Warming up

It is now ten years since the then Scottish Executive set out its plan to “end the misery” of fuel poverty.

Hugh Henry, then Labour’s Deputy Minister for Social Justice, said at the time it was “simply not acceptable” that people in 21st century Scotland were facing the dilemma of whether to pay their fuel bills, or buy basic necessities like food - this was neatly shortened to the soundbite “choosing between heating and eating.” That administration set itself the task of abolishing fuel poverty by 2016, creating the conditions where “all Scots can afford to enjoy the comforts of a warm, dry home.” The initial report, using data from 1996, estimated that 738,000 households were in fuel poverty, spending 10 per cent or more of their income on heating their homes - a sizeable 35 per cent of the population.

That year - aided by deregulation of the energy market and a drop in fuel prices - the numbers, according to the Scottish House Condition Survey, dipped to 293,000, just over 13 per cent of the population.

Since then, however, there has been a steady rise and groups like Energy Action Scotland, a charity which is campaigning to end fuel poverty north of the border, say the issue is now worse than ever.

Th e most recent SHCS figures show that 658,000 - or 27.9 per cent of Scots homes - were in fuel poverty in 2010. But Energy Action Scotland estimates that in 2012 this has risen far higher, to the 900,000 homes mark - 40 per cent of Scottish households.

Worse still, the number of people estimated as being in “extreme fuel poverty” - spending at least 20 per cent of their income on heating - has stayed at the 8 per cent mark in the last decade and there are now believed to be 185,000 people living in the direst of circumstances.

Th e concern over people being unable to afford heating for their homes is exacerbated during the colder months of the year - official statistics have seen the number of “excess winter deaths” in previous years at around 2,500 - although the most recent figures showed that in 2011/12, a far milder winter, the seasonal difference of deaths in winter was 1,420, the lowest for 61 years.

Energy Action Scotland hosts its annual conference in Dundee this month and it will focus on further action needed over the next four years if there is to be any chance of meeting the ambitious target of ensuring all Scots live in a warm, dry home.

However, the charity’s director, Norman Kerr, told Holyrood he did not believe there had been significant progress in eradicating fuel poverty and called for a “step-change” in measures to tackle it.

“We spoke a number of years ago about the choice between heat or eat, For many people that is still a real issue - do I put hot food on the table, or do I switch the heating on?

“With welfare reform coming along, where we’re talking about taking £1,000 a year off people’s benefits it’s going to become an even starker choice.” As with most issues, the bottom line comes down to funding and for all that is being done, Energy Action Scotland say the current level of direct government investment needs to be doubled from its current level of £65m.

And at the same time, a report commissioned by WWF Scotland into fuel poverty and climate change claimed the level of investment needed across both UK and Scottish Governments by 2016 was £6.3bn - but the level of funding actually available is just £0.85bn.

The total funds allocated to tackling fuel poverty by the Scottish Government in 2012/13 is around £200m, with £65m coming directly from the Government coffers and the rest due to come from private investment.

Kerr says over the years funding has fallen short of what has been needed and money needs to be reallocated from elsewhere.

“Yes, the Scottish Government are spending £65m, that’s indisputable, what is the impact of that £65m? From Energy Action Scotland’s point of view, it’s less of an impact than it should be,” he said.

“The Scottish Parliament needs to show the way. There are a number of choices that government has to make; none of them are easy choices.

“Do we need to dual the A9 as quickly as we can? I’m sure some people will argue we do. But there are nearly 3,000 excess winter deaths in Scotland every year that are attributed to cold damp homes, should we not be doing something to reduce that.

“A result for me would be for the Scottish Government in the budgets for 2013/14 to 2015/16 to double what they are doing to £130m or £140m as well as having to attract that other private sector investment, That’s the kind of scale we need to see.

“That will mean hard choices, it will mean that they will need to put other projects onto the back-burner or get better value out of those projects, but we do need to see a significant scale up on investment.” The WWF report ‘Mind The Gap’ said the level of ambition on energy efficiency needed to be reviewed: “Otherwise, there is a very real danger that these policies will fall well short of delivering the short to medium-term carbon reduction and fuel poverty targets.” One of the central strands to tackling fuel poverty is ensuring homes are energy efficient.

This goes beyond simply insulating lofts and double-glazing and is about ensuring all homes, old and new, retain as much of the heat as possible.

There are already several schemes set up by both the SNP Scottish Government and Conservative/Lib Dem UK Coalition, policies which they claim will ease the burden on poorer households.

In Scotland the Universal Home Insulation Scheme, implemented by local authorities and funded by the Scottish Government, started in 2008 and is set to end in March 2013. It has seen more than 327,400 cavity wall or loft insulation installed, either free or at a discount, with more than one in every 10 homes receiving support.

In addition, more than 6,800 vouchers have been paid in support of householders and private landlords to replace old, inefficient boilers.

Replacing that is the National Retrofit Programme which was announced this year and is due to start from April next year. It will target whole areas across Scotland ensuring the existing homes are sufficiently insulated.

In the UK, the Energy Company Obligation (ECO) is replacing two other schemes aimed at addressing energy efficiency and the UK Government is launching the Green Deal - which will make it possible for homeowners to carry out work to improve their homes - but with no upfront costs. Retrofitting or insulation works worth £10,000, for example, would be added to the mortgage on the home and stay with the property not with the owner - although this has caused some concerns over whether it would make homes harder to sell as they have outstanding finance on them.

Scottish ministers have regularly decried the existence of fuel poverty “in an energy- rich country like Scotland” and Deputy First Minister Nicola Sturgeon, who has taken over responsibility of infrastructure and investment from Alex Neil, announced last month a series of extra measures: 10,000 extra homes are being given help to cut their energy bills with an additional £6m on insulation, and 35,000 homes would be able to get £500 vouchers to contribute to measures for their homes.

Her announcement came on a tour of a scheme run by Glasgow City Council and Lochfield Housing Association to improve insulation for more than 200 homes in the city’s Easterhouse area, including fitting exterior cladding, new roofs and guttering.

Speaking to Holyrood, she defended the Government’s record on funding energy efficiency measures in particular and compared it to the UK Government where directly funded fuel poverty measures are now being phased out and will be funded from the contributions of the energy companies.

She said: “I have got a lot of sympathy with these organisations that want to see as much money invested as possible.

“The Government is determined to invest as much money as we possibly can.

“Comparing both the Scottish Government and the UK it couldn’t be clearer. “In total we are spending around a quarter of a billion pounds over the spending review period on fuel poverty and energy efficiency which lies in stark contrast to the Westminster Government, which has cut its fuel poverty funding in England year on year – it will be the only country in the UK not to have government-backed support.

“Energy price increases certainly haven’t helped. Every 5 per cent increase in energy price is estimated to put about 46,000 to 47,000 people in fuel poverty.” She added: “Not only is this completely unacceptable in an energy rich country like Scotland, it also risks undoing the good work that the Scottish Government is doing to tackle this hard-hitting issue.

“That is why we are urging the UK Government – which has responsibility in this area - to take a firmer stance with energy companies in terms of regulating price rises.

“I am also personally committed to meeting with all the energy companies to discuss price rises and what more can be done now to help vulnerable customers in particular.” A spokeswoman for DECC said that although fuel poverty is devolved to Scotland there were measures being taken that would help UK-wide.

She said: “The UK Government has introduced a number of policies that benefit consumers right across Great Britain.

“Around 2 million households will get help under the Warm Home Discount Scheme this year, including over 1 million low income pensioners who will automatically get £130 off their bill. In the longer term we will be helping people use less energy through the Green Deal and Energy Company Obligation, giving extra help to those who need it most.” It is the issue of energy bills that has repeatedly hit the headlines in recent months - particularly as winter approaches.

Five major energy firms have announced a rise in prices, with the most recent - and largest average increase - coming from EDF Energy, which said its gas and electricity prices would be going up by 10.8 per cent from 7 December.

The rise was blamed on the wholesale cost of energy and charges from the UK Government for energy efficiency schemes. E.On is the only one of the ‘big six’ not to put its prices up this year.

UK ministers have criticised the rises and Prime Minister David Cameron said in Parliament that he wanted to ensure that companies would be forced to put their customers on the lowest tariffs available.

But there have been calls to go further than that.

At this year’s Labour conference, Shadow Energy Secretary Caroline Flint criticised the regulator Ofgem for failing to prevent high price rises and pledged that her party would scrap it and start again.

“Why, when prices rise,” she asked, “do bills go up like a rocket but when they come down they fall like a feather - if at all?

“The reason is - they’re allowed to run their businesses in such a complicated way that it’s almost impossible to know what the true cost of energy is. This must end.” Kerr agrees an overhaul is needed of the energy market - but said: “It’s fine to have the soundbite, but what are we going to replace the regulator with unless you completely overhaul what they are able to regulate?” He has called instead for an overhaul of the wholesale energy market, which makes up the largest part of electricity bills. “We do need to take a serious look at this part of the market,” he said. “Ofgem are saying we want the generators to sell more on the ‘day-ahead’ market and I think that’s fine but I don’t know that that’s a market that’s truly understood by people who are not in the industry.

“Ofgem say that there’s competition by selling that, and concluded that that competition works well. But I would have to suggest if that’s the biggest part of the bill and that keeps going up, that’s not really working particularly well.” And he added for all the criticism from Westminster ministers and MPs on rising prices, they are also benefiting from the extra VAT.

“They get to wring their hands and say it’s terrible that prices have gone up. But they get the VAT increase on that. The Government get a sizeable return on VAT but yet put nothing from the collection of that VAT into the energy efficiency policy.” He also added that there were “fundamental issues” about the way fuel bills operated, with part of the cost going towards funding energy efficiency measures - the Energy Company Obligation.

“Every customer in the UK currently pays about £88 a year on their bill on those environmental taxes. The downside of that is that it is an exceptionally aggressive way to do that, because it’s a flat rate on the bill, irrespective of how much energy you use.

“A single, young, unemployed, under-25 mother in a one-bedroom flat, struggling on benefits, not achieving national minimum wage, is paying the same as a family of four who are all in employment, living in a three or four-bedroom house, that will consume significantly more energy and who can afford to pay for more energy.” One of the solutions that is frequently put forward to combat the energy companies raising costs, is to encourage people to shop around - just like they do for car insurance or phone contracts.

The advice is echoed by the UK’s Department for Energy and Climate Change, where a spokeswoman said: “We would urge all consumers to shop around and check that they are still on the best energy tariff – and if they find they are not, vote with their feet and take their business elsewhere. The Government is taking action to make that even easier for consumers to do.” It has also advocated community schemes where people club together to get a better deal on their energy - “collective purchasing and switching” - such as ‘Cornwall Together’.

But while ultimately the customer has the power to walk away and change providers, Kerr disagrees that simply switching the supplier is the answer, saying customers should be helped to get better deals from their existing suppliers - and companies encouraged to reward loyalty.

“If you’re on the wrong tariff or wrong payment method and you switch your supplier onto exactly the same, you’re no better off - you’ve saved a few pounds, but is it worth the hassle of saving £20.

Would you change your car insurance for £20 - you might change it if it was £100.” Schemes like the Home Heat Helpline - which is funded by the energy companies - are available to help people through the process of simplifying their energy bills.

Ultimately the bill that comes through the door is only one strand to the causes of fuel poverty. Many of those susceptible to it are likely to be in employment, but in low-paid jobs. The classification for those vulnerable to fuel poverty, is people who earn less than £400 a week - with 80 per cent of those who earn less than that classed as fuel poor. It is where commitments being made to ensure people in Scotland earn a living wage are coming to the fore - although at the moment this is restricted to some parts of the public sector.

One of the ways in which schemes like the Energy Assistance Package are aiming to assist vulnerable households is by ensuring people are claiming all the benefits they are entitled to.

The Scottish Power Energy People Trust, which Norman Kerr chairs, recently visited a project in Brighton which was able to increase the benefits of working families by as much as £1,500 a year - equivalent to some heating bills.

Energy Action Scotland’s conference, to be held on 8 and 9 November, will feature a variety of speakers including Ian Marchant, chief executive of SSE, Nicola Sturgeon and David Sigsworth, the chair of the Scottish Fuel Poverty Forum.

Included in the list is Dr Peter Cawston, GPs at the Deep End, which looked at the health impact of fuel poverty in the 50 most deprived areas of Scotland.

Kerr said: “In the report they’re listing people presenting with mental health problems, deep anxiety because they’ve not got the money to pay for the energy bill, the food bill, they’ve run out of money to pay the rent and their question is ‘what one do I pay this month?’ “If people present at the doctor’s surgery with severe depression, the doctor is prescribing some tablets to help the depression, but what he’s actually thinking is I should be prescribing you a more efficient home or something that will help reduce your energy bill.”