Fuel Poverty Forum: Submission by Scottish Federation of Housing Associations

September 19 2008

Paper written by Peter Foreman, Traprain Consultants

Background 

This submission is made in response to Call for Evidence from the Fuel Poverty Forum. It should be regarded as an interim paper, pending the receipt of data from members. 

The Forum has been established by the Cabinet Secretary for Health and Wellbeing “to advise the Scottish Government on how it can improve progress towards the target to eradicate fuel poverty as far as reasonably practicable by 2016, within the available public resources”. 

The Scottish Federation of Housing Associations (SFHA) represents Registered Social Landlords involved in the provision of social rented housing within Scotland. Members also provide other services, including co-ownership and affordable properties for sale, and, in many cases, support services for their tenants and others. As such they are intimately involved in issues of fuel poverty as it impacts on their tenants on a day-to-day basis. They fully support the target of seeking to eradicate fuel poverty.  

The caveat that such elimination has to be within “available public resources” is understood, but clearly presents a challenge in the context of the many calls on the Scottish Government budget, and the fact that significant amendments to overall benefit or tax regimes are likely to be reserved matters. 

Additional funding sources may, of course, come from those energy companies who are part of the Forum. Many such companies have shown a willingness to address fuel poverty issues as part of their programmes of corporate social responsibility, (e.g. Scottish Power’s Energy People Trust) and this should be actively supported and encouraged. 

The SFHA are supportive of the efforts the Forum is making to involve a wide range of bodies and individuals. The issue of fuel poverty is not one where ideas should be restricted to those from traditional sources.  

Fuel Poverty 

Fuel Poverty is generally defined as where a household spends at least 10% of income on fuel costs. While this is, obviously, an inexact measure, it has proved a useful tool to gauge progress in this area. Reduction of fuel poverty levels has long been a target for both United Kingdom and Scottish Governments, and good progress had been made up to 2004. However, recent figures from Energywatch (the consumer watchdog) suggest that the number of households within the United Kingdom living in fuel poverty has increased to around 4,000,000, which is double the 2004 figure, and a worrying development. Figures from Energy Action Scotland have suggested that around a third of Scottish households live in fuel poverty. This would imply a figure of around 700,000 for Scotland alone. These all compare with United Kingdom Government figures of 880,000 as quoted in the recent Scottish Government Review. The variations undoubtedly reflect the margins for error in statistics of this nature, but there must be a suggestion that the position is already worse than anticipated, and likely to deteriorate further, for reasons outlined in this Submission, unless prompt and positive action is taken. 

Whatever the figures, the position in Scotland is unlikely to be materially better than the overall United Kingdom figures, when taking into account relative levels of deprivation and colder climate, balanced to some extent by tougher building standards. 

Little would be gained by spending resources on finding out which figures are correct. The fact is that numbers remain far too high, and appear to be increasing. This can only get worse as fuel prices increase. 

This worsening is of greater concern when it is remembered that these latest statistics will relate to the period prior to recent very large price increases by major domestic energy suppliers. These increases will be likely to have a disproportionate impact on poorer families, and the levels of reported fuel poverty are, therefore, likely to increase still further. 

Solutions to fuel poverty 

While this may be trite, fuel poverty would, of course, be eliminated if absolute poverty were also eliminated. While a clear focus on fuel poverty itself is welcomed, this should not be at the expense of efforts to improve the overall position of the poorest members of society. 

It is worth reflecting on the fact that fuel poverty can really only be eliminated or reduced by one of three routes, or a combination of them: 

    • Increase income
    • Reduce fuel costs
    • Reduce fuel consumption

A number of these issues are outwith the control of the Scottish Government (and to some extent, also the United Kingdom Government, so far as wholesale fuel costs are concerned). 

Increase income 

General policies to increase employment, including those relating to improved training, have an important role to play in the reduction of poverty generally, and, therefore, fuel poverty. However, there is a trap to be considered in the context of this Submission. As fuel prices increase, unless benefits are adjusted accordingly, the impact on poorer families may make the amount of income needed to offset lost benefits too large to prevent discouraging unemployed homeowners from returning to employment. This is primarily a Westminster issue, but one where the Scottish Government could, and should, be active in encouraging appropriate action by Ministers. 

The overall position of families in fuel poverty can be increased by improved financial education, which is a relatively low-cost way to improve the value obtained from other benefits. Advice to maximise benefits received, and to improve the use made of income available has clear benefit in a number of areas, not just fuel poverty. It has to be recognised that part of this may be improved up-take of benefits, which has a negative impact on the funds available overall in the country, but this is the use to which Parliament wanted the funds put, so there should be no objections.  

However, there is one particular area where assistance with financial management could have a rapid, and significant advantage, and that is in the reduction of the need for pre-payment meters. The arguments in this area are well rehearsed, and are the subject of threatened Government action at this time. Pre-payment meters are significantly more expensive for their users (despite providing slightly enhanced cash-flow to the energy suppliers), and, unless action is taken, this position is unlikely to improve as overall energy prices escalate. Differentials vary, but the average penalty for pre-payment meters in Scotland is already between £170 and £296, depending on supplier. This is when compared with online direct debit, which emphasises the additional problem that obtaining the best prices often requires (1) secure access to the internet and (2) a bank account. 

While this not a straightforward area, it is difficult to see how a substantial risk premium is needed in circumstances where cash-flow is enhanced and bad-debt risk virtually eliminated. This would normally be expected to lead to reduced costs, balanced only by increased capital cost for meters plus management costs of dealing with prepayment arrangements. The margins obtained by energy companies appear excessive, and immediate relief could be obtained by the removal of this difference. 

However, even if current government efforts have the result of closing the gap between the price paid for pre-payment meters, and that for conventional credit accounts, it may well be that the position is likely to remain negative, and efforts to improve financial management and negotiate credit arrangements with suppliers could be a way of making significant inroads into this problem for a relatively modest outlay. The wider benefits of such a programme in the reduction of overall deprivation and poverty make this area of action additionally attractive. 

It would also address a very worrying problem that arises from the use of prepayment meters, in situations where these meters are not recalibrated with sufficient regularity. In such cases, the individuals who may be using the meters to control budgets are still, in reality, running up debt as the meters are not recovering the true cost of the energy. The industry is look at technical solutions to this problem, but, in the meantime, consideration could be given to requiring the companies to fix their prices until the next recalibration.  

This might require some margin in pricing to be retained, but energy companies were able to offer fixed pricing for credit customers until July 2008, which shows it is possible. Original fixing offers were often made ahead of a substantial increase in capacity in the gas market from the Norwegian Ormen Lange field and the Hook and Isle of Grain LNG terminals, which looked like a one-way bet by the energy companies against a potentially falling market. It has not worked out that way, but suggests that energy companies can take risks in this area, but may require some encouragement to do so again. 

A number of SFHA members are already actively involved in offering advice in this area, as are other charities, Citizens Advice Bureaux etc. However, enhanced funding of those bodies with existing experience could have good rates of return. 

Further, energy tariffs are often complex and opaque (a problem that exists not just for those on fuel poverty), and any efforts to make the market more transparent should be encouraged. 

Reduce Fuel Costs 

The position in this area is particularly concerning. Immediately prior to the preparation of this Submission Centrica/British Gas/Scottish Gas announced domestic fuel price increases of up to 35%. This was accompanied by warnings from the Group that prices could rise by as much as 70%. Jake Ulrich, the Managing Director of Centrica Energy stated[ii] that gas price rises were likely to lead to a “potentially significant” rise in the numbers of people living in fuel poverty. We will return to Mr Ulrich’s more controversial, although possibly misunderstood, comments below. 

So, why have energy prices in general, and domestic gas prices in particular, increased so rapidly, and what, if anything, can be done about it? 

The sudden increase in oil prices to >$140 per barrel caught most in the market by surprise. It should be noted that, in real terms, the price in 1979 reached the equivalent of $106.43 in today’s prices.[iii] As such, current price levels of around $120 (as of the date of this Submission) are not as severe as appears from the raw figures once inflation and exchange rates are factored into the equation.  

Given that oil has virtually disappeared as a fuel for electricity generation, and those living in fuel poverty, at least in urban centres, are unlikely to rely on oil heating, this would all seem to be somewhat academic. The problem has been that gas prices have tracked up in line with oil. Oil prices have risen as a result of high demand (much of it from China and India), over which the Government can have little control, and some measure of speculation (the exact impact is a subject of heated dispute) over which Western Governments should, and probably will, take some action, but where the Scottish Government can have little influence. 

Historically the link between oil and gas prices made sense, when they were alternative energy sources, but the logic has not existed for many years. Gas is now a fungible commodity – that is, one which is tradable (particularly as liquefied natural gas – LNG), and should have a separate market, with only limited influence from crude oil prices. Allan Asher, the Chief Executive of Energywatch, said, in response to the Jake Ulrich quotes mentioned elsewhere, that “The Government is right to say that the link to oil is a cause of the problems [in the gas price] but wrong to say there is nothing that can be done….Government can and should act in those areas where it can have an effect. Action to cut the price link between gas and oil, action to improve the working of the domestic market, action to help those who can least afford to keep warm”[iv].  

This sounds unanswerable, and SFHA would certainly support the final aim (and address it in this Submission). However, it is difficult to see how the wider goals can be achieved. The Government could, of course, make it illegal to link gas prices to oil, but it is unclear how this would work in practice,  since traders would probably carry on much as before, but without the overt linkage to spot oil prices. Improvements in the domestic energy market (not just for gas) are known to be under review, but these will have little short-term effect, and those in fuel poverty are unlikely to be the prime targets for energy companies seeking to offer better deals. 

In addition, there are wider difficulties with the failure of the European Union to open up the energy market across the board as originally envisaged. This is a wider issue, and outwith the scope of this Submission. Continued efforts in this area would, however, be worthwhile. 

Further, the overall emphasis on improving competition in the energy market is welcomed. Even the Financial Times stated on 26th July 2008[v] that, in relation to utility companies “the service that customers get is poor and the charges are high. Choice does not mean customers get a good deal”. The same article also quoted Cambridge Energy Research Associates as saying that European gas prices have roughly doubled in the first half of 2008 as a result of rising oil prices. 

It is also worth bearing in mind that many rural communities in Scotland do not have access to mains gas supplies. As such, they have a restricted choice of energy supplies, including bottled gas, which, because of the handling costs, is likely to always be more expensive than mains supplies. 

This brings us to issues of overall gas supply. Until relatively recently, the United Kingdom has been insulated from supply problems by the surplus of gas produced by the North and Irish Sea fields. This peak has passed, and we are now a net importer. This is not necessarily the end of the world – the long-term agreement for Norwegian gas from the Ormen Lange field is a case in point, but other problems are causing a supply squeeze, and a price increase. This would be leading to high prices even without the oil price link.

The problems include the fact that non-Norwegian gas comes to the United Kingdom via the Interconnector pipeline from Belgium (originally built to export British gas to the Ruhr), and another new line recently added. These are, effectively intended for gas from Russia and Central Asia, but this passes through other European markets first, and the lack of an open market within the European Union means that price signals from the United Kingdom are not attracting supplies, as they are being held and stored by foreign gas monopolies, particularly since they have concern about the security of supplies from, or travelling through, Russia. The United Kingdom in general, and Scotland in particular, have limited gas storage capacity (sometimes as low as a few days’ demand), which makes it difficult to snap up bargains on the spot market. 

The other great hope of the industry is LNG. Major receiving terminals have been constructed at isle of Grain in Kent and Hook at Milford Haven in South Wales (but not in Scotland), but the number of tankers arriving has been frequently reported as low. The reason is reported to be that high prices in the Far East and elsewhere are attracting the available cargoes from suppliers such as Algeria and Qatar. However, there is concern that some of the problems could be addressed if the industry would enter into long-term purchasing agreements. The Egyptian LNG industry has 20 year supply agreements with France and Belgium, and Qatar is reported to have 25 year deals with China. The British market has been very good at chasing the domestic price down in a weak market, but now appears to be struggling in a much tighter regime. The national review of the energy market will, no doubt, address these concerns.  

This Submission does not seek to address the very complex subject of overall energy policy, but to make it clear that such policy is complex, and is unlikely to deliver short-term goals in the reduction of global energy prices. Policy goals of this nature should, of course, be pursued, but are unlikely to relieve the areas of fuel poverty under discussion, at least in the short term. 

Value Added Tax (VAT) on gas and electricity supplies are already at a reduced rate of 5%. European law may make it impossible to eliminate the tax altogether, and a reduction would require discussions with Brussels which, coupled with the fact that this would reduce the United Kingdom Government’s tax take probably means that this is an unlikely target, although it is one which would make an immediate saving for all consumers, not just those in fuel poverty. A distinction between the tax charge for domestic and commercial use might be one way of targeting the savings slightly more accurately, although it would seem to be impossible to focus differential VAT rates on the poorest members of society. 

Some statements and reports on fuel poverty have included suggestions promoting the increased use of renewable energy to replace traditional sources. This is an initially attractive proposal, since it appears to produce a “win-win” solution whereby a reduction in fuel poverty is aiding wider climate change goals. This is not the place to debate appropriate ways to tackle climate change, but the approach has the danger of conflating two positive targets and thereby activating the “law of unintended consequences” by encouraging what is primarily an economic decision on an uneconomic (and inaccurate) financial basis. Much of the current renewable energy sources (e.g. wind and solar) are economically attractive because of de facto subsidies through the renewable obligation certificates or ROCS scheme. While such obligations and other supportive measures remain in place, costs for consumers will be reduced, since the demand from energy suppliers for renewable energy will probably exceed supply in the foreseeable future. The problem is that, were the current arrangements to be withdrawn, the economics start to look much less attractive.  

There have been successful schemes to use renewable energy in areas where mains electricity supplies were poor or non-existent (e.g. Gigha), and this is an area where the problems of fuel availability in remote rural communities could be addressed, and fuel poverty be reduced at the same time. 

The costs of generating renewable energy have reduced dramatically, but supply remains intermittent and uncertain (in relation to wind and solar energy at least). There are excellent reasons for supporting renewable energy.

However, mixing this initiative with reduction of fuel poverty may lead to bad long-term decisions. Changing primary physical supply should be a long term decision (possibly over 25 years). If the economics only work with subsidies that are not guaranteed to remain in place, this is a challenging issue for individuals or charitable bodies, such as many Housing Associations. It may well be that long-term sale agreements can be entered into with energy companies which would pass this risk to them. However, even if these matters can be resolved, there is an issue related to the difference between fitting renewable energy in new build properties – which is likely to continue to make sense – and retrofitting them to existing buildings. New properties will be governed by the 2007 Building Regulations, and new planning consents by the terms of Planning Advice Note 84. It is instructive that the stated goal of the Note is to reduce Carbon Dioxide emissions below the level of the 2007 Regulations. There appears to be no reference to energy costs, although the Building Regulations clearly address issues such as insulation that should minimise energy consumption. 

SFHA members have been involved in the use of renewable energy of various types, including ground source heat pumps. It is encouraging to note that the snappily titled Climate Change and Sustainable Energy Act 2006 (Sources of Energy and Technologies) Order 2008 has rectified a lacuna in the previous law with effect from 23rd July 2008, and has, in effect, included heat pumps (whether air, water or ground source) within the definition of “microgeneration”, which should mean that surplus energy produced by such systems is potentially available to meet ROCS obligations. 

In relation to retrofits, each property will need to be reviewed to see if the savings in energy costs will be sufficient to produce a realistic pay-back on capital expenditure. If it does not, it could be more economically sensible to subsidise energy costs, and save the capital. That is, unless funds earmarked for climate change could be used to cross-subsidise the capital costs of installation for different policy reasons, such as the reduction in levels of fuel poverty. 

Some other European countries have used VAT rates to promote the use of renewable energy. Examples include Belgium who have reduced the VAT rate on solar panels and wind turbines by 15%, and France where a 5.5% rate reduction has been applied to residential energy equipment using renewable resources. Other countries provide support through other parts of the tax system. This is clearly a matter that will have to be addressed at Westminster, but the Scottish Government can no doubt add weight to any arguments. 

On the subject of VAT, SFHA have supported the campaign by Energy Action Scotland to seek to persuade the Chancellor of the Exchequer to use the windfall from the VAT produced by rising energy prices to support programmes aimed at alleviating fuel poverty (such as those described later in this Submission). We continue to support this approach, which would also supply additional funds to remove pressure from the Scottish Government budget in this area. It is, however, recognised that this is a difficult area, and it is unlikely that the Chancellor could take action unless it applied to the entire United Kingdom. With a range of other pressures on the national budget (including the possibility of using this income to remove the need to apply the October 2008 petrol price escalator), coupled with the fact that a proportion of VAT revenue is earmarked for the European Union, this will not be an easy negotiation, but should still be pursued. 

Depressingly, it is possible to argue that, if low electricity costs were the sole goal, we should build coal-fired stations without sulphur dioxide scrubbers or carbon dioxide capture. The effect would be significant environmental pollution; acid rain in Scandinavia; negative impact on climate change etc etc. This is clearly unacceptable for a range of political and moral reasons, but does demonstrate the fact that the various goals of energy policy (and economic policy) can sometimes be in conflict.  

The Scottish Government needs to ensure that it has considered long-term price impacts fully when considering Scotland’s future energy needs. The decision to expand renewable energy is welcome for a range of reasons, some of which have been touched upon, but will not necessarily have a significant reduction in prices, at least in the short term. New nuclear power generation has been ruled out, which may put pressure to build gas-fired stations as a short term fix as the existing nuclear stations at Hunterston and Torness come off-stream. This will further increase the demand for imported gas, and so the wheel turns. 

Reduce fuel consumption 

This would seem to be a long term area on which the Scottish Government could, and should, focus attention. It will not produce instant returns, but has the advantage of meeting two distinct targets – reduction of fuel poverty and reduction of overall energy consumption to meet climate change goals, without the longer-term problems mentioned in the previous section.

There has been considerable discussion in the media about ways that families can reduce energy consumption. Unfortunately, much of this has focused on matters such as disconnecting mobile phone chargers; avoiding the use of patio heaters; or not leaving plasma televisions on standby. These are all good ideas, but of limited relevance to many of those on fuel poverty. Turning down the thermostat is both worthwhile and sensible, but not where this leads to hypothermia. An approach to those in multiple deprivation (including fuel poverty) will have to be more focused, and delivered by those most closely connected with the individuals concerned. SFHA members are often able either to deliver such services, or at the least, will be able to assist in ensuring that the right households among their tenants and co-owners receive the support that they need. 

While this Submission looks mainly at household energy costs, fuel price increases will impact in other areas, notably transport. Again, there has been much welcome publicity on how motorists can reduce their fuel costs (including the slightly surreal vision of Jeremy Clarkson advising people to drive more slowly). This advice is, of course, of little help to people without private transport. Fuel costs will inevitably lead to rises in prices on public transport, and this may also be an area where the Scottish Government can continue and extend support for free bus and/or rail travel. Apart from the obvious assistance, it makes it easier for people to enter or remain in the workforce, thus reducing overall poverty levels, and, thus lifting households out of fuel poverty by the most effective route. As explained, this is increasing the family income figure so that the fuel portion, even if it is not reduced, drops below 10%. Fuel poverty action is focused on home energy costs – but a holistic approach to the impact of fuel prices will be needed. 

To return to the remarks from Mr Ulrich mentioned earlier in this Submission, he was widely quoted (and much criticised) as suggesting that the solution to rising heating bills was for people to wear two extra sweaters. This remark (which was, in fact, a reference to long-forgotten comments by President Jimmy Carter during the oil price shock of the late 1970s) has drawn understandable anger at an apparent insensitivity. While the choice of words was unfortunate, this criticism has distracted from a debate on the main thrust of Mr Ulrich’s comments. These were that high energy prices were here to stay (at least for the immediate future), and that price pressures would lead people to “change the temperature they keep the house, they’ll be more cognisant of energy waste, they’ll buy better appliances”.  

This is all true, and the history of twentieth century oil shocks bears this out, but the types of savings mentioned (e.g. reducing heating settings) are, as mentioned earlier, less helpful for people already operating on the margin in order to keep down un-payable bills. The importance of these remarks to the debate on fuel poverty is not only that they emphasise that high energy prices are unlikely to be a short-term phenomenon, but also that price does tend to change behaviour. To give a recent example, increased gasoline (petrol) prices in the United States have had a dramatic negative impact on the sales of Sports Utility Vehicles, balanced by an increase in sales of smaller, more high-mileage models. Environmental concerns had produced a much less significant impact. Before we appear to be “knocking” our American cousins, unleaded petrol really only took off in this country when price differentials meant the motorist saw this as economically viable. It has been suggested that increased fuel prices may dampen demand for energy by 5 – 10%. That is helpful in macro-economic and long-term climate change terms, but unhelpful for anybody not keeping themselves warm in a cold winter. 

Accordingly, it is important to ensure that price drivers are not blunted so as to fail to encourage improved energy efficiency. This is a delicate balance. Too high a subsidy and there is no incentive to take steps to reduce unnecessary consumption; too little and people go cold or hungry. We consider that in the short-term it will be essential to provide straightforward cash support through the benefit system, but a more effective long term solution is to continue, revive and expand measures to improve home insulation; replace inefficient appliances; create a better understanding of true energy costs etc.  This needs to cover all uses of energy.  

A recent statement by Michael Witherell of the University of California at Santa Barbara suggests that, overall, around 22% of energy is used for lighting.[vi] Much of the focus in Scotland to date has, as illustrated below, been on reducing heating costs. Straightforward use of low-energy light bulbs may also be of assistance. There are some issues with these products, but they do save costs, and the power companies have been doing a good job with providing free bulbs, although this has tended to be to all consumers, and might well be better focused in the future. 

Existing initiatives 

It is important to note that there have been a number of initiatives already in this area, and these can provide a good basis for addressing some of the issues raised in this Submission. For example:

Central heating programme

This scheme has provided

  •   a central heating system and advice on how to use it
  •   loft, cold tank and pipe insulation
  •   cavity wall insulation
  •   draught proofing
  •   a carbon monoxide detector on non-electric systems
  •   a mains-linked smoke detector and a cold alarm
  •   advice on the use of energy in the home
  •   an optional check of entitlement to state benefit 

The scheme has been prioritised on those who have never had a central heating system; the over-80s and people on the Guarantee Element of Pension Credit who have a system which is broken beyond repair.

Others who are not in the priority groups have to reapply next year. The need for prioritisation in this way is inevitable, but does illustrate the financial constraints that are likely to apply in any similar scheme. 

A renewables pilot study was set up in 2006 to run alongside the Central Heating and Warm Deal schemes (see below), with a view to including these technologies at a later date. As discussed above, while SFHA are supportive of both the fuel poverty and renewables initiatives, we do caution that these have totally different drivers, and mixing the two could be problematic. We would suggest that the Central Heating scheme should be allowed to install renewables as well as (or, more probably, in support of) conventional systems, but that the economics of such decisions should be subjected to a sensitivity test, assuming the withdrawal of indirect financial support for renewables at some stage.  

Warm Deal

This scheme is primarily focused on insulation, and provides:

  •    A grant of up to £500 for insulation measures to households in receipt of a range of passport benefits
  •    A grant of £125 for pensioners not in receipt of benefits
  •    A benefits health check from the Pensions Service for all pensioners who apply

The scheme has had some success, and figures for 2005-6 suggest 256,145 homes had been insulated. It is informative to note that published data suggests that tenants of private rented accommodation reduced their fuel bills by an average of £111 per household, and tenants of Housing Associations by £21. A total of £75m was spent, producing an average cost of around £300 per household. On this basis, the payback for private tenants is less than 3 years, and for Housing Associations, nearer 15.  

This places SFHA in a quandary. On these statistics, where resources are limited, greater benefits appear to accrue by concentrating on the private rented sector. However, it seems almost certain that the discrepancy arises from the fact that Housing Association properties are already better constructed and insulated, and it would seem unjust to penalise the tenants of SFHA members, while increasing the reversion value of private rented property, merely because Housing Associations are doing a good job. 

The scheme has been focused on the relative deprivation of the recipients (based on passport benefits), rather than the size of heating bills, or the improvements that can be obtained. It is unclear how the latter could be applied fairly, and without wasting scarce resources on administrative costs. It is, therefore, suggested that the current approach continues. 

This initiative appears to have had the enthusiastic support of energy companies. This has lead to scattergun marketing to all households through flyers in energy bills etc, rather than a targeted approach to those in need. Despite this, SFHA support continuing to use of the facilities of the energy companies, not least because the indirect effect may be to encourage others not subject to fuel poverty to improve insulation at their own expense, which will provide wider benefits. 

We would mention in passing that this scheme is also promoting itself on the basis of reductions in carbon emissions, with the 2005-6 figure estimated at a remarkably exact 8,576 tonnes. This is valuable and important, although such numbers are difficult to evaluate out of context. The reduction figure for the scheme in the whole of Scotland is the equivalent to the emissions of just under 1% of those of East Renfrewshire.[vii] This point is made, not to appear critical of a beneficial scheme, but rather to reiterate that the primary purpose of these schemes is to help those in need; rather than to reduce climate change. The latter remains a useful side-effect, rather than the main emphasis. 

Summary 

SFHA wish to work with the Forum to do whatever they and their members can to attack the problem of fuel poverty. As mentioned in the opening of this Submission, these are preliminary thoughts, intended to continue dialogue, and SFHA would welcome the chance to continued discussion, and to introduce data from members as and when it becomes available. 

The Forum has challenges associated with the fact that many issues need action from Westminster, coupled with budgetary constraints in a slowing economy, and the fact that winter is fast approaching. 

We have yet to finalise our views, however, some points that we would like considered are:

    • Energy costs are likely to continue high for the immediate future. Many of the reasons are outwith the control of the Scottish (or Westminster) Governments.
    • There is a  need to continue and expand existing support (e.g. Central Heating and Warm Deal schemes)
    • Support should also be provided for financial management training, including ensuring full benefit take-up, and negotiation of better tariffs with energy suppliers
    • Efforts to reduce the severe penalties from the use of pre-payment meters
    • Short-term support for recent price increases looks likely to have to be delivered through enhanced benefits
    • In the longer term, reduction in consumption is a better option, with spin-off benefits in relation to other policies (e.g. climate change)
    • Despite the last comment, fuel poverty reduction measures should be focused on fuel poverty, and not be used to achieve other goals, such as the use of renewables, unless they themselves provide for a reduction in fuel poverty
    • Remote rural communities are likely to require a different approach to urban and small-town communities with, for example, access to mains gas.
    • Fuel poverty is only one issue (albeit an important one in the present economic climate). The reduction of overall poverty will have the effect of reducing fuel poverty as well.


Source Economist 26th July 2008

[ii] Source Channel 4 News, and quoted elsewhere

[iii] Source InflationData.com

[iv] Source Channel 4 News and wire services

[v] Lex column

[vi] Source Economist 12th July 2008

[vii] Source Greenspace Research