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3. Devolved Policy Issues
3.1 Definition and Measurement of Fuel Poverty
We recognise there are a number of potential problems and anomalies with the current measurement of the numbers of people in fuel poverty. We are concerned that the measurement of fuel poverty underestimates the impact of fuel poverty on families with young children under five. We understand that, up until 2002, the full Satisfactory Heating Regime was applied to households with children under five 4, and we believe that a more accurate picture of fuel poverty would be achieved by re-applying the Full Satisfactory Heating Regime. To preserve continuity in the available data, we do not suggest that the definition is changed but recommend that both sets of figures should be provided in future SHCS publications.
Furthermore, we note that the measurement of fuel poverty is based on a theoretical level of energy use at a standard price, rather than actual spend, which may mean that some of the improvements recommended here, such as switching from a standard tariff to a discounted tariff, will not impact on the official numbers of fuel poor. Information from the Scottish House Condition Survey indicates actual spending by pensioner households was less than the projected cost of keeping their homes reasonably warm, suggesting they may be rationing their own energy to save money, while families with young children are spending more in order to maintain warm homes. "Flagship or Flagging" - a recent report 5 by Age Concern (England) - found that, as a result of the rising cost of living, two-thirds of pensioners are cutting back on the amount of gas and electricity they are using.
3.2 Holistic Approach
We believe that an effective response to the seriousness of the situation must embody a holistic approach, in the form of an Energy Assistance Package that addresses both the home and the householder. The package which we propose includes advice on tariffs to address energy prices paid, a benefit check to maximise income, and an energy audit with follow up to provide physical means of reducing energy use.
Education and advice on effective use of energy are key to this and should proactively target those most likely to be fuel poor. Beyond the installation of specific energy efficiency measures, all grant schemes should include energy advice and income maximisation advice; and these must be seen as independent and streamlined, recognising that a one stop and face to face approach will be most effective. We must build on the experience of how people access and use advice.
Income maximisation measures should build on existing knowledge and practice through current infrastructure, such as Citizens Advice Direct and the Scottish Helpline for Older People. Exploring ways of integrating benefits and tax credits uptake from enquiries to Energy Saving Scotland Advice Centre ( ESSac) network 6, companies and Government programmes would be of considerable benefit.
3.3 Specific Issues
(a) Houses off the gas grid - of which Scotland has more than a proportionate share - represent particular difficulties. A wider range of solutions should be offered here, particularly sustainable solutions such as micro-renewables (building on the emerging findings of the Renewables Pilot which were shared with the Forum prior to their publication), micro-generation and community-scale combined heat and power. Where such measures have the potential to reduce fuel poverty, there should be targeting in carbon reduction schemes to maximise reductions in fuel poverty.
(b) For other hard to treat properties - where fuel poverty is harder to eradicate - those insulation measures (e.g. external and internal wall insulation) that are known to work should be included more widely as part of any grant programme. Further research may be needed on ensuring the most effective technologies for some property types (e.g. high rise blocks and tenements).
3.4 CERT Activity in Scotland
While CERT activity originates in agreements between the UK Government and the energy companies, we welcome the formation of the Scottish Government's CERT Strategy Group. We welcome that an agreement, in principle, has been reached through that Group for energy companies and Scottish Government to work together to deliver at least pro rata CERT investment in Scotland, to report activity levels in Scotland and to support an integrated approach to fuel poverty. Suppliers are expected to achieve at least 40% of the carbon savings under CERT from priority group customers; we would expect the Scottish Government to work with the energy suppliers to maximise the amount of these savings that benefit the fuel poor. Our proposals would contribute significantly to making it easier for energy companies to access information and people in Scotland.
On 11 September 2008, the Prime Minister announced details of a £1 billion package of measures over 3 years to tackle fuel poverty, including a 20% increase in CERT spending and a new £350 million Community Energy Saving Programme which would target fuel poor areas. The measures to be included under CERT will be subject to consultation and we urge the Scottish Government to use this opportunity to make representation to ensure that CERT measures and those to be included in the Community Energy Saving Programme reflect the unique nature of the Scottish housing stock.
3.5 Bulk Purchasing
Consideration should also be given to bulk purchasing by Government on behalf of fuel poor customers. The concept of bulk purchasing was endorsed by the IPPR7 who calculated that around 2 million people could save around £83.5 million a year on gas and that 3.6 million people could save around £76.7 million on electricity. Such proposals deserve further scrutiny and consideration.
3.6 Partnership with Local Authorities
We note that Local Authorities share responsibility with Scottish Government for reaching the 2016 target for eradication of fuel poverty. Single outcome agreements already include outcomes and indicators aimed at poverty and inequalities, emissions reduction and climate change, but they do not all include a specific indicator on fuel poverty. We recommend that partnership working by the Local Authorities and Scottish Government to achieve the target continues, and we expect this will be reflected in the Local Housing Strategies.
3.7 Other Policies which Impact on Fuel Poverty.
We note that a number of policy areas will have an impact on fuel poverty, and we recommend that future policy decisions around, for example, the Climate Change Bill should include specific targets and measures for the residential sector which help tackle fuel poverty.
Recognition must be given within the Climate Change Bill that an early focus on domestic energy efficiency (ideally with a target and an action plan to deliver them) will yield multiple policy and practical benefits if priority could be given to people in fuel poverty.
Building standards and planning policy changes must also take into account how they can help reduce fuel poverty. Emerging carbon reduction schemes and other building-related policy changes (such as building standards, planning policy changes, an obligation to provide renewable heat, and specific measures for the residential sector) must all take into account how they can help reduce fuel poverty.
3.8 Energy Efficiency Investment
Raising the standard of the private rented sector would be beneficial to many fuel poor households. The forthcoming consultation on reducing emissions from existing domestic buildings should consider whether Government should set minimum energy efficiency standards for properties at point of sale or rental as a means to raise the standard of private rented and owner occupied sector. Another option would be to make the Scottish Housing Quality Standard ( SHQS) mandatory for private sector housing as it is currently for social housing. An alternative approach might be to raise the minimum repairing standard rather than the quality standard. Regardless of how it is set, the minimum standard could be raised over time, and is in our view only acceptable if accompanied by corresponding financial support.
We believe that a finance scheme consisting of low interest loans should be made available to those more able to pay, and to landlords of those in fuel poverty; these loans could either be paid back from energy savings or at point of sale of the property. Private landlords can also claim a tax deduction under section 312 of the Income Tax (Trading and Other Income) Act 2005, if they install energy saving measures in houses which they let. The Landlords' Energy Saving Allowance ( LESA) 8 allows them to claim up to £1,500 per property, and the energy saving items covered are loft, cavity wall, solid wall, hot water system and floor insulation and draught proofing. Currently Government grant support exists for microgeneration but not for insulation (except under the Warm Deal).
We believe that energy companies should look more closely at engaging in energy services and in providing long term contracts for higher value measures such as heat pumps, solar thermal, external insulation and CHP, where funding could be mortgaged by the individual or community through subsequent savings they make on their energy bills.
3.9 Scottish Fuel Poverty Forum
We believe that the Forum has an ongoing independent role both in monitoring programmes and in advising Scottish Ministers and others on further actions required, including fuel poverty proofing other Scottish Government policies such as the emerging anti-poverty framework. In the short time available for completion of this report, we have been unable to consider adding further bodies to the membership of the Forum; however, we believe that this should now be reviewed to ensure that the Forum is representative of relevant stakeholders. A formal link should also be established between the Scottish Forum and the equivalent bodies elsewhere in the UK.
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