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Free central heating for pensioners and families

19/09/2000

A £350 million total investment to help instal free central heating for all pensioners and all social tenants across Scotland in the next five years was announced today by the First Minister Donald Dewar and Communities Minister Wendy Alexander.

Around 70,000 pensioners and 71,000 other council and housing association tenants are set to benefit from the scheme which will involve the installation of central heating and insulation.

The scheme is expected to save elderly people an average £550 a year on their heating bills. Over 90 per cent of those who will benefit from the scheme will be taken out of fuel poverty.

Announcing the scheme the First Minister said:

"The aim of this project is clear - to provide warm, dry homes to those most in need.

"Our first priority is for all council and housing association pensioners to have their central heating installed.

"This scheme will radically improve the health of the elderly, reduce the number of winter deaths and pressures on the health service."

The groups who will benefit are:

  • 40,000 pensioners who are owner-occupiers or rent in the private sector
  • 85,000 council tenants (around a third of these are pensioners); and
  • 16,000 housing association tenants (again, around a third are pensioners).

This morning (Monday 18 September) Communities Minister Wendy Alexander will meet with energy companies, COSLA, Energy Action Scotland, Help the Aged and Age Concern to discuss the scheme, which includes advice on efficient heating use.

Ms Alexander announced that a working group will be set up to ensure effective implementation of the scheme. She said:

"A home which is properly heated and insulated is cheaper to run than one which has heating from electric bar fires and therefore it is important to recognise - it's warmer and smarter.

"We are determined to ensure that everyone gets the maximum benefits from the scheme. It's not just about installing central heating systems but ensuring homes are properly insulated and people get proper advice about using their systems.

"All the major players are involved in this radical project. This Government is committed to delivering social justice to the heart of Scotland and this scheme does exactly that."

The working group will be chaired by Deputy Local Government Minister, Frank McAveety and will include representatives from Transco, Scottish Gas, ScottishPower, Scottish Hydro-Electric, COSLA, Energy Action Scotland, Age Concern and Help the Aged.

BACKGROUND

1. A background note on the scheme is attached.

2. The total programme will involve investing £350 million and will be fully fundable through new money, support from Scottish Homes and the Warm Deal, resources from reduced debt repayments, obligations on new landlords and support from Scottish Gas, ScottishPower and Scottish

Hydro-Electic. Transo will also commit to the programme under their Affordable Warmth programme for installation of heating systems.

Briefing paper

Central heating for the elderly and families

Summary

The biggest ever programme to tackle fuel poverty in Scotland. Around 70,000 pensioners and 71,000 other council and HA tenants will receive central heating, insulation, and energy advice. The total investment will be around £350 million. Those who benefit will typically see their fuel costs halved. More than 90% of beneficiaries will be taken out of fuel poverty.

1. The programme will install central heating, insulation and offer energy advice for all council homes and all private homes where the householder is a pensioner. The programme will be completed within five years starting from next April. The first priority for new systems will be pensioners in council houses. Around 70,000 pensioners and 71,000 other council and housing association tenants will benefit under the scheme. The average cost of improvement is estimated at £2,500 of which £2,000 is for the system and £500 for insulation and advice.

2. This is the top spending priority for the extra money for housing and communities. The total programme will involve investing £350 million and will be fully fundable through new money, support from Scottish Homes and the Warm Deal, resources from reduced debt repayments, obligations on new landlords and support from Scottish Gas, ScottishPower and Scottish Hydro-Electric. Transco will also commit to the programme under their Affordable Warmth programme for installation of heating systems.

Key Outcomes

3. Installing central heating and insulation will:

  • Improve the health of the elderly, reduce the number of winter deaths and lower the incidence of cold-related illnesses. A recent study funded by the Joseph Rowntree Foundation showed a link between a low indoor ambient temperature and ill-health for the elderly.
  • Reduce the pressure on the NHS, for example, the average cost of a visit to the GP is £17;
  • Lower the cost for pensioners of heating their home to an adequate temperature to reduce the number in fuel poverty. Over 90%, i.e. over 125,000, of people who benefit under the scheme will be lifted out of fuel poverty; and
  • Through efficient heating and effective insulation reduce CO2 emissions (the estimated reduction for installing central heating and insulation is 0.8 tonnes of CO2 per annum - a saving of about 10% per home).

Who would benefit?

4. The groups who would benefit are:

  • 40,000 pensioners who are owner-occupiers or rent in the private sector;
  • 85,000 council tenants (of which we estimate one third are pensioners who lack central heating); and
  • 16,000 housing association tenants (again we estimate one third to be pensioners).

5. The income profile for the pensioners is that 45% have incomes of less than £100 a week, 30% between £100 and £200, and 25% have more than £200 a week. Although 25% have incomes over £200 per week, many are not far over this threshold and a significant number of this group would be classified as fuel poor under the commonly accepted definition of needing to spend more than 10% of their income on fuel. They would qualify for a high level of improvement grant support for the work if a means test were applied. As such, the arguments for means testing the programme are weak and there would be little or no saving in practice.

Cash Savings for Elderly People

6. A home which is centrally heated and properly insulated is more efficiently and affordably heated than with electric fires, convection heaters etc. The figures in the following table show the estimated average savings of £550 per annum per household. The figures take account of the use of different fuel sources for heating. In practice some of the savings will usually be taken as extra warmth and some as cash.

7. Once central heating has been installed it will typically half bills as the average annual heating cost with central heating and insulation would be less than £500. Obviously the prevalence of fuel poverty means many pensioners do not spend £1000 heating their homes, but this scheme will allow homes to be heated to a temperature that would cost £1000 on average if central heating and insulation were not present. These cost and savings figures have been produced following consultation with the energy companies and Energy Action Scotland.

Insulation only

Central Heating only

Both

Saving

£180 per annum

£400 per annum

£550 per annum*

*The figures for both improvements, i.e. £550 is less than £400 plus £180 because, less heating is required where insulation is in place reducing the effect of the heating system.

How we would deliver the programme

8. There will be different delivery mechanisms for the different groups to benefit.

  • Private sector: The Housing Bill will allow improvement grants to be paid for the installation of heating and insulation.
  • Council stock (7 councils considering stock transfer): a requirement to include the provision of heating and insulation is part of the transfer terms and the valuations must be prepared on this basis.
  • Council stock (other): the resources will be paid as specific grant to ensure that the money is genuinely additional to existing resources.
  • Housing associations: the resources will be paid as grant by Scottish Homes.

8. The Working Group (see below) will examine delivery issues further before final decisions are made.

Working in Partnership

9. We will take this programme forward in partnership with local authorities, the private sector and voluntary organisations.

  • Transco are underwriting leasing deals to authorities for heating systems which benefit from tax breaks and a number of authorities are already exploring these.
  • Scottish Gas, ScottishPower and Scottish Hydro-Electric are required under their regulation to meet Energy Efficiency Commitment targets as laid down by Ofgem and have agreed to work with the Scottish Executive to deliver a co-ordinated programme.
  • Local authorities will support the sustainability of the programme by using their existing resources to replace or upgrade 20,000 obsolete systems per year (this figure will fall as stock is transferred to housing associations). We will also encourage them to work with Transco and other leasing companies to ensure value for money and we are exploring this with COSLA.
  • Energy Action Scotland will help in the design of the implementation programme.
  • Help the Aged and Age Concern will help in the design of the programme and provide advice on reaching the key target group.

10. The Deputy Minister for Local Government, Frank McAveety, will chair the Working Group involving all the organisations named above to prepare a detailed implementation plan so that work can begin in installing systems in April of next year. This Group will examine the most effective methods for delivering the programme and ensure that it achieves its objectives.

PRESS CONTACTS - for Sunday

Transco

Attendee: Bill Russell

Contact: Francoise van Buuren (0131-559-6235/0385-290494)

Scottish Power

Attendee: Willie MacDiarmid

Contact: Colin McSeveny (0850 884815)

Scottish Hydro-Electric

Attendee: David Sigsworth

Contact: Bob Major (07767-852823/01383-722549)

Scottish Gas

Attendee: Steve Gorry

Contact: Nance Smith (0131-559-5302/07979-566264)

Energy Action Scotland

Attendee: Ann Loughrey

Contact: Ann Loughrey or Norman Kerr (0141-226-3064/07711-375647)

Age Concern

Attendee: Jess Barrow

Contact: Age Concern Scotland (0131 220 3345)

Help the Aged:

Attendee: Richard Baker

Contact: Richard Baker (0131-556-4666/0773-0911565)

COSLA

Attendee: Michael McGlynn

Press officer: David Kennedy (01968 670165/07788 452 710)

STUC

Attendee: Graham Smith

News Release: SE2497/2000
19 Sep 2000