Developing an Energy Efficiency Standard for Social Housing: consultation

3. Background

This chapter looks at:

• A brief summary of changes in social rented housing in the last 20 years
• Progress towards the Scottish Housing Quality Standard
• Other factors affecting the energy efficiency of housing

Scottish social rented housing: changes since 1990

3.1 The term "social rented sector" is used to describe housing provided by local authorities and registered social landlords ( RSLs) that are registered with the Scottish Housing Regulator. In 1991, when the first Scottish House Condition Survey ( SHCS) took place, there were 854,000 social rented homes in Scotland, which accounted for 42% of the whole housing stock. Currently there are 596,000 homes in the social rented sector, just under a quarter of Scotland's housing stock ⁴ .

3.2 In 1991, 86% of the social housing stock was owned by local authorities and only 14% by RSLs. In 2011, local authority stock accounted for 54% of the total and 46% was owned by RSLs. Stock transfer (such as the Community Ownership Programme) where a local authority transfers either all or part of its housing stock to a RSL and the housing association new build programme are the main reasons for this shift. Six local authorities (Argyll & Bute, Scottish Borders, Glasgow, Dumfries & Galloway, Inverclyde and Comhairle nan Eilean Siar) have transferred their housing stock to RSLs via Large Scale Voluntary Transfers ( LSVTs) and therefore do not own any homes themselves. The remaining 26 local authorities own nearly 320,000 homes and around 170 Registered Social Landlords own nearly 275,000 homes (as at 31 March 2011). ⁵

Social rented stock profile - 1991 to 2010

	1991	2010
Type of dwelling	Proportion of stock		Change
detached	0.7	0.5	0
other houses	45	42	-3
tenement	33	35	2
4-in-a-block	14	15	1
tower/slab	7	7	0
flat from converted house	0.3	0.7	0
Total	100	100	0

Source: Scottish House Condition Survey ⁶

3.3 As the table above shows, the different types of dwelling within the social rented housing sector has not changed very much over this period. In both 1991 and 2010, semi-detached and terraced housing account for the largest proportion of the stock, followed by tenements, then '4-in-a blocks'. The number of dwellings in tower/slab blocks has remained constant at less than 10% of the stock.

3.4 One key change has been the increase in the number of timber-framed dwellings. In 1991 cavity wall construction (excluding timber frame) accounted for 83% of the social housing stock, but this had fallen to 75% by 2009. In contrast, timber frame construction accounted for 9% in 2009, compared to just 1% in 1991.

Progress towards the Scottish Housing Quality Standard

3.5 Social landlords are working towards meeting the Scottish Housing Quality Standard ( SHQS) by the end of March 2015. The SHQS has 5 elements that social rented landlords need to meet, one of which is being energy efficient, which means that properties should have:

• 100mm of roof insulation (minimum);
• Cavity wall or equivalent insulation (where technically feasible and appropriate);
• Hot water tank and pipe and cold water tank insulation;
• Full and efficient central heating ⁷ ; and
• Any other energy efficiency measures that will bring the property up to a minimum energy efficiency rating ⁸ subject to technical feasibility and proportionate cost.

3.6 Landlords should have plans in place to achieve all of this where practicably possible. The most recent (2010) Scottish House Condition Survey ( SHCS) ⁹ shows that 53% of RSL properties are failing to meet the SHQS and 69% of local authority properties are failing to meet the SHQS. Across the social sector, most failures (44% of dwellings) are on the energy efficiency element. Nonetheless, according to the 2010 SHCS, social rented housing is more energy efficient than the housing stock as a whole and 73% of social rented housing had a 'good' National Home Energy Rating ( NHER) rating of at least 7 ¹⁰ . We are seeking further information on why the failure rate for this criterion is relatively high, given the energy efficiency of the sector appears to be improving.

3.7 Some landlords have been making significant progress towards meeting the SHQS and improving the energy efficiency of their homes and we have taken this into account in developing the standard. Whilst social landlords are implementing the delivery of SHQS, they should not see the delivery of SHQS and the new proposed standard as separate entities. Instead it will be more practical if implementation of both is integrated, and we will review any reporting practicalities. The proposed energy efficiency standard builds on the SHQS and the suggested ratings (see the tables on page 28) for many homes do not go much beyond what would be expected to meet the SHQS. In fact for certain house types, meeting the SHQS should mean that the 2020 target has also been met.

3.8 In one particular instance (detached houses and bungalows with electrical space heating), the proposed standard is below that expected for the SHQS to reflect the difficulty of reaching the required energy efficiency rating of 60 for such properties. This is dealt with in more detail in Chapter 6.

Climate Change

3.9 The Climate Change (Scotland) Act 2009 requires the Scottish Government to set out how Scotland will meet targets to reduce carbon emissions from 1990 levels across all sectors by 42% by 2020 and 80% by 2050 (with annual targets for each year between 2010 and 2050 set by Ministers at five-yearly intervals). In order to deliver the targets set in the Climate Change (Scotland) Act 2009, there must be a step-change reduction in energy use and a move to non-carbon alternatives. The Energy Efficiency Action Plan ¹¹ reinforces the urgent need for action on energy efficiency. It outlines the challenge, the Scottish Government's vision, and our approach. Section B of the plan introduces a headline target to reduce Scottish final energy consumption by 12% by 2020 from a 2005 baseline, with an indication of how this will be monitored.

3.10 Part 3 of the Climate Change (Scotland) Act requires Scottish Ministers to lay reports in Parliament setting out proposals and policies for meeting the targets, once they have been set. The first of these reports - covering targets, proposals and policies for the current decade - was published in March 2011 ¹² . Proposals and policies for Homes and Communities are set out in chapter 4 of the report. It recognises that meeting the targets is not just a matter for Scottish Government action and funding but depends on funding and action on the part of everyone - national and local government, private and third sector, individual households and communities. A second Report on Proposals and Policies, which will include targets and proposals for the 2020s and an update on progress with our current proposals and policies, will be laid in Parliament later this year.

3.11 While the Report on Proposals and Policies sets the basic framework for the housing contribution to the Climate Change Act targets, the Sustainable Housing Strategy (see paragraphs 1.1-1.2 above) will be a more detailed plan of action for the next two decades. So the two documents will complement each other.

3.12 The Climate Change (Scotland) Act 2009 requires public bodies, such as councils, to ensure that they are acting sustainably through their actions and through the decisions they make. Councils also have statutory duties, through the requirement to have Local Housing Strategies ( LHS) in place, and specific guidance ¹³ has been issued on addressing climate change.

3.13 Climate change will affect almost all aspects of Scottish society and the challenges of adapting to climate change have been mapped in the Climate Change Adaptation Framework, with a specific Action Plan for the Built Environment ¹⁴ . This deals with how we should adapt our buildings to deal with increased winter rainfall and increased summer temperatures due to climate change. For new housing, Planning and Building Standards are reviewing synergies between sustainability and adaptation policies. This underlines our strategic approach to address the effects of climate change, not just for housing, but our whole built environment.

Scottish Government programmes

3.14 A range of Scottish Government programmes aimed at reducing carbon emissions and tackling fuel poverty are currently in operation. In 2011-12, a total budget of £57.5 million was available to support these Home Energy Efficiency programmes, and this will rise to £65 million in 2013-14 and to £66.250m in 2014-15. One major blockage to undertaking work in social rented housing is the inability or unwillingness of owners and private landlords to undertake energy efficiency improvements. This year's programmes, which are restricted to owner-occupiers and tenants in the private rented sector, include:

• £38m for the Energy Assistance Package
• £14m for the Universal Home Insulation Scheme
• £5m for the Boiler Scrappage Scheme

3.15 In 2012-13 we will launch our new Warm Homes Fund, making available £50 million over the next five years, to deliver renewable energy and energy-efficient homes to those communities worst affected by fuel poverty. The aim of this fund will be to support initiatives such as district heating schemes, and community-owned renewable power and it will be open to the social rented sector. A National Retrofit Programme will be launched in 2013 to draw in all relevant forms of support from local, Scottish and UK governments, EU sources, energy companies, revenue from renewable heat and energy and support from the private sector.

3.16 In addition to the above, the Scottish Government has an Energy Efficiency budget of around £18m in 2012-13 for the provision of energy efficiency advice to support landlords, tenants and owner occupiers. Advice is delivered by Energy Savings Scotland Advice Centres managed by the Energy Saving Trust. The funding is also targeted at conducting research, delivering pilot programmes, ensuring robust data is available and delivering the Energy Efficiency Action Plan and Climate Change objectives.

Fuel Poverty

3.17 The above programmes are helping to tackle fuel poverty, for example, between the Energy Assistance Package's launch in 2009 and September 2011, over 210,000 households have taken up offers of help. These range from benefit checks to switching to lower tariffs and to delivering over 21,000 heating measures (complete systems and boilers).

3.18 The Cabinet Secretary for Infrastructure and Capital Investment has tasked the Scottish Fuel Poverty Forum with undertaking a Review of the fuel poverty strategy, the interim report of which was published on 6 June ¹⁵ . The Review looks at the current Scottish definition and the alternative proposed by the Hills Review.

3.19 The Forum has been tasked with bringing forward innovative ideas as part of the review, an early example being the £5m announced to extend the gas grid to off-grid communities within a reasonable distance of the mains. The Forum is also examining options to reduce costs for consumers through the bulk buying of electricity.

UK Government Welfare Reform

3.20 The UK Government is reforming the welfare system, and this will affect the social rented sector. Around two-thirds of tenants in the social rented sector receive housing benefit ¹⁶ . The UK Government intends that the majority of working age claimants receive their housing benefit direct, rather than being paid to the landlord. Social sector tenants who rely on housing benefit and who have one or more spare rooms will have their benefit restricted. The exact impact of these changes is hard to predict, though social landlords who take action to prepare are likely to fare better than those who do not. In this context, investing in more energy efficient measures will generally help tenants reduce their heating costs for the long term, and is all the more crucial.

Low Carbon Economy

3.21 The transition to a low carbon economy in Scotland will mean taking full advantage of business opportunities that enable us to both meet our Climate Change Act targets and boost the Scottish economy. Scotland is uniquely placed to lead global progress in the low carbon arena. As a country we are blessed with the natural resources to generate massive amounts of renewable energy. And our experience, expertise and skills in developing our energy resource are world class. Scotland's competitive advantage can secure tens of thousands of green jobs and billions of pounds in investment ¹⁷ . This approach is fundamental to our drive to deliver economic, social and environmental benefits for everyone in Scotland. .

3.22 The low carbon market is already worth £8.8 billion to Scotland - by 2015 this could rise to over £12 billion, representing over 10% of the Scottish economy. By 2020, there could be 130,000 low carbon jobs in Scotland, around double the current number, representing over 5% of the Scottish workforce ¹⁸ .

Ageing Population

3.23 Scotland's population is ageing, and according to recent statistics ¹⁹ the population aged 75 and over is projected to increase in all Council areas from 2010 to 2035. The largest percentage increases are projected in West Lothian (146 per cent - an increase of 13,700) and Aberdeenshire (131 per cent - an increase of 23,400), with the smallest increase in Glasgow City (36 per cent - an increase of 14,200). Overall, by 2035 the Scottish population aged 75 and over is projected to increase by 82 per cent, an increase of 332,000.

3.24 Older people consistently tell us that they want to live in their own homes for as long as possible, instead of in hospitals and care homes. The Scottish Government is working to enable them to do this and published a national strategy for housing for older people in December 2011 ²⁰ . Having a safe, comfortable and warm home is particularly important to older people, who tend to spend more time at home than the general population. Older people are also more likely to have mobility or other health issues, which make them more susceptible to cold. However, with high fuel prices, keeping the home warm is a major challenge for many older people, particularly those on low incomes. Homes that are well insulated will provide greater comfort and should help to reduce fuel costs, thus helping older people to remain there safely and comfortably.

Conclusion

3.25 Social landlords are working hard to meet the SHQS and improve the quality of housing provided to their tenants, including the energy efficiency of it. However, the SHQS standard was introduced in 2004 since when there has been an increased recognition of everybody's role in meeting climate change responsibilities. And by making a significant contribution to meeting Scotland's Climate Change targets, there is the chance to also improve the thermal fabric of homes, install new renewable technologies and help address Fuel Poverty. These social benefits will also help wider economic benefits to be realised.