Consumer Scotland - energy, post and water - draft workplan 2022 to 2023: consultation

4. Consumer issues across sectors

Increasing costs for essential services

What is the issue?

The cost of living has been increasing, and the cost of energy is set to increase substantially in 2022. Essential household bills will rise as businesses and consumers face myriad upward financial pressures. For example, typical household energy bills could rise by around £600 in 2022 as the price cap increases and the costs associated with energy company failures are recouped. Taxes will also rise steeply from April, whilst the 6.6% rise in the National Living Wage should go some way to protect the lowest earners, low income and vulnerable households will inevitably be the hardest hit. Costs will also be driven up by inflation, which is currently 5.4%. This combination of circumstances has the potential to cause significant detriment, negatively impacting people's quality of life and decreasing households' financial resilience.

Why are we looking at it?

The needs of consumers most at risk from increases in the costs of essential services in Scotland must be better understood to target support and mitigate against negative consumer outcomes. We will therefore undertake work to better understand the real impact of price increases on low income and vulnerable households, including those that do not currently qualify for additional financial support. We will also investigate alternative approaches to the targeting of support to ensure that consumers most in need of assistance receive it. We will ensure that specific characteristics of consumers in Scotland, such as increased rurality, are captured in this work.

What is the outcome we're looking for?

An in-depth analysis of the impact of increasing charges on low-income and vulnerable households to inform targeted support interventions across selected utilities and monitoring of the ongoing response by the UK Government to address these issues.

Understanding the needs and aspirations of consumers in vulnerable circumstances

What is the issue?

The ability to access essential services is a basic requirement of every household. In well-functioning markets, consumers in vulnerable circumstances must be able to confidently engage and see their needs and aspirations met. As we decarbonise our homes, transport and other aspects of our lives, there will be a need to redesign the way in which services are delivered. This presents a significant opportunity to place consumers in vulnerable circumstances at the heart of service design.

Why are we looking at it?

The Financial Conduct Authority has estimated that 50% of the UK adult population have characteristics of potential vulnerability. It is likely that new vulnerabilities will emerge as markets evolve and any accompanying support for consumers must reflect current and future needs. As the statutory consumer body in Scotland, we will engage consumers in vulnerable circumstances to ensure that their lived experience informs our work. Consumer Scotland will establish a short-life expert forum to ensure this consumer engagement is effective at identifying and understanding consumer vulnerabilities and uses that insight to drive positive outcomes.

What is the outcome we're looking for?

Comprehensive data on the needs and aspirations of people in vulnerable circumstances that informs essential service design, both now and as we move towards Net Zero. This work looking at energy and water is likely to be part of a similar approach covering other sectors.

Consumer attitudes and experiences of Net Zero

What is the issue?

Scotland's homes, businesses, and neighbourhoods will need to be made more energy and water efficient to make them fit for purpose in a Net Zero Scotland. Consumer will require support and leadership from their energy, water, and post suppliers.

The Energy Consumers Commission undertook research in 2020-2021 and 2021-2022 to establish a baseline understanding of consumer experiences of energy markets in Scotland. The tracker survey provides valuable insight into consumer experiences as they navigate Scotland's transition to Net Zero carbon emissions.

Scottish Water has committed to achieve Net Zero by 2040. This approach will include engaging with customers to improve their understanding of their role in helping to achieve this through the appropriate use of water and wastewater services.

Why are we looking at it?

It is vital that Consumer Scotland understands the issues that matter to consumers during this time of change. The COVID-19 pandemic and cost of living crisis have caused huge changes in how people from Scotland live and work, as well as creating additional pressures on household budgets, underlining the importance of a just transition to Net Zero. We will identify changes in consumer experience and measure how these shift over time, providing evidence of the efficacy of policy and practice.

What is the outcome we're looking for?

To track ongoing consumer engagement with and progress towards decarbonisation. Building an evidence base that provides consumer insight to inform the rapidly developing Net Zero agenda.

Consultation Questions:

1. Are these appropriate cross sector consumer issues to focus on in our work to improve outcomes for consumers in Scotland?

2. Would you recommend the addition or removal of any cross sector issues of focus?