The Scottish Fuel Poverty Advisory Panel consultation response to the Review of England's Fuel Poverty Strategy

The Scottish Fuel Poverty Advisory Panel has responded the the UK Government’s consultation on its review of England’s Fuel Poverty Strategy. The Panel has chosen to do this because the proposals for England's new strategy include a foundational pillar of energy affordability, which will, or certainly has the potential, to have benefits for Scottish households too.

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4. Energy Market Reform

Your consultation notes the transition to net zero and the reform this is driving to the energy market, as a challenge in supporting those suffering fuel poverty. As the energy market restructures to one supplied predominantly through renewables and away from fossil fuels, there is a real opportunity to achieve lower and less volatile energy prices, if accompanied by fair energy pricing and supportive policy choices. There is a key question to be answered around how this transition can tackle fuel poverty head-on, rather than solely avoiding detriment, although avoiding detriment is vital too. In addition to effective support for vulnerable consumers, this requires strong policy alignment to ensure that low carbon heating systems can provide thermal comfort at an affordable installation and running cost. There is also the potential future detriment for those in (or vulnerable to fuel poverty) on the gas-grid, as the transition away from gas to electric heating gains momentum. There is a risk that those still on the gas-grid could bear a disproportionate burden of the policy costs, just as is currently the case for those with electric heating systems.

The careful rebalancing of gas and electricity prices is needed to address current, and avoid future, inequity. Ensuring that fuel poverty mitigation features as a measurable objective within wider net zero policies will help to facilitate a just transition. Net zero is a challenge for the Scottish and the UK Governments but the UK Government does hold the levers on energy market reform and energy pricing which has an impact on the capacity of the Scottish Government in their aim to deliver a just transition.

At the heart of all these complex policy challenges are those in fuel poverty. We note your question on whether to introduce an affordability factor to sit alongside the official LILEE measure for fuel poverty in England and can offer some reflections from working with the Scottish fuel poverty definition. The Scottish fuel poverty metrics do include an affordability measure – a household is in fuel poverty if after paying for its housing costs it needs more than 10% of its remaining income to pay for its energy needs, and if after paying for its energy the household is left in poverty (as defined by the Minimum Income Standard). We have recently been investigating rural and remote fuel poverty in Scotland and have heard how using the first part of the fuel poverty measure for Scotland (a household is in fuel poverty if after paying for its housing costs it needs more than 10% of its remaining income to pay for its energy needs) over 80%[5] of households in the Western Isles fall into this category. Applying both fuel poverty measures – income and housing energy needs – gives a figure, for the Western Isles, of 57%[6] of households suffering fuel poverty.

These two figures – 80% and 57% of households – shine a stark light on the challenge which many communities in Scotland face in the struggle to heat their homes and why a flexible energy discount mechanism is needed as well as energy efficiency improvements and equitable energy pricing. It is why it is imperative that Scotland’s needs are considered within consumer protection and market energy reform.

In conclusion, we hope that the thinking we have offered on a flexible energy discount mechanism, the need for energy market reform to have the alleviation of current and prevent future fuel poverty as a core objective, and changes to fuel poverty funding models will be helpful. The Scottish and UK Governments have separate Fuel Poverty Strategies to enable and bring focus to their fuel poverty policy delivery. However, a collaborative framework for effective responses to fuel poverty is also a prerequisite to achieve enduring change for those in, and at risk of, fuel poverty.

We would be very happy to meet with you to discuss the issues we have set out further.

Kind Regards,

Matthew Cole (Chairing Member)
Margaret Corrigan (Member)
Dr Kirsten Jenkins (Member)
Alister Steele (Member)
Dr Fraser Stewart (Member)

The Scottish Fuel Poverty Advisory Panel
7th Floor
Atlantic Quay
150 Broomielaw
Glasgow, G2 8LU

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