National Islands Plan: annual report 2021

Fuel Poverty

Strategic Objective 5 – To reduce levels of fuel poverty

We committed to review how delivery schemes can work better locally and review funding for island communities.

Work is ongoing in relation to this commitment.

We continue to target areas and communities with higher levels of fuel poverty through our Area Based Schemes. Local schemes are designed and delivered by councils, in conjunction with utility companies and local delivery partners, targeting fuel poor areas to provide energy efficiency measures to a large number of Scottish households and help reduce fuel poverty. ABS funding enables local delivery partners to offer energy efficiency measures at no cost or a reduced cost to owner occupiers and private landlords with fewer than four properties.

Scottish Government funding for Area Based Schemes reflects the higher levels of fuel poverty need in some communities. Allocations to councils are based upon a needs-based funding model agreed with COSLA. In 2020 we reviewed and updated the model to reflect the new definition of fuel poverty in Scotland. We also agreed with councils that levels of extreme fuel poverty should be included as a new weighting in determining ABS grant funding.

Regular updates to the ABS funding model has helped to ensure that our funding has continued to be targeted effectively each year since 2013. Every council in Scotland was offered more funding in 2021/22 than in 2020/21 and the average funding per fuel poor household increased across Scotland. For example in 2021/22, the six `island local authorities' were allocated just under £12.2 million in ABS funding. This compares with £11 million in 2020/21; £9.6 million in 2019/20; and £9.5 million in 2018/19.

We continue to recognise that the costs of delivering energy efficiency measures are higher in remote rural and island areas. Councils serving remote rural/island communities can provide grant-in-aid worth up to £14,000 for those in extreme fuel poverty. In 2021/22 we expanded the scope of ABS projects to include funding for zero/low carbon heating measures. This includes a £2,000 uplift to reflect the greater delivery costs in remote rural areas and island communities.

We continue to target households across Scotland most likely to be in fuel poverty through our Warmer Homes Scotland scheme. The scheme is designed to help those living in, or at risk of, fuel poverty through installing insulation and heating measures to individual homes. The scheme recommends low-carbon measures first, alongside a package of fabric measures, to increase the energy efficiency of the property and decrease carbon emissions. These include High Heat Retention Heating Systems, Air Source Heat Pumps, Ground Source Heat Pumps, Micro-hydro and Micro-wind. Some of these measures may be of particular benefit to households living in rural and island areas that are not served by the gas grid.

The scheme is being delivered on a regional basis by Warmworks (including a separate Islands region) to ensure that all households in Scotland receive the same level of service. Grant levels within the scheme have been increased to encourage the installation of air source heat pumps and external wall insulation together to cover the cost of these high cost measures. Warmer Homes Scotland operates a national pricing mechanism, meaning that rural and island homes aren't disproportionately affected.

The successor to Warmer Homes Scotland is currently undergoing procurement, to go live 2023. As part of scheme design, and eligibility working group has been formed which is reviewing ways in which eligibility levels and processes could be changed to better target support at fuel poor households. This will take cognisance of the particular issues affecting households in remote and island communities.

We committed to develop a remote rural, remote small town and island Minimum Income Standard uplift, with the uplift for island areas to be determined separately.

This commitment has been fulfilled.

Scottish Government have published a report from Loughborough University on the cost of remoteness when measuring fuel poverty. The report establishes the uplifts to the UK Minimum Income Standard which will apply to households in remote rural, remote small town and island areas when measuring fuel poverty.

We committed to produce an Island Communities Impact Assessment (ICIA) on the final Fuel Poverty Strategy, ensuring that representatives from island local authorities are fully involved in its development.

Work is ongoing in relation to this commitment.

The proposed Fuel Poverty Strategy was laid in Parliament on 9 November 2021. The Fuel Poverty Strategy was published in December 2021. We have undertaken a further Island Communities Impact Assessment specifically on the Strategy and this will be published in due course.

We committed to carry out research and analysis to meet the requirements of the Fuel Poverty (Targets, Definition and Strategy) (Scotland) Act 2019 that will also enhance our understanding of the costs of living faced by families living in island communities.

This commitment has been fulfilled.

Scottish Government have published a report from Loughborough University on the cost of remoteness when measuring fuel poverty. The report establishes the uplifts to the UK Minimum Income Standard which will apply to households in remote rural, remote small town and island areas when measuring fuel poverty.

The published research excludes housing (rent, council tax and water rates), childcare and fuel costs since these are not required for fuel poverty measurement and so is not a direct comparison to the UK MIS.

The final report concludes that the findings confirm those of the 2013 Minimum Income Standard research for remote rural Scotland (on which current uplifts are based), showing that the extra costs in these areas are of broadly the same magnitude to what the research team originally anticipated although there is some variation by household-type to the uplifts we are currently applying in fuel poverty monitoring.