National Islands Plan Annual Report 2022

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.

Implementation Route Map action

The successor to the Warmer Homes Scotland scheme is currently undergoing procurement, to go live 2023. As part of scheme design, an 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.

The Scottish Government continues to support those in fuel poverty in our island communities through our Advice and Delivery Schemes. This has included work to ensure that our schemes are fit for purpose and effective at meeting the requirements of our island communities.

In December 2022, the Home Energy Scotland (HES) Grant and Loan Scheme was launched to support the installation of energy efficiency and zero emission heating, replacing the previous HES Loan and Cashback Scheme. The Grant and Loan Scheme offers eligible owner-occupiers across Scotland, including in the islands, a standalone grant that can be taken in tandem with an optional interest free loan. The new scheme offers applicants the opportunity to take a standalone grant without having to undergo credit checks, unlike the previous loan and cashback arrangements.

The new grant provides funding for heat pumps up to £7,500 and for energy efficiency improvements – up to 75% of the combined cost of the improvements and up to the maximum grant amount of £7,500. An additional £7,500 of funding is available as an optional interest free loan for both heat pump and energy efficiency improvements.

The HES Grant and Loan Scheme introduced a rural uplift of £1,500 to both the heat pump and energy efficiency grants. This uplift increases the heat pump grant flat rate and the maximum limit of the energy efficiency grant to £9,000, meaning rural and island households can claim up to £18,000 in grant funding compared to £15,000 in non-rural areas.

The rural uplift is a recognition of the higher costs faced by rural and island households associated with the installation of measures such as increased transportation costs and accommodation costs for installers. The rural uplift aims to support rural and island applicants with these additional costs.

Our Area Based Schemes (ABS) were launched in April 2013 to support local authorities to reduce fuel poverty by delivering energy efficiency programmes in fuel poor areas. Local schemes are designed and delivered by local authorities, in conjunction with utility companies and local delivery partners, to offer measures at no or reduced cost to owner occupiers and private landlords with fewer than four properties. The support is available for households in or at risk of fuel poverty, and funding is also provided for some 'infill properties' to enable works that can be completed.

Scottish Government funding for ABS reflects the higher levels of fuel poverty need in some communities. Allocations to councils are based upon a needs-based funding model agreed with the Convention of Scottish Local Authorities (COSLA). This year ABS funding allocated to the six island local authorities (as per the Islands Act) was just under £11.4 million. This compares with £12.2 million in 21-22; £10.9 million in 2020-21; £9.6 million in 2019/20; and in 2018/19, we awarded £9.5 million in grants to these authorities. Over the last three years we have provided funding to enable over 3,000 fuel poor households in island council areas to benefit from energy efficiency improvements.

Research for the Scottish Government found evidence for additional living costs for households in remote rural Scotland that typically add 15-30% to a household budget, compared to urban areas of the UK. Therefore, this year we have increased the value of our uplift for remote rural and island communities to reflect costs that are 22% greater on average. This is equivalent to an additional £2,000 – £3,000 per property in remote rural and island communities.

Our Warmer Homes Scotland Scheme is the Scottish Government's national fuel poverty scheme, designed to make homes warmer for those living in fuel poverty or at risk of fuel poverty through installing insulation and heating measures into individual properties. The scheme operates throughout Scotland, including the islands, and improvements are recommended as bespoke packages on a house-by-house basis.

Warmer Homes Scotland is targeted at those living in owner occupied properties who are in or at risk of fuel poverty, with a limited offer for those in private rented sector where measures installed are not covered by the landlords' obligations. Eligibility to the scheme is determined using proxies which indicate that a household is in or at risk of being in fuel poverty.

Through Warmer Homes Scotland we have made available renewable heat and new insulation measures, which may be particularly beneficial to rural and island communities not served by the gas grid. Grant levels in the scheme have been increased to accommodate deep energy efficiency retrofit and low-carbon heating systems, which are more likely to be of benefit in rural and island communities.

There are twenty-four contractors now registered with Warmworks, the Warmer Homes Scotland Managing Agent. Six are in island areas, providing a local service as part of a national delivery network.

The Home Energy Scotland (HES) Advice Line is a domestic advice service which acts as a single point of access for free, bespoke and impartial advice on energy efficiency, zero emission heating and fuel poverty support in Scotland, and acts a gateway to Scottish Government Heat and Energy Efficiency Delivery Schemes such as Scotland's flagship fuel poverty Scheme, Warmer Homes Scotland, outlined above.

The Home Energy Scotland network is set up to provide coverage on an equitable basis across Scotland in both rural and urban areas through five regional advice centres, with a six-centre offering an out of hours service. The five regional centres cover the following areas: The Highlands and Islands, North-East Scotland, Strathclyde and Central, South-East Scotland and South-West Scotland.

The cost of in-person advice provision does vary widely with geography. Overall, the cost of provision per head of population will be significantly higher in remoter areas and this pro rata cost per head of population is factored into the HES budget allocated to each area. To serve the Highland and Islands region and to fulfil the requirement that advice centres offer the same degree of service throughout Scotland, HES centre contractors have recruited outreach staff who fulfil multiple roles including providing home visits, promotional and engagement work and attendance at local events and activities.

HES have well established referral pathways with partners covering rural areas, enabling them to refer households through the secure Home Energy Scotland referral portal to Home Energy Scotland advisers for advice, support and onward referral/signposting to other specialist organisations.

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.

Commitment Fulfilled

This commitment was fulfilled in 2021. Please see the National Islands Plan Annual Report 2021 for further details.

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

Implementation Route Map action

In the 2021/22 Programme for Government we committed to publishing the Fuel Poverty Strategy by the end of 2021. We are committed to continuing to take full account of the special circumstances faced by those living in island areas and will be undertaking a further Island Communities Impact Assessment, specifically on the Strategy.

Commitment Fulfilled

We have maintained our commitment to produce a dedicated Island Communities Impact Assessment for the final Fuel Poverty Strategy, which was published in December 2021 and builds upon the ICIA produced for the Fuel Poverty (Targets, Definition and Strategy) (Scotland) Act 2019. A compressed timetable for our Strategy publication, combined with ongoing Covid-19 restrictions across 2021, limited our opportunities for consultation to online stakeholder events, which included Island based stakeholders.

As required by the 2019 Fuel Poverty Act, a new statutory Scottish Fuel Poverty Advisory Panel was established from January 2022. The panel is an advisory non-departmental public body (NDPB) which will oversee the implementation of the Fuel Poverty Strategy, providing an important means of external scrutiny of our progress towards meeting the statutory targets. As the 2019 Act requires the Scottish Government to formally consult with the panel on the strategy, we are presently working with them in relation to appropriate next steps, with a view to refresh our Fuel Poverty Strategy expected by Spring 2023. Officials will at the appropriate stage in advance, consider and review the necessary impact assessments, with any required action to ensure these are an up-to-date reflection of the current landscape.

We committed to carrying 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.

Commitment Fulfilled

This commitment was fulfilled in 2021. Please see the National Islands Plan Annual Report 2021 for further details.