Fuel poverty strategy for Scotland: consultation

Section 2: Scottish Government Policy Context

The complex nature of fuel poverty means there are a range of drivers and there can be a range of causes - from insecure employment to poorly insulated and draughty homes to excessive fuel prices - that affect whether an individual is in, or is vulnerable to, fuel poverty.

Targets and legislation won't deliver our ambition of affordable warmth and energy use on its own. This strategy and the forthcoming Warm Homes Bill are cross-cutting and will be complemented by activity across a range of sectors. By reducing fuel poverty we are forging links to a number of our priorities across government such as: reducing health inequalities; empowering communities; growing a sustainable economy, including in rural areas; and reducing carbon emissions. Our work on fuel poverty may also contribute to the progressive realisation of the right to an adequate standard of living (including the continuous improvement of living conditions), supporting our commitment to take actions that give effect to the vitally important economic, social and cultural rights set out in the International Covenant on Economic, Social and Cultural Rights.

We already have a wide range of policies and approaches in place that contribute to reducing fuel poverty. Some examples of these, and the drivers of fuel poverty they help to tackle, are set out below.

Energy efficiency

Building on the success of the Home Energy Efficiency Programmes for Scotland ( HEEPS), we are working to develop and implement SEEP, which will be a core component of the Scottish Government's new Energy Strategy. We consulted on SEEP and the draft Energy Strategy earlier this year and are currently working to further develop both in response to the feedback received.

SEEP will provide an offer of support to owners and occupants across Scotland - domestic and non-domestic - to improve the energy efficiency rating of their buildings over the longer term, with eradication of fuel poverty at its heart.

It will be an integrated programme of support for domestic and non-domestic buildings with a key role for partners in local government, housing associations, communities and the private sector, building on our existing successful energy efficiency programmes, in particular HEEPS.

In addition to our focus on removing inadequate energy efficiency in properties as a driver of fuel poverty, SEEP will also seek to leverage further private investment into improving energy efficiency to support the development of loan schemes to enable households and businesses who can afford to pay, to spread the upfront costs of investing in energy efficiency.

We have already consulted on the overall design of SEEP in early 2017 - the consultation set out the challenges and opportunities of integrating our policies and programmes to deliver wider benefits and to support energy solutions that provide warmer homes and better outcomes for consumers overall. We are now analysing the responses to this consultation as we develop a Routemap for the programme, which we will publish in 2018. This will set out our long term ambition for the programme, its component parts, and our timeline for delivery. In particular it will set out how we will consider the role of standards and regulatory frameworks that give certainty to consumers and make it as easy as possible and the norm to invest in energy efficiency. It will set out the range of incentives and delivery mechanisms that can support the uptake of energy efficiency measures, and the advice and information services that SEEP will offer to ensure that households and businesses can benefit from improvements to their properties. It will set out our clear and continuing commitment to improving the energy performance of buildings where fuel poor households live, through our area-based and national schemes.

Our commitment to a programme on this scale, across Scotland, provides certainty of work and an economic boost to urban and rural communities. As set out in our Programme for Government we will bring forward legislation, in the third year of this Parliamentary Session, necessary to deliver Scotland's Energy Efficiency Programme

We have also been consulting this year on a number of aspects relating to SEEP, including the regulation of private rented sector housing to increase energy efficiency standards. How we shape policy as a result of these consultations can play a part in alleviating fuel poverty and this will be a key consideration going forward. We will be seeking views on other strategic approaches to improving energy efficiency in the coming months. For example, later this year we will be consulting on our preferred approach to regulation of district heating and on Local Heat and Energy Efficiency Strategies ( LHEES), which will provide important information to help design our future SEEP delivery programmes, and to ensure that district heating is developed in a way which supports our fuel poverty objectives.

Energy prices

Energy prices remain a huge concern for many Scottish households and this Government is acutely aware of the pressures that many face in meeting their energy bills. During its review of the energy markets, the Competition and Markets Authority ( CMA) found that domestic energy consumers face substantial detriment, with customers as a whole paying an average of £1.4 billion per year more than they would have done under a well-functioning market in the years from 2012 to 2015 - a sum reaching £2 billion in 2015.

Although the existing market provides scope for consumers to save money on their energy bills by switching tariff or supplier, a low level of consumer engagement in the market persists, and this is particularly pronounced in Scotland. Moreover, those who do engage are typically higher income earners with the ability to pay by Direct Debit and with access to mains gas and the Internet who can access lower prices by switching to fixed price deals.

We welcome the remedies proposed by the CMA to increase competition and engagement in the market - these reforms are long overdue. We are carefully monitoring the implementation of the remedies to ensure the benefits are felt by all Scottish consumers, particularly for those most in need. However, we do not believe the remedies address the fundamental issues here and it is clear that the UK Government has failed to provide a competitive market that delivers fair energy bills for all.

The power to regulate the energy market rests with the UK Government. But we are determined to use the powers we do have to provide targeted support to those who need it. We believe everyone should be able to access affordable energy and we are currently exploring a range of delivery options to facilitate this, including, as announced by the First Minister on 10 October, a publicly-owned energy company ( POEC). Further details will be available by the end of the year, when the Government's long term Energy Strategy is published. We are also looking further at collective switching models, identifying barriers to switching and developing targeted policy interventions. And we are working to ensure that the benefits of Smart Meters are fully realised for all consumers, but with a particular focus on the benefits that the roll-out can bring for those in fuel poverty.

Energy companies are key partners in delivering a fairer Scotland, and in December 2016 the Cabinet Secretary for Communities, Social Security and Equalities chaired a summit of suppliers to address inequalities in the retail energy market. Ministers will follow-up with energy companies in the coming months as we seek to identify further actions they could take that will make a material and important difference to low income families in Scotland.

As highlighted in the recommendations of the SWG, supporting local energy generation can play an important part in developing affordable energy supplies. Scotland is already a leader in the development of Local Energy Systems, providing local solutions to match local needs with improved consumer and community benefits.

Local energy can help to tackle some of our most pressing issues from security of supply, to demand reduction, making energy supplies more affordable for households and businesses, to stimulating regeneration and local economic benefit. Various funding programmes, including the Local Energy Challenge Fund, have supported projects that seek to demonstrate the use of low carbon technologies to reduce consumer energy bills.

The Scottish Government wishes to see renewable energy projects making an offer of shared ownership to local communities as standard. Increased shared ownership offers a range of benefits, including building capacity and empowering community members through giving them control or input into local energy. The income received from the investment can support a range of local projects, including tackling fuel poverty should the community decide this is a priority.

Energy use

Through Home Energy Scotland ( HES) we already offer advice and support on energy use in the home. We also recognise that some of our more vulnerable householders will need additional support and we currently offer home visits where that is more appropriate. We have been considering how this could be expanded and are supporting pilots to test different approaches.

This includes the HES Homecare pilot programme, which we launched earlier this year and that will see up to 220 rural households offered targeted in-home support to cut their energy bills. Advisers from HES will visit selected homes in rural areas, through referrals from Health partners, to see what more can be done to reduce their fuel bills. The £300,000, 12-month HES Homecare pilot will be evaluated before a decision is taken on whether to roll it out to households nationwide. The HES Homecare pilot complements previous pilots we have run through HES, which have tested new and innovative approaches to helping householders control their heating systems, enabling them to maximise the benefits of the energy efficiency measures that have been installed. We are considering the findings of these pilots, as well as working with our partners, as we design SEEP to ensure that behavioral advice is fully embedded into programme delivery, helping householders feel empowered and in control of their homes.

Income

Inclusive growth remains central to creating a fairer Scotland and tackling poverty in any setting; and through maintaining close links with this government's economic strategy we will continue to build a skilled, healthy, productive workforce that is essential to the sustained, long-term prosperity of the Scottish economy.

Through the development of SEEP we will provide the opportunities to develop the supply chain for energy efficiency services and technologies. Once the programme is fully operational we expect there to be an estimated 4,000 jobs supported each year across Scotland, including in remote areas.

We are also working to develop a social security system that meets the needs of our most vulnerable citizens and we will consider different ways that any devolved benefits can be used to help those that need them.

In addition, as set out in the 2017 Programme for Government, in 2018 we will start the roll-out of a Family Financial Health Check aimed at those on low incomes.

This will offer low-income families with children access to a 'financial MOT', including advice on maximising incomes, ensuring benefit take up, and make the most of their money by accessing the best deals on financial products and services, including energy tariffs. We will ensure that the families in most need know about this service and are encouraged to use it.