Memorandum submitted by Energy Action Scotland (FP 14)
Energy Action Scotland (EAS) is the Scottish charity with the remit of ending fuel poverty. EAS has been working with this remit since its inception in 1983 and has campaigned on the issue of fuel poverty and delivered many practical and research projects to tackle the problems of cold, damp homes. EAS is a member of the Scottish Fuel Poverty Forum which is reviewing the current arrangements for the eradication of fuel poverty in Scotland.
EAS welcomes the opportunity to provide comment and evidence and would be happy to provide additional information to the inquiry should this be required.
1. Progress against Government targets
1.1 The Scottish Government is required by the Housing (Scotland) Act 2001 to end fuel poverty, as far as is practicable, by 2016 and plans to do this are set out in the Scottish Fuel Poverty Statement. The number of Scottish households living in fuel poverty dropped from 756,000 (35.6%) in 1996 to 293,000 (13.4%) in 2002. Half the reduction was deemed due to increases in household income, 35% to reduced fuel prices and 15% to improved energy efficiency of housing. The most recent figures from the Scottish House Condition Survey show that there were 618,000 households living in fuel poverty in Scotland in 2008, representing 27% of the total.
1.2 According to figures produced by the Scottish Government early in 2008, for every 1% rise in fuel prices an estimated 8,000 more households would go into fuel poverty. Based on the assumption that the only thing changing in the modelling was fuel price, household income and energy efficiency are assumed to remain static. Further based on the percentage rise in fuel prices over the period Q3 2005 to Q3 2008 for fuel and light as calculated by DECC, prices have risen relative to the GDP deflator from 91.3 to 137.7. This is a 51% increase in real terms. Continuing on the basis that other influences remained static, we should have seen fuel poverty at 951,000 households. Given that the official figure is 618,000 we could assume that the action of the other influences - energy efficiency and household income - have worked positively to restrict the growth of fuel poverty. Improvements in these factors between 2005 and 2008 might therefore be assumed to have prevented some 330,000 households from falling into fuel poverty.
1.3 However, the reliability of official fuel poverty figures is compromised because of the time lapse between collection and publication of data. The most recent figures for Scotland do not reflect all of the significant fuel price increases during 2008-09. Accordingly, EAS estimates that there are currently almost three-quarters of a million fuel poor households in Scotland.
1.4 In measuring fuel poverty, fuel costs are modelled, as is fuel consumption. Fuel prices are calculated on the basis of location, fuel mix and payment methods. EAS believes that there is therefore a danger that real levels of fuel poverty are underestimated in many instances i.e. rural areas with no access to gas supply; areas of high density, income-poor households with limited choice of payment methods; households where housing benefit increases to accommodate rent increases (and leads to a higher level of income/lower proportion of income spent on fuel being assumed).
2. The definition of households in fuel poverty commonly used - i.e. those households where more than 10% of income has to be spent on fuel for adequate heating.
2.1 EAS believes that the definition of fuel poverty needs to be clearer. Where the official headline figure (i.e. based on full income definition) is used, the basic income definition, with housing-related benefits excluded, should also be highlighted.
2.2 As mentioned earlier, there are factors such as increased housing benefits (following rent increases for example) that inadvertently lead to a reduction in the likelihood of a household being classified as fuel poor.
2.3 Also, 10% relates to expenditure on fuel, not expenditure on 'adequate heating'. Dr. Brenda Boardman's specific definition is 'Fuel Poverty is the inability to afford adequate warmth because of the energy inefficiency of the dwelling'.
3. The coherence of the government's initiatives on energy efficiency
Investment in energy efficiency in the UK by both central and devolved governments has been substantial. However, as shown above, while this investment has mitigated fuel poverty, levels are still rising.
3.1 EAS believes that improving energy efficiency is the most sustainable solution to fuel poverty and can also make a significant contribution towards reducing emissions and ensuring security of energy supply. Energy efficiency is devolved to Scottish Government and EAS believes that there must be increased investment in energy efficiency measures in order to alleviate fuel poverty.
3.2 Current Government-supported programmes have differing aims and objectives. Future initiatives must be clearer about how/where/why/whether they all have the same ultimate aim(s). There are significant synergies and consequently opportunities to achieve cross-programme benefits, but at present there is a general assumption that initiatives designed to reduce carbon emissions, for example, will automatically benefit the fuel poor. This is not necessarily the case.
3.3 There needs to be a clear link between 'domestic energy efficiency' programmes and a move to acting on demand side management. It is not enough simply to reduce emissions or improve efficiency or make bills cheaper. There needs to be greater consideration given to using less energy.
3.4 There is no clear forward plan that takes all homes to levels of energy efficiency that will lead to considerable reductions in overall energy demand at production stage (reducing the need to replace aging power generation plant may be crucial in tackling climate change). Proposals limited to simple insulation measures or low aspirational targets for housing i.e. the Scottish Housing Quality Standard (SQHS) reaching SAP 50 or NHER 5, will not solve fuel poverty or reduce carbon emissions sufficiently or in a sustainable manner. All homes must move towards a great energy efficiency scoring, i.e. NHER 8 or above. The need to use less energy overall is the only sustainable way of reducing the risk of exposure to fuel poverty and ensuring that the rising cost of fuel has less impact on householders by ensuring they use less fuel in the first place. If the ultimate aim is to provide a home that can achieve a specific heating regime and achieve a standard of energy efficiency at or above an NHER score of 8, then fuel use will decrease, fuel bills will reduce and householders will have warmer and healthier homes. Any rebound will be shown by longer periods of heating and lighting but still with reduced fuel use. Government should pursue policies of zero heat load homes, that is where homes do not require any form of heating system.
3.5 Also, in terms of coherence, current programmes - Scottish Government programmes as well as CERT, CESP and others - do not offer the same level and type of support to all energy-users. EAS believes that all legislation must be 'co-aligned' in order that every household regardless of tenure or income level/source is governed by the same standards and has access to the appropriate support. All grant, support and discount schemes for energy efficiency (including those aimed primarily at fuel poverty and/or carbon reduction) need to be streamlined to make them more accessible for people to apply. The current arrangements are too fragmented and complicated for the public to navigate easily and this is a deterrent to people being able to take advantage of available offers.
3.6 In setting energy efficiency standards, it has to be recognised that not all homes will meet that standard immediately (unless the standard is set too low). Moreover, that vulnerable and fuel poor households will require time and assistance to reach whatever target is set by legislation. Government should take the lead in providing that support; to place a further burden on local authorities perhaps through existing legislation such as the Power of Well Being would place an undue burden on local authorities unless this is backed up with increased funding ring-fenced for this purpose.
3.7 More important is how to make any assistance provided sustainable. For example, a measure such as cavity wall insulation will, once fitted, continue to provide benefit as long as the building remains in occupation. However, the provision of a heating system will only provide benefit if it is used properly and for as long as the system is working and well maintained. Furthermore, this intervention will have a finite life span. Government should therefore seek to work more closely with the energy supply industry and heating system manufacturers to seek development of an agreement whereby, once a heating system is gifted by the Government, it is then maintained and supported for as long as the householder remains in that property and remains vulnerable or fuel poor.
3.8 If Government energy efficiency targets are to be met, homes need to be 'fuel poverty proof' i.e. as energy efficient as possible, with access to a choice of domestic fuels and tariffs, and with disposable household income maximised. Homes should be NHER 8 or better to ensure that Households Below Average Income are protected
3.9 EAS believes that the most sustainable unit of energy is the one that doesn't need to be generated and therefore calls on Government to give the highest possible priority to increased investment in energy efficiency.
4. The methods used to target assistance at households which need it most
Scotland's main government-led energy efficiency programme is the Energy Assistance Package (EAP). EAP was designed to be a national programme with a regional delivery. It could be refocused to be the main delivery mechanism for all energy efficiency and carbon saving measures across the domestic sector. It has an inclusive approach that draws in all households and could provide 'Energy Assistance' to every household in Scotland, via advice, loans, grants, home visits and though not currently the case, could be adapted to provide a vehicle for many partners to become involved. This involvement could be as managing agent, delivery contractor, advice agent or home visitor. It would have the ability to draw in many partners from the voluntary, public and private sectors, utilising the experience and expertise of those best-placed to deliver results.
4.1 However, EAP is currently a reactive programme. EAS believes that a more proactive, area-based approach such as that adopted for the Home Insulation Scheme, supported by an EAP-type programme offers the best opportunities for optimising access to homes and consequently, better-facilitating achievement of a range of targets. A proactive programme would be crucial in enabling access to support for those most in need (vulnerable, fuel poor and/or those living in the most energy inefficient homes, for example) and for those actively seeking to take action. EAS also believes that an area-based approach would have to be supported by an appropriate change in legislation relating to enforcement issues for multiple-ownership properties, terraced housing, etc, so that genuine economies of scale existed in terms of physical measure installation and positive outcomes.
4.2 EAS believes that the importance of the third sector, particularly in relation to their role as trusted intermediaries and effecting behavioural change, is often underestimated and underplayed. Greater consideration should be given to the third sector and their potential contribution to the significant changes required. EAS also believes that the role of local authorities and COSLA should be emphasised more, given their level of contact with the public in conjunction with the potential impact in terms of, for example, procurement and the establishment of ESCOs.
5. Social tariffs and plans to put social price support on a statutory footing
Introducing mandatory social price support will be funded by requiring energy suppliers to make available at least £300 million per annum by 2013. There are concerns that mandatory social tariffs are in effect a regressive tax paid for by all those who do not benefit from them.
5.1 Reducing the price of fuel will undoubtedly result in lower fuel bills, removing some households from fuel poverty. However, given that the most recent Scottish House Condition survey identified more households just above than just below the fuel poverty threshold, will more households be moved into fuel poverty as a result of price increases?
5.2 Initiatives such as the Energy Costs Support Scheme are welcome, but data-sharing is a sensitive issue. Benefits (relating to improved energy efficiency, income disposable income, etc) accruing from such an approach must be specific and identifiable.
6. Winter fuel payments and cold weather payments
Whilst it may be convenient to relate Cold Weather Payments to the locality of weather stations in the UK, a greater understanding of the risk of extreme localised climate is necessary to ensure that vulnerable households receive payments commensurate with the weather they experience. The cost of maintaining reasonable heating levels in Scottish housing is significantly higher than in other parts of the UK but there is no allowance for this in calculation of the benefits. For example, it costs 62% more to heat a house to equivalent internal temperatures in Stornoway compared with an identical house in Bristol. Accordingly, EAS believes that a regional weighting should apply.
6.1 Winter Fuel Payments are non means-tested annual payments to those aged 60 and over. Given the current restriction of winter fuel payments to pensioners, consideration could be given to incorporation into basic pension payments during the winter months to ensure take-up. However, many of those receiving Winter Fuel Payments are not fuel poor. EAS also believes that consideration should also be given to applying the qualifying criteria for the Cold Weather Payment to the Winter Fuel Payment to enable more vulnerable groups to benefit.
6.2 DECC has already assessed that directing the Winter Fuel Payment to specifically offset fuel bills would remove over one million households from fuel poverty. Classifying the same payment as 'income' would remove fewer than one-fifth of this number from fuel poverty.
7. Support for households which are not connected to the mains gas grid
EAS recommends that particular attention should be paid to the problems affecting rural areas where it is more difficult to achieve economies of scale and where 25% of households are not currently connected to a mains gas network. In these areas it will be necessary to use market transformation initiatives to make new technologies such as solar water heating, biomass and heat pumps more affordable as current grant schemes are still not sufficient to stimulate demand for these technologies.
7.1 Government needs to ensure that rural areas do not continue to miss out on schemes designed to alleviate fuel poverty as is currently the case. There is anecdotal evidence from EAS members that existing grant schemes are not operating equitably across Scotland and that households that are off the mains gas network and those that are living in hard to treat housing may be missing out on these schemes. The suggested reason for this is because it is more difficult for scheme managers to achieve economies of scale in these more sparsely populated areas and EAS recommends that this problem should be addressed as a matter of urgency.
· It is clearly important to make any assistance provided sustainable. For example, a measure such as cavity wall insulation will, once fitted, continue to provide benefit as long as the building remains in occupation. However, the provision of a heating system will only provide benefit if it is used properly and for as long as the system is working and well maintained. Furthermore, this intervention will have a finite life span. Government should therefore seek to work more closely with the energy supply industry and heating system manufacturers to seek development of an agreement whereby, once a heating system is 'gifted' by the Government, it is then maintained and supported for as long as the householder remains in that property and remains vulnerable or fuel poor.
· Government must ensure that any mapping exercise involves views from those currently working at every level in the energy efficiency and fuel poverty fields. In terms of raising awareness and effecting behavioural change, the views of community based organisations, advisory groups etc. must be taken into consideration.
· Measures such as internal thermal dry lining, solar water heating, reinstatement of wooden shutters, replacement of concrete floors and alternative heating sources will all make significant contributions to energy efficiency and fuel poverty. However, many of the measures are costly and do not attract any element of grant funding. The Scottish Government should give priority to including such measures into its grant and loan programmes, while working directly with the UK Government to ensure changes to legislation to enable programmes such as CERT that would allow fuel suppliers to support these types of energy saving measure.
· EAS believes that a major factor in achieving significant change is the issue of consistency. The public need to hear consistent messages to enable them to tune in to the message, understand it and then have it reinforced to stimulate them into action. This is unlikely to be over very short periods of time but rather over the medium to longer term. Too many campaigns are short lived and rapidly changing messages are confusing to the public; this confusion leads to inertia. If the public are unsure, then they will do nothing.
· Advice given face to face and at key trigger points in individuals' circumstances will more likely lead to action. All Government programmes should have a significant element of face to face advice built in. A substantial proportion of households will require this approach to take action or change behaviour. Existing research into energy advice highlights the need for advice to be delivered face to face if behavioural change is to be maintained. With this in mind there is therefore a requirement for the current Scottish Government fuel poverty programme, the Energy Assistance Package, to deliver face to face energy advice at every appropriate stage, including specifically stage four of the programme once heating and advanced energy efficiency measures have been installed.
 Fuel Poverty in Scotland: Further Analysis of the Scottish House Condition survey 2002
 Scottish House Condition Survey; Scotland Key Findings for 2008
 Estimate of Fuel Poor Households in Scotland: Scottish House Condition Survey March 2008
 NHER is a means of rating the energy efficiency of a dwelling on a scale of 0-10 where 0 is the least energy efficient
 Households Below Average Income: a means of measuring living standards as determined by disposable income
 Average figure calculated using data taken from Scottish Parliament Written Answer S3W-19556, 19 January 2009