Tackling fuel poverty in Scotland: a strategic approach

Chapter 3 – Making Homes Warmer and Cheaper to Heat

While we need to take action to address all four drivers of fuel poverty, 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, with powers over the energy supply market also reserved to the UK Government. Therefore, our main area of influence in tackling fuel poverty is through improving the energy efficiency of the home.

We class any home that has an EPC rating below C as having poor energy efficiency which means fuel bills may be higher than they need to be. We are committed to raising the standard of energy efficiency of all homes across Scotland and eradicating poor energy efficiency as a driver of fuel poverty.

What are we doing now?

The Scottish Government provides support to improve the energy efficiency of homes through its Heat in Buildings programme. As part of this, our Warmer Homes Scotland programme and Area Based Schemes prioritise fuel poor households for support.

Over the next five years, we will invest at least £465 million to support those in fuel poverty in the heat transition and to remove poor energy efficiency as a driver of fuel poverty. Our Area Based Schemes will increase their reach to support higher numbers of households in or at risk of fuel poverty. We expect to deliver an increasing number of 'whole house' retrofits. The Warmer Homes Scotland contract is due to end in September 2022 and we propose to replace it with a new and enhanced 7 year national scheme.

Impartial, free, tailored advice on energy efficiency and eligibility for our schemes is provided by our award winning Home Energy Scotland service which is available to all households in Scotland.

SG Action – Those in fuel poverty will continue to be supported as one of the key priorities within appropriate schemes of our Heat in Buildings programme

Warmer Homes Scotland

Warmer Homes Scotland (WHS) is the Scottish Government's current national fuel poverty scheme. It helps eligible households^[7] by funding the installation of a range of heating (including renewable and micro-renewable heating measures) and insulation measures to improve the energy efficiency of the property, making homes warmer and cheaper to heat. More than £156 million has been invested through WHS since its launch in September 2015, helping almost 25,000 households throughout Scotland.

WHS - Case Study

Mrs B lives in an old, listed building and had been struggling to keep warm for quite some time. As Mrs B's home is a listed property, there were some restrictions on what could be installed. However, Mrs B knew that underfloor insulation would make a big difference to the level of warmth she experienced in her home.

After an initial conversation with Home Energy Scotland, Mrs B was deemed to be eligible for help under WHS. An initial survey with Warmworks determined that Mrs B qualified to receive underfloor insulation under the scheme, which would be installed at no cost to her.

Once the installation was completed, an inspector from Warmworks visited Mrs B to ensure that everything had been installed correctly and that she was happy with the installation. Mrs B has already noticed a difference in terms of the comfort of her home:

"The floors aren't draughty at all and you can now sit on the floor – a noticeable difference. It's been totally worth it. I'm delighted to have it. "

Area Based Schemes

Area Based Schemes (ABS) are delivered by local authorities targeting fuel poor areas and communities. In 2021-22, we updated the ABS allocation model to reflect the new definition of fuel poverty and added a new weighting to reflect different levels of extreme fuel poverty across Scotland. This has ensured that the average amount of ABS funding per fuel poor household has continued to increase across Scotland and for individual local authorities. Funding for ABS targets the 'hardest to treat' properties requiring measures such as external wall or complex cavity wall insulation^[8].

ABS Case Study

External Wall Insulation Project - South Ayrshire

Mr & Mrs A felt the programme came at an opportune moment as they had recognised that improvements were needed to the property both in terms of the structure and the energy efficiency.

The property was previously draughty and they also had some issues with dampness. Since the insulation upgrades, they described the property as being much warmer and no further issues with draughts or dampness.

They have been able to use their heating less.

"You get up in the morning and the house is warm, even when heating is not on. It's never cold. It gives you peace of mind"

Local authorities have the flexibility to propose ABS special projects that provide an opportunity to test the effectiveness of new technologies, such as smart meters and battery storage technology, in reducing fuel poverty.

Since 2013, the Scottish Government and local councils have delivered energy efficiency improvements to over 100,000 households through our ABS.

Home Energy Scotland

Our award winning Home Energy Scotland (HES) service is the gateway to WHS. To ensure that households receive holistic support, covering all 4 drivers of fuel poverty, HES also provide advice on how to use energy in the home more efficiently, can provide information on switching energy supplier and can make referrals for benefit checks. Where a household requires further support to be able to access the service, HES Energycarers can make home visits, obtain relevant information and assess eligibility for schemes such as WHS, and other grant funds and charitable trusts.

What we will do to tackle fuel poverty and poor energy efficiency?

Living in a home with poor energy efficiency means it costs more than average to heat it to an adequate temperature. For those in fuel poverty, this cost is often too high and so they have to find ways to cope with living in a cold, damp home. It is therefore crucial that we achieve our aim of removing poor energy efficiency as a driver of fuel poverty.

To be able to do this, we need to first understand who is most likely to be in fuel poverty and live in a home with poor energy efficiency. This will allow support to be well-targeted and also tailored to the needs of fuel poor households.

Which fuel poor households are more likely to live in a home with poor energy efficiency?

In order to target energy efficiency interventions at fuel poor households, it is helpful to be aware of the differences in characteristics between fuel poor households living in homes below EPC band C (approximately 385,000 on average over 2017-19) compared to non-fuel poor households in similarly inefficient homes (approximately 987,000 on average over 2017-19). Some examples from our analysis include that fuel poor households are:

• More likely to have a low income (below £300 per week) and other associated indicators of low income.
• Less likely to live in the owner occupied sector (75% versus 45%), and more likely to be in the rental sectors (20% vs 11% private rental and 35% vs 14% social rented).
• More likely to live in the lowest council tax bands A and B (58% versus 27%).
• More likely to be a female headed household (51% vs 35%).
• More likely to have a prepayment meter (29% vs 14%).
• Less likely to live in a home heated by gas (64% versus 75%) and more likely to live in a home heated by electricity (22% versus 11%).
• More likely to have someone in the household with a long-term sickness or disability (56% versus 41%).
• Less likely to live in a detached dwelling or semi-detached dwelling (40% versus 52%) and more likely to live in a tenement (22% versus 14%).
• More likely to live in remote rural areas (13% versus 8%).
• Less likely to be families - (15% versus 23%).

As our annual survey is only able to capture energy efficiency information for properties which can be assessed using our current EPC methodology, our analysis does not capture the experience of those who live in other types of accommodation, such as members of the Gypsy/Traveller community. However, we received feedback as part of the consultation on the Draft Fuel Poverty Strategy that there are a lack of measures to reduce fuel poverty among the Gypsy/Traveller community living in caravans and mobile homes.

Targeting action to make homes warmer- disabled people and people experiencing poor health

Our analysis shows fuel poor households with low levels of energy efficiency are more likely to have at least one member who has a long-term illness or disability (56%) when compared to non-fuel poor households in similarly inefficient homes (41%). This is particularly concerning, given those with long term health conditions are often more vulnerable to the impacts of living in a cold, damp home.

In our Lived Experience Research, those with chronic health conditions told us they felt particularly vulnerable to the impacts of poor energy efficiency and heating systems.

"It's just really uncomfortable… I quite often have to go and get a hot water bottle… because of my disability I can't fully regulate my body temperature, so once I'm cold I'm freezing, and it takes me a long time to warm up. "

Maggie, 35+ no children, Owner occupier, Large urban, FP and EHR

That is why eligibility for our current national fuel poverty scheme, Warmer Homes Scotland, has a focus on those with a long term health condition (as well as carers, older people and families with children under 16 years of age). We will ensure that the replacement scheme for WHS continues to provide support to those fuel poor households who face the greatest health risks of staying in a cold home.

SG Action - We will ensure that the replacement scheme for Warmer Homes Scotland continues to provide support to those fuel poor households who face the greatest health risks of staying in a cold home

As well as providing support, we need to ensure that we continue to raise awareness of the help that is available. HES will continue to build partnerships with organisations working with those with a long-term health condition or disability. We set out further details of our approach to partnership working in Chapter 8.

Targeting action to make homes warmer – property type and age

Our analysis also shows that there is a higher likelihood of fuel poor households with low levels of energy efficiency living in tenements (22%) when compared to non-fuel poor households in similarly inefficient homes (14%). These types of properties can bemore difficult to improve and improvements to communal areas can be complicated where the building is mixed-tenure or mixed-use.

For older buildings which are designated as listed or in conservation areas, we will work with Historic Environment Scotland to consider what further specific provisionsmay be needed within regulations in meeting requirements for decarbonisation of their heat supply and reducing their demand for heat.

SG Action - We will work with Historic Environment Scotland to consider what further specific provisions or exemptions may be needed within regulations in meeting requirements for decarbonisation of their heat supply and reducing their demand for heat

Mixed-tenure or mixed-use buildings make up a significant share of Scotland's building stock. We recognise the challenges that common works present to mixed-use, tenement, and mixed tenure buildings, and that this often presents a barrier to installing energy efficiency and zero emissions heating measures unless property owners act together.

To date, our ABS projects have been particularly successful in delivering improvements for multi-occupancy properties such as flats and tenements, as well as whole streets of terraced and semi-detached housing.

We will seek further evidence in this area in 2022 before consulting on a regulatory approach for mixed-tenure buildings which, as with the wider building stock, would see them required to reach a good level of energy efficiency, equivalent to EPC C, where technically feasible and cost effective, and install a zero emissions heating supply.

We will also consider bringing forward primary legislation, if required, to facilitate the common works that will be essential for decarbonisation of these buildings, such as connection to heat networks or whole building insulation.

SG Action - We will consult on a regulatory approach for mixed-tenure buildings which would see them required to reach a good level of energy efficiency, equivalent to EPC C, where technically feasible and cost effective, and install a zero emissions heating supply

We are also aware that some existing Gypsy/Traveller accommodation can have poor levels of energy efficiency which can be difficult to improve. The Scottish Government is investing in Gypsy/Traveller accommodation through the £20 million Gypsy/Traveller Accommodation Fund, available over five years from 2021/22. The fund is intended for both significant renovation and improvements of standards on existing sites and the building of new sites. This builds on the £2 million short term funding provided in 2020/21 and represents a sustained investment, working with local authorities to provide more and better accommodation for Gypsy/Travellers.

The early projects under the Fund will act as demonstration projects and provide opportunities for exploring issues around measuring and improving the energy efficiency of Gypsy/Traveller accommodation.

To drive a significant improvement in the quality of new sites, we are also developing a Site Design Guide for Gypsy/Traveller sites, in conjunction with residents and local authorities. This will set the standard for new accommodation, including improved energy efficiency.

We are encouraging local authorities to submit proposals which aim to improve the energy efficiency of Gypsy/Traveller accommodation as part of ABS Special Projects. We will apply any learning from these projects to the delivery of WHS, the scheme that replaces it, and ABS, making them more inclusive and responsive to the needs of Scotland's Gypsy/Traveller communities.

SG Action – We will apply the learnings from projects funded by the Gypsy/Traveller Accommodation Fund or undertaken as part of ABS Special Projects that seek to improve the energy efficiency of Gypsy/Traveller accommodation to Warmer Homes Scotland, the scheme that replaces it, and our Area Based Schemes

In our action plan for the Gypsy/Traveller community, "Improving the Lives of Gypsy Travellers", we committed to speak to Gypsy/Travellers with lived experience of fuel poverty to understand how the Fuel Poverty Strategy and our programmes may need to be adapted to reflect the particular needs of the community. Due to the impact of COVID-19 restrictions, we have had to delay this work and we now aim to carry this research out in 2022. The outcomes of this research will feed into the first review of the Fuel Poverty Strategy which should be completed no later than 2026.

SG Action – In 2022, we will undertake research with members of the Gypsy/Traveller community who have lived experience of fuel poverty to better understand how we can reflect their needs in Warmer Homes Scotland, the scheme that replaces it, and our Area Based Schemes

Targeting action to make homes warmer – tenure

Our analysis of fuel poverty in Scotland shows that there is a higher likelihood of fuel poor households with low levels of energy efficiency in their homes being tenants (55%) than non-fuel poor households in similarly inefficient homes (25%) and a lower likelihood of them being owner occupiers (45% versus 75%).

To tackle poor energy efficiency in the private rented sector, we had been committed to the introduction of regulations to ensure properties in the private rented sector reach an EPC D by 2025 and have trailed this standard for the past 3 years. However, we recognise that the private rented sector has been significantly affected by the ongoing COVID-19 pandemic, with emergency legislation needed to prevent evictions, support tenants and landlords, and protect the broader sector. As a result, and to reflect the need to reduce pressure on the sector, the formal process to bring these regulations forward was halted.

Our commitment to improving the energy efficiency of this sector remains. In line with the direction provided by the Climate Change Committee, we will introduce regulations requiring private rented sector properties to meet a minimum standard equivalent to EPC C, where technically feasible and cost-effective, by 2028.

SG Action - We will introduce regulations requiring private rented sector properties to meet a minimum standard equivalent to EPC C, where technically feasible and cost-effective, by 2028

To tackle poor energy efficiency in the social rented sector, the Energy Efficiency Standard for Social Housing (EESSH) was launched in March 2014. Its aim was to encourage social landlords to improve the energy efficiency of the social housing stock in Scotland. The first EESSH milestone set for December 2020 is based on minimum EPC Energy Efficiency Ratings (EERs) which vary depending on the type of property and the fuel used to heat it.

In June 2019, the then Minister for Local Government, Housing and Planning agreed a second EESSH2 milestone for all social housing to meet, or be treated as meeting, EPC B, or be as energy efficient as practically possible, by the end of December 2032.

In March 2021, the independent short-life working group, the Net Zero Social Housing Taskforce (ZEST), was convened by the then Minister for Local Government, Housing and Planning. Ministers set out specific framing questions to inform the work of ZEST and to focus on actions that will make a difference to the pace of decarbonisation across Scotland whilst ensuring fuel poverty is not exacerbated. ZEST submitted its report to Ministers at the end of August who will respond to its recommendations in due course.

SG Action - We will work with social housing stakeholders to respond to the Zero Emissions Social Housing Taskforce report and recommendations and bring forward the review of EESSH2 as quickly as possible

In the second half of 2020, we launched the Social Housing Net Zero Heat Fund to support social housing landlords across Scotland to install zero emissions heating systems or take a fabric first approach to energy efficiency measures across their existing stock. Applicants are required to demonstrate that the improvements have led to a reduction in energy bills for their tenants.

We have committed to making £200 million available during the current Parliament and will work with the sector to assess the impact of funding to date. Where improvements have met the aim of reducing energy bills for tenants, we will ensure that we share the learning with the social housing sector as well as applying it to our Warmer Homes Scotland and Area Based Schemes.

SG Action – We will seek to identify Social Housing Net Zero Fund projects which have been successful in reducing energy bills for those in fuel poverty and share the learning with the wider social housing sector as well as applying it to Warmer Homes Scotland, the scheme that replaces it, and our Area Based Schemes

Targeting action to make homes warmer – remote rural properties

Fuel poor households in properties with low levels of energy efficiency are more likely to live in our remote rural communities (13%) than non-fuel poor households in similarly inefficient homes (8%). We know from our engagement with these communities that the reasons for this are varied and include:

• Higher costs being applied for energy efficiency works due to remoteness
• A lack of qualified tradespeople based locally
• A greater number of hard to treat properties which require bespoke measures, cost more to improve, and are often isolated, making them potentially less suited to an area-based approach
• A greater number of off-gas grid properties, some of which cannot benefit from a switch to cheaper fuel types or tariffs

We have already taken action to make WHS and ABS more flexible and responsive to the needs of our remote rural communities. WHS operates a 'National Customer Price' mechanism. This is designed to take into account the additional costs of delivering energy efficiency measures in the islands and other remote regions but ensures that households in these areas get access to the same quality of service and the same amount of measures as households in more accessible regions do.

Though our ABS programme, more funding is available to reflect extreme fuel poverty and to reflect higher costs of delivery, for example in remote rural and island communities. In 2020-21, the maximum grant available to households in very remote rural areas (including all island communities) rose to £14,000 compared to a maximum of £12,000 in other parts of Scotland. Furthermore, local authorities can take action to target isolated properties or communities as special projects, reflecting the needs of our remote rural communities.

The managing agent for WHS, Warmworks, is helping to ensure there are qualified tradespeople that can deliver in our remote rural communities. It has procured a supply chain of 24 installers, with 6 based in the islands, to deliver the scheme, 23 of which are SMEs and all of which are based in Scotland.

Through WHS, we have also made renewable heat measures available which are particularly beneficial to our remote rural and island communities not served by the gas grid. These include renewable heating systems such as ground source heat pumps, micro-wind, and micro hydro systems. An increasing number of low carbon heating systems are now installed in properties that traditionally have relied on domestic oil and LPG heating systems, which are no longer supported through the programme. Low carbon heating systems are encouraged to help meet Scotland's net zero targets.

The successor to WHS will provide measures appropriate to each property, taking into account current and potential energy efficiency levels. The new scheme will have a flexible design to allow inclusion of innovative new technologies as they become established. This will ensure that properties in remote or rural areas will receive the same standard of service from the scheme as other areas.

We believe developing Scottish specific skill requirements for retrofit work will help professionalise the sector and provide pathways for young people to enter it. That is why, alongside our draft Heat in Building Strategy, we published a consultation on Scottish skills requirements for energy efficiency, zero emissions and low carbon heating systems, microgeneration and heat networks for homes. It also set out our proposals for retrofit installers, energy assessors, designers, advisors, evaluators and retrofit coordinators.

Furthermore, this consultation sought views on the impact these proposals will have, including on remote rural and island areas, and we plan to publish our response to this consultation as part of a wider policy statement covering quality assurance for our Heat in Buildings Strategy in early 2022.

Targeting action to make homes warmer – fuel type

Our analysis of fuel poverty in Scotland also shows that fuel poor households living in homes with low levels of energy efficiency are more likely to live in a home heated by electricity (22%) when compared to non-fuel poor households living in similarly inefficient homes (11%). However, fuel poor households using gas for heating represent the majority of fuel poor households living in homes with low levels of energy efficiency.

Which fuel poor households are least likely to be able to improve the energy efficiency of their home?

While it is important to understand which fuel poor households are most likely to live in a home with poor energy efficiency, we also need to understand the factors that can make it more difficult for households to take action to address poor energy efficiency.

Our Lived Experience Research showed that fuel poor households face a variety of barriers to improving the energy efficiency of their home. Tenants, whether private or social, told us they have little control over replacing or changing their heating system as decisions are made by their landlord. These barriers were more likely to be present for households in extreme fuel poverty and echo findings in the Evidence Review.

Our Evidence Review highlighted further reasons why fuel poor households may be put off making energy efficiency improvements. These included fears about damage, uncertainty about the extent of physical disruption, and concerns about hidden costs, such as redecoration. We recognise that help also needs to be available for improvements and repairs that will enable the installation of energy efficiency measures.

Across all fuel poor households that we spoke to as part of our Lived Experience Research, whether renters or owner-occupiers, awareness of the support available from WHS or ABS was low. This also mirrored the findings in the Evidence Review which showed that households found it difficult to know where to go for energy efficiency information and, where different sources existed, found it difficult to know which sources to trust. This highlights why our approach must include support to improve energy literacy and continue to raise awareness of the support available.

Tackling barriers to warm homes – funding for improvements

To ensure we are able to meet our ambitious targets, we will continue to provide funded support to households in fuel poverty, helping them to install energy efficiency measures through WHS, the scheme that replaces it, and ABS.

SG Action - We will continue to provide funded support to households in fuel poverty, helping them to install energy efficiency measures through Warmer Homes Scotland, the scheme that replaces it, and our Area Based Schemes

Funding for improvements is also available via the Energy Company Obligation (ECO), a UK Government programme to deliver energy efficiency measures across Great Britain. The legislation obliges eligible energy providers to deliver energy efficiency improvements to help fuel poor households reduce the cost of heating their homes.

The ECO is funded through a charge on the energy bills of all customers of regulated energy companies with over 250,000 customers. As of December 2020, the Department for Business, Energy& Industrial Strategy (BEIS) report that 287,996 households in Scotland have received ECO finance (13. 4% of GB); or an average of 118 measures per 1000 households (compared to 81 in Wales and 77 in England).

We do not believe the current levy schemes are fair or effective in reducing fuel poverty in Scotland. Levy funding is a reserved matter for the UK Government and we have urged them to review levy funding for both the ECO and the Warm Homes Discount. Nevertheless, the Scottish Government will continue to seek to maximise the impact of this funding on removing poor energy efficiency as a driver of fuel poverty.

We believe that with greater flexibility we could achieve more in Scotland. Scottish Ministers have proposed that the two existing schemes are combined as a single, flexible Scottish Fuel Poverty scheme, as provided for in the Scotland Act. This would provide a fairer basis for targeted rebates and additional investment in energy efficiency measures that reflect the needs and circumstances of Scottish households. However, we cannot make any changes to these fuel poverty schemes without the consent of the UK Government.

UKG Action – We urge the UK Government to review levy funding for the Energy Company Obligation and the Warm Homes Discount and work with Scottish Ministers so that these can be combined as a single, flexible Scottish Fuel Poverty scheme, as provided for in the Scotland Act

Tackling barriers to warm homes – an all tenure approach

In our Lived Experience Research, fuel poor households that rent their homes told us that they lack the ability to make decisions about changes to their property, including energy efficiency measures. Among some private renters, there was a tendency to not want to bother their landlord with requests for insulation.

"[The surveyor] said the house could have better insulation… But… I'm not going to my landlord for the time that I'll be here complaining. "

Eilidh, 35+ no children, Private renter, Remote rural/small towns, EFP

Private renters also queried whether they or their landlord would be eligible for support to improve the energy efficiency of their home. This echoed the findings of the Evidence Review which noted that private renters in particular tended to hold the perception that they were not eligible for energy efficiency interventions due to not owning their home.

In our Lived Experience Research, those renting from councils or housing associations felt more comfortable raising issues with their landlords. However, they also felt that decisions around energy efficiency were out of their control and gave accounts of councils and housing associations not responding to requests for improvements or stating that work would take place but which did not happen.

"The [housing association] kept on saying they are going to be putting new windows in last year… I just don't know if they are going to bother… that is actually wooden windows, they're not plastic. I think they have been there since the word dot, since they were built. "

Isabel, 35+ no children, Social renter, Other urban/non-remote rural, EFP and EHR

Our Evidence Review found that there could also be frustrations for households in the social rented sector at the lack of autonomy over choice of fuel type and that tenancy relations in general were an important factor in obtaining energy efficiency improvements.

As part of our vision for Housing to 2040, we want to ensure that all homes, no matter their tenure, are required to meet the same standards. To achieve this we are developing a new tenure-neutral Housing Standard which will be aligned to the proposed regulatory standards for energy efficiency and heating. This will ensure a clear minimum standard setting out what people are entitled to expect and what they are expected to do.

SG Action – We will introduce a new tenure-neutral Housing Standard which will ensure that our homes, both new and existing, achieve the same levels of energy efficiency

Following consultation, we aim to publish a draft Standard in 2023 and progress legislation in 2024/25 for phased introduction from 2025 to 2030. In the meantime, we will continue to take action to address the specific issues faced by those in the rented sector.

Tackling barriers to warm homes – providing enabling measures

As part of our Lived Experience Research, we asked fuel poor households how helpful it would be to have support to make home improvements that facilitate energy efficiency measures, for example loft clearances, moving furniture, or lifting flooring. They generally thought this was a good idea and a few had personal experience of the difficulties that come with getting this type of work done:

"When they approached me about that, I said that I didn't want a new boiler because all of the upheaval, because I've got a wooden floor in the kitchen, and it's my responsibility then to get the slats uplifted, and I just don't want to be bothered with it. "

Lorraine, 35+ no children, Social renter, Large urban, EFP and EHR

Households told us that making further support available with home improvements to enable energy efficiency measures to be installed, e. g. help to clear loft space prior to insulation, would be helpful. The need to carry out these improvements first often put people off installing measures. This echoed findings of the Evidence Review which highlighted various concerns that could put households off having energy efficiency work completed, including uncertainty about hidden costs such as redecoration, uncertainty about the extent of physical disruption, or being asked for information that was difficult to collect.

Through WHS we already provide assistance with loft clearances and have introduced additional enabling measures, including asbestos removal, the installation of fuel storage tanks and the removal of failed cavity wall insulation prior to infill as the costs of these were seen as a potential barrier for customers who wished to benefit from the scheme. The successor scheme will be flexible and able to introduce new measures over time.

SG Action - We will continue to provide enabling measures, such as assistance with loft clearances, asbestos removal, the installation of fuel storage tanks and the removal of failed cavity wall insulation, to help facilitate energy efficiency improvements

HES Energycarers can also provide support to vulnerable households who require enabling measures. This includes helping them to deal with structural dampness, condensation and disrepair, including seeking funding for repair and improvement work and contacting and engaging other support agencies.

Through our Housing to 2040 consultation, island communities told us that there is little point attempting to improve the energy efficiency of a home if it isn't maintained to a certain level of repair (wind and water tight). In response, we will develop a new 'Help to Improve' policy approach. We will work with stakeholders to design new support for repairs and improvements which work alongside WHS and ABS, allowing us to take a whole-house approach where possible.

Tackling barriers to warm homes – accessible support and advice

Fuel poor households that we spoke with as part of our Lived Experience Research had low awareness of sources of advice and support on home heating. They 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. These findings were echoed in our Evidence Review which highlighted that some households find it difficult to know where to go for energy efficiency information and also to know which sources to trust.

We have continued to fund Energy Saving Trust to carry out promotional activity to promote Home Energy Scotland and referrals to Warmer Homes Scotland. We will also develop a bespoke Public Engagement Strategy for heat in buildings.

Making homes warmer for everyone in fuel poverty

We are committed to lifting all households in Scotland out of fuel poverty. That means, as well as targeted actions, we must ensure our approach to addressing fuel poverty leaves no household behind. That is why our delivery schemes, regulations and standards will aim to support all households in fuel poverty.

Making homes warmer for everyone in fuel poverty – Warmer Homes Scotland and Area Based Schemes

Working with national and local delivery partners, we are continuing to improve and extend our existing programmes, Warmer Homes Scotland and our Area Based Schemes. We want to ensure that we reach as many fuel poor households as possible through our delivery schemes.

In the Draft Fuel Poverty Strategy, we committed to reviewing eligibility criteria for WHS, taking account of the new fuel poverty definition to help target support to those who need it most. Eligibility for WHS is currently based on receipt of specific benefits administered by the Department for Work and Pensions (DWP). Due to the impact of COVID-19, we have not been able to review eligibility for WHS. In our Lived Experience Research, some of the households that we spoke to felt that more support was required for those in work but not in receipt of social security payments.

The Evidence Review also provided examples of households on low incomes who did not qualify for support due to not receiving social security payments that would allow them to meet eligibility criteria. This included disabled people who have not been able to access the disability benefits used as eligibility criteria and elderly people with small occupational pensions.

We know that actual income information allows better targeting of fuel poor households than using receipt of benefits as a proxy for low income. However, we need to ensure assessment is simple and easy and not too intrusive as some people may not be comfortable with sharing their information. We will work with the Scottish Fuel Poverty Advisory Panel to consider how our targeting of schemes can be further streamlined and improved.

SG Action - Working with the Scottish Fuel Poverty Advisory Panel, we will seek to ensure that eligibility criteria for our Area Based Schemes and the new scheme to replace Warmer Homes Scotland, are aligned with the updated fuel poverty definition and continue to target assistance to those that need it most

SG Action – We will explore the development of a fuel poverty assessment tool

£50m funding has been allocated for WHS for 2021/22 an increase from £32m in 2020/21. New measures have also been introduced in 2021, including electrical energy storage, a smart ventilation system and the extraction of failed cavity wall insulation in advance of infill of cavity wall insulation.

Over the next five years, it is our intention that, as well as prioritising insulation measures, ABS will deliver an increasing number of 'whole house' retrofits to fuel poor households and will adopt a 'zero emissions first' approach.

SG Action – Over the next five years, we will deliver an increasing number of 'whole house' retrofits to fuel poor households and will adopt a 'zero emissions first' approach

We have increased our annual investment in local ABS projects to £64m in 2021-22 (from £55m in 2020-21). This has allowed us to increase the scope of ABS projects to provide more whole house retrofits that include zero/low carbon heating and microgeneration (solar photovoltaics etc. ), where this is technically feasible and will help to reduce fuel poverty.

We are also currently exploring how to better identify potential projects and increase take-up by households through better identification of fuel poverty.

SG Action – We will explore how to better identify potential projects and increase take up by fuel poor households for our Area Based Schemes

Our Lived Experience Research showed that while most households who had energy efficiency measures installed felt that these had improved the warmth of their home, there was a minority who felt that there had been little difference.

"I must admit I didn't really [notice a difference in heat retention], our loft is not a very large loft, but there must be some difference… before. . . the roof used to clear quite quickly [of snow], but since the insulation it tends to stay there, that's the only difference I could see. "

Dean, 35+ no children, Owner occupier, Large urban, EFP and EHR

Furthermore, our Lived Experience Research showed that the household's views on the efficiency of their property often did not match its EPC rating (the indicator of the energy efficiency of a property). Our Evidence Review revealed similar findings, with households often uncertain and in some cases sceptical about the actual impact of the installed measures on the warmth of their homes and on their fuel bills.

WHS, its replacement scheme, and ABS will continue to monitor the impact of measures upon indoor temperatures and take account of the experience of households to better understand how we can improve warmth and comfort.

SG Action - We will continue to monitor whether our investment helps households to maintain an adequate indoor temperature and will supplement this with increased qualitative feedback from the households we support

To ensure that all households in Scotland can access free and impartial advice on how to make reduce energy bills and make homes warmer and cheaper to heat, we will continue to fund HES.

SG Action - We will continue to fund Home Energy Scotland to provide advice and support on how to reduce energy bills and make homes warmer and cheaper to heat

Annual progress on the delivery of WHS is reported on by both the Scottish Government and Warmworks.

Making homes warmer for everyone in fuel poverty – regulation and standards

To underpin our investment and provide long-term certainty to home owners, landlords, and tenants, we will introduce new regulations to set standards for energy efficiency and also zero emissions heating, where it is within our legal competence. Together, these regulations will cover the full range of Scotland's homes and address both their energy efficiency and their direct emissions from heating.

We will introduce regulation fairly and in a way that considers the health and wellbeing of Scotland's people, including continuing to target the removal of poor energy efficiency as a driver of fuel poverty and ensuring our actions have no detrimental impact on fuel poverty, unless additional mitigating measures can also be put in place.

Proposals for improvement to current energy standards for new homes are set out in a Scottish Government consultation^[9] published on 26 July 2021. This review proposes further improvements to the energy and emissions standard set for new homes, including an option to incorporate some of the elements associated with the delivery of new homes to the recognised PassivHaus standard. A further review of energy standards set through Scottish building regulations is planned to align with the introduction of the New Build Heat Standard in 2024.

SG Action – We will introduce new energy standards for new homes in 2021 and 2024, taking into account the responses to our consultation

As set out in our Heat in Buildings Strategy, the New Build Heat Standard will ensure that, from 2024, where there is an installed heating system contained within a new building, it will be required to produce zero direct greenhouse gas emissions at the point of use. We envisage that at present, electrical heating or heat supplied by heat networks would produce no direct greenhouse gas emissions at point of use, but we recognise that there are other technologies which could produce a similar outcome and are seeking evidence on this.

For affordable homes, it is essential that the fabric of the homes is sufficiently energy efficient to avoid worsening fuel poverty. Offsite construction offers the prospect of improved construction quality which will potentially enhance the energy efficiency of the home. In the longer term, we aim to build affordable homes that are net zero carbon across their full life cycle. This too will need to be done in a way that helps to tackle – and not worsen – fuel poverty.

For existing homes, in addition to the standards set out earlier in this chapter for both socially and privately rented homes, we will regulate for all buildings across all tenures to achieve a good level of energy efficiency by 2033 and (subject to devolved competence, technological developments and action from the UK Government in reserved areas) to use zero emissions heating (and cooling) by 2045. This brings forward the target end date for energy efficiency standards by 7 years and proposes to introduce standards for heating, not previously included in the Energy Efficient Scotland Route Map.

SG Action - We will regulate for all buildings across all tenures to achieve a good level of energy efficiency by 2033 and use zero emissions heating (and cooling) by 2045, where within our legal competence

Due to the depth of fuel poverty experienced in some households we know that reaching EPC C will not be enough to lift all households out of fuel poverty. That is why we are setting a higher ambition for fuel poor households, regardless of tenure. We will continue to invest in WHS and ABS to maximise the number of households in fuel poverty achieving a level of energy efficiency equivalent to EPC C by 2030 and EPC B by 2040.

SG Action - We will continue to invest in Warmer Homes Scotland and our Area Based Schemes to maximise the number of households in fuel poverty achieving a level of energy efficiency equivalent to EPC C by 2030 and EPC B by 2040

We want our regulations and standards to deliver homes that are warmer and cheaper to heat and which also produce zero emissions from heating. This will help us to ensure that we meet both our climate change and fuel poverty targets.

EPCs and the methodology behind these are the backbone of our existing standards. To be a useful tool for property owners, EPCs need to set out clear, tailored recommendations on the measures needed to make homes cheaper to heat and power as well as to reduce emissions to zero.

EPCs for homes currently include two ratings: an Energy Efficiency Rating (EER) and an Environmental Impact Rating (EIR). The EER is currently a rating of the cost of energy based on energy demand. The EIR is based on carbon emissions.

The EER is the primary rating in use and is currently the basis of our energy efficiency standards. The current EER can be improved by installing a cheaper to run fossil fuel heating system, such as replacing electric storage heaters with a gas or oil boiler. Conversely, installing a zero emissions system could lead to a worsening of the rating where it will lead to higher running costs.

The current system helps to prevent running costs increasing for the householder and therefore provides some protection for those in fuel poverty. However, it is not compatible with our zero emissions objectives. We will therefore reform the existing EPC so that it includes three indicators as a basis for future standards:

• an indicator for energy efficiency which will recommend to building owners the measures needed to reduce demand for heat and will also show the measures needed to remove poor energy efficiency
• an indicator for heating emissions which will recommend to building owners the most appropriate form(s) of heating system to reduce emissions to zero
• an indicator for cost of heating which will inform building owners and tenants of the impact of the energy efficiency and heat emissions measures on their energy bills.

SG Action - We will reform the existing EPC assessment process so that it includes three indicators so that it is compatible with both our fuel poverty and our climate change targets

As we reform the EPC system we will ensure that it continues to fulfil its original intentions, including as a regulatory tool, on fuel poverty.

Making homes warmer for everyone in fuel poverty - Local Heat & Energy Efficiency Strategies

As we transform our homes and buildings by making them more energy efficient and installing low and zero emissions heating, we will need to consider our local surroundings and resources, whether in urban or suburban areas or smaller rural towns and villages or in our remote and island communities. The transition to zero emissions buildings may look different in different communities and require approaches tailored to place. It will be important for local communities to shape and be involved in decisions about solutions that are most appropriate for their local area.

Local Heat & Energy Efficiency Strategies (LHEES) are at the heart of planning a place based, locally-led and tailored approach. Once in place, these local strategies will provide a framework for taking an area-based approach to heat and energy efficiency planning and delivery.

LHEES will set out the long-term plan for decarbonising heat in buildings and improving their energy efficiency across an entire local authority area. The process of developing Local Strategies and Delivery Plans will allow local authorities to identify where poor energy efficiency is a driver for fuel poverty. The Strategies will facilitate the strategic deployment of programmes, support and funding for energy efficiency measures and heat decarbonisation that will help to address poor energy efficiency as a driver for fuel poverty.

We want LHEES and Delivery Plans to be in place for all local authority areas by the end of 2023. A consistent approach to LHEES for all parts of Scotland will help to ensure that, collectively, LHEES act as a national plan for reducing emissions from our buildings and removing poor energy efficiency as a driver of fuel poverty.

SG Action – We will work with local authority partners and wider stakeholders to introduce LHEES for all local authority areas by the end of 2023