has been sent to Shona Robison, Cabinet Secretary for Social Justice, Housing and Local Government and to Dean Lockhart MSP, Convener, Net Zero, Energy and Transport Committee.
Yours sincerely