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Fuel Poverty Briefing SNP Oct 09doc - Fuel Poverty Briefing

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Fuel Poverty Briefing SNP Oct 09doc - Fuel Poverty Briefing

    Fuel Poverty Briefing

    SNP Conference October 2009

Background

    At this year‟s SNP Conference in Inverness the Centre for Scottish Public Policy (CSPP or Centre) have organised a number of events across our policy areas. Further info can be accessed here.

This briefing covers our event on fuel poverty - Keeping Juice in Yir Hoose: the Tipping Point

    for Scotland’s Fuel Poor. Supported by Calor and eaga Scotland , the event will bring the

    climate change and fuel poverty agendas together by examining what impact the Climate Change Bill and future initiatives, such as the Renewable Heat Incentive, will have on the fuel poor.

    What follows is by no means an exhaustive analysis of fuel poverty. Rather, it is an overview of a complex issue for those planning to attend our event. Specifically, it seeks to review attempts by the Scottish and UK Government to tackle fuel poverty and in so doing unravel the connection between this issue and the climate change agenda.

     thThe Climate Change (Scotland) Act 2009 received Royal Assent on 4 August 2009. Chapter

    3 of the 2009 Acts main focus is Energy Efficiency and places a duty of Scottish Ministers to promote energy efficiency.

Definition of Fuel Poverty

    The Scottish Government has defined fuel poverty as a circumstance whereby a household

    "would be required to spend more than 10% of its income (including Housing Benefit or Income Support for Mortgage Interest) on all household fuel use."

    Those in extreme poverty spend over 20% of their income on fuel. Whilst the causes of Fuel Poverty are numerous, the main sources can be defined as follows:

    ; The energy efficiency of a household

    ; Low income

    ; The inability of a household to utilise competition, for example, many low income

    households are unable to change energy suppliers if they use Pre Paid Metres (which are

    much more expensive than Direct Debit) or have arrears with a supplier ; The cost of fuel

    While the Scottish Government has created various programmes to assist the fuel poor, since 2003 the percentage of households living in fuel poverty has risen from 15.4% to 25.3% in 122007. Indeed, 1 in 4 Scottish households are fuel poor. Therefore we must consider what

     1 http://www.scotland.gov.uk/Resource/Doc/933/0079066.pdf pg 25 this is the most up-to-date

    information available on the government website 2 “Review of Fuel Poverty in Scotland”, Scottish Government, May 2008:

    http://www.scotland.gov.uk/Topics/Built-Environment/Housing/access/FP/fuelpovertyreview

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    the Scottish Government has done to tackle fuel poverty. The main focus of the Scottish Government‟s approach to fuel poverty has centred on improving the energy efficiency of low income households. This is predominantly due to the fact that that regulation of energy companies is a reserved power

Previous attempts made by the Scottish Government to tackle fuel poverty

    The Central Heating Programme (CHP) provided advice, insulation improvements and central heating installation. The focus was not only to install and therefore create more energy efficient homes, but also to advise people on the best way to use their central heating.

    An optional check on benefit entitlement was also offered to ensure that people were in receipt of the maximum amount of money possible. The main criticism levied against the CHP was the growing waiting list and its cost-effectiveness.

    The Warm Deal focused on providing grants for people on benefits allowing them to buy better insulation for their households. This programme was provided by Scottish Gas for the private households and the Local Authorities for Social sector households.

Out with the old; in with the new

    With the election of a SNP Scottish Government in 2007 a new approach to tackling fuel poverty was announced: namely, the Energy Assistance Package (EAP). This scheme replaced both the CHP and Warm Deal as the Scottish Government aims to

    “…ensure that by November 2016, so far as is reasonably practicable, people are not living in fuel poverty in Scotland”

The EAP is described as a “more holistic package” which will be managed by the Energy

    Savings Trust in partnership with the Scottish Government, energy companies and advice centres. The package has four stages:

    1. Free advice from the Energy Savings Advice Centre. This hotline is available for

    anyone seeking free expert advice.

    2. A benefit and tax credit check for those at risk of fuel poverty and advice on low cost

    energy tariffs.

    3. For elderly households and households on specific benefits step three provides

    insulation measures.

    4. This is for the most vulnerable to fuel poverty and is a „package of enhanced energy

    efficiency measures‟.

     3The EAP will be monitored by the Scottish Fuel Poverty Forum who will advise and make

    recommendations to the Scottish Government on required policy changes. Organisations such as Energy Action Scotland will respond to consultations and will influence Government 4Policy making with recommendations and advice.

     3 http://www.scotland.gov.uk/Topics/Built-Environment/Housing/access/FP/ScottishFuelPovertyForum 4 See the Energy Action Scotland website http://www.eas.org.uk/

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    It remains to be seen how effective the new package is. Certainly it is too early to draw fixed conclusions but already they are serious concerns surfacing. Examples abound: at Stage 1 there is a target to receive 75,000 phone calls into the Energy Savings Advice Centres in the first year but in the five months from April to August 2009 only 14,633 calls were taken. At Stage 2, in the same period, 3,139 households were offered income maximization while the target for the year is 50,000. At stage 3, the target is 30,000 households and the actual figure was 3031 by the end of August. And similarly at Stage 4 the target is to help 10,000 households over the year, but up until August only 173 households were assisted through the scheme.

    The published data also suggests that there is a high level of drop-out between the stages, somewhat higher than has been indicated in the targets, although this may be explained in part as the result of lags between the completions of each stage.

    Most recently the Scottish Government announced a Pilot Loan Scheme which will offer interest free loans which can be spent on upgrading boilers, insulation, double glazing or renewables. Finance and Sustainable Growth Secretary John Swinney MSP said: "Energy efficiency is a key part of our economic recovery programme and our climate change ambitions. A waste of energy is a waste of money and with high fuel prices and the need to cut emissions, we must all take steps to cut energy use - in our homes, in the transport we 5use, in businesses and across the public sector.”

    Policy Interplay

    Although there is not any mention of fuel poverty per se in the Climate Change (Scotland) Bill, there is a clear synergy between the Scottish Government‟s approach to climate change and

    energy efficiency. Naturally, this should come as no surprise as fuel poverty is predominantly caused by inefficiently insulated households as can be demonstrated from the results of a consultation on the Energy Efficiency Action Plan below:

    “A 42 per cent cut in emissions from homes by 2020 would require substantial upgrades to properties - for instance:

    ; 1.55 million homes would need loft insulation

    ; 625,000 homes would need cavity wall insulation 6; 500,000 homes would need double glazing”

    The Scottish Government also introduced an energy efficiency scheme in February 2009. The Household Insulation Scheme “will deliver a street-by-street approach, offering energy audits

    and benefit advice to all households in the selected areas. Loft and cavity wall insulation will be offered where applicable. Around 96,000 houses are expected to benefit in the first year of 7the scheme... (the Housing insulation Scheme) will also create and sustain around 900 jobs.”

     5 Loan Scheme for Home Insulation http://www.scotland.gov.uk/News/Releases/2009/10/08103328 6 Loan Scheme for Home Insulation http://www.scotland.gov.uk/News/Releases/2009/10/08103328 7 Energy Action Scotland http://www.eas.org.uk/index.php?page_id=135

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    To reiterate: while fuel poverty is not specifically mentioned in the Climate Change (Scotland) Act 2009, the emphasis on Energy Efficiency is important for the Fuel Poverty agenda in Scotland as it is the only area that the Scottish Government. Potential tensions, as the Government point out, need to be ironed out in that carbon saving may be achieved more cost-efficiently by seeking to influence fuel-rich households, with the potential to save relatively large amounts of carbon per property and less need to rely on grants” (see ref 2, p42).

    Fuel Prices

    A major issue which the Scottish Government are unable to deal with is the rise in the cost of fuel. The Scottish House Condition Survey Key Findings 2007 indicates that whilst income rose by 10% from 2006-2007, fuel costs rose by 4% and standing charges by 17%. With this in mind, the question as to what are the government doing to suppress this sort of increase arises.

    The Scottish Government does not have control over the regulation of energy companies and therefore over fuel prices. Nor do they have control over the provision of benefits for individuals in order to increase their income to assist in paying for their heating. Whilst the Social Security Act 1990 allows the Scottish government to pay out grants to people for the purpose of insulating their home „the Scotland Act reserves to Westminster all matters relating to social security benefits (which determine the incomes of many low income households) and 8to the regulation of energy companies (including pricing).‟ Therefore there is a barrier

    hindering the government from taking measures to prevent fuel costs rising. The Scottish Government does promote benefit up take alongside Westminster in order to encourage those on low income‟s to utilise any means of gaining help.

What have Westminster been doing?

    The UK Government have introduced social tariffs which are said to reduce the impact of rising fuel prices on low income households. Social tariffs are not however viewed as the 9solution to fuel poverty but rather a complement to other measures. Effectively organisations

    are encouraged to offer reduced tariffs to clients that they believe are in households that are vulnerable to Fuel Poverty.

They are also running a three year Programme entitled the Carbon Emission Reduction stTarget (CERT) which came into force on 1 April 2008. This programme places an obligation

    on energy suppliers to reduce their carbon output by promoting more efficient “energy saving measures, including loft and cavity wall insulation and high-efficiency lighting and 10appliances.”

Partnership working

     8 http://www.scotland.gov.uk/Resource/Doc/1035/0060411.pdf „Review of Fuel Poverty in Scotland‟

    2008 pg24 9 http://www.scotland.gov.uk/Resource/Doc/1035/0060411.pdf „Review of Fuel Poverty in Scotland‟

    Pg 26 10 The Department of Energy and Climate Change

    http://www.decc.gov.uk/en/content/cms/consultations/open/cert/cert.aspx

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    Undeniably both the UK and Scottish Government have to make a more concerted effort to work together to fight fuel poverty. Whilst urging person‟s to ensure they are collecting all the benefits they are entitled to has been a collective approach by both Government‟s, they must join up in their approach to reducing fuel prices and in providing greater help in increasing the energy efficiency of vulnerable households.

It is clear there is a link between the Scottish Government‟s approach to fuel poverty and to

    climate change due to the fact that both are inherently connected and relate to fuel efficiency. What must happen now is that activists must use the high profile nature of climate change to shine a brighter light on the demise of Scotland‟s (indeed all) fuel poor. Meanwhile, we must

    ensure that progress is occurring in the key objectives set out in 2008 report (p4) by the

    Scottish Fuel Poverty Forum.

Tightening the Purse Strings

    The current economic conditions and the culminating squeeze on public finances should not jeopardise the 2016 target to “eradicate fuel poverty”. Yes, there is a need to take a “strategic 11view of how to manage public services with fewer resources in the next few years”. But the

    efficiency savings should not be found from the current (or future) housing and regeneration spending plans as set out in the Draft Scottish Budget Bill 2010-2011. At first glance it

    appears that our fears are misplaced with the increase of ?5m to the EAP in 09-10 as announced in the Budget Bill. Yet a closer look paints a different picture.

    Table 3.05 details detailed spending plans (level 3) for housing and regeneration and both areas are affected by cuts in spending. Focusing on the former, total cuts in spend between 09-11 amount to ?168.9m with the EAP‟s budget being cut by ?5m and home insulation

    spend freezing at ?15m. The Scottish Government explains that these are the result of the 2009 UK Budget‟s demand for “?5bn additional efficiency savings”. And Professor David Bell

    argues that the “level of spending on Housing and Regeneration in 20101-11 will still be

    around its long term average (see p12-13).

But with the current economic situation fraught with uncertainty and Scotland‟s public sector

    accounting for 50% of GDP public spending will have to be cut - or tax rises introduced. The key objective, then, for everyone involved in the fight against fuel poverty is simple: insulate the 2016 target from the expenditure pressure facing our public sector if indeed there is “no 12place for fuel poverty in [our] society”

Eilidh Clements,

    CSPP Research Associate (Energy & Environment)

     11 “The 2010-2011 Draft Budget”. Report by Professor David Bell, September 2009:

    http://www.scottish.parliament.uk/s3/committees/finance/budget/documents/2010-11adviserpaper.pdf

     12 “Towards 2016: The Future of Fuel Poverty in Scotland” A report by the Scottish Fuel Poverty Forum, Sep 2008: http://www.scotland.gov.uk/Resource/Doc/240939/0066903.pdf

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