Fuel Poverty: Scottish Government response to working group reports

Executive Summary

The Scottish Government welcomes the work of the Fuel Poverty Strategic Working Group ( SWG) and the Rural Fuel Poverty Task Force ( TF). With over 100 recommendations between them we have grouped the recommendations and our responses into 6 themes covering a new fuel poverty strategy, the four key drivers of fuel poverty (income, energy costs, energy performance and energy use) and accountability and scrutiny. The response sets out for each a summary of the recommendations, current activity and future actions.

Both Groups highlighted that there has been a lot of work already done to eradicate fuel poverty, but that, despite these efforts, fuel poverty still exists. The reports highlight where improvements can be made and will inform the development of a new, long-term fuel poverty strategy.

Fuel Poverty Strategy

We agree with both groups that simply doing 'more of the same' won't eradicate fuel poverty. Both groups set out a number of recommendations about a new approach to tackling fuel poverty, including: undertaking a review of the definition to ensure a focus on those most in need no matter where they live in Scotland; setting a new target; and a collaborative approach which will enable local partnerships to take a lead responsibility for ensuring the eradication of fuel poverty in their areas.

Following the recommended review of the fuel poverty definition, we will publish a consultation paper in autumn this year on a new, long-term fuel poverty strategy, including proposals for a new overarching target. This strategy will feed into the development of a new Warm Homes Bill, which we plan to introduce in 2018 - Year Two of this Parliament.

Whilst this work is being taken forward we will continue to deliver our existing fuel poverty and energy efficiency programmes.

Incomes

Low incomes are a key driver of fuel poverty, and both groups made the case for actions to increase income levels, including exploring the potential for new solutions to support people on low incomes to afford the energy they need through the social security system. This was in addition to recommendations to continue to support local community energy projects and to ensure the design and delivery of energy efficiency programmes maximises economic and social benefits for local communities, including by encouraging and enabling smaller local contractors to be well placed to access opportunities to win contracts for work. Both groups were keen to highlight that these actions will provide jobs and boost both the local and national economy.

Tackling poverty is a top priority for this Government and we are determined to do all we can, wherever we can, to reduce the harm it causes.

We are 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 most.

Longer-term, through the development of Scotland's Energy Efficiency Programme ( SEEP), we will provide the opportunities to develop the supply chain for energy efficiency services and technologies. It is critical that the supply chain keeps up with demand, and our commitment to building capacity in this sector will help to create more highly-skilled and better paid jobs in our local communities, as well as help to provide better quality goods and services.

Making Energy Costs Affordable

Whilst recognising that much of the necessary action to be taken on fuel prices is outwith the Scottish Government's control, the groups made a number of recommendations on cost. Strategic actions included setting fuel poverty alleviation as a central objective in the new Energy Strategy; ensuring implementation of the Competition and Markets Authority ( CMA) remedies on metering; work with others to ensure regulation of the GB energy market addresses fuel poverty; work with Ofgem to ensure that all Pre-Payment customers have access to tariffs and support; and work with UK Government to deliver a supportive and stable policy framework that enables the development of local energy projects that tackle fuel poverty. These are set alongside some more practical actions that Scottish Government can directly manage such as using newly devolved powers to better target Warm Home Discount; investigating whether there is market supply failure in non-regulated fuels; exploring best use of smart meter data to reduce fuel poverty; and funding Home Energy Scotland ( HES) to extend the switching service they are currently providing.

Some recommendations are directed at other bodies, such as Ofgem, UK Government, energy suppliers and advice providing organisations. We will work with all relevant parties in implementing these recommendations.

As set out in the Energy Strategy, we want to achieve a fair deal for Scottish consumers and are working to empower people to make an active choice on their energy supply, including providing an impartial switching service and tailored advice and support on smart meters. We will also examine the merits of collective switching and group buying models as a way to increase engagement, with a particular focus on disengaged and offline consumers. And we will continue to support the development of robust new business models that offer the opportunity for reduced costs to consumers.

Energy Performance

The two groups highlighted that improving the energy performance of homes can have a significant impact on fuel poverty. They made a series of recommendations covering actions they believe should be taken to eliminate poor energy efficiency as a factor in fuel poverty in Scotland. Many of these recommendations were set out as criteria for the design of the new SEEP programme. This includes the milestone target that all properties of fuel poor households should be upgraded to at least an EPC band C by 2025 and that regulations for a minimum standard of energy performance for the private housing sector should be introduced. It was recognised that these requirements for enhanced energy efficiency would need to be incentivised within delivery programmes. The groups also recommended that Scottish Government schemes should support the costs of essential building repair and improvement works, as well as some enabling measures which were ineligible as part of the Warmer Homes Scotland scheme. It was felt that additional funding to fulfil these recommendations could be levered in by using new powers to ensure that the Energy Company Obligation ( ECO) supports the objectives of SEEP.

More specifically, there were recommendations in relation to the energy performance tools used to assess building performance and it was recommended that Government influences the next iteration of the RdSAP tool ^[1] and Energy Performance Certificate ( EPC) so that they properly reflect the range of climate conditions and other characteristics in rural and urban parts of Scotland.

Through our existing Home Energy Efficiency Programmes for Scotland ( HEEPS) we offer a package of support to help those who are struggling to pay their energy bills. Our area-based schemes are designed and delivered by all 32 councils, with local delivery partners, to provide energy efficiency measures. Our national scheme, Warmer Homes Scotland, offers insulation and heating measures to vulnerable private sector households to improve the energy efficiency of homes across Scotland.

We will consult in 2017 on different elements of SEEP, including minimum energy efficiency standards for homes in the private rented sector, phased regulation of other existing buildings to bring them up to higher energy efficiency standards and new heat regulations to support the development of heat networks.

Concerns were raised by both groups on the mechanisms currently used to identify the fuel poor and to determine measures for properties. We will continue to explore what the most appropriate assessment mechanisms might be and consider how we want to take these forward in SEEP.

Energy Use: Using heating and energy saving technology

Alongside costs, income and energy performance, both groups highlighted that how people use the energy in their homes has a significant impact on fuel poverty. They set out a number of recommendations on this theme, including that energy use is acknowledged and addressed in the new fuel poverty strategy as the fourth driver of fuel poverty and that Government undertakes further research to understand the best approaches for support and engagement on the use of heating and energy saving technologies. The groups were supportive of a single contact telephone number for consumers and suggested that the support already provided by Home Energy Scotland ( HES, the Scottish Government-funded one stop shop for advice and information on energy savings), could be further developed to also support consumers who have concerns about any aspect of delivery of energy efficiency measures provided by the public sector. Access to the support on offer was explored and the Task Force recommended that Home Energy Scotland further develops its existing referral mechanisms to ensure the service is delivered in all rural and remote areas. In recognition that some of our more vulnerable householders will need additional support, the Task Force also made a key recommendation that the Government puts in place a comprehensive 'Energycarer' pilot to assess the effectiveness of high quality, in-home locally delivered, holistic support.

As part of the design of SEEP we will include provision of advice to users on best use of measures installed - keeping people and their needs at the centre of our approach to tackling fuel poverty. We will continue to fund Home Energy Scotland to provide energy efficiency advice.

We will launch a ' HES Homecare' pilot, based on the Task Force's 'Energycarer' recommendation, to provide face-to-face advice and support within the home.

Accountability & Scrutiny

Both working groups stressed the importance of robust monitoring and evaluation of the development and delivery of the forthcoming fuel poverty strategy. They recommended that a cross-ministerial group should lead the new fuel poverty strategy with robust and transparent scrutiny arrangements which should be developed with the Fuel Poverty Forum. They said that a monitoring and evaluation framework for the new fuel poverty strategy and for SEEP should be established and results reported on regularly. The groups recommended that monitoring of programmes includes an assessment of their practical effectiveness, including addressing issues around consumer experiences. Both groups highlighted that the fuel poverty strategy and the programmes that are used to deliver it must be fully costed to meet the outcomes desired and that they take account of potentially higher costs of delivery in rural and remote areas of Scotland.

We will work with the Fuel Poverty Forum on its role and remit to ensure it is robustly monitoring progress on tackling fuel poverty including the actions set out in this report.

We recognise that fuel poverty is a cross-cutting issue with interests across a range of portfolios including housing, health and energy. To further enhance joint working, we will convene a summit of Ministers in the autumn to review the draft fuel poverty strategy and intended actions to tackle fuel poverty.