Fuel poverty strategy for Scotland: consultation

Section 5: Targets and indicators

We recognise that the fuel poverty landscape now is very different to that of 2002, in particular in relation to fuel prices, and that eradicating fuel poverty is a massive challenge. The gains we have made in the last 10 years to address some aspects of fuel poverty, such as improving the energy efficiency of homes, have been outstripped by other factors which are beyond our control, primarily rising fuel prices, and this will continue to be a challenge in the years to come. Since 2003, the proportion of dwellings rated A to D has increased by 37% and median household income has grown by 36%. However, fuel prices have risen much faster, so that by 2015 they were more than two and a half times their level in 2003, an increase of 170%.

Trends in Fuel Poverty, Fuel Price, Energy Efficiency and Median Income, 2003/04 to 2015

Source: Scottish House Condition Survey: 2015 Key Findings report at http://www.gov.scot/Resource/0051/00511081.pdf.

We also recognise that the revised definition will require changes to how we measure fuel poverty and how we tackle it, influencing our delivery programmes and meaning it will be 2019 before we can report against progress using data from the SHCS.

However, eradicating fuel poverty is crucial to making Scotland fairer and that is why we are introducing the Warm Homes Bill to enshrine our ambition to do so in legislation.

We therefore propose to include in the Bill a new statutory target to eradicate fuel poverty.

Questions

10) What are your views on our proposal to set a new statutory target to eradicate fuel poverty in the Warm Homes Bill?

Measurement of indicators

Our long term ambition of eradicating fuel poverty will only be achieved by significant effort to tackle all of its drivers but we recognise that a number of factors which contribute to fuel poverty levels, in particular fuel prices, remain beyond our control. Our proposed approach will underpin our overarching ambition with a framework that takes that into account. By 2015, fuel prices were more than two and a half times their level in 2003, an increase of 170%, a much faster growth than general inflation over that time. The chart below demonstrates how that compares to fuel poverty levels, based on the definition of fuel poverty used at the time (the '10% definition'), over those years.

Fuel Poverty Rates & Fuel Price Trends since 2003/04

Source: Scottish House Condition Survey: 2015 Key Findings report at http://www.gov.scot/Resource/0051/00511081.pdf.

Whilst the Scottish Government will do all it can to encourage and promote greater engagement with the energy market - including switching suppliers, and a greater uptake of low carbon, affordable energy solutions - powers to put an end to excessive fuel price increases remain reserved to the UK Government. But we must be ambitious, which is why we are looking to develop a publicly-owned energy company to do as much as we can to minimise energy costs. We will also continue to drive forward our aspiration to eradicate poor energy performance as a cause of fuel poverty. We must continue to grow a sustainable economy, creating more jobs and raising incomes.

Our proposed framework will underpin our overarching ambition. We propose to have three indicators with sub-targets within this framework which would be monitored on a non-statutory basis:

Sub-Targets

• The overall fuel poverty rate will be less than 10% by 2040 ;
• Ensure the median household fuel poverty gap is no more than £250 (in 2015 prices before adding inflation) by 2040 ; and
• Remove energy efficiency as a driver for fuel poverty by ensuring all homes reach a minimum energy performance rating by 2040.

With Interim Milestones To 2030

• The overall fuel poverty rate will be less than 20% by 2030;
• Ensure the median household fuel poverty gap is no more than £450 (in 2015 prices before adding inflation) by 2030; and
• Progress towards removing energy efficiency as a driver for fuel poverty by ensuring all homes reach a minimum energy performance rating

Further measurements - Fuel Poverty Gap

The Warm Homes Bill will set targets relating to the eradication of fuel poverty, and whilst our focus will always be on reducing overall numbers of people in fuel poverty, we must do all we can to alleviate the adverse effects of those who remain unable to afford their energy costs. With this in mind, and in addition to monitoring these key trends and the impact on the overall levels of fuel poverty, we propose that it would be helpful to monitor the depth of fuel poverty households are experiencing. By doing so, we aim to demonstrate a more rounded picture of the effectiveness of our interventions and the progress in reducing that gap.

The fuel poverty gap is not a measure which we currently track or target on. However, based on the revised definition of fuel poverty, initial analysis indicates that the median fuel poverty gap was £654 in 2015. Whilst our ambition is to reduce the median fuel poverty gap to less than £250 (in 2015 prices before adding inflation)by 2040, we plan to set an interim milestone to reduce the fuel poverty rate to 20% by 2030 and reduce the fuel poverty median gap to less than £450 (in 2015 prices before adding inflation) by 2030, which will be a significant improvement for those who are struggling with their energy costs. We will start publishing information on the fuel poverty gap in the annual SHCS Report. We will commission an independent review of delivery to 2030 and recommend further necessary action to take to meet the 2040 eradication target and associated sub-targets. This would be undertaken by 2031.

The lowest rates of fuel poverty are associated with higher energy efficiency standards. We will aim to eradicate energy efficiency as a driver of fuel poverty by setting an ambitious target to ensure all homes reach a minimum energy efficiency rating. Further work is being done to set a long term direction for SEEP, including setting out minimum standards of energy efficiency across different tenures. We will be consulting on these issues in the coming months and the outcome of those will inform how this target is set.

The sub-targets we have set out will involve a significant effort across all drivers of fuel poverty. The SWG and RFPTF were clear in their respective recommendations that we need to look beyond the three traditionally recognised drivers of fuel poverty (income, fuel prices and energy performance) and consider new ways to influence action across wider factors, including how individuals use energy in their homes. These recommendations were strongly supported by stakeholders across the sector and as we develop SEEP we will continue to refine our approach to ensuring householders receive the appropriate support to enable them to make informed choices about their energy use.

Questions

11) What are your views on the proposed sub-targets?

a) What are your views on the proposed levels?

b) What are your views on the proposed timeframe?

12) What are your views on the proposed interim milestones?

a) What are your views on the proposed levels?

b) What are your views on the proposed timeframe?