Note of Meeting of Scottish Fuel Poverty Forum 30 May 2008 – Annex B

Review of Fuel Poverty Presentation to Scottish Fuel Poverty Forum 30 May 2008

Need for review The Scottish Government is committed to ensuring, so far as reasonably practicable, that people are not living in fuel poverty in Scotland by November Prognosis not good. Numbers of fuel poor increasing, and nature of Programmes to tackle it has changed. Time to take stock of what has been achieved and what changes to Programmes required to achieve the target.

Definition of fuel poverty A household is in fuel poverty if, in order to maintain a satisfactory heating regime, it 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 Scottish Fuel Poverty Statement 10% rule – at margin, incomes have to rise 10 times the rate of fuel prices to prevent fuel poverty

Extent of fuel poverty Increasing proportion of households, and likely to continue rising with fuel price rises 543,000 households in 2005/06 (23.5%) 173,000 households (7.5%) in extreme fuel poverty, over 20% of income

Higher rate than England 23.5% vs. 7% of households, even though Scottish homes more energy efficient (55-59 vs.48 using SAP). Why? Satisfactory heating defined as warmer for pensioners in Scotland than England Higher proportion of pensioners and long term sick More rural households – off gas grid, hard to insulate homes Longer heating season with colder climate & higher windspeeds

Determinants of fuel poverty Reduction in fuel poverty between 1996 and 2002 attributable to: Household incomes (50%) Fuel prices (35%) Energy efficiency of housing (15%) First two largely reserved, third devolved.

Fuel price increases 30% real rise in gas prices and 20% real rise in electricity prices between May 2005 and May 2006

Impacts of various changes on fuel poverty levels If all housing attains NHER 7 would reduce rate from 23.5% to 18.2% If all housing attains NHER 10, would reduce rate to 10.0% To eliminate fuel poverty, total personal incomes in Scotland would have to rise by £3-3.5 billion per annum (c.5%)

Central Heating and Warm Deal Programmes Achievements: CHP: Installed 97,000 central heating systems and spent £300m Warm Deal: Installed insulation measures in 280,000 houses and spent £80m Warmer homes, lower fuel bills and carbon savings

Central Heating and Warm Deal Programmes Issues: CHP not well targeted at the fuel poor Switch from first time systems to replacements Insulation measures under both CHP and Warm Deal not well integrated with CERT – displacing fuel companies?

Central Heating: Private Sector Installations Changing Programme:

Switch from First Time Systems to Replacements First time systems fallen from 91% to 7% Less carbon and fuel bill savings from replacements

Proportion of Households by Age that is Fuel Poor Half those eligible for Central Heating are not fuel poor Quarter of all fuel poor households are not eligible for Central Heating as under 60

Relationship between Fuel Poverty and Household Income Closer correlation between low incomes and fuel poverty than between age and fuel poverty ¾ in the bottom two deciles of income are fuel poor

Synergy with other Government policies? One Government purpose Solidarity – tackling poverty Cohesion – effective rural delivery Housing Repairs and Improvements – owner responsibility Sustainability – concerted action required, work with energy companies not in competition

Conclusions Review concludes: Fuel Poverty a growing problem Challenge to meet the 2016 target Current programmes have achieved a lot, but becoming less effective Leaves hanging the question for the Forum - How to use resources more effectively going forward?