Tackling fuel poverty in Scotland: a strategic approach

Ministerial Foreword

Our vision is for everyone to have a warm, safe home that they can afford and that meets their needs, in a place where they want to live. Tackling the drivers of fuel poverty to ensure everyone can afford the energy they need to live comfortably is essential to achieving this vision.

In 2019, we introduced the Fuel Poverty (Targets, Definition and Strategy) (Scotland) Act 2019 ("The Fuel Poverty Act") which was passed unanimously by Parliament. This landmark piece of legislation remains the most ambitious and comprehensive fuel poverty legislation in the UK, setting us on a course to eradicate fuel poverty. It sets a new definition of both fuel poverty and extreme fuel poverty, focusing on low-income households and targeting our resources at those most in need of support, no matter where they live in Scotland.

The Fuel Poverty Act sets stretching statutory targets for reducing fuel poverty. The overarching target is that in the year 2040, as far as reasonably practicable, no household in Scotland is in fuel poverty and, in any event, no more than 5% of households are fuel poor, no more than 1% are in extreme fuel poverty and the fuel poverty gap is no more than £250 (in 2015 prices). The legislation sets interim targets within this for 2030 and 2035.

Our context for achieving these ambitious targets for fuel poverty was challenging before but, with the need to decarbonise our society, that challenge has been amplified. The Climate Change (Emissions Reduction Targets) (Scotland) Act 2019 sets equally ambitious and legally binding targets for us to achieve net zero greenhouse gas emissions by 2045, with interim targets requiring a 75% reduction by 2030, and 90% by 2040.

Last year was undoubtedly a very challenging time as we collectively faced the difficulties of the COVID-19 pandemic and its financial and, for many, tragically personal impacts. Over these more recent months, we have also seen a period of sustained pressure on household incomes due to the removal of the Universal Credit uplift alongside the impacts of rising fuel and food costs. These challenges created a perfect storm that has hit those on the lowest incomes hardest and highlights that households can move in and out of fuel poverty as income and energy costs change over time.

The vast majority of the welfare benefits system and the regulation of energy companies are reserved matters and overall energy/fuel prices are dictated by the market. Despite this, we are already doing what we can, with the powers that we have, to increase incomes, reduce household costs, and mitigate the impacts of poverty in Scotland.

This Fuel Poverty Strategy identifies a comprehensive range of actions to address all four drivers of fuel poverty and address fuel poverty for those at highest risk. These actions have been informed by evidence, including lived experience, and learning from the changing context as we respond to the COVID-19 pandemic and the climate emergency.

In order to make our homes easier and greener to heat – progressing our commitments both to decarbonise the heating in 1 million homes by 2030 and to remove poor energy efficiency as a driver of fuel poverty – we have committed to investing at least £1. 8 billion over the course of this Parliament. As set out in the Programme for Government, we will provide increased funding this year for home energy programmes and measures that remove poor energy efficiency as a driver of fuel poverty. We will allocate £200 million for heat and energy efficiency projects in social housing over this parliamentary term.

Alongside the increased funding, work to decarbonise our homes and buildings will be led and co-ordinated by a new dedicated National Public Energy Agency, to be established by 2025. In recognition of the urgency and need for us to act now, a virtual agency will be in place by September next year and will act first to coordinate and then accelerate existing- and new- delivery programmes as part of the transition process. As set out in our Heat in Buildings Strategy, published on 7 October this year, the Agency will work in line with a set of guiding principles to support our targets on fuel poverty and net zero.

We are clear that as we decarbonise our society, we will do so in a way that supports and enables the eradication of fuel poverty to ensure we achieve a just transition. Many actions we have taken have reduced carbon emissions from homes while making them warmer and cheaper to heat. However, we recognise there are tensions between our commitment to decarbonise heating and our fuel poverty aims, with many zero emissions heating systems being more costly to install and potentially more expensive to run than fossil fuel alternatives, all other things being equal, under present market conditions. We need to work together across sectors and jurisdictions to overcome these issues.

The actions we are taking through this strategy are the start of the collaborative approach we will need and want to take over the coming months and years between national and local government, businesses (including the energy sector), the third sector, landlords, tenants, and home owners. We will ensure our approach continues to be driven and informed by the evidence, including lived experience. The Scottish Fuel Poverty Advisory Panel will have a crucial role in advising and supporting the actions we will take and holding us to account for making the progress required.

We know there is no single or quick fix and our actions will need to evolve within the overall framework to take account of the changing context to 2040. As a Government, we are clear that by working together with our partners we can bring an end to fuel poverty so that in Scotland people are not having to choose between using less energy than they need or cutting back on food or other essentials.

Michael Matheson MSP
Cabinet Secretary for Net Zero, Energy and Transport