Fuel Poverty: Scottish Government response to working group reports

Chapter 2 - Incomes

Both working groups highlighted that low incomes are a key driver of fuel poverty, and each made the case for Scottish Government actions to increase income levels, including:

• Exploring potential solutions, through the social security powers to be devolved, to support people on low incomes to afford sufficient energy for healthy living;
• Scotland's Energy Efficiency Programme should be designed to maximise economic and social benefits for local communities; and
• Ensure all affordable warmth/fuel poverty funding programmes for rural areas should have a minimum contracted life cycle of 5 years in order to encourage and enable smaller local contractors to invest in the training and accreditation required to deliver the outcomes.

This chapter addresses the following recommendations:

Strategic Working Group Recommended Actions

Rural Fuel Poverty Task Force Recommended Actions

*please refer to Annex A of this report for full details of each recommended action

What the working groups said

The Strategic Working Group identified low income as a key driver of fuel poverty, highlighting that households in the social rented sector will generally be living in homes with good energy performance, but many are still in fuel poverty due to low income. The Strategic Working Group highlighted two key ways of addressing this, with actions required through the social security system and, longer-term, through economic development creating jobs and businesses. For the former, the Strategic Working Group noted that the devolution of certain social security benefits, in particular Winter Fuel and Cold Weather Payments, offered opportunities to the Scottish Government to address fuel poverty. In addition, the Group advised the Scottish Government to urge the UK Government to review reserved welfare policies "through a fuel poverty lens".

The Strategic Working Group further stressed the important role for local partners who understand the challenges of applying for benefits and can build on existing efforts to identify and assist more people to access the support they are entitled to.

The Task Force also recognised the importance of using new powers over Winter Fuel and Cold Weather Payments more creatively and pressed for these to be aligned with the eradication of fuel poverty and take full account of the locality effects of cold, wind and driving rain (especially prevalent in rural areas).

Longer term, both groups highlighted the opportunity that energy efficiency programmes can present in terms of economic development for local communities, particularly where this is supported by appropriate training to up-skill local workforces, and, where flexibility for rural businesses is introduced, to overcome barriers previously experienced. This in turn helps provides jobs and increased income for local households.

The Task Force also highlighted the economic benefits to communities of local energy projects, such as the ACCESS project in Mull and the NINES project in Shetland. These projects can circumvent network constraints, increase local job opportunities and provide cheap, locally-generated electricity. The Task Force called on the Scottish and UK Governments to collaborate on delivering a supportive and stable policy framework in this area.

What the Scottish Government is doing

We know that increasing household incomes can make a difference to fuel poverty levels. The latest Scottish House Condition Survey results indicate that between 2014 and 2015 there was a nominal increase (2%) in the average income of the surveyed households and this modest boost to incomes explained 0.6 percentage points of the 4.2 percentage point reduction in fuel poverty between 2014 and 2015.

Tackling poverty is a top priority for the Scottish Government and we are determined to do all we can, wherever we can, to reduce the harm it causes. The Scottish Government's efforts to alleviate poverty and tackle inequality continue to be subject to independent scrutiny by the reappointed Independent Advisor on Poverty and Inequality, Naomi Eisenstadt. Professor Eisenstadt will provide valuable insight into our proposals to tackle inequality and will continue to give the Scottish Government a clear focus for going forward. Last year we published our Fairer Scotland Action Plan which sets out 50 concrete actions we will take in this parliamentary term to alleviate poverty and tackle inequality. One of the key actions in the Plan is to bring forward a Child Poverty Bill for Scotland, setting out ambitious income-based targets for 2030, and establishing a robust framework for measuring and reporting on child poverty.

At the same time, we are committed to developing a social security system which is grounded in the core principles of dignity and respect. We consulted on social security in Scotland last year, including on winter fuel payments and cold weather payments, and received over 500 responses, both from individuals and organisations. This is a powerful indication of how strongly people in Scotland feel about social security, and we have been considering those views carefully. We have published our response to the consultation, and will use the findings to inform the Social Security Bill which we have committed to introducing to Parliament by summer 2017. As this work progresses we will keep our partners and Parliament informed and work with them to implement a service that best meets the needs of the people of Scotland and delivered through the Scottish Government's new social security agency

The benefits that are being devolved provide us with an opportunity to consider the different ways they can be used to create a fairer Scotland and tackle inequalities. This applies to the approach we will take with new powers over Winter Fuel Payments and Cold Weather Payments, both of which were highlighted by the groups. We will take account of the views of both the Fuel Poverty Strategic Working Group and the Rural Fuel Poverty Task Force as we develop policy on the use of these new powers.

We know that increased employment remains the best route out of poverty, and this applies in both urban and rural areas. Scotland's Energy Efficiency Programme will deliver our commitment to make energy efficiency a national infrastructure priority, boosting energy efficiency investment in Scotland and decarbonising heat provision over the long term. One of the aims of SEEP is to accelerate the pace and scale of delivering energy efficiency measures and will have multiple benefits, including the opportunity to create a substantial Scottish market and 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 recognise, too, that community energy projects are under increasing pressure to deliver their social and economic objectives in the face of rising retail energy costs. As part of the Scottish Government's draft Energy Strategy ^[2] , we will continue to support local community energy projects, currently funded through CARES and the Local Energy Challenge Fund. The additional income from community and local ownership of renewables can help fund measures to alleviate fuel poverty.

More opportunities for Scotland's energy efficiency supply chain, and ensuring there are more frontline workers in communities who can readily identify householders who would benefit from help, will firstly entail mapping of the current supply chain to identify any gaps in the capacity, skills, training, or quality of service required to deliver SEEP and where these gaps exist geographically. This mapping will help to inform an action plan that will set out the steps needed to build a highly skilled, professional supply chain. Alongside this Home Energy Scotland will continue to provide fuel poverty awareness training to front line staff as required.

Actions

The Scottish Government is committed to the following actions:

• We will drive forward the actions in the Fairer Scotland Action Plan and consider the views of the Independent Poverty Advisor in the development of the new fuel poverty strategy consultation which will be published in autumn 2017;
• We will consider options for future delivery of Winter Fuel and Cold Weather Payments which will be implemented as part of the new Social Security powers, in a way that supports our most vulnerable citizens;
• Through SEEP, we will look to create a substantial Scottish market and supply chain for energy efficiency services and technologies that will, once fully operational, support 4,000 jobs per annum across Scotland, including in remote areas; and
• As outlined in the draft Energy Strategy, we will work with communities and industry to develop innovative local energy systems proportionate to local needs.