Local Government and Communities Committee

Meeting date: Wednesday, November 21, 2018

Official Report 718KB pdf

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Fuel Poverty (Target, Definition and Strategy) (Scotland) Bill: Stage 1

Before we begin item 3, I put on the record my thanks to all those people who came to meet us at Lochee community hub in Dundee to talk about their experiences of fuel poverty. Alongside hearing from experts such as the witnesses we have before us today, we also hear from those who have lived experience. We are grateful that so many people took the time to come to meet us on Monday.

Today is the first day of stage 1 of the Fuel Poverty (Target, Definition and Strategy) (Scotland) Bill, and we will be taking evidence on the bill from now until the end of December before reporting to Parliament early in the new year.

I welcome today’s witnesses: Elizabeth Leighton, director of the Existing Homes Alliance Scotland; Craig Salter, a policy officer at Citizens Advice Scotland; Linda Corbett, an energy adviser at East Ayrshire citizens advice bureau; Norman Kerr, director of Energy Action Scotland; and Dion Alexander, the chairman of the Highlands and Islands housing associations affordable warmth group. I thank you all for your submissions. We go straight to questions.

What is your view on the main drivers of fuel poverty and the degree to which each driver contributes to overall fuel poverty rates and levels?

We have mainly talked about three drivers. We have only really started to consider the fourth driver within the past year or two. The extent to which how energy is used in the home is a contributory factor has not been well measured or defined, although we know that behaviour change can reduce bills by around 10 per cent if people amend how they use appliances or set their heating. It is a contributory factor.

The measurement of energy efficiency across Scotland has been drawn from the Scottish house condition survey. We have seen energy efficiency levels rise over a period of time.

Scottish Government statistics have shown that increasing income has a better outcome than increasing energy efficiency in the shorter term. However, given that fuel prices continue to increase, we need to—pardon the pun—insulate homes against rising costs. The more energy efficient the home, the less energy it will use.

You are allowed to make one pun per visit.

Good. I declare that as my pun.

It is a complex interaction and, just because we sort one element, that does not mean that the others will fall into line.

I second what Norrie Kerr has just said. I will give a bit of insight into the impact of behaviour change. In the past year, we have carried out a lot of research into the support needs of people who are in fuel poverty, particularly the forms of support that people who rely on electric heating require. We know that there are high levels of fuel poverty among people who have electric heating because of high costs.

One of the things that we see in that research is that how a lot of people use their heating has a big impact on their heating bills. We see a lot of people who have storage heating but do not necessarily know how to use it, and a lot of people who have time-of-use tariffs and dynamically teleswitched tariffs and meters that they do not necessarily understand, so they use their heating at the wrong times. That perhaps tells us that behaviour change is complex and can apply differently in different circumstances. It is definitely an area in which we need to get more evidence, but it has a big impact on certain groups.

We welcome the fact that the strategy is looking at all four drivers of fuel poverty. We particularly welcome the Government’s commitment to removing poor energy performance as a driver of fuel poverty. Doing that is within the powers of the Scottish Government and it is high time that poor energy performance is removed as a reason for fuel poverty. We can do that; there is no technical reason why it is not possible. It is a matter of investment, planning and, as we know, working on behaviour change to maximise the impact of whatever measures are put in place.

At the same time, we recognise that work has to be done across all the drivers of fuel poverty, which is why we have argued that any progress reports, measurements and targets should reflect the four drivers and should report on outcomes across the board.

Before I bring anyone else in, I want to mention something that you talked about. The Scottish Government has limited powers in areas such as fuel prices and household income. Is it wise to set a fuel poverty target when we do not have control of all the drivers?

The Scottish Government can push the boundaries of its powers, which have grown in the past few years. It has more powers in social security and it is exploring how it can affect energy prices through supporting community energy or a publicly owned energy company. There are areas—even reserved areas—where we can push the boundaries. The Government can set those targets, and ambitious targets drive innovation and investment and provide certainty for the supply chain to invest, which can help to drive down prices in the longer run. We believe that ambitious targets are achievable.

The one thing that I thought that I had to say today is that we have to be sure that this bill will mean that this is the last generation that will live in fuel poverty. If we cannot walk away from this session confident that that is what we are setting out to achieve with the bill, we will have failed.

I would like to talk about fuel prices. At Citizens Advice Scotland we very much welcome the cap on the charges for prepayment customers and the safeguard tariff that is being rolled out, particularly for those on the priority services register. However, I think that it falls short of the mark, when it could actually be a very useful tool to help to pull people out of fuel poverty. At the moment, when someone is on the priority services register, it is because of vulnerabilities in relation to health conditions. However, we are doing a disservice to those who are financially vulnerable but who do not necessarily have health conditions by not allowing them to be included in the register which, as I said, opens up access to the safeguard tariff. There is definitely work to be done on our understanding and definition of vulnerability. We should look not only at health and age but at how quickly people can move from one state of vulnerability to another, and at how that can compound their experience of fuel poverty.

I want to mention a couple of things. The Scottish Government is now taking more powers over social security and—although it does not control energy price—over the energy company obligation and through that, over the warm home discount scheme. The Scottish Government administers, and could change, that scheme. For example, it might want to lift the level that is applied in a remote and rural area and reduce it in an urban area, so that the same amount of money is spent. There can be a recognition that, in certain parts of Scotland, it is more difficult to heat your home.

The second thing that I want to mention is not particularly new. The social security powers in the mid-1980s acknowledged the needs that are associated with certain house types. Some members may be familiar with bits of Glasgow and, in particular, with the Barrowfield estate, which was designated as a hard-to-heat estate; everyone on that estate received an uplift per week over the winter season through their social security payments. Therefore, there is a recognition that additional payments can be made using social security powers to mitigate fuel prices in winter.

The Scottish Government may not have access to all the drivers, but it has access to some that would certainly mitigate fuel costs in particular.

I have one specific response on the wisdom of fuel poverty targets. In our submission, we say that it would be helpful to continue to measure extreme fuel poverty. At the moment, there is basic fuel poverty which, under the old definition, is having to spend 10 per cent of income to keep your home warm, as you know. Extreme fuel poverty is having to spend twice that or more. In our submission, we ask that extreme fuel poverty should continue to be measured, because it will provide a guide to what is going on in the elimination of the worst forms of fuel poverty. We say very firmly that extreme fuel poverty is intolerable in a civilised society and that it should be eradicated as quickly as possible—within five years.

As for the main target on fuel poverty, we completely take the point that not all the drivers are within the powers of the Scottish Government. Nevertheless, we think that it should be possible to reduce the level to about 5 per cent. You are always going to have people popping in and out of fuel poverty, no matter where you get to, so 5 per cent is not an unreasonable figure for basic fuel poverty.

10:15  

To go back to the main drivers of fuel poverty, I imagine that we will discuss in more detail the question that we have raised in the rural and remote rural context about the level of disposable income and why the definition of fuel poverty needs to reflect that properly through the minimum income standard, which we support. A driver of fuel poverty is the lack of trusted local support in some areas, particularly remote rural areas. It is quite revealing to look at the map that the Scottish Government produced of the home energy efficiency programmes for Scotland area-based schemes—HEEPS ABS—successes and otherwise for 2015-16, for example. That shows some surprising gaps in areas where we would have expected there to have been high activity.

To say that there is a lack of trusted local support does not mean that the support is not excellent where it exists or that there are not good, helpful national services. However, what works best in solving the problems in remote rural areas is having people available to go into the homes of people who would not otherwise think that they deserved any help at all, such as the old lady who lives in a croft house at the end of a lane somewhere. I hear many such examples in which that availability has made a difference.

That begs a question about the lack of reliable funding to maintain trusted support. People are looking around for funding in a hand-to-mouth way—there is a lot of that going on. An effective new fuel poverty strategy should look seriously at the public funding commitment to ensure that the proper outreach is provided in areas in which it is most needed.

Before I get to the questions that I wanted to ask, I want to ask Linda Corbett a follow-up question. She mentioned the safeguard tariff. As the convener said, three of us visited Dundee this week. We met a lot of people who prepay their electricity and gas, and we heard about issues relating to that. What is the safeguard tariff?

It is a tariff that is set for credit customers. Prepay is slightly different. With prepay, there is a cap on the maximum amount that can be charged per unit of gas and electricity. The safeguard tariff is essentially the same, but it is for people on a credit meter as opposed to a prepay meter.

That is useful.

I have a couple of linked questions about the bill, so the witnesses can answer them in a linked way. What do you think of the 5 per cent target? Should the target be more ambitious? That target has to be achieved by 2040, which is 22 years away. I think that all of you said in your written evidence that that is not ambitious enough. The two issues are linked. What do you think about the 5 per cent target and the date of 2040?

In our evidence, we came out very strongly in favour of a much more ambitious target. As I said earlier, the bill should ensure that the generation that is now living in fuel poverty is the last. We have called for the date to be moved forward to 2032. That aligns with work that is being done in relation to the Climate Change (Emissions Reduction Targets) (Scotland) Bill and the climate change plan. We have also called for the target to be zero per cent—to eradicate fuel poverty as far as is reasonably practicable. We acknowledge that there are people who move in and out of fuel poverty and that we might not be able to get that down to absolute zero. There will be particular times when that is not possible, but we think that that is a reasonable position and that that is an achievable and credible target for us to strive for.

I support what Di Alexander said. Levels of extreme fuel poverty should continue to be measured. We may be able to look for examples from the Child Poverty (Scotland) Act 2017, which talks about “persistent poverty”. The risk is that, if we allow for 5 per cent, those people will be the most difficult, hardest and most expensive to reach, and they will just be left behind. We cannot be in a position where we say that it is okay for that 5 per cent to continue to live in fuel poverty in 2040—surely that is unacceptable.

I agree with what Elizabeth Leighton just said. We understand the logic of the 5 per cent target. As Dion Alexander said, there is a transient element to fuel poverty. However, if that is the target to be met, there has to be a commitment to an ambition to continue or even step up work to reduce the percentage of households in fuel poverty to zero. If that 5 per cent of households are hard to reach or have a greater support need, more resource has to be put towards supporting them.

We agree that the 2040 target date is too far in the future. It would mean a reduction of 1 per cent per year, which does not reflect the progress that we have seen in recent years and it is 22 years in the future. We, too, would support a target date of 2032. That would bring the fuel poverty target in line with some of the ambitions that have been set out around energy efficiency, such as improving the energy efficiency of social housing and improving general energy efficiency standards.

As discussed, there are four drivers of fuel poverty. If we have a target, for all intents and purposes, to remove poor energy efficiency as a driver of fuel poverty by around 2032 and then, eight years later, there is a target to completely eradicate fuel poverty, we risk an undue focus—as there has been in the past, to an extent—on energy efficiency alone, so that the other drivers of fuel poverty are left until later.

As has been pointed out already, all the drivers of fuel poverty interact. They all have a significant impact and, as a result, they all need to be addressed together. If we are saying that we can achieve improvements in energy efficiency by 2032, work should be on-going alongside that to address the other drivers too. In that regard, 2032 is an achievable target.

In 2016, the level of fuel poverty was at 27 per cent. If you apply the proposed new definition, it comes down to 24 per cent, so there is a 3 per cent drop by changing the definition. If we start with that 24 per cent figure and we aim to meet the 5 per cent target for 2042, a further 19 per cent of people need to be brought out of fuel poverty. If we keep to a 20-year programme that starts in 2020, that is less than a 1 per cent improvement every year.

That is certainly not ambitious. That target could be achieved through business as usual, if we continue to change how we measure people who are in fuel poverty. The Scottish house condition survey has already changed its methodology three times—in 2011, 2014 and 2016. We continue to change the methodology and each time we have seen fuel poverty figures drop. Our worry is that changes will continue to be made that do not actually mean anything, other than that we are not providing enough support to homes. We could manage down the apparent levels of fuel poverty by continuing to change the definition and manipulating the data we collect.

I will reflect on some of the comments from the other panel members. I agree with the 5 per cent target and with the 2032 target, again with a secondary target stretching to 2040. That is because I would like fuel poverty strategies to be embedded and not simply removed once a target is reached—it must be an on-going thing, particularly for rural and outlying areas, where there are small communities that learn from each other. Behaviours are a learned thing and we would like to see fuel poverty strategies enter education. We want to look at how we can support young people to understand energy efficiency and how to behave in an energy efficient way so that, rather than needing to remove them from fuel poverty in the future, we can avoid their getting into fuel poverty in the first place. I welcome the 2040 target, but there should be a bit more ambition. As Craig Salter and Norrie Kerr said, 2032 would probably be more realistic.

Norrie Kerr talked about the 19 per cent figure. By the time that we come to 2020, a reduction of a lot more than 19 per cent will be needed. The 24 per cent fuel poverty figure has been skewed by the massive fluctuations in energy prices, and particularly the drop around the time that the house condition survey was done. Obviously, we have had massive increases since then, particularly in standing charges, so I expect that there will be a bit more work to do than dealing with 19 per cent.

We, too, support a programme of 14 years, which matches the one that the Parliament instigated in 2001-02 and which terminated in 2016. We see no good reason for the period to be any longer than that. I have referred to extreme fuel poverty and the good grounds that exist for there being a target on that as well, and for eliminating it pronto.

With my Highlands and Islands hat on, I make the point that the Scottish house condition survey statistics for local authorities show that, under the existing, or so-called old, definition, 50 per cent—a half—of all households in the Highlands and Islands are in fuel poverty. There has to be a concerted attempt to recognise the places that have the highest levels of fuel poverty and the difficulties that have been faced in eliminating fuel poverty in those areas. In effect, the figures have been flatlining for years in those areas, which suggests that a new and better approach is needed to ensure that the target is reached there.

Mr Simpson asked about the safeguard tariff. We need to bear it in mind that that is a temporary measure. Our worry about the safeguard tariff and the prepayment tariff caps is that those will in some way amend household behaviour in the wrong direction. In other words, people will think that the Government is protecting them by applying a cap, and they will be less likely to switch supplier, to shop around for a better deal or to change their payment method. The safeguard tariff is a short-term measure and even Ofgem—the Office of Gas and Electricity Markets—admits that it is not sure of the impact on switching rates. If we want people to find better deals and lower prices, we have to recognise that any tariff cap can be only a temporary measure and we must continue to support householders to view their energy bills and consider how to reduce them rather than simply sit back and think that they are protected, when they may be paying far too much.

I want to go back to the 2040 target. It is a long way away but, in the policy memorandum, the Government says that achieving it

“will require the use of cost-effective low carbon heating”.

As you all know, most homes do not have that, so to roll it out nationwide would be a massive project, which I presume is why the Government has picked 2040. Under those circumstances, is that date not reasonable? I can see that Mr Kerr is itching to come in. You have all said that it should be 2032. Either that is plucked out of thin air or it is based on something. Perhaps you can explain where you got the date of 2032 from and why the Government is wrong, given that it will take an awful lot of work to get low-carbon heating in all homes.

Before the witnesses respond, I ask them to keep their answers a bit shorter, because we have a lot to get through and we have only an hour to get through it.

10:30  

We do not necessarily need to put low-carbon heat and fuel poverty together. A low-carbon heat source will not in itself solve fuel poverty. The electricity grid in Scotland is now mainly low carbon. We will have our gas grid for many years to come and we will not replace it, although we are looking at technologies that reduce the amount of carbon in the gas mix, such as biofuels and a range of other mixes, including hydrogen. However, simply giving someone low-carbon heat does not take away the fact that they are fuel poor. It may actually contribute to their fuel poverty if there is a significant additional cost of the technology that is applied to gain that low-carbon heat, such as completely stripping out the gas grid and moving to electricity alone for heating.

We need to scale up the ambition. We could all say that 2040 sounds absolutely fine, but that would not give a step change in productivity levels or in the number of homes that are tackled each year. In all honesty, it condemns another generation to live in fuel poverty. The 2032 target is based on what we can reasonably expect in a number of parliamentary sessions and with an increase in the budget. I am sorry that my answer is exceptionally longer than you had hoped for, convener, but, if we maintain the budget at its current levels, that is what we will get. Some time ago, Energy Action Scotland talked about a need for £200 million a year. That is a very old figure, but we have never achieved that level of expenditure. We are way behind and we need to raise our game significantly.

We will move on. Alexander Stewart has a question.

There has been lots of discussion of the new definition of fuel poverty, and it has been mentioned this morning. What is your view on the new definition? Is it an improvement? If so, why? If it is not an improvement, why not?

It is a bit like a curate’s egg, in that it is good in parts. We welcome the fact that we have a fuel poverty bill, and we are more than happy to have a re-examination of the definition, because the definition logically underpins the work that flows from it to give the evidence base to show what is happening across the board in relation to fuel poverty. It will therefore enable the proper evidence-based development of policies and programmes to address the problems and all but eliminate fuel poverty in a way that previous fuel poverty strategies have failed to do.

We welcome the fact that the minimum income standard is being used to underpin and inform the evidence-based understanding of poverty and the amount of disposable income that people have. However, for us in the Highlands—many other organisations have made exactly the same point—it falls down badly and radically undermines the whole approach, by not using all the available minimum income standard evidence.

As you are aware, evidence has been gathered for remote rural Scotland on exactly the same basis as for the minimum income standard UK data. It was first gathered in 2013 and refreshed in 2016. We are saying, “Please, please use this evidence.” The independent panel of academics that came up with the new fuel poverty definition recognised that there was a particular problem in remote rural areas of Scotland and suggested an uplift, in the same way, for example, that we have a London uplift on the MIS UK data when it is used to inform the living wage. We are asking people to do the same thing for remote rural Scotland, because we know from the MIS remote rural Scotland data that, depending on their household type and location, families in remote rural areas need between 10 and 35 per cent more income to achieve the same basic level of income as those in households elsewhere. That has to be a fundamental contributor to fuel poverty; it is not the only contributor, but it must be recognised in any definition if that definition is to have credibility and serve the purpose for which it is designed.

Di Alexander is absolutely right. We support the new definition, with the proviso that the minimum income standard for remote rural areas must be included. Our research has backed up a lot of what organisations such as Highlands and Islands Enterprise have come out with, which is that, as Di Alexander says, incomes that are 10 to 40 per cent higher are required.

Last year, CAS commissioned qualitative research on the support needs of households that were defined as being fuel poor. One of the interesting things that came out of that was that the groups that self-identified as having a significant need for fuel poverty support corresponded quite closely with the groups that were more likely to be defined as fuel poor under the Scottish Government’s impact assessment, based on the new definition. There was one exception to that, which was households in rural areas. Households in remote rural areas, in particular, said that they needed all sorts of advice and financial support. The fact that that was the one group that did not correspond with what was in the impact assessment suggests that that is the one area where there is a need for fundamental change.

You believe that if that change is not made to the definition, it will be flawed because it will not include people in remote rural locations.

I think so, yes.

I have so many questions that I will not have time to ask them all. I represent more than 6,000 island constituents and I support the position on the minimum income standard. Does the panel believe that when we look to tackle fuel poverty there should be additional emphasis on island and rural communities to bring them down, if you like, to the average proportion of people that suffer from fuel poverty? Some local authorities might have 10 or 15 per cent fuel poverty, but in Highland and remote authorities it might be 30 or 40 per cent. Should there initially be a specific focus on putting additional resources into those areas to reduce the level of fuel poverty at least to the Scottish average? Would the panel support such a measure?

In East Ayrshire, we are not remote rural, but we certainly have some rural areas, and we see particular difficulties with access to support services. One of the main difficulties for people in rural areas is access to finances in order to travel; another is access to transport to make the journey to reach the support services. Such people often end up living in isolation. They look to neighbours, friends and family for support, but those people tend to be in exactly the same position. We need something in the strategy that identifies that people in those groups potentially need extra support.

Elizabeth Leighton and others on the panel said that the Scottish Government needs to be more ambitious, but the Scottish Government does not have much control over income, pensions being an obvious example.

Even if the Scottish Government set up its own energy company and sold fuel at cost, we would still be subject to world prices. How realistic is it to reduce fuel poverty year on year? The previous strategy was not successful, and despite its best efforts the Scottish Government is buffeted by external factors.

The panel members have all said that the Scottish Government is aiming to reduce fuel poverty by only 1 per cent a year. However, if we reduce the number of people in fuel poverty from 600,000 to 140,000, that will be a 77 per cent reduction. That is more like 4 per cent per year.

On the ambition, although I commend the Scottish Government and this Parliament for having such a strong commitment to the eradication of fuel poverty and for having had, over the years, a series of programmes to address the issue, which have mainly addressed energy efficiency, I argue that we should learn from the lessons of the past and consider why fuel poverty has not reduced as much as it should have done.

Let us learn from programme evaluation, which has not been done until fairly recently. Let us look at how forming the types of partnership that the strategy envisages could make programmes more effective, and let us consider greater investment—yes, it comes down to numbers in the budget—not just in delivering measures but in before and after care, in helping people to understand how to manage their energy more effectively, by switching and so on. If we seriously want to eradicate fuel poverty, it will require greater investment.

As Norrie Kerr said, we have to up our game. It requires a step change. If we are going along with a business-as-usual budget and a business-as-usual strategy, we will have business-as-usual results. The whole point of the bill and the strategy, following the work of the Scottish rural fuel poverty task force and the Scottish fuel poverty strategic working group, is to change our approach, building on what we have been doing and improving.

The submission from the Existing Homes Alliance was excellent, as are all the submissions. You said:

“We ... note the positive results from research undertaken by the Energy Agency and NHS Ayrshire and Arran”—

that is my area—

“where preliminary analysis of the health impacts of the area-based solid wall insulation schemes suggests lower hospital admission rates for respiratory and cardiovascular related conditions in these areas compared with a control group of postcodes who had not yet participated in the scheme.”

Have you had discussions with the Scottish ministers about, for example, the possibility of switching national health service resources into fuel poverty reduction? You have proposed a budget increase from £110 million to £234 million a year, which looks quite ambitious on the face of it, but we might save the NHS money by investing in fuel poverty. I know that Norrie Kerr has talked about that over the years. Have you discussed the issue with ministers and had a positive response? Is it being considered?

It is certainly something that we have raised, in that we have asked whether we should be looking more globally at the budget. Fuel poverty should not just come under housing; we need to consider more broadly where the other benefits come from and who else should be investing in reducing fuel poverty. It goes beyond health, of course, to economy, because of all the jobs that could be created and sustained if we had an ambitious programme, just on the energy efficiency side of things.

You are right, in that we are starting to see hard evidence of the health benefits. NHS Ayrshire and Arran has been a leader, working with the Energy Agency, in demonstrating that. We need more of that evaluation to be done, so that we have the evidence and can cost the benefits to the NHS. Previous research has indicated that there could be savings to the NHS of up to £80 million a year—let alone the health and wellbeing benefits to individuals.

That is why we were so disappointed by the financial memorandum, which fails to look at the cost of reaching the target, whether we are talking about a target to have 5 per cent of households in fuel poverty by 2040 or a target of true eradication. What is the cost, and how will we meet it, through public investment and private investment, and by bringing in other Government policies and portfolios? We are disappointed that the Finance and Constitution Committee is apparently not going to report on the financial memorandum, although that is one of the questions that we think it should look at—not just the amount of the budget, but where it comes from.

10:45  

My final question—I thank the convener for his indulgence—is also for Elizabeth Leighton. I am sorry that I am focusing on one individual, but I want to discuss a point that is made in the Existing Homes Alliance Scotland submission. It says:

“the Scottish Government has stated in the Draft Fuel Poverty Strategy that it will develop ‘...if appropriate, a wider Energy Efficient Scotland Bill for later in this Parliament, and this would be the vehicle for any further legislative changes needed to support Energy Efficient Scotland, beyond the fuel poverty provisions contained in the Fuel Poverty (Target, Definition and Strategy) (Scotland) Bill’.”

Do you feel that the bill represents a missed opportunity and that it should be much more rounded? Other members of the panel may wish to comment on that, too. Instead of our looking to have another bill a year or two from now, should everything be contained in one bill? If possible, would you like additional provisions in the bill that we are discussing?

The bill’s genesis was as a warm homes bill. It was about warm, low-carbon, affordable homes for everybody in Scotland, so we were disappointed when a decision was taken to make it focus only on fuel poverty. We welcome the focus, but it is limited. The opportunity has been missed to support it by providing a complementary statutory underpinning for the energy efficient Scotland programme, which is very much needed in order to provide ambition to deliver on the removal of poor energy performance as a driver of fuel poverty.

We know that there is consideration of a possible energy efficient Scotland bill. Perhaps we will hear more about that on Thursday, when, I believe, the minister will make a statement to Parliament. It will be positive if there is a firm commitment to such a bill and information on what it will contain. Failing that, the bill that we are discussing provides a perfect opportunity to take the matter forward in a timely fashion and in a way that supports achievement of the targets.

On that point, we have written evidence from the energy poverty research initiative and Common Weal, which says that they are

“disappointed that the Scottish Government has chosen to ignore the consensus at the expert workshop”

in 2017

“that the finalisation of the new definition should be postponed for two to three years to allow the development and inclusion of a robust Scottish definition of vulnerability in the new definition of fuel poverty.”

We have some conflicting evidence, but we will need to deal with that.

Dion Alexander said that the definition should underpin everything that will flow from it. It should be the evidence base for, I presume, the strategy, the implementation and delivery against the target. I have a general question about how we go about measuring fuel poverty. Information comes from the Scottish house condition survey and there is a modelling exercise that, as far as I can see, measures fuel poverty by local authority area. We have a map in the Scottish Parliament information centre briefing that shows that.

Dion Alexander has asked for an uplift to the minimum income standard in relation to remote rural Scotland, and he mentions in his submission a better alignment with the urban/rural classification. First, how well can the current measurements of fuel poverty align with the geography of Scotland? Secondly, if the bill is passed as it stands, will it help us to prioritise and to plan where and how we are going to spend money?

Does it align with the geography of Scotland? It could do better, particularly in relation to the way that information is gathered according to the Scottish Government’s sixfold urban/rural classification system. In effect, categories 1 and 2 are the cities, categories 3 and 4 are towns and categories 5 and 6 are rural settlements—that is to say, settlements of 3,000 people or fewer. Category 5 settlements are within half an hour’s drive time from a major conurbation and category 6 is remote rural areas that are more than half an hour’s drive time from a major conurbation.

Information is gathered to an extent on those two rural categories but, often—as has been the case in relation to fuel poverty—it is globalised, as it were, and presented as being to do with rural areas in general rather than with category 5 and category 6. It is aggregated. We are saying that, henceforth, all information should be gathered so that we can see clearly what is happening in category 5 and in category 6—in other words, in accessible rural areas and remote rural areas. It is commonly recognised, not least by the panel of academics who came up with the new definition, that remote rural areas are where the greatest problems are.

My colleagues have already made the point that we need a much better understanding of outcomes. A lot of assumptions are made on the basis of inputs—that is to say, people assume that energy efficiency inputs will necessarily equate to affordable warmth outcomes. However, that is not the case. Experience shows that, too often, an energy efficiency input does not necessarily mean that the person who is living in the house ends up achieving warmth at a price that they can afford, so they still have a problem.

To complement the much better understanding of what is going on in remote rural Scotland as well as accessible rural Scotland, we need an improved understanding of the outcomes. I hope that the new fuel poverty strategy will take that question seriously so that we can have a much better understanding of what works and what does not work. One of the major weaknesses of the fuel poverty strategy is that it has not looked nearly closely enough at real outcomes in terms of affordable warmth.

Forgive me, but I have forgotten the second part of your question.

Others can answer the second part of my question, too, if they like. If I am a policy maker in the Scottish Government in five years’ time and I want to eradicate fuel poverty on Skye, will I be in a better position to do that after this bill is enacted than I am today?

You will not be, unless you really think hard about it from the perspective of the people who need the help and work out what kind of help works best for them. The experience of the Highlands and Islands—I have come across the issue in other places, but that is the place that I know best—shows that what works best is tackling the problem on the front line by having skilled and trusted fuel poverty alleviation people based in the community, such as those in the Lochalsh and Skye Housing Association’s energy advice service, so that they can find people and ensure that nobody is missed out.

They do that by building trust, using word of mouth and by going into someone’s house and looking at all the things that are causing that household to have difficulty, which can involve the fact that the fabric of the property needs improving; that more insulation is needed; that the heating system needs changing; that there is a problem with the electricity tariff, which is a feature of remote rural areas, as they are, essentially, off the gas grid; or that they are not using the system as well as they could be. The fuel poverty alleviation people can provide the handholding support that someone might need, particularly if they are elderly and independent-minded or if they simply do not understand what the system can offer them.

Where such a service can provide a mix of technical advice and a form of support that is almost like social work—I do not mean that in a demeaning way, but it is a fact that some people need a lot of handholding—that works extremely well. That is the way to get to grips with the problem. That requires resourcing and revenue funding to ensure that that effective outreach takes place.

In effect, you are saying that the bill will not make a difference to that; it is about how we implement things on the ground.

That is right. Clearly, there is—

Keep it short, Mr Alexander.

Sorry, convener.

That is fine. Just on—

Mr Kerr wants to come in.

Mr Wightman talked about measurement. The Scottish house condition survey uses BREDEM 2012—Building Research Establishment domestic energy model 2012—which has a number of anomalies. For example, in calculating fuel costs, it uses a Scottish average for oil, although oil prices in remote and rural areas are very different from inner-city oil prices. I suggest that, if we are going to use the house condition survey as our main touchstone, we must amend BREDEM to take into account a number of issues.

Another issue is that, as Mr Wightman rightly said, the survey results are by local authority area, which is difficult in a huge area such as the Highlands. However, using proxies—we will always use proxies—we can apply additional work that will get good figures down to ward level in certain areas.

The bill itself will not make it easier to target resources to fuel-poor households. When the minister talked about introducing the bill, he was looking for a doorstep tool, so that someone on the doorstep of a household could make an assessment of its fuel poverty. Given the complexity of the definition, that doorstep tool is nigh on impossible. It would have to take into account a person’s income and fuel costs and then work out the MIS. Therefore, a doorstep tool for an individual house is a non-starter, but we can amend BREDEM and we can do additional work that will move the information down to ward level, which would be more useful for local authorities.

I would be grateful if Mr Kerr could write to the committee with further thoughts on what that work would involve. That would be useful.

Certainly, I will do that.

I agree with that point, but there is also something to be said around how the definition is used in budgeting. Obviously, if we have a more accurate definition, that could play a role in aligning fuel poverty budgets. How do we do that more effectively with the new definition compared to the old one? There is nothing in the bill that would make that easier. One solution could be a more in-depth requirement, either for a third party or for ministers, to report on the impact of each individual driver of fuel poverty, as well as the impact of measures to address those drivers individually, so that we can understand where the money needs to be spent. If we see that energy prices are holding back progress, we will know that money needs to go to innovation on that. That is a more general point, but a more accurate and detailed definition can play a role in budgeting.

We will come back to reporting and accountability, so I will leave it there.

Liam McArthur has a couple of questions on that.

As someone with the dubious honour of representing the part of the country with the highest levels of fuel poverty—Orkney—that is of particular interest. I congratulate the panel on the distinction of gathering such compelling evidence that the Government saw fit to issue its retaliation first, with an explanatory note. Even in that note, the Government appears to accept that the combined impact of the new definition and targets will be a greater reduction in the fuel poverty rate in urban areas when compared to rural areas.

The committee has heard concerns from everyone about the absence of the rural MIS, which goes against the advice of the rural fuel poverty task force and the independent expert panel, and against the wishes of pretty much every organisation that is involved in housing and fuel poverty across the Highlands and Islands. From the note, that decision appears to be based on the potential costs of including a rural MIS and the delays in implementing the system. What is the panel’s response to those two concerns, which the Government appears to be using to justify its position on the issue?

11:00  

The figure that is quoted in the paper is a cost of £0.5 million over four years. From my conversations with Professor Donald Hirsch of Loughborough University, who is the key person responsible for gathering minimum income standard data and who led the work on the MIS for remote rural Scotland, I think that he is surprised that it would need to cost that much, but I respectfully suggest that the only way in which the committee can bottom that out is to invite Professor Hirsch to give evidence and discuss the matter.

That raises the question as to whether it would be money well spent. Our view is that it would.

On the figure of £0.5 million over four years, if we amend BREDEM—there is a reference to the need to amend BREDEM—that will not be free, but that has not been costed. I think that the figure has been given to demonstrate why we should not apply a remote rural uplift, rather than why we should. In the great scheme of things, £0.5 million over four years is a drop in the ocean to get more accurate reporting that will enable us to dedicate resources to a particular area. I am sorry, but I think that the figure is a smokescreen.

In his written submission to the committee, Professor Hirsch said:

“Were this matter of a remote rural variation to be reconsidered in the course of the Bill, I can confirm that ongoing measurement of such a variation would be feasible with a modest amount of ongoing research to keep it up to date.”

He does not quantify that, but what he says suggests the order of magnitude that we are talking about.

Mr Salter talked about budgeting. Do you agree that, if we do not get the criteria right, we will not direct resources in the most efficient way?

I absolutely agree. I cannot comment on the figure that the Scottish Government has put on that but, as Norrie Kerr and I both said, if we start from the wrong point, we will not be able to budget effectively and we will not get the outcomes that the bill tries to achieve.

I absolutely agree that it would be money well spent, if it ultimately meant that fuel poverty support got to the people who are in greatest need, in particular those who have, historically, found it harder to access support.

We have touched on the cost, but what about the delay? Do you envisage a delay, given what you have said about the need to crack on and have more ambitious targets?

I have not seen any great detail from the Scottish Government about exactly what the delay would be and what would cause it. As far as I am aware, and as Di Alexander said, a lot of the work has already been done. There is Professor Hirsch’s work, and Highlands and Islands Enterprise has done extensive research on the matter.

Such exceptions or uplifts are already applied in other parts of the country, such as London. It appears to me that the problem should not be insurmountable. As Norrie Kerr rightly pointed out, in the Scottish house condition survey, methodologies are revised and applied retroactively so, even if there were a short delay, there is no reason why a remote rural uplift should not then be applied once the information is ready. A delay is not a reason not to do it.

What are the panel’s views on the principle of having a fuel poverty strategy and the timetable for producing it, given that it will probably come out in 2019, after the bill has been passed? What do you think of the draft fuel poverty strategy that was published alongside the bill?

Please make your answers as brief as possible.

I will make a start. The strategy needs to be in place—the question is whether lessons have been learned from the previous schemes that will impact on it. The strategy is more focused on removing poor energy efficiency as the main driver, and we would like to see a lot more built into it for support services such as Citizens Advice Scotland that are doing the handholding. It is important that we have a strategy, but I do not think that it is wide enough. It is very narrowly focused.

In our submission, we spell out what we would like to see included in the preparation of the fuel poverty strategy. A lot of work has already been done on this by both the strategic working group, for which Elizabeth Leighton provided the secretariat, and the rural fuel poverty task force, which the Scottish Government convened and which I chaired. There is a lot of information available.

That said, a useful way of ensuring that the strategy delivers for remote rural Scotland is to island proof it, as per the requirements of the Islands (Scotland) Act 2018, which is all but in place now—I think that it has a few small stages still to go through. As I understand it, the minister, Kevin Stewart, has indicated that he is happy for the bill and the strategy to be island proofed as soon as possible, and I urge the committee to support that view, because that would be useful in making sure that the bill and the strategy do what they are required to do in practice.

I have a couple of points. First, on the consultation requirements, we welcome the specific reference to getting the views of

“those with lived experience of fuel poverty”.

We think that that is positive, but their views should be gathered in order to report on progress, too. The consultation should be more co-designed instead of being a passive request for some input, with feedback wrapped in. Indeed, we have made extensive comments on that aspect.

Secondly, with regard to the content—and this goes back to my previous comments about business as usual—does the strategy contain specific policies or programmes that are different from those that we have now? We should build on what we have now, which has been successful, but if we are to make the step change towards accelerated progress, the strategy should contain new programmes and policies that use certain levers such as regulation or incentives or look at how explicit links are being made with other strategies such as the child poverty strategy or public health strategies. Those things should be evidenced in the fuel poverty strategy, so that we know that this will be mainstreamed across all of Scotland and not follow the current pepper-pot approach, which means that, if you are lucky, you might have funding for a year-long project to provide the kinds of services—the handholding and so on—that others have talked about. If you are not lucky, you do not have anything. We would like to see the strategy developed so that it moves on from where we are today.

On the consultation requirements and the reference to the “lived experience”, we would very much like front-line workers to be consulted, too, as it might give a good indication of the trigger points for when consumers approach a trusted intermediary, which includes organisations such as Energy Action Scotland, Home Energy Scotland, the Energy Saving Trust and, obviously, Citizens Advice Scotland. There is already a vast wealth of knowledge, and I am quite sure that many front-line workers in those organisations will be more than happy to pipe up and talk about their experience, too.

I agree. There is also a lot of scope and a lot of options for setting out in more detail how the

“lived experience of fuel poverty”

is measured. As Linda Corbett has said, it is very important to speak to front-line workers, and quite a lot of work has already been done through the Scottish household survey. That could be expanded on to get more fuel poverty data.

The strategy sets out a commitment to addressing all four drivers of fuel poverty but, as I have said before, we need a lot more detail on how that will be done. We have talked a lot today about some of the limitations on Scottish Government powers; because of that, the strategy needs a lot more detail on what it will do to bring down energy prices and increase incomes.

We also had some thoughts on the vulnerability criteria. The academic review panel recommended that there should be on-going work to define vulnerability and produce a set of criteria that would include things such as health and disability as indicators of vulnerability. There would be benefit in the strategy if there was a clear commitment to establishing something like a permanent panel of public health experts to review the criteria on an on-going basis. Vulnerability is a complex issue that changes a lot over time for society and individuals, and its definition should be reviewed regularly.

On the vulnerability criteria, the strategy assumes 75 as the age at which people require an enhanced heating regime, but that is potentially too high. Vulnerability is not just a health issue. After retirement age, people become more financially vulnerable and spend more time at home, and the same goes for people with children under five. At least until the first stage of work is undertaken to set out the vulnerability criteria, it would be beneficial to include households with children under five and to bring the assumed age for requiring an enhanced heating regime in line with the pension age.

Elizabeth Leighton correctly identified that the financial memorandum merely reflects the costs of implementing the bill—for example, the costs of printing a strategy, the time that it takes to write it and so on. You have highlighted other bills such as the Climate Change (Emissions Reduction Targets) (Scotland) Bill that contain more detailed costs for achieving the targets. It would be unreasonable to expect that we can assess the full costs of achieving the target, but what can reasonably be done to assess the broad costs of eradicating fuel poverty either though the bill as it stands or in any amended target that we might have?

In our evidence, we suggested that some projections could be made about the costs and gave some examples of research on energy efficiency that has been carried out over the past few years by Consumer Focus—which is now Consumer Futures. Its estimate of the cost of alleviating fuel poverty is an example of how such projections can be made in order to indicate what it would cost to achieve, for example, the energy efficient Scotland accelerated targets for fuel-poor homes.

Those figures indicated that at least double the current annual budget for energy efficiency and fuel poverty programmes has to be made available. I stress that phrase “at least”, because the research looked at only one driver and is a little bit dated. If public health officials were spoken to and front-line workers consulted, it would be possible to project how we could address the other drivers, too. I would not say, therefore, that it would be unreasonable to do a projection—an estimate—of the costs as has been done for the climate change plan and the climate change bill. Importantly, the wider benefits of action on climate change were also looked at, and the same could be done for fuel poverty.

The arguments have been well rehearsed about the benefits for health, wellbeing, jobs, the economy and improved energy security as well as, of course, the energy savings, which go into people’s pockets and get spent in the local economy. Again, there has been research in all those areas, and it could be documented to evidence why investment in this area is well worth our while. You could look again at other Government budgets that could contribute to this effort.

11:15  

Some time ago now, the Highlands and Islands housing associations affordable warmth group drew up a proposal for what we called an “energy carer” based model of delivery, which I have described in my previous answers. Although the Scottish Government never formally responded, the proposal was picked up and advocated for by the Scottish Government’s rural fuel poverty task force, so there is work out there that goes into detail on what it would cost to deliver the kind of personalised outreach service that would be required to tackle the problems in the Highlands and Islands.

Another matter that we have skipped over is monitoring. The Climate Change Act 2008 established the Committee on Climate Change, which produces reports and is an independent, statutory adviser to Government. Section 6 of this bill says that periodic reports are to be prepared by Scottish ministers and laid before Parliament. I think that, in your evidence, you have all said something about the need for enhanced reporting and scrutiny to help future parliamentarians and policy makers assess whether we are on track; Craig Salter, for example, has talked about reporting on each of the individual drivers. I know that we have your written evidence, but it would be useful to hear any brief comments that you might have about how important you think that might be.

Monitoring is very important, and it is also very important that the major reviews are done sooner rather than later; there could be one five years from now, or if you started counting from 2019, there would be major reports in 2024 and 2029. I reiterate that annual interim reports are required in order to keep proper tabs on what is really happening and try to avoid repeating the problem with the previous fuel poverty strategy, when we were always looking back to find that things were not really improving very much and it appeared as though not enough effective action was being taken to alter the direction of travel.

It would be beneficial if a third-party organisation had the statutory role of monitoring and producing frequent reports on the progress that was being made on each of the four drivers of fuel poverty. I say “each of the four drivers”, but I mean each of the recognised drivers, as they could change over time. That would give a more robust level of scrutiny, similar to that of the Committee on Climate Change.

There would also be a benefit from ministers being required to respond to the reports in Parliament and on each of the drivers of fuel poverty. It is important and beneficial to have a statutory requirement at least to measure and look at each driver to ensure that we do not focus only on one aspect of fuel poverty. Even if it ends up that not every driver can be tackled to the same extent, we need to understand why that is and where the sticking points are.

Very briefly, the Home Energy Conservation Act 1995, which came into force in 1996, requires local authorities to report every two years on progress towards their statutory targets. That was to allow scrutiny of progress and, if needed, to allow the target to be amended and guidance to be given on change. A review every five years seems far too long to allow for significant change or for guidance to be given. If we do it every five years, and then take a year to publish, that will run into six years, so the information will already be five years behind. The house condition survey used to be carried out every five years, but now it models every year and becomes statistically valid every three years, although the figures are put out every year. There is a precedent for gathering that information and reporting to Parliament.

We have argued that the fuel poverty advisory panel should be established on a statutory basis so that it is independent, goes beyond one Administration, can respond to reports and can provide advice to Parliament. Annual reporting, which would involve shorter reports than five-yearly ones, provides an opportunity to consider whether any corrective action should be taken if progress is not sufficient and whether the approach is adequately resourced. This is not just about the strategy and having nice ideas and plans; it is about considering whether that strategy is adequately resourced to deliver what it says it is going to do. That is what is being done with the child poverty and climate change legislation.

I want to go back to the strategy, which is set out in part 3 of the bill. In considering the Planning (Scotland) Bill, the committee agreed to an amendment on enhanced parliamentary scrutiny of the national planning framework. Should that also apply to the fuel poverty strategy? In other words, should the Parliament have a greater role in the strategy so that it is not just left to ministers to publish it, show us it and then move on?

To give the briefest of answers, I say yes.

I see that there is unanimity. I wish that all the questions had been like that.

I have a small final question. The bits at the end of bills, which might seem to be boring, are often the most interesting. Section 13 is on commencement, while section 14 tells us what the act will be called once it is enacted. Section 13 says:

“This section”—

that is, the commencement section—

“and section 14 come into force on the day after Royal Assent.”

In other words, when the Queen signs the bill and it becomes an act, all that we will have is a name and the fact that that name comes into force on that day—and nothing else. We will have to wait for ministers to commence everything else in what will then be an act, including section 3, which some of you have talked about the need to commence. Should we strengthen the commencement provisions so that we have a timetable for doing that rather than just leave it to ministers?

I see that no one has a view. It does not matter.

I see that Dion Alexander has a view. You spoiled it, Mr Alexander—it was going so well. [Laughter.]

I could not agree more that a timetable is needed. Indeed, the same point was made in many of the responses to the fuel poverty consultation document earlier in the year rather than the submissions to the committee. We need milestones and a much clearer way of understanding what is planned, and we need that sooner rather than later.

To be fair, the bill contains the milestones, but the trigger point or the point when the clock starts ticking for virtually the whole bill is in the gift of ministers. Should we set some of those dates in the bill? Perhaps it should say, for example, that some provisions shall be triggered a year after royal assent.

You have taken the words out of my mouth. We have suggested 12 months from the date of royal assent, which we think would be reasonable, given that we already have a draft strategy. A 12-month timetable would ensure that the bill did not languish. I do not think that the Scottish Government intends that to happen, but such a timetable would give assurance that the momentum will be maintained.

Graham Simpson wants to come in with a final point.

It is actually a final question. The bill is an incredibly flimsy document. If we did not have it, would anyone lose out?

The simple answer to that is yes, because we would have nothing that said what we want to do. We would have an energy efficiency programme that trundled on to no end, and we would simply continue to provide people with some help without knowing how effective it was. The bill will help to bring that into focus. We on this side of the table all disagree with the 2040 date, but the bill lays out what we intend to achieve. If we do not have that, there will be no focus for future work or programmes.

Does anyone have any final comments?

I have prepared two case studies of people in fuel poverty, which I will leave with the committee. The first involves a person with whom we worked closely to bring them out of fuel poverty—she was in a local authority property and had plenty of options—while the second is about a lady who has worked very hard to be energy efficient. Although she engaged with two separate programmes—warmer homes Scotland for external wall insulation and, historically, the green deal, although I know that that is reserved to Westminster—she is now, despite that work, in fuel poverty. I have no strategies left to pull her out of it other than give it time and hope for a change of circumstances. The point of including that relates to the 5 per cent target, and the fact that there are some people who just cannot move out of fuel poverty. I will leave those case studies with the committee for members’ perusal.

I appreciate that very much—that is very kind of you.

On the question whether the bill will make any difference, we certainly welcome it, although we have said that it needs a lot more in it and that it is only half a bill. We have given a starter list of amendments that can be made or areas where the bill can be supplemented so that we can put in place the relevant powers and commitments to allow us to move on from where we are. That would remove barriers and create opportunities to be more ambitious in eradicating fuel poverty across all the drivers. The list is not complete, but it gives examples of where the bill could make a difference if it were amended.

On that note, I thank our witnesses for their time and their useful answers. I suspend the meeting briefly to allow the witnesses to leave.

11:27 Meeting suspended.  

11:31 On resuming—