Fuel Poverty Act
The Fuel Poverty (Targets, Definition and Strategy) (Scotland) Act was passed by Parliament with unanimous support in June 2019 and received Royal Assent on 18 July 2019. It sets statutory targets for reducing fuel poverty, introduces a new definition which aligns fuel poverty more closely with relative income poverty and requires Scottish Ministers to produce a comprehensive strategy to show how they intend to meet the targets.
The development of this legislation was informed by the recommendations put forward by the Fuel Poverty Strategic Working Group and the Scottish Rural Fuel Poverty Task Force, which both reported in October 2016, and by a consultation held between November 2017 and February 2018. The legislation was laid in Parliament in June 2018 together with an illustrative draft fuel poverty strategy and the following impact assessments:
The statutory targets set by the 2019 Act are that in 2040:
- no more than 5% of households should be in fuel poverty;
- no more than 1% of households should be in extreme fuel poverty; and
- the median fuel poverty gap of households in fuel poverty is no more than £250 in 2015 prices before adding inflation.
Each of these 2040 targets must be achieved not only in Scotland as a whole, but also within each of the 32 local authority areas. This is to ensure that no part of the country is left behind. There are also interim targets set for the same metrics at 2030 and 2035. However, the interim targets only need to be met at a national level.
The 2019 Act establishes a new two-part definition whereby a household is considered fuel poor if:
- after housing costs have been deducted, more than 10% (20% for extreme fuel poverty) of their net income is required to pay for their reasonable fuel needs; and
- after further adjustments are made to deduct childcare costs and any benefits received for a disability or care need, their remaining income is insufficient to maintain an acceptable standard of living, defined as being at least 90% of the UK Minimum Income Standard (MIS).
To take account of the generally higher costs of living in Scotland’s remote, rural and island communities, the legislation provides for uplifts to be applied to the MIS for households in these areas.
The Final Fuel Poverty Strategy was due to be published in September 2020. However, development of the strategy has now been paused due to the COVID-19 outbreak.