Lived experience of fuel poverty: research

Executive Summary

Background

This report sets out findings from qualitative research into the lived experiences of fuel poverty in Scotland, carried out between late 2019 and early 2020.

The Fuel Poverty (Targets, Definition and Strategy) (Scotland) Bill was introduced to the Scottish Parliament on 26 June 2018 and the Fuel Poverty (Targets, Definition and Strategy) (Scotland) Act 2019^[1] received Royal Assent on 18th July 2019. It states that by 2040 no more than 5% of households will be in fuel poverty and no more than 1% in extreme fuel poverty in each local authority area and in Scotland as a whole.

The Fuel Poverty (Targets, Definition and Strategy) (Scotland) Act sets outs out a new definition of fuel poverty. Under the new definition a household is in fuel poverty if, in order to maintain a satisfactory heating regime:

• more than 10% of the household’s adjusted net income (after housing costs) is required for total fuel costs, and
• after deducting fuel costs, benefits received for a care need or disability and childcare costs, the household’s remaining adjusted net income is insufficient to maintain an acceptable standard of living (defined as 90% of the UK Minimum Income Standard)^[2]. In remote rural, remote small town and island areas there is an uplift to the Minimum Income Standard to take into account higher living costs.
• extreme fuel poverty follows the same definition except that a household would have to spend more than 20% of its adjusted net income (after housing costs) on total fuel costs to maintain a satisfactory heating regime.

The fuel poverty calculation involves estimating the costs of heating a home to a satisfactory heating regime. There are four heating regimes that can be applied to households, one standard heating regime and three enhanced heating regimes (EHRs) as described in The Fuel Poverty (Enhanced Heating) (Scotland) Regulations 2020^[3].

Aims

This research aimed to enhance our understanding of how people experience, make sense of, and respond to, living in fuel poverty. The research also aimed to test some new policy ideas to understand perceptions of how effective they might be. Findings will be used to inform the development of a new fuel poverty strategy for Scotland.

A number of questions were developed to guide the research, informed by the review of existing evidence produced by the Scottish Government:

1. What is the experience of households in fuel poverty to whom the Enhanced Heating Regimes apply, and how does this differ from other households in fuel poverty?

2. How does the experience of those in fuel poverty and extreme fuel poverty differ?

3. What is the experience of groups that have high levels of fuel poverty under the new definition?

4. How are smart meters used in fuel poor households, and what is their impact?

5. a) What do people know/not know about advice services to help address fuel poverty, and what sources of information are currently used?

b) What are people's views on policy ideas relating to how the Scottish Government would improve its advice offer?

c) What are people’s views on how advice services could be improved?

The policy ideas tested as part of research question 5 were:

• Support to help people switch to a different energy supplier or switch to paying by direct debit.
• Further support for people already receiving help through programmes like Warmer Homes Scotland, such as switching suppliers, advice on using heating efficiently and maintaining good air quality.
• A referral for a benefits check, so that they can check whether they were eligible for any benefits that they may not know about.
• Further support to help make home improvements, including help with loft clearances, moving furniture or lifting flooring to facilitate energy efficiency work

Methodology

A qualitative approach was used to explore in-depth the lived experience of fuel poverty. This took the form of interviews with 40 participants living in households categorised as in either fuel poverty or extreme fuel poverty (under the new definition, following amendments agreed at Stage 2 of the Bill) according to the Scottish House Condition Survey (SHCS) 2016-18.

Participants from across Scotland were recruited by telephone from the Scottish Household Survey (SHS) (of which the SHCS is a module) recontacts database. There were three stages to the fieldwork: a 20 to 30-minute telephone interview; a heating diary task; and a second 60 to 90-minute interview (face-to-face in 30 cases and by telephone with the remaining 10.

Findings

Heating the home and staying warm

Satisfaction with warmth in the home varied, from those reporting no issues to those who were struggling to keep most or any of their rooms as warm as they would like. The latter group made up around half of participants in this study.

Participants were generally mindful of the costs of fuel and heated their homes accordingly, while some limited their use of heating. Attitudes towards limiting heating use ranged from those that appeared to downplay or normalise these behaviours, to those who reported feeling stressed and frustrated at being unable to afford to heat their homes to the temperature they would like.

Those living in poorly heated homes used a number of coping strategies to stay warm, including wearing more layers of clothes, blankets or sleeping bags, using hot water bottles, taping over vents, and parents co-sleeping with children.

For those in the most difficult circumstances, being unable to heat their homes to the level they would like was having negative impacts on their physical and mental health and that of their families.

Heating systems and energy efficiency

Satisfaction with heating systems varied. Those with gas central heating tended to be more positive about their heating system than those using electric storage heaters. Those using oil central heating were generally content, but the rising price of oil was a source of worry for those on low incomes.

Participants’ perceptions of the energy efficiency of their homes also varied, from those who felt their homes retained heat well to those who identified issues related to draughts or heat escaping from the home. These views often did not reflect the Energy Performance Certificate (EPC) ratings of their homes. Those who rented their homes had less control over improving their heating systems or energy efficiency than those who owned their homes.

Around half of participants had experienced condensation and mould on windows. Other damp and ventilation-related problems were not as common but were more prevalent among social renters. Perceived problems with air quality were not widespread, however those with chronic health conditions felt more of an impact if they perceived the air quality to be poor.

Paying for fuel

Although all participants were categorised as being in fuel poverty or extreme fuel poverty, most said their fuel bills were expensive but “manageable”, meaning they could cover their costs using their own income. A few also said they rarely or never worried about covering their fuel or other household bills. This highlights that although fuel poverty is correlated with low income, it is not equivalent to income poverty. For those struggling to cover bills and basic living costs, the cost of fuel contributed to feelings of stress, worry and anxiety.

Those paying for fuel by monthly direct debit liked the regular nature of payments, and felt it was the most affordable way of paying. Prepayment users were also happy with their method of paying for fuel, saying it provided a sense of control by allowing them to decide how much money to put into their account and manage their energy use accordingly. They saw direct debit, by contrast, as a loss of control and had very little appetite for switching to direct debit.

Prepayment was more common among those in households categorised as being in extreme fuel poverty and those in groups with high levels of fuel poverty under the new definition including social and private renters and low income households, which fits with findings from the 2018 SHCS^[4]. Prepayment was also more common in households aged 65 and over, a pattern not found in SHCS data.

Smart meters

Twelve participants had smart meters. They found In-Home Displays useful in helping visualise how much energy they used and to better understand the amount of energy different appliances used. However, even where In-Home Displays were being used, the extent to which this had contributed to a change in behaviour appeared limited. Only a few had noticed a reduction in their energy bills as a result of smart meters.

There was also some criticism of smart meters, including problems with their connectivity and accuracy. Among those without a smart meter, concerns were raised about their perceived inaccuracy, as well as data privacy and security.

Taking action and finding support

The most common actions taken to improve home heating tended to be those without a financial cost, for example changing supplier or payment method (around two thirds of participants had taken at least one of those actions). It was less common for participants to report more expensive actions such as changing their heating system, fuel type or buying energy efficient appliances. Where energy efficiency improvements had been made, such as insulation, this was usually as a result of support from government-funded schemes or from social landlords.

Suspicion of the energy companies underpinned participants’ mixed views on switching suppliers. Due to the risk of suppliers potentially increasing prices over time, there was a fear that switching suppliers actually posed a financial risk which those on the lowest incomes felt they could not afford to take.

Awareness of and use sources of advice and support on home heating was low. Rather than using advice services, participants tended to access the information they needed online, or via word of mouth. Participants also often did not see themselves as needing to seek out support or advice or were cynical about the extent to which they would personally benefit from it.

Policy ideas

The four suggested policy ideas were met with a fairly lukewarm response. Most did not think they would use or need these types of support.

Only a few participants felt they would benefit from support switching supplier or payment methods. Perceived benefits included the potential for saving money as a result of switching supplier or to direct debit. However, those sceptical about the benefits of switching were less enthusiastic about this policy idea. Offering further support to those already receiving help via Warmer Homes Scotland was seen as a good idea in principal, but again participants generally assumed that they would not personally need this type of support.

None of the participants said they would use the referral to a benefits check. Several did, however, feel that this could be a good idea for vulnerable people who might be missing out on the benefits they were entitled to. Support to help make home improvements was generally well received, and a few participants said that they would make use of this service.

Variation in experience by different groups

Those with chronic health conditions and disabilities identified a greater sensitivity to cold and reliance on heating than other participants in this study, with most saying they experienced negative impacts on their physical and mental health when they could not afford to heat their homes adequately.

Some of those in households categorised as being in extreme fuel poverty felt restricted in the extent to which they could reduce their bills. This was either because they lived in a property unsuitable for central heating or because decisions were ultimately out of their control (as tenants) or the cost of improvements meant they could not afford to have them carried out (owner occupiers).

Most of those on the lowest incomes were regularly limiting their heating use and using the most extreme coping strategies to stay warm. In the worst cases they were cutting back on buying food and other essentials, and a few had to rely on friends and family for food or money for household expenses.

The research also provided some additional insights into the distinct experiences of those living in remote rural locations. All of those using oil and solid fuel as the main heating source were in remote rural locations. Their experiences highlighted that living in these locations meant having limited options available when it came to their source of fuel. Participants felt that this lack of choice resulted in higher prices than might be available for customers on mains gas with multiple supplier options. There were no other strong findings to suggest variation in experiences by location.