Fuel Poverty Strategy for Scotland: consultation analysis

2. Review of the Fuel Poverty Definition

Summary of Questions 1 and 2

• The new definition of fuel poverty, or efforts to improve the definition of fuel poverty, were broadly welcomed, particularly as a means of targeting those in most need of support.
• Some felt that the new definition is more complex and that this may make identifying fuel poor households more challenging.
• There was broad support for the use of After Housing Cost ( AHC) income and the Minimum Income Standard ( MIS).
• A number of respondents were concerned that the Scottish Government does not propose to adjust the UK MIS threshold upward for households living in remote rural areas.
• It was suggested that that MIS thresholds should be adjusted where at least one member of the household is long-term sick or disabled.
• There was support for further work being done to develop a specific list of health and disability categories, as well as age bands, to satisfactorily encompass the term ‘vulnerable to the adverse health and wellbeing impacts of living in fuel poverty’.
• There were queries as to why the age threshold has been set at 75 years, and suggestions that State Pension Age might be a more appropriate threshold.

2.1. The Scottish Government appointed an independent panel of experts to review the definition of fuel poverty to ensure it is fit for purpose. The Definition Review Panel made clear both that continuing to use the existing 10% definition would be unsatisfactory and that the definition should not be based on household income before housing costs. The revised definition it proposed was that households in Scotland are in fuel poverty if: they need to spend more than 10% of their after housing cost ( AHC) income on heating and electricity in order to attain a healthy indoor environment that is commensurate with their vulnerability status; and if these housing and fuel costs were deducted, they would have less than 90% of Scotland’s Minimum Income Standard ( MIS) as their residual income from which to pay for all the other core necessities commensurate with a decent standard of living. ^[7]

2.2. The Scottish Government proposes that the Warm Homes Bill will include a new definition of fuel poverty including an income threshold based on 90% of the UK MIS (after subtracting housing, fuel and childcare costs) and that the 10% fuel cost to income ratio will be based on an AHC basis. The Scottish Government does not, however, intend to take forward some of the detail of the measurement of the definition proposed by the Definition Review Panel: the MIS thresholds will not be adjusted upward for households living in remote rural areas or where at least one member of the household is long-term sick or disabled.

2.3. Question 1 sought respondent’s views on the proposed new definition of fuel poverty.

Question 1 - Do you have any comments on this new definition of fuel poverty, in particular, what do you think about the proposal to use AHC and MIS as means to measure fuel poverty in Scotland?

a) What, if any, challenges do you think this approach could present in enabling targeting of resources to those most vulnerable to fuel poverty; and

b) If this definition is to be used, how would you propose these challenges are overcome?

2.4. A total of 88 respondents commented at Question 1a and 85 respondents commented at Question 1b. A breakdown of the number of comments received by respondent type is set out in Table 2 below.

Table 2: Number of comments by respondent type

Type of respondent	Number of comments at 1a	Number of comments at 1b
Organisations:
Community or Tenant Group or Federation	4	4
Energy Company	6	6
Health and Social Care	5	5
Housing Association	8	8
Housing Body or Group	3	2
Inter-agency Group or Partnership	5	5
Local Authority	21	20
Other	7	7
Research Group	2	2
Third Sector	18	17
Organisations	79	76
Individuals	9	9
All respondents	88	85

2.5. Some responses to the first part of Question 1 were extensive, incorporating detailed arguments and worked financial examples to illustrate points made. Although these can only be summarised very briefly in a report of this kind, all consultation responses are available in their entirety to the Scottish Government.

General comments

2.6. The new definition of fuel poverty was broadly welcomed by many respondents, (around 1 in 5 of those answering the question) while an approximately equal number of others (also around 1 in 5 of those answering the question), expressed support for the attempt to improve the definition of fuel poverty, or agreed that the current definition is no longer fit for purpose. However, many responses were caveated, particularly expressing concern that the Scottish Government does not propose to follow the Definition Review Panel’s recommendations to adjust the UK MIS threshold upward for households living in remote rural areas.

2.7. Positive points on the new definition included that it will:

• Better target support to the most in need, placing greater emphasis on households with low incomes than under the current definition. This was suggested by around 1 in 5 of those answering the question.
• Prevent relatively wealthy households with high energy costs from being considered to be in fuel poverty. This was suggested by around 1 in 10 of those answering the question.
• Improve understanding of the number and distribution of households in fuel poverty and will assist in targeting action and measuring progress. Specifically, it was suggested the new definition may better identify those in private rented accommodation, younger people and those with families who may not currently be captured by the old definition. More Black and Minority Ethnic ( BME) households were also suggested likely to come under the new definition.

2.8. Less welcome aspects of the proposed definition identified by respondents were primarily that:

• It is more complex and less easy to understand than the previous version. This point was made by around 3 in 10 of those answering the question.
• This complexity may make identifying or assessing fuel poor households more of a challenge for staff, could act as a barrier to engaging households needing support, or could lead to inaccurate reporting due to different interpretations of the data. This range of issues was highlighted by around 1 in 6 of those answering the question.

2.9. The need for a definition that can be communicated easily was suggested to be important, that any formula used should be transparent and widely disseminated, and that a consistent approach to assessment is needed. An online template, calculator or app was thought necessary, along with appropriate staff training. A checklist advising customers of the information it would be useful to have available at an appointment with an advisor was suggested.

2.10. It was also noted that the consultation paper does not provide detail on the mechanisms by which the proposed new statutory target will be delivered, other than to refer to Scotland’s Energy Efficiency Programme ( SEEP) as the main relevant programme. Clarity on what the definition is to be used for was requested, including whether it will be used to assess eligibility for support, or to monitor the scale of fuel poverty. It was suggested that, given its complexity, the new definition may be more useful as a statistical tool, and that simplified criteria may be more useful for targeted funding. The potential importance of proxies going forward was also noted.

2.11. Respondents sometimes noted and agreed with the Definition Review Panel’s recommendation that further work be undertaken to develop a specific list of health and disability categories, as well as age bands, ‘which would satisfactorily encompass the term “vulnerable to the adverse health and wellbeing impacts of living in fuel poverty”’. In this context it was suggested that:

• Implementation should be postponed for two to three years to allow the development and inclusion of a robust Scottish definition of vulnerability in the new definition of fuel poverty.
• The Scottish Government’s determination that such work should not delay implementation of a revised definition could mean the targeting of those ‘most in need’ may be missed, or that some degree of subjectivity in the assessment will be required until the work is completed.

2.12. A small number of respondents suggested that, without simplification or clarification of the definition or adjustment in the proposed methodology with respect to the rural MIS, they would prefer to see the existing definition of fuel poverty retained. It was also suggested that, for a number of years, new and old definitions should be used in parallel to help assess the new Fuel Poverty Strategy’s progress.

2.13. Other concerns raised by small numbers of respondents included:

• The definition does not mention ‘extreme fuel poverty’ and this should be addressed.
• The definition could exclude some households with low income and high fuel bills. It was suggested that only those with high housing costs combined with their fuel costs are likely to pass the income test, potentially excluding groups of people on low incomes, and that this could include households with low rents, and pensioners who have paid off their mortgage.
• Under the new definition, borderline households may move in and out of fuel poverty as a result of variation in income or fuel prices, and so may not receive the help they need.
• Clarity is needed as to how local fuel prices will be used in the calculation, particularly given their fluctuation and diversity in island settings.
• There could be problems for area-based schemes which have traditionally made use of proxies. It was suggested that households that are not eligible for assistance might decline to participate in energy efficiency improvement schemes and that this could stop common improvements being carried out.
• Use of actual data with respect to the energy performance of a property would be preferable to use of modelled data. Using real data was suggested to be cost-effective as well as more accurate, robust and defensible.
• Disappointment that a more sophisticated hybrid ‘Boardman’ ^[8] / MIS approach’ is not being adopted was also expressed.

Childcare costs

2.14. The relatively small number of respondents who commented specifically, agreed that childcare costs should be subtracted prior to residual income being determined, and it was noted that such costs are substantial for many households. It was also suggested, however, that it can be difficult to establish childcare costs in some circumstances, such as in non-nuclear families or where child maintenance payments are involved.

2.15. A further suggestion was that other care costs represent a significant element of the cost of living for many older and disabled people and that these should also be included.

After Housing Cost

2.16. Around 2 in 5 of those answering the question made a statement of broad support for use of AHC, including as a more accurate measure of the income available to spend on fuel. However, respondents often requested greater clarity on which housing costs are included or excluded. This issue was raised by around 1 in 6 of those answering the question, with further comments including that:

• The change to AHC is only positive if real housing costs are included. Property repair and maintenance costs were highlighted most frequently, and it was also suggested that fewer owners of older homes, which may not be energy efficient, will in future be considered to be in fuel poverty and eligible for assistance.
• All elements to be included or excluded from AHC should be specified and explained.

2.17. It was also suggested that there could be inequity within and between housing tenures, and that research to determine what can reasonably be considered as ‘housing costs’ might be commissioned.

Minimum Income Standard

2.18. Around 3 in 10 of those answering the question made a statement in support of the principle of adopting the MIS, including because it is based on what the public think people need for an acceptable minimum standard of living and so is based on lived experience and actual costs that households face. It was also suggested, however, that some explanatory work may be needed since the concept will be relatively new to many people and could be seen as more subjective than a simple link to income.

2.19. General points on the MIS, each made by only a small number of respondents, included that:

• Clarification is needed as to whether the definition is based on Scottish or UK MIS, as the consultation refers to Scotland’s MIS in the text, but to UK MIS in the footnotes.
• The rationale for using 90% of MIS rather than the full figure should be given. ^[9]
• It was also considered important that the MIS calculation be transparent and consistent in order to gain support and confidence that the outcomes are reasonable. Success was suggested to depend on the accuracy with which the MIS is stated and updated.
• Indication of what constitutes being fuel poor for a family of over 6 people should be provided.

Remote rural or island communities

2.20. Around 1 in 3 respondents of those answering the question expressed concerns that the Scottish Government does not propose to follow the Definition Review Panel’s recommendations to adjust the UK MIS threshold upward for households living in remote rural areas. It was suggested that the Scottish Government is seeking to adopt a ‘one-size-fits-all’ solution, and that the proposed approach will obscure or confuse the extent of fuel poverty in rural areas.

2.21. Respondents quoted the Scottish Rural Fuel Poverty Taskforce, the Scottish Fuel Poverty Strategic Working Group, the Joseph Rowntree Foundation, and the findings of the 2016 report on ‘A Minimum Income Standard for Remote Rural Scotland’ ^[10] as illustrating the higher living costs in rural areas. Points made included that:

• Living costs in rural areas are such that 10-40% higher incomes are required to achieve the UK average MIS level.
• The new definition would see fuel poverty rates in rural areas fall from 34.9% to 20.3% - below the urban rural poverty rate and below the national average.

2.22. Around 1 in 10 of those answering the question provided examples to illustrate a concern that the proposed definition will seriously under-represent the extent of fuel poverty in remote rural or island areas and lead to resources or investment being diverted away from the areas where fuel poverty is highest.

2.23. The explanation given in the consultation paper that a rural adjustment would be ‘inconsistent with the broader approach taken by Scottish Government in measuring income poverty’ was questioned, and suggested to be failing to:

• Reflect the Government’s agreement with the Definition Review Panel ‘that fuel poverty is distinctly different from other forms of poverty’.
• Meet the Government’s commitment that ‘the Fuel Poverty Strategy will be firmly based on the principle of social justice and creating a fairer and more equal society, irrespective of whether individuals live in urban or rural Scotland.’

2.24. It was also noted that, while adjustments for those living in remote, rural or island communities are not normally made when measuring income poverty, such adjustments are not unheard of across the public-sector landscape in Scotland.

2.25. Other points related to fuel poverty in rural areas included reference to the absence of mains gas. It was suggested that off-gas areas can be used as a proxy for higher fuel bills and hence for fuel poverty and that a weighting should be applied to reflect being off-gas grid.

2.26. A further suggestion was that, if the new definition is used, one possible approach to tackling rural fuel poverty would be for Government to fund advice and advocacy agencies to measure actual energy use rather than proxies for fuel poverty, and then to provide funding to address fuel poverty on the basis of these measured costs.

2.27. Finally, with specific reference to fuel poverty in the islands, it was argued that the proposed definition must be ‘island-proofed’ as per the commitment in the draft Islands (Scotland) Bill, and that a full impact assessment should be carried out, before implementation.

Households where at least one member of the household is long-term sick or disabled

2.28. Respondents who commented on this issue all suggested that MIS thresholds should be adjusted where at least one member of the household is long-term sick or disabled. This issue was raised by around 1 in 10 of those answering the question. Further arguments included that:

• The proposal could have adverse effects on vulnerable people and may be discriminatory.
• These households may have lower income generating potential, higher additional costs, and spend more time at home. ^[11]
• The reason given in the consultation paper is not adequate unless negative consequences from the policy inconsistencies mentioned can be demonstrated, or that the consultation paper is itself inconsistent in the arguments made.

Heating regime for vulnerable households

2.29. Several respondents welcomed the Scottish Government’s intention to accept the Definition Review Panel’s recommendation on heating regimes for vulnerable households by increasing the bedroom temperature from 18°C to 20°C and maintaining the living room temperature of 23°C. It was noted that this is more generous than the previous definition and means more people may be defined as fuel poor. It was also suggested, however, that 23° is very warm and that 21°C would both be comfortable for most people and in line with efforts to reduce fuel consumption.

Households with children under 5

2.30. Respondents who commented specifically on the decision not to apply the enhanced heating regime for vulnerable households to households with children under 5:

• Argued that enhanced heating regime should be applied to such households including because they may spend more time at home.
• Supported the Scottish Government’s proposal for a further review of evidence or suggested that the definition can only be finalised when the review is complete.

Challenges in enabling targeting of resources

2.31. Respondents who commented specifically on challenges in enabling targeting of resources most frequently identified gathering the necessary data as a significant issue. This issue was raised by around 1 in 10 of those answering the question with further points including:

• Detail is required to clarify how sufficient and reliable data could be gathered on individual households to determine whether they are in fuel poverty, to an extent that would allow effective targeting of resources.
• Those involved in the Scottish House Condition Survey ( SHCS) will need to produce robust and consistent data that can be used on the doorstep by others who are not connected with the survey, for example contractors checking eligibility for schemes such as Home Energy Efficiency Programmes ( HEEPS).
• Obtaining information from households that have not sought assistance may be difficult and resource intensive.
• Identifying lower income households with high housing costs, but who may not be in receipt of benefits will be a challenge, and that housing benefit or universal credit data will be useful in this respect. Proxies such as benefit levels and Energy Performance Certificate ( EPC) rating were suggested in the absence of detailed data.
• More thought and analysis may be needed on the benefits of a more accurate definition versus the complexity of measurement using it.

Proposals for overcoming challenges in targeting resources

2.32. Answers to the second part of Question 1 tended to reflect the emphasis of the respondent’s earlier comments and the most frequently made points at Question 1b were that the Scottish Government should accept the advice of the Definition Review Panel and adjust the MIS upward for remote rural areas and/or for disabled people. These issues were raised by around 1 in 6 of those answering the question. Other comments on the definition per se, where already covered above, are not duplicated here.

2.33. General suggestions on overcoming challenges included:

• There may be value in targeting different types of support in different ways – for example, by providing immediate financial support to those on the lowest incomes.
• The Scottish Government should work with industry to consider how the new definition will affect the supply chain.
• There could be a small-scale pilot for any new data set.

Data quality

2.34. Suggestions included that fuel poverty data should be produced by the Scottish Government and disseminated to local authorities or that work between Government and local authorities will be central to ensuring that data collection is fit for purpose. Other respondents highlighted the importance of impartiality, suggesting that there needs to be an appropriate audit process, independent of reporting organisations, or that data collection should be separate from the Energy Saving Trust ( EST) and Home Energy Scotland ( HES).

2.35. The SHCS team collecting data from households was suggested to have a vital role in making data management robust, and that the new requirements will add extra complexity. It was also suggested that both quantitative and qualitative data relating to people with protected characteristics identified under the Equality Act 2010 should be collected.

Collecting data

Clear process

2.36. The need for clear assessment guidelines and straightforward parameters that are easy to interpret for/with customers was highlighted. Ensuring transparency in the decision-making process was also suggested to be important to minimise disputes, both between partners on eligibility questions, and with households who believe they should qualify for assistance.

Staff training and resources

2.37. Several respondents highlighted the importance of staff being properly trained and resourced and that this should include staff responsible for providing advice or information to those affected by fuel poverty. Development of a ‘doorstep tool’ or eligibility calculator was suggested to be a priority. An Excel-based poverty calculator used by the Centre for Sustainable Energy was suggested as a possible model.

2.38. While most respondents suggested technological solutions to be important, an element of caution was also expressed concerning reliance on unproven technology.

Raising awareness and referral routes

2.39. The need to raise awareness among the general public was highlighted and it was suggested that very clear reasons for the changes implemented will need to be given. A small number of respondents also pointed to the importance of involving communities and people with lived experience of fuel poverty in the decision-making process.

2.40. Sign posting by healthcare or social care routes, energy advisers, groups mailings, advertisements in appropriate publications, and television campaigns were all suggested as means of targeting those who may be experiencing fuel poverty. For the working population it was suggested targeting should be through the workplace. In general, communication on a face-to-face basis rather than by telephone was suggested to be preferable.

Relationship with individual households

2.41. Since detailed personal information will be required from individual households, a good relationship between household and surveyor was suggested to be important. Other advice included avoiding asking households to fill in forms.

Other sources of information

2.42. The importance of sharing more detailed data on householders was highlighted and development of data linkage to support targeting was suggested as an area with potential. A number of respondents pointed to the value of information sharing and collaborative approaches between organisations and across Government.

2.43. It was also argued that a range of indicators/proxies may still be needed to ensure easy access to support rather than the need to have a full survey undertaken before help can be provided. Suggestions included:

• Being in receipt of certain benefits.
• Living in a property with a poor EPC rating.
• Eligibility for Cold Weather Payments.

2.44. It was also suggested, however, that someone with low household income but not claiming benefits, not in social housing and not accessing services will be very difficult to identify.

2.45. A small number of respondents made points specifically relating to operation of area-based schemes including that indicators could continue to be used for area-based projects, particularly for energy efficiency schemes where the focus is on features of the property rather that the current occupants. It was also suggested that it may be helpful to learn from those places where area-based delivery has been most effective, and target support to help underperforming local authorities.

Further research

2.46. A small number of respondents suggested the need for further academic work, including updating the MIS on a regular basis, and measuring and monitoring the outcomes of the new fuel poverty definition and its impact on the effective delivery of the new Strategy. It was also suggested that there should be research relating to people in the private rented sector who are living in fuel poverty.

2.47. Question 2 sought respondent’s views on the proposal to use 75 years of age as a threshold. The consultation paper explains that the Scottish Government proposes that, for older households, where a person does not suffer from any long-term ill health or disability, they will not be considered vulnerable until they reach 75 years of age.

Question 2 - Do you have any views on the proposal of using 75 years of age as a threshold for identifying those who are likely to be vulnerable to the adverse health outcomes of fuel poverty?

2.48. A total of 87 respondents commented at Question 2. A breakdown of the number of comments received by respondent type is set out in Table 3 below.

Table 3: Number of comments by respondent type

Type of respondent	Number
Organisations:
Community or Tenant Group or Federation	4
Energy Company	5
Health and Social Care	5
Housing Association	8
Housing Body or Group	3
Inter-agency Group or Partnership	5
Local Authority	21
Other	6
Research Group	2
Third Sector	18
Organisations	77
Individuals	10
All respondents	87

2.49. Opinions at Question 2 were often nuanced, with some respondents both seeing merit in the proposals and expressing reservations. Overall, the majority of respondents tended to express concerns. Respondents sometimes also observed that age, or age alone, is not a good indicator of vulnerability.

2.50. The most frequently raised issues were:

• Support for the Definition Review Panel’s recommendation for further work to develop a specific list of health and disability categories, as well as age bands, to satisfactorily encompass the term “vulnerable to the adverse health and wellbeing impacts of living in fuel poverty”. This issue was raised by around 1 in 5 respondents who answered the question.
• Observation that life expectancy is below 75 in many of Scotland’s most disadvantaged communities. This issue was raised by around 1 in 5 respondents who answered the question.
• Suggestion that 75 is an arbitrary choice or that it is not clear why 75 has been selected. These issues were raised by around 1 in 6 respondents who answered the question.
• Suggestion that State Pension Age might be a more appropriate threshold. This issue was raised by around 1 in 8 respondents who answered the question.

2.51. Points made in support of a change to the current threshold included that taking the age as 60 does not reflect improved life expectancy and that people should not automatically be considered vulnerable at 60. Respondents also suggested the proposal to be:

• Justified, reasonable, pragmatic or to have merit.
• Evidence-based.
• In line with NHS guidance or the views of many health professionals.
• In line with Warmer Homes Scotland qualifying criteria.

2.52. It was also noted that those between 60 - 75 will continue to be included in the definition of vulnerability where they also have a long-term sickness or disability, and that the change will release funding for other fuel-poor households but also that the policy should be reviewed on a regular basis to ensure the age threshold remains appropriate.

2.53. Points made against a change to 75 included, as noted above, that this figure seems to be arbitrary, or that it represents a very crude way of defining vulnerability. A small number of respondents argued that vulnerability to fuel poverty would be better framed in terms of a household’s ability to deal with and resolve challenges in respect of their energy use, and that this would encourage support for understanding energy bills and making behavioural changes, rather than focusing primarily on improving the fabric of the building. The need to develop support programmes such as ‘Energycarer’ was also suggested.

2.54. Respondents also argued that the choice of 75 is not evidence-based, queried the robustness of the evidence used, or expressed a view that moving to 75 is too big a jump from 60 and may cause some cases of vulnerability to be overlooked. Alternative suggestions included that the threshold should be 65, 67, 70, lower than 75, or that there could be staged approach. It was also argued that the age profile of illnesses exacerbated by fuel poverty should be considered and used to determine the correct age threshold, if this has not already been done.

2.55. Most frequently, however, respondents argued that the threshold should be in line with State Pension Age. Arguments in favour of the latter approach included that, irrespective of activity levels, this is likely to the point at which income is reduced and when people spend more time at home and so need to heat their homes for longer.

2.56. References to poorer life expectancy in disadvantaged communities were frequent, with respondents sometimes arguing that the proposed change would discriminate against those most likely to be vulnerable or would stop many being eligible for support. It was argued that ways of taking the poorer health outcomes of such households into account must found, with one specific suggestion being a weighted approach, reflecting reduced life expectancy in socially deprived areas.

2.57. It was also suggested that the proposed change could have a disproportionate effect in rural and island areas where a higher proportion of the population is elderly. Respondents expressing this view sometimes also referenced other issues relating to rural and island communities addressed at Question 1.

2.58. The importance of any proposed change in age being accompanied by increased efforts to identify those under 75 who need assistance under other criteria was highlighted. Many respondents called on the Scottish Government to implement the Definition Review Panel’s recommendation for further work to develop a specific list of health and disability categories, as well as age bands, to satisfactorily encompass the term “vulnerable to the adverse health and wellbeing impacts of living in fuel poverty.

2.59. Work by the Consumer Futures Unit and by the energy sector under Ofgem’s Significant Code Review were suggested to be of value in helping to identify and support vulnerable people. Preventative work was also suggested, including supporting people below 75 to take action to improve their homes at an age when they may be more likely to accept help or to be able to invest in improvements. Also highlighted was existing work with GP practices, identifying households where the early onset of long term conditions resulting from cold damp homes are indicated.

2.60. Among other health related issues suggested for consideration were that:

• Mental as well as physical health issues should be included.
• Vulnerability could be difficult to validate for someone awaiting diagnosis – a process that can take long periods.

2.61. A small number of respondents highlighted other policy areas or assistance schemes that might be affected by the proposed change including:

• How increasing the age at which people are considered vulnerable may relate to policy looking to support older people to remain in their own homes for longer.
• How assessments for other assistance such as Cold Weather Payments and Winter Fuel Payments might be affected.

2.62. It was also noted that with respect to Personal Independence Payments, those under 60 have a disability definition which includes mobility needs, but mobility disability is not recognised over the age of 60. This means anyone between 60 and 75 would have to have disability care needs to be viewed as vulnerable.

2.63. Finally, it was argued that there may be a risk of discrimination if a generic age threshold is used without providing justification. In particular it was suggested that a high proportion of the older BME population will be affected by the change in age, and that this was not addressed in the equality impact assessment.