Utility Week

Customers UTILITY WEEK | 24TH - 30TH NOVEMBER 2017 | 23 Analysis T here 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 Scot- tish National Party from its Labour prede- cessors, was that fuel poverty should be eradicated "as far as is reasonably practica- ble" 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 one- 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 last week announced that it would introduce a new statutory target to eliminate the curse of cold homes, which will be enshrined in a Warm Homes Bill, 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 Scot- tish 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 pov- erty, it includes a number of interim steps for tackling cold homes. By 2030, the paper says, the overall fuel poverty rate should be less than 20 per cent and 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, that is, the amount they are out of pocket thanks to high fuel costs, should be no greater than £450, based on 2015 prices before adding inflation. By the end of the following decade, the consultation paper pledges the overall fuel poverty rate should be less than 10 per cent and that all homes should have reached a "minimum" energy performance rating. By this point, it states, the median house- hold fuel poverty gap should be no more than £250. The Scottish government is also revis- ing its definition of fuel poverty to exclude housing costs, which it is agreed should help focus attention on the lower income house- holds that most need help. While welcoming the recommitment to a statutory target, Craig Salter, energy spokes- man for Citizen Advice Scotland's consumer futures unit, says he looks forward to "fur- ther details" over the coming months. Stewart agrees more detail is important. "We would like there to be a date to end fuel poverty with funding commitments." Targeted approach "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 effi- ciency 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 effi- ciency has recovered to £129 million, this is less than the £200 million a year that 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 one-third since the target was set in 2003, while fuel prices had risen by 170 per cent over the same period. This analysis, though, needs to take into account the artificially low level of energy prices that existed 15 years ago, says Kerr: "The 12 months 2002/03 was the peak of the deregulated market: prices were unsustainable." However, he has some sympathy for the Scottish government given the relatively high heating costs customers have to pay, particu- larly 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, rather than the £1,400 paid by bill payers across the UK as a whole. In the Orkney Islands, according to the fuel poverty monitor, 65 per cent of house- holds have trouble paying their energy bills compared with a Scotland-wide average of around 30 per cent. "Undoubtedly, had the Scottish gov- ernment 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 Scot- land was down 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 improvement 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 redou- bled efforts to address the factors that have largely driven the increases in fuel poverty in recent years. This is likely to be more chal- lenging and will require more innovative solutions, because 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. Fuel poverty in Scotland 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. By David Blackman.

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