Tackling fuel poverty in Scotland: a strategic approach

Executive Summary

The Scottish Government is committed to ending fuel poverty.

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.

That is why we set stretching targets within the Fuel Poverty (Targets, Definition and Strategy) (Scotland) Act 2019 ("the Fuel Poverty Act") with an overarching target that in the year 2040, as far as reasonably practicable, no household in Scotland is in fuel poverty^[1] 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 also sets sub-targets and interim targets within this for 2030 and 2035.

This Fuel Poverty Strategy sets out policies and proposals for national government, local authorities and third sector partners to help us collectively make strong progress towards these targets. This covers:-

• Actions to make progress now on the four drivers of fuel poverty
• Actions to ensure fewer people are at risk of fuel poverty in the future by making systemic change
• Actions to ensure that we continue to make progress to tackling fuel poverty at the same time as we decarbonise the way we heat and power our homes

We will engage with the Scottish Fuel Poverty Advisory Panel ("the Panel") on this final Strategy after the public appointments process has concluded. We will work with the Panel to ensure effective delivery and to develop our approach and respond as new evidence, technologies and opportunities arise.

We're already doing a lot to support fuel poor households

This Strategy builds on twelve years of investment by the Scottish Government to support action on fuel poverty by improving the energy efficiency of homes through Warmer Homes Scotland and our Area Based Schemes. The award winning Home Energy Scotland service provides tailored advice to households in Scotland on how they can improve the energy efficiency of their home and is the gateway to our Warmer Homes Scotland scheme.

Since 2009, we have allocated over £1 billion through energy efficiency programmes to make homes in Scotland warmer and cheaper to heat. This funding has attracted hundreds of millions more pounds in investment from energy company contributions and funding from local councils, landlords and individual householders. Since 2013, over 150,000 homes throughout Scotland have benefited from our energy efficiency programmes. We've helped more than 100,000 households through our Area Based Schemes and, since its launch in September 2015, Warmer Homes Scotland has installed measures, such as insulation and heating upgrades, in over 25,000 homes. In addition to Warmer Homes Scotland and Area Based Schemes, the Scottish Government provides a range of loans and cashback grants to facilitate energy efficiency improvements.

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 includes delivering new benefits, like Child Winter Heating Assistance and the Scottish Child Payment, as well as improved versions of existing benefits, like our planned replacement for Cold Weather Payments.

While the majority of households in fuel poverty are on a low income, it is those households who are also in income poverty that are most likely to face difficulties paying for their essential needs. We are already taking a range of actions to tackle poverty and build a fairer Scotland for all.

The COVID-19 pandemic increased pressures on fuel poor households

We acted quickly to ensure that appropriate support was available for those struggling with increased household energy bills during the pandemic. Through our Wellbeing and Supporting Communities Funds, we supported over 100 local organisations to deliver a range of community focused projects providing support around energy use and fuel insecurity. As part of the Winter Plan for Social Protection, we also made £7 million available to a number of third sector partners to help households struggling with fuel costs. Our funding allowed organisations to provide same-day support to both prepayment meter users and those using unregulated fuels at risk of imminent self-disconnection over the winter.

As part of the Winter Support Fund, we are making a further £10 million available to third sector partners to support those facing fuel insecurity this winter. This work will build on the work taken forward under the Winter Plan for Social Protection. We are working with partner organisations to deliver projects that can help those struggling with their fuel costs. In doing so, we will seek to ensure that those receiving help are connected with wider advice and support on energy efficiency, income maximisation, and how to reduce energy bills.

We are now all facing a climate emergency

The context we are now working in has changed significantly with the rapid escalation of focus on decarbonising the way that we heat our homes, as a result of the climate emergency. We recognise that some properties risk increased costs when switching from fossil fuels to zero emissions heat and have committed to ensuring our approach will protect households in fuel poverty.

As set out in our Heat in Buildings Strategy, work to transform our homes and buildings over the next two decades will be directed by a set of guiding principles which will aim to ensure our actions do not have a detrimental impact on fuel poverty rates. This will be done by building the evidence base on the interactions between our fuel poverty and climate commitments and applying that knowledge to our policy design and to our programmes, mitigating the risks of unintended consequences, tracking progress, and learning by doing in order to adjust immediately where unintended consequences arise. Where the intended actions have the potential to impact on fuel poverty we will undertake an assessment to understand what those impacts will be. We will only take forward actions where they are found to have no detrimental impact on fuel poverty rates, unless additional mitigating measures can also be put in place.

We recognise that some households are more likely to be in fuel poverty than others

Based on our analysis of fuel poverty in Scotland, we know that there is an increased risk of fuel poverty for households on low incomes, those who rent their accommodation, and those who live in remote areas. We also know that people with pre-payment meters, those who rely on electricity as their main heating fuel, those who lack full central heating and those who live in homes with very low energy efficiency are all at higher risk.

Additionally, evidence shows that young households (aged 16-24), households with a female head of household, households who live in the 15% most deprived areas, households where a member has a long term health condition and households living in flats are at a higher risk of fuel poverty.

Households at risk of fuel poverty are not a homogenous group and a range of circumstances contribute to the risk faced.

We also know that some fuel poor households can face particular challenges when it comes to getting out of fuel poverty for a variety of reasons, for example, having less or no choice in energy tariffs, requiring a greater amount of energy than average to meet their household needs, facing difficulties in achieving energy efficiency improvements, or being unaware or unable to access fuel poverty related advice and support. Gypsy/Traveller communities face particular challenges which must be better understood and addressed to promote equality of outcomes.

As we work closely with the Scottish Fuel Poverty Advisory Panel to deliver the actions that support this Strategy we will ensure a person-centred approach guides our policy and investment decisions to ensure maximum impact and effectiveness in supporting those at highest risk to overcome fuel poverty.

This strategy sets out action to tackle the four drivers of fuel poverty:

• poor energy efficiency of the home;
• low household income;
• high energy prices;
• how energy is used in the home

As set out in detail in this Strategy, we have identified a comprehensive range of actions to tackle these drivers 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 climate emergency.

The actions detailed in this document cover the following priority action areas:

1. We will keep evidence, including lived experience, at the heart of our approach and we will work with the Scottish Fuel Poverty Advisory Panel to build our understanding of how people in fuel poverty with different protected characteristics use energy in the home to ensure our approach promotes equality of outcomes, including a specific focus on the experience of Gypsy/Traveller communities.

2. We will maximise the benefit of our heat in buildings capital investment programmes through measures that support a reduction in fuel poverty – integrating learning on new technologies, as appropriate.

3. We will drive up energy efficiency standards in all tenures through regulation, delivering a new Housing Standard and a review of energy efficiency standards in social housing – ensuring our approach maximises the impact on fuel poverty.

4. We will demand action from the UK Government to change their approach to the operation of energy markets to provide effective, flexible support for fuel poor households.

5. We will ensure that all households in fuel poverty have access to high quality, impactful advice.

6. We will ensure targeted support for those unable to afford the energy they need, those who need greater warmth, and those facing specific barriers to getting out of fuel poverty.

7. We will work with local authorities to ensure effective, local action to tackle fuel poverty across Scotland.

8. In collaboration with the Scottish Fuel Poverty Advisory Panel, we will develop an effective outcomes-focused monitoring and evaluation framework for this strategy.

9. We will continue to take action to raise household incomes and reduce household costs for those in poverty.

10. We will tackle the stigma of fuel poverty, working closely with communities and partners working with people living in fuel poverty.

Getting this right will support our vision of a fairer Scotland, promoting equality of outcomes for people. It is also essential that we continue to tackle and address fuel poverty as we seek to decarbonise the way we use energy in our homes.

We will only achieve these aims by working collectively and across boundaries at all levels of local/national government and in partnership with both the private and third sector. Our work must continue to be driven and informed by the evidence, including lived experience.

These are challenging targets and we will continue to learn and adapt as we implement this strategy.