Fuel Poverty
The next item of business is a statement by Alex Neil on fuel poverty. The cabinet secretary will take questions at the end of his statement; there should therefore be no interventions or interruptions during the statement.
14:33
Thank you for allowing me to update Parliament on the review, which I commissioned last October, of the fuel poverty strategy. In the light of rising energy prices, I wanted an independent body to take another look at how we are tackling the issue and to bring forward ideas. The review—led by the Scottish fuel poverty forum, which I re-established—was published today.
The forum represents a wide range of stakeholders, from energy companies to campaigning groups, so gaining consensus is difficult. However, it has produced an excellent interim report, which is backed by all its members. I thank the forum very much for its valuable contribution to the debate about how we can tackle the problem of fuel poverty. That problem is a disgrace in an energy-rich nation. I have met the chair of the forum—Professor David Sigsworth—to discuss the forum’s main recommendations, and am happy to inform members that I support all of them.
Our building regulations for housing have the most demanding energy standards in the United Kingdom, and are comparable with the best in Europe. Despite that, we still have a major legacy problem in respect of poor-condition stock and fuel poverty in our existing stock. Around 80 per cent of homes across Scotland will still be in use when our final emissions targets are to be met in 2050. We must focus on the existing housing stock in order to tackle fuel poverty and to achieve the housing milestones that we need to reach in order to meet our emissions targets. That is why I will introduce a national retrofit programme, which will initially focus on areas of fuel poverty and related deprivation.
In the spending review, the Scottish Government showed its determination to tackle fuel poverty head-on. In contrast with the UK Government, we are not cutting our fuel poverty budget to ribbons, but are providing around £0.25 billion for fuel poverty and energy efficiency programmes. We need to identify solutions that will supplement that budget so that we can spend at least the £200 million annually that the Economy, Energy and Tourism Committee called for in its excellent report on fuel poverty. I believe that we can deliver those sums by designing schemes that lever in obligations to be placed on energy companies. The forum will work with us and the Convention of Scottish Local Authorities in designing a national retrofit programme to work alongside energy company obligations, and to produce schemes that provide the biggest bang for everyone’s buck.
The programme will prioritise fuel poor areas and will cover the whole of Scotland in around 10 years: it will finish the job that was started by our area-based insulation schemes and build on the successes of our current fuel poverty and energy efficiency programmes. Some 122,000 households have already received physical measures through those schemes, and a further 382,000 households have received other assistance. It is estimated that, over the lifetime of the measures that will be installed under the schemes, there will be a net gain in household income of around £700 million and a saving of 3 million tonnes of CO2.
We are working with COSLA to give local authorities a wider role in delivery of the new programme and in promotion of benefits to the community, because they have a great deal of knowledge about the areas that need to be tackled and there is a level of trust of them in their communities that allows them to make it over the doorstep and to assist householders to undertake essential work.
I also asked the forum to look at the definition of fuel poverty and to confirm whether it is still valid. By and large, the forum believes that it is still valid and has asked that further research be done in order to provide greater insight on the causes of fuel poverty. I welcome that approach because the problem cannot be defined away by using a different way of counting. We need to understand more about why fuel poverty is so prevalent, and where investment in the fabric of our housing stock can improve health and wellbeing. The problem touches all parts of Scotland, but is most acute in rural and remote communities that simply do not have access to mains gas and in which the housing is not always suitable for loft and cavity-wall insulation.
In our 2011 manifesto, we highlighted how we would, in order to establish a Scottish futures fund, use savings that were made by the Scottish Futures Trust and Transport Scotland in the deal that was reached to construct the Forth replacement crossing. That fund will enable us to take action to create opportunities and tackle injustice across our society. We have committed to investing £50 million in our warm homes fund in this session from the £250 million that will be saved, in order to deliver renewable energy and energy efficient homes in the communities that are worst affected by fuel poverty. I will make a further announcement shortly about when we expect to launch the fund.
Extension of the gas grid, where it makes economic sense to do so, is an extremely effective way to reduce fuel poverty. We have taken that suggestion from the forum and made available £5 million in loan funding to provide connections. From 1 September, that fund will be open for business and will provide an opportunity for approximately 10,000 fuel-poor households in communities across the country to benefit.
However, energy efficiency can never be a total solution to fuel poverty. If we raised the entire housing stock in Scotland to a minimum of 10 on the national home-energy rating, we would still have a level of fuel poverty of around 14 per cent. However, as members know, we do not have full control over other causes of fuel poverty—yet.
Pricing has the biggest impact on fuel poverty, and I urge all energy companies to do their utmost to shelter the most vulnerable people from price increases. We must tackle energy prices and increase incomes if we are to eradicate fuel poverty.
We do not have the powers now, but we want to change that, so we will give the Scottish people the chance to rectify the situation in 2015. In the meantime, we will do all that we possibly can with the powers that we have to maximise incomes and to assist households to access lower tariffs and reduce their energy bills.
We are continuing to work with energy companies. At the summit that we hosted with the big six last November, the energy suppliers agreed to work in partnership to maximise the carbon emissions reduction target scheme and the community energy saving programme in their final year; to implement concerted action to contact vulnerable customers and to offer support to help them to transfer to the most efficient tariff; to achieve clarity, transparency, simplicity and fair choice for consumers; to offer support to the voluntary sector to engage with hard-to-reach groups; and to provide more detail on help through trust funds and so on.
Since then, we have worked with trusted intermediary organisations and the energy suppliers to deliver the actions that were set out in the communiqué. We have made good progress. Energy companies have already taken action to publish their best tariffs and best energy efficiency offerings in a common format; to signpost customers to the home energy Scotland hotline; to introduce greater incentives to encourage take-up of free insulation; to provide full information on and to proactively promote their trust funds; to reduce prices and/or undertake annual and tariff reviews; and to work with intermediaries to maximise uptake of the CERT scheme.
We are engaging with the Office of Gas and Electricity Markets to consider how the retail market review will provide further progress on that, and to ensure that vulnerable customers can gain the benefits from the market that internet-savvy consumers who are regular switchers already enjoy.
All those measures are essential to tackling fuel poverty in Scotland. In conclusion, I take this opportunity to thank Professor Sigsworth and the forum for the interim report, and to confirm once again the Government’s commitment to tackling fuel poverty and to implementing the forum’s recommendations.
The cabinet secretary will now take questions on the issues that have been raised in his statement. I intend to allow a maximum of 20 minutes for questions, after which we will move on to the next item of business. A number of members have indicated that they would like to ask questions, so succinct questions and answers would be helpful. I ask members who wish to ask a question to ensure that they have pressed their request-to-speak buttons.
I thank the cabinet secretary for his statement and welcome the fuel poverty forum’s excellent interim report. We were disappointed that the Scottish Government reduced spending on fuel poverty by a third last year, when too many people in Scotland remain fuel poor, but we welcomed the restoration of the budget to its previous levels in the spending review.
We also welcome the warm homes fund and look forward to its launch, given that we had proposed a green new deal to make 10,000 homes energy efficient. The proposals in the report can make a real difference to tackling fuel poverty, so I ask the cabinet secretary how much the Scottish Government will invest in the national retrofit programme, and how many people that will benefit.
Energy-efficient homes and pricing are crucial to tackling fuel poverty. The cabinet secretary likes to talk about powers that he does not have, but the Scottish Government could play a role in reducing prices now, through promoting the collective purchasing of energy by local authorities and housing associations, as the report highlights. Will the Scottish Government take forward that proposal?
Finally, does the cabinet secretary believe that, through those and other measures, the Scottish Government will meet its target of eradicating fuel poverty by 2016?
Housing associations already have access to the relatively cheap electricity tariffs that are available through the national public sector contract for electricity. Along with other intermediary organisations, we are taking measures to increase take-up by housing associations of that opportunity, which could make a substantial difference to the tariffs that are paid by tenants of housing association properties. Local authorities are, of course, already part of that deal, and we are keen to extend it as far as possible across the social rented sector.
Secondly, as far as budgets are concerned, the Economy, Energy and Tourism Committee report called for a total of £200 million to be spent on tackling fuel poverty every year. It is my intention that, between what the Scottish Government puts in and what we can expect as our share of the energy company obligation commitments under the new arrangements that are being introduced under the Energy Act 2011, we will meet the commitment to spend £200 million a year. About £120 million will come from the energy companies. The amount that we provide through the warm homes fund will go up to about £18 million in 2014-15. With existing funding, that will add about another £66 million or £67 million. Together, those funds will help to fund the national retrofit programme.
I, too, congratulate the Scottish fuel poverty forum on the content of its interim report, and I join the minister in accepting the nature of the demands that are made in it. The report represents a major contribution to achieving our objectives.
I have a couple of specific questions. The minister mentioned his wish to target resources at communities that are in greatest need and went on to describe the problem as it exists in some areas of rural Scotland. Will he guarantee that isolated rural communities will not be left to the end of the 10-year period but will be assisted at the beginning of it?
That ties in with my second question, which relates to mains gas, an issue on which I get a great deal of correspondence from villages in the north-east. How much does the minister expect to achieve with the £10 million loan fund? Will he consider extending the fund if it can be proved early in the day that it is a successful measure?
The minister brought up independence—that is only to be expected—but is he really telling us that fuel poverty could be eliminated in an independent Scotland, when the SNP Government’s prospectus is entirely dependent on squeezing every last tax penny out of the oil and gas reserves, and when its current policy is driven exclusively by generation of electricity by means that are dependent on feed-in tariffs and renewables obligation certificates, which are already costing Scotland’s energy consumers a fortune?
Given the utter mess that George Osborne made of oil taxation, I do not think that any Tory is in a good position to criticise us.
Alex Johnstone asked two substantive questions. First, I give an absolute guarantee that isolated rural communities will not be at the tail end of the programme. Indeed, it could be argued that many of those communities should be at the front end of the programme, because many of them are in the most dire need when it comes to fuel poverty. The range of options that is open to people who live in towns and cities is just not available to people in such communities—access to the gas grid is a classic example of that. Therefore, they are pretty restricted in how they can tackle fuel supply and fuel poverty. It is incumbent on us to prioritise those communities.
The second question was about what the new fund for gas connections will achieve. To a large extent, that will depend on who applies for the funding and how big the villages are. For example, some villages that qualify for funding might be very small—more like hamlets of 30 or 40 houses—while others may be of 200 or 300 houses. The cost difference between them might not be that big because we are paying for the basic connection. It will be very difficult to give an accurate estimate. Undoubtedly, there is a huge pent-up demand for that kind of funding throughout Scotland so I anticipate that the take-up will be very high indeed.
I also welcome the excellent interim report from the fuel poverty forum and congratulate it on the work that it is doing on behalf of the Government to alleviate fuel poverty in Scotland. What are the next steps towards introducing the area-based national retrofit programme? What assurances can the cabinet secretary give that delivery of the programme will efficiently target the needs of those who are affected?
The top priority is to ensure our share of ECO funding under the new arrangements in the new Energy Act 2011. We hope to have agreement on that with the UK Government and the energy companies within the next few months. We will then be able to make much more detailed plans for implementation of the national retrofit programme, which we intend to start at the beginning of the new financial year in 2013.
From the index of multiple deprivation, we know down to postcode area where poverty is at its greatest. Those communities will be given priority in the implementation of the programme.
I also welcome the cabinet secretary’s announcement of the introduction of a national retrofit programme and note that it will be focused on areas of fuel poverty and related deprivation. I am also reassured by his answer to Alex Johnstone that the focus will include rural areas. As the cabinet secretary will be aware, rural homes are frequently older single-wall properties that can be difficult and expensive to insulate. Will the national retrofit programme have a strand to tackle specifically that rather difficult problem?
I am very keen to ensure that there are no technological restrictions on the programme so that, for example, cavity wall and loft insulation can be made available to everyone in Scotland and not restricted, as it is at the moment. Pre-1919 and hard-to-heat housing, which was built in the days when roofs and attics were not built to be particularly accessible, can be a problem but we have to compensate for that with other forms of insulation to ensure that every house in Scotland meets the necessary standard. I take Elaine Murray’s point that we should try to ensure that the choice that is available is wide enough to cater for all possibilities.
I warmly welcome the report and the cabinet secretary’s statement. As he is aware, energy efficiency and tackling fuel poverty are important for helping people to keep their homes warm and for bringing down carbon emissions. How is the Scottish Government going to work with the newly elected local authorities to build on the measures that he announced in his statement?
My officials have been in close dialogue with COSLA during and after the council elections. Once COSLA has appointed its new spokesperson, I will arrange an early meeting on fuel poverty. The previous spokesperson, Councillor Harry McGuigan, was very helpful under COSLA’s previous regime and I am sure that we will have a good working relationship with the COSLA representative. There is general agreement with COSLA that we have to move along with the national retrofit programme. I understand that there is a great deal of enthusiasm for the principle of the programme—in particular, for the idea that local authorities will be primarily responsible for delivering it.
The minister will be aware that people who are in fuel poverty are unable to invest in microrenewables, which could provide them with major savings. Will the minister look at ensuring that the fuel poor can access microrenewables and the funding to install them? Can priority be given to people who are off the gas grid? Will he also look at alternatives to deprivation indicators in rural areas? The indicators often work against the fuel poor in mixed-income communities?
That latter point is a very fair one. We will look at the issue, because we do not want to miss out anybody. However, I emphasise that the purpose of the programme is to cover the whole of Scotland, so although we are prioritising fuel-poor areas, we will move on to the non-fuel-poor areas because, in order that we can meet our fuel poverty and emissions targets, we will have to cover the existing homes stock to ensure that it is up to standard.
I do not have funding in my budget for microrenewables, but I take Rhoda Grant’s point on that and I will raise it with my colleague Mr Swinney.
I welcome the statement and the emphasis on vulnerable groups, including people with severe disabilities and terminally ill people, and on carers. Can the cabinet secretary give an estimate of how much carers are currently helped and will be helped under the new measures?
As John Mason will be aware, last year I extended the energy assistance programme to cover carers, who make a major contribution to looking after vulnerable members of our community. I anticipate—in fact, I am absolutely sure and determined—that carers will qualify for the national retrofit programme, just as they qualify today for the energy assistance programme.
I note the statement and the national retrofit programme, but has the cabinet secretary considered the supply side as well as the demand side? Will he consider feasibility work on the retrofitting of power stations, particularly in relation to coal generation and implementing district heating schemes around power stations to reduce consumption and to lift those who live near power stations out of fuel poverty?
My colleagues Mr Swinney and Mr Ewing are considering the role that district heating can play as it falls within their bailiwick, rather than mine. However, we are on the same page on the issue. Where we can use district heating systems to alleviate fuel poverty and reduce emissions, we should try to do so.
I welcome the cabinet secretary’s statement and commend the Scottish fuel poverty forum for its report. Fuel poverty is a significant issue in my constituency, where there is at least one death each year from hypothermia. A major contributory component is the failure of many people on low incomes, particularly pensioners, to claim the benefits to which they are entitled. Although those benefits are in part reserved to Westminster, what steps can and will the Scottish Government take to encourage higher uptake?
We have down the years run various campaigns to encourage uptake. It is an on-going battle to encourage more people, particularly pensioners, to take up the range of advice and support that is available, including access to lower tariffs and, in some cases, additional benefits. If members want to help their constituents, I suggest that they get them to phone the freephone number 0800 512012 to access advice on all aspects of the benefits to which they are entitled, and on how to improve their heating situation.
I thank the cabinet secretary for providing advance sight of his statement, much of which I welcome—although perhaps not the suggestion that the referendum on separation has slipped back to 2015. I, too, congratulate the members of the fuel poverty forum on its interim report. I also look forward to welcoming David Sigsworth to Orkney later this summer, where he will see at first hand some of the innovative collaborative work that is being done to tackle the problem, which is particularly prevalent in the island communities.
Mr McArthur, we need a question.
Although I welcomed the cabinet secretary’s comments about island and remote areas being at the front of the queue in the programme, what specific steps are being taken to ensure that the range of fuel poverty measures will fully address the needs of remote and island areas?
I will just correct Liam McArthur. We are not having a “referendum on separation”. We are having a referendum on independence. Separation is a 19th century concept.
Now that I have corrected the member, I will make two points. First, we are working with local authorities individually and collectively and we will work with them on the design of the programme to ensure that island and remote and rural communities are all covered by the programme and get the requisite priority.
Secondly—I know that this is a particular issue for Liam McArthur in Orkney—we intend that the programme will be delivered by local authorities, which I hope will have major spin-offs in local economies so that more local contractors and local jobs can be assisted by the associated spend. One of the lessons that we have learned is that, rather than arranging the delivery mechanism at national level, it is more effective to have the delivery mechanism arranged at local level—particularly at local authority level. We hope that the major spin-off benefits of that will be more jobs, more investment and more economic activity in each local authority area.
I will struggle to call everyone who wants to ask a question.
During the previous ministerial statement on fuel poverty, I asked the cabinet secretary about the Government’s commitment to collective bargaining for energy. Today, the cabinet secretary has accepted the recommendations on collective purchasing and has said in response to Richard Baker that he is keen to extend the local authority tariff to the social housing sector—
I am sorry; I really need a question.
Okay.
For those reasons, I am puzzled about why measures to encourage collective bargaining are not included in the cabinet secretary’s statement today. Will the cabinet secretary back collective purchasing, support the Dundee energy summit that I am holding in June to set up a scheme for Dundee and commit to roll out that scheme across the country?
As I have already said to Richard Baker, we are already doing that through the national public sector electricity contract. Every tenant in every housing association in Scotland has, in principle, access to the tariffs under the public sector electricity contract.
I want to follow on from Mark Griffin’s question about district heating schemes. There are a number of good district heating schemes in Dundee and elsewhere in Scotland. Last week, I and other members of the Local Government and Regeneration Committee visited Shetland—
I really need a question.
In Shetland, the committee saw the district heating scheme in Lerwick, which is powered by renewable heat, which would otherwise be lost to the sea or the atmosphere.
I am sorry, but we really need a question.
What efforts does the cabinet secretary suggest be made to encourage more such renewable energy schemes for heat?
We already have a district heating loan scheme that is funding schemes across the country. It has a budget of at least £5 million for the next three years and is currently open to applications. I agree with those who have said that that is not enough. We want to transform the scale of uptake of district heating in Scotland. As I said earlier, my colleagues Mr Swinney and Mr Ewing are working to that end and have set up an expert commission on district heating to identify the challenges and drive progress.
How much carbon would have been saved, how many jobs in the construction sector would have been protected and how many households would have been taken out of fuel poverty if the Government had implemented a national area-based, universal, all-Scotland 10-year insulation and retrofit programme when we proposed it four years ago, instead of digging its heels in and refusing to amend its budget?
The fact of life is that we have run a number of successful fuel poverty programmes. The energy assistance package and both our insulation programmes have had a tremendous impact in terms of the number of people whom they have helped and the money that they have saved those people. The national retrofit programme is a natural progression from where we are today.
I am sure that Patrick Harvie thinks, with hindsight, that his ideas are always the best. No doubt, we all think that. I hope that, in the spirit of consensus that has been shown around the chamber, he will accept that a national retrofit programme is the way ahead.
I apologise to the members whom I was unable to call. We must move on to the next item of business.