Tackling Fuel Poverty in Scotland - periodic report 2021-2024: Scottish Fuel Poverty Advisory Panel's response

Part 3: Revised Fuel Poverty Strategy

The Panel recognises that the Periodic Report and our reflections on it represent a significant opportunity to influence what the 2026 revised fuel poverty strategy looks like.

As set out above, and notwithstanding the tight timescales presented by the current parliamentary timetable, the Panel’s view is clear: a comprehensive strategy review is required by the end of 2026, with the output being a revised strategy. It is essential that the revised strategy includes a clear and credible fuel poverty reduction plan to achieve the statutory targets.

In doing this a greater emphasis must be placed on the monitoring and evaluation of progress, alongside flexible policy actions where monitoring and evaluation highlights insufficient progress and/or heightened fuel poverty need.

The Panel would also advise that consideration is given to the alignment of periodic reporting, strategy reviews and the fuel poverty target dates.

In our previous advice on the Strategy, we set out several recom- mendations. These complement other recommendations we have made throughout the lifetime of the Panel (see Appendix Two for a full list).

Rather than repeat these, we have here focussed on those most relevant to our review of the Periodic Report.

We begin our consideration of the revised fuel poverty Strategy by highlighting key contextual challenges for the revised strategy, and what must be addressed to create an environment in which fuel poverty targets can be met.

Contextual challenges for a revised strategy

Despite some positive progress, Scotland’s housing still has very low rates of energy efficiency. Accelerating the rate of improvements to the energy efficiency of the housing stock is a prerequisite for meeting the statutory targets and will require increased investment and strong leadership. The revised Heat in Buildings Bill should provide a vehicle to address accelerated delivery, make clear how it relates to the mitigation of and reduction of fuel poverty, and contributes to the fuel poverty targets.

Alongside improving energy efficiency, there needs to be an increased awareness of challenges around how energy is used in the home.

As above, this includes self-rationing, self-disconnection, the incorrect use of technologies (including mistaken beliefs about which cost less) and inadequate ventilation or under heating.

As the cost of living remains high, these behaviours will remain critical drivers of lived experience, and the Scottish Government should therefore develop a strong-evidence base of their impact and consumer thinking to tackle energy inequalities.

At the same time the contribution of third sector advice services which remain under pressure should be recognised as part of a more integrated and holistic approach which can help drive behavioural change.

The Scottish Government should take stock of advice models, their funding arrangements and what works best.

The Scottish Government should also create a fuel poverty delivery plan which includes how to increase low household net income as related to the attainment of the fuel poverty targets.

This should cover a consideration of taxation levers, a cash first versus fuel bills first approach, and the balance of support for major policy actions, including the flexible energy discount mechanism and development of minimum income guarantee.

One, as of yet untested view (to our knowledge), is that by protecting the fuel poor, a flexible energy discount mechanism (sometimes called a social tariff) would facilitate net zero because vulnerable consumers would be protected.

If the intention is to work with or influence UK level funding, clear and accountable actions should be laid out, not just statements of aspiration. Where there are complementarities and trade- offs with UK government actions, these should be set out and evidenced.

High Energy Prices

High energy prices have had a significant impact on rates of fuel poverty and energy price volatility continues. With the transition to decarbonised domestic heating, to meet the fuel poverty targets it is essential that there is affordable and stable long-term electricity pricing.

The recent announcement on the Review of Electricity Market Arrangements (REMA) to retain a single national, but reformed, GB-wide wholesale market to improve the efficiency of our future power, sees the move away from the potential of zonal pricing.

It is imperative that the revised fuel poverty Strategy makes clear (a) the extent to which high energy prices are affecting the fuel poverty targets, (b) how key UK-wide policy and market reforms will affect the targets, and (c) where the opportunities for Scottish Government to influence lie.

Fuel poverty levels are highest in remote rural Scotland. The Panel has researched the high levels of fuel poverty in remote rural communities, including on islands. We are of the view that given the specifically challenging circumstances for those in fuel poverty in these communities, they have a different starting point for decarbonisation.

We recommend that island and remote rural communities have a specific, more focused and co-ordinated, approach for tackling fuel poverty with clear leadership and enhanced resources.

It is important to note that a Fuel Poverty Strategy for England is also being developed by the UK Government. Fuel poverty drivers are impacted by both reserved and devolved policy interventions.

This new Strategy for England presents an opportunity for the Scottish Government to influence the impact on Scottish households from the interventions being considered for England, not least because the English Fuel Poverty Strategy might address energy prices or the link between welfare, low income and fuel poverty. Notwithstanding the different levels of need and place, between the different countries of the UK, there are similarities too where a common or aligned approach could improve outcomes.

For example, in remote rural areas where there is a dependency on unregulated fuels or in considering the optimum replacement heating approach for existing housing stock.

Recommendations to the Scottish Government for developing a revised Fuel Poverty Strategy

Recommendation 1:

The Scottish Government should be transparent on whether the current Strategy can make the necessary progress towards meeting the legislative targets

The revised strategy needs to build from this point.

Recommendation 2:

Development of the revised strategy should not be delayed beyond 2026

Planning for a strategy review should commence immediately. The groundwork needs to start now with priority given to developing a programme for stakeholder consultation and reviewing the effectiveness of the current delivery frameworks and their ability to respond to the step change required. A commitment to a strategy review would mean that any further work on the monitoring and evaluation framework under development would include only the most impactful actions in the current strategy.

Recommendation 3:

A strategic governance model should be adopted

Including clear accountability and responsibilities for fuel poverty in Scotland, with one fuel poverty reduction delivery plan, everybody knowing what they are doing to deliver, and what gaps remain.

Recommendation 4:

A revised strategy should make clear where policy dependencies exist across the fuel poverty landscape

(e.g. child poverty, climate change, heat in buildings and health), that policy and strategy co-dependencies need to be aligned, and that a formal governance structure exists to facilitate co-delivery including oversight of the fuel poverty reduction plan.

Recommendation 5:

A revised strategy should give equal attention to all fuel poverty drivers

Making clear their relationship to the fuel poverty definition, relative weighting in terms of impact on fuel poverty outcomes, and key devolved powers available to address them.

Recommendation 6:

A revised strategy should include a resource plan for the period of the strategy linked to outcomes

presenting an opportunity to bring a strong focus to the fiscal levers and policies. This includes (a) specifying clearly whether this funding is a fuel poverty measure (not related to another catch all policy action), (b) clearly stating spending targets, and (c) evidencing that the funding is sufficient.

Recommendation 7:

A revised strategy should develop and embed a robust monitoring and evaluation framework at the outset

Learning from the experience of the current Strategy.

Recommendation 8:

A revised strategy should set out a clear, evidence-led, strategic approach to influencing reserved issues

as support and resource prioritisation by the UK Government will be key to delivery. This includes prioritising a strong, collaborative relationship with the UK Government.

Recommendation 9:

A revised strategy should set out how the five yearly strategy revision timetable corresponds with the 2030, 2035 and 2040 fuel poverty targets, and the triennial periodic reporting of progress

This would bring coherence to strategic planning, delivery and reporting, and support governance of fuel poverty policy.

Concluding Remarks

The Panel recognises the Scottish Government’s commitment to addressing fuel poverty and working collaboratively across national and local government, as well as the private and third sectors. All stakeholders that the Panel has engaged with recognise the systemic negative impact that living in fuel poverty has, and the opportunities ending fuel poverty would bring, including personal, social and health benefits.

Strategic prioritisation, decisive action and clear leadership is needed to ensure that the statutory targets are achieved in what is a complex landscape, and it is essential that a revised strategy harnesses the expertise and capacity of all stakeholders.

Whilst the presentation of the Periodic Report makes it difficult to evaluate progress, the Panel is clear in its views that the Strategy falls short and that the Scottish Government needs to do much more to tackle fuel poverty now and to demonstrate that the 2040 target can be met

The Panel’s vision is for a Scotland where everyone lives in an energy efficient home and has access to affordable and clean energy – a Scotland where no one lives in fuel poverty. Achieving the 2040 fuel poverty targets would deliver this.

Scotland is an energy rich nation and yet the reality is that around a third of Scottish households now live in fuel poverty, and this has been so for the lifetime of the current Strategy. The Panel is of the view that the extent of the commitments to address the current levels of fuel poverty, to reduce, and ultimately to eradicate fuel poverty, are strategic policy choices.

As the first appointment term of the Panel comes to an end, it remains committed to supporting the Scottish Government to achieve meaningful action towards the elimination of fuel poverty. Scotland’s statutory fuel poverty targets set out the national aspiration to eliminate fuel poverty.

With a reformed approach and renewed vigour, we look forward to the Scottish Government delivering for those in fuel poverty.