Scotland’s battle with fuel poverty rages on

The Scottish government has announced it will introduce a new target to eliminate cold homes in the country, but details of how it will reach those targets are scant. David Blackman reports.

There were some red faces in Edinburgh last year when the Scottish government had to admit that it had missed its target to eliminate fuel poverty north of the border.

The commitment, inherited by the Scottish National Party from its Labour predecessors, was that fuel poverty should be eradicated “as far as is reasonably practicable” by last November.

However, Scotland has a long way to go to meet this ambitious goal, judging by the most recent annual edition of the UK Fuel Poverty Monitor, published by National Energy Action. This shows that nearly a third (30.7 per cent) of homes in Scotland were in fuel poverty in 2015, the last year for which figures are available.

Unabashed, the Scottish government announced last week that it would introduce a new statutory target to eliminate the curse of cold homes, which will be enshrined in a Warm Homes Bill that is due to be introduced next year.

“A lot of other European countries don’t set a target so we are glad there has been a renewed commitment,” says David Stewart, lead on energy efficiency policy at the Scottish Federation of Housing Associations. But the consultation paper, published last week, contains no firm date by when the ambitious goal of fuel poverty eradication should be achieved. And there is no detail about what exactly the “minimum” energy performance rating for homes should be.

While there is no end date for fuel poverty, it includes a number of interim steps for tackling the cold homes curse.

By 2030, the paper says that the overall fuel poverty rate will be less than 20 per cent and that there should be “progress towards” ensuring all homes reach a minimum energy performance rating. In addition, it says the median gap for households in fuel poverty i.e. the amount that they are out of pocket thanks to high fuel costs, should be no greater than £450, based on 2015 prices before adding inflation.

“We would like there to be a date to end fuel poverty with funding commitments.”

David Stewart, lead on energy efficiency policy, the Scottish Federation of Housing Associations

By the end of the following decade, the consultation paper pledges that the overall fuel poverty rate will be less than 10 per cent and that all homes should have reached a “minimum” energy performance rating. By this point, it states that the median household fuel poverty gap should be no more than £250.

In addition, the Scottish government is revising its definition of fuel poverty to exclude housing costs, which it is agreed should help to focus attention on the lower income households that most need help.

While welcoming the recommitment to a statutory target, Craig Salter, energy spokesman for Citizen Advice Scotland’s consumer futures unit looks forward to “further details” over the next few months.

Stewart agrees that more detail is important.  “We would like there to be a date to end fuel poverty with funding commitments.”

“We need to push them on targets: they need to up their game,” says Norman Kerr, director of Energy Action Scotland, who argues that part of the problem is that Holyrood took its eye off the ball on energy efficiency funding.

Noting that spending on energy efficiency fell to £45 million in 2007/08, he says: “Over that period, when they thought the problem was cracked, we saw investment diminished.”

But while annual spending on energy efficiency has recovered to £129 million, this is less than the £200 million per annum which Energy Action Scotland estimated back in 2006 would be needed to meet the 2016 target. Kerr says: “The minister loves to quote the figure of half a billion but if you look at that over four years it falls short of the figure we recommended in 2006.”

Holyrood’s excuse for missing the target is that energy price inflation has outpaced growth in incomes.

Household incomes have increased by just over a third since the target was set in 2003, while fuel prices had risen by 170 per cent over the same period.

This analysis needs though to take into account the artificially low level of energy prices that existed 15 years ago, says Kerr: “2002/03 was the peak of the deregulated market: prices were unsustainable,” he says.

“Undoubtedly had the Scottish government not invested in energy efficiency programmes, the picture would be much worse.”

Norman Kerr, director, Energy Action Scotland

But he has some sympathy for the Scottish government given the relatively higher heating costs customers have to pay, particularly in the more northern and rural parts of the country.

Typical bills are likely to be £2,200 in such remote areas, where households have to keep the heating on longer and rely on electricity and oil, than the £1400 paid by bill payers across the UK as a whole.

In the Orkney Islands, according to the fuel poverty monitor, 65 per cent of households have trouble paying their energy bills compared to a Scotland-wide average of around 30 per cent.

“Undoubtedly had the Scottish government not invested in energy efficiency programmes, the picture would be much worse,” says Kerr.

And the fuel poverty picture is at least improving in Scotland in contrast to south of the border. The proportion of fuel poor households edged up by 0.4 per cent in England over the same period, according to the Office for National Statistics, admittedly using a new and different measure.

The number of fuel poor homes in Scotland fell from 845,000 in 2014 to 748,000 in 2015, a fall from 34.9 per cent of all households.

The Scottish government acknowledges that the bulk of this improvements came down to the fall in the global cost of the oil that many of the country’s most fuel poor households rely on for heating.

Salter says: “There will need to be redoubled efforts to address the factors that have largely driven the increases in fuel poverty in recent years. This is likely to be more challenging and will require more innovative solutions, as the Scottish government has limited powers over matters such as the price of energy.”

The Scottish government will have to do a bit more homework on its fuel poverty plans if it wants to avoid a fresh serving of humble pie.