Fuel Poverty Bill
We want everyone to live in homes that are warm and energy efficient. But there are still far too many households living in cold, damp houses that they can’t afford to heat. That is why we have introduced our world leading Fuel Poverty (Target, Definition and Strategy) (Scotland) Bill. This legislation is dedicated to tackling the root causes of fuel poverty.
The bill sets in statute, three aims:
1. That no more than 5% of households will be in fuel poverty by 2040.
This target is ambitious, not just for tackling fuel poverty, but also for ensuring that we can support the development of innovative technology and workforce that will deliver low carbon heating solutions.
2. Create a new definition of fuel poverty that better aligns with income poverty.
The current definition only captures those who spend more than 10% of their income on household fuel, which has had the unintended consequence of defining some higher income households as fuel poor if they live in large properties with correspondingly high energy bills.
3. Develop a long term fuel poverty strategy. We are working with a huge range of stakeholders on our draft. The strategy looks at fuel poverty as a whole and aims to support everyone who needs it no matter where they live.
Scotland is one of only a handful of countries to define fuel poverty, let alone set a goal to eradicate it. Achieving the target will place Scotland amongst the very best in the world in terms of tackling fuel poverty.
For the first time, we are considering how much income a household has left to maintain an acceptable standard of living after taking account of its housing costs, childcare costs and required spend on fuel. The new way of measuring fuel poverty will bring in more of those households with low income, not currently classed as fuel poor, and allow us to target our actions for this group more effectively.
To give you an example of what this new change would mean:
Ann is a single parent of a primary aged child who works 35 hours per week at the national living wage (£7.83 per hour). Her salary plus benefits give her a total net income of £18,500. She rents a poorly insulated home in the private sector for £5000 a year where the annual fuel bill for her 2 bed flat is £1500 and she pays £500 a year in afterschool club costs for her child. As her fuel bill is less than 10% of her net income she is not currently considered fuel poor.
Under the proposed new definition, there will be a two part test to establish if Ann is in fuel poverty:
Test 1 – Firstly, we now deduct housing costs so Ann’s net income after housing costs is £13,500. As her fuel costs (£1,500) are now more than 10% of this she moves to the second test.
Test 2 – Secondly, we calculate her income after housing, fuel bills and childcare costs which is £11.500. As this is below 90% of the Minimum Income Standard (which for her is £13,425), Ann would be considered fuel poor.
To show what the impact would be at the population level, the diagram below entitled ‘Fuel Poor and Income Poor Households, SHCS’ shows that under the proposed new definition just 12% of income poor households are not considered fuel poor compared to 28% under the current definition.
We must continue to be world leaders in this area and we want to do it whilst growing the Scottish economy, creating jobs and opportunities for new skills and sectors and creating a brighter future for our children.
This strategy is a huge and exciting opportunity that builds on what we have already achieved:
· By the end of 2021 we will have allocated £1 billion on tackling fuel poverty and improving energy efficiency
· Since 2013, over 120,000 homes throughout Scotland have benefitted from energy efficiency measures through our Home Energy Efficiency Programmes
· Remote areas have needed additional support so have received 3 times more funding per fuel poor household since 2014.
· Since 2014 the maximum level of grants for energy efficiency measures in remote rural areas the Area Based Scheme is almost 40% higher than other parts of Scotland to take into account higher costs of delivering improvement.
· The Home Energy Scotland’s benefits check unlocked £2,345,842 in income for people in Scotland, helping them get all the income they are entitled to.
· The Warmer Homes Scotland scheme has created almost 100 apprenticeships in the supply chain.
I am passionate about this Bill and I know that the work we are doing around fuel poverty and energy efficiency has and will continue to transform people’s lives – making our homes warmer, greener and more energy efficient. That’s why the goal of eradicating fuel poverty is one shared by us all.
Fuel Poor and Income Poor Households, SHCS 2016