1. Introduction and context
The Scottish Government’s fuel poverty definition considers the proportion of household income post housing that is required to heat a home. At a household level, levels of fuel poverty can be mitigated by reducing the volume of energy used (i.e. through the installation of energy efficiency measures), or by increasing household income, or reducing the amount paid for fuel. The Scottish Fuel Poverty Advisory Panel are interested in the relative efficacy of approaches which increase household income or reduce the amount paid for fuel as mechanisms for mitigating fuel poverty, Currently, a variety of approaches are used for this end. Warm Home Discount is directly applied by energy suppliers to eligible households’ bills, whereas cold weather payments including Pension Age Winter Heating Payment, Winter Heating Payment, and Child Winter Heating Payment are provided as cash.
The Analytical Annex to the Scottish Government’s Fuel Poverty Strategy states that in the majority of case reducing fuel bills directly is a more effective means of reducing fuel poverty rates than providing a more general income-related benefit[1]. This is due to the criterion in the fuel poverty definition that fuel costs are more than 10% of net income after housing costs. As a result, this analysis finds that in terms of reducing fuel poverty as technically defined, £10 off a fuel bill would have the same effect as increasing income by £100. However, there are arguments for a cash-first approach to poverty support on the grounds of personal choice, dignity, and autonomy. In the example of food insecurity, the Scottish Government has moved towards a cash-first system in order to prioritise beneficiaries’ dignity and autonomy and enable people to make their own choices to meet their essential needs[2].
In the example of housing, with the introduction of Universal Credit (UC), the Department for Work and Pensions moved to a model where housing costs are paid directly to the benefit recipient. In Scotland, a recipient can request to have the housing element of UC paid directly to their landlord after the first payment is made – this is referred to as “Scottish choices”. In England and Wales, this is only possible through an Alternative Payment Arrangement for those who are struggling to budget, in rent arrears, or vulnerable.
Within the context of fuel poverty there is minimal discussion of the comparative advantages and disadvantages of income-based support versus money off energy bills question. Given this, SFPAP issued a call for evidence to a range stakeholders who work within the areas of fuel poverty specifically and poverty more generally. Questions were issued in November 2025. The questions asked are provided in Annex A to this report. The following organisations responded to the Panel’s questions:
- Changeworks
- Citizens Advice Scotland (CAS)
- Energy Action Scotland (EAS)
- Energy Saving Trust (EST)
- Energy UK
- Fuel Bank Foundation (FBF)
- The Institute for Public Policy Research Scotland (IPPR Scotland)
- The Poverty and Inequality Commission (PIC) and their Experts by Experience Panel
- The Scottish Federation of Housing Associations (SFHA)
- The Wise Group
Given the small number of respondents, the findings presented in this report do not represent the perspectives of the whole poverty sector, but they do provide an interesting overview of the relevant arguments.
The report that follows provides the arguments from these organisations’ responses, as well as supplementary evidence from the limited relevant literature that exists. Part 2 of this report will focus on income-based support, with part 3 focusing on money off energy bills. Following these, part 4 will focus on other approaches to fuel poverty as discussed by the respondents to the call for evidence. Part 5 will discuss potential approaches to energy debt, and part 6 will analyse other comments from the call for evidence.