Fuel Poverty

– in the Scottish Parliament on 5 October 2011.

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Photo of Tricia Marwick Tricia Marwick None

The next item of business is a statement by the Cabinet Secretary for Infrastructure and Capital Investment, Alex Neil, on fuel poverty. The cabinet secretary will take questions at the end of his statement and there should be no interruptions or interventions.

Photo of Alex Neil Alex Neil Scottish National Party

I thank the Presiding Officer for allowing me to update members on fuel poverty in Scotland. Fuel poverty is a problem that currently affects one third of Scottish households. It is caused by high fuel prices, energy-inefficient housing and low household incomes. It is a complex issue: although it is a subset of general poverty, it can affect those on a higher income who would not consider themselves to be poor.

We are emerging from the worst economic recession since the second world war and we face severe restraint in public expenditure. Scottish households are under severe pressure and, at the same time, energy prices continue to increase due to movements in the wholesale markets and other factors.

I am sure that all members in the chamber are concerned by the latest round of price increases by the big six energy suppliers. Despite significant energy efficiency improvements in Scotland’s housing stock, increases in fuel prices are undoing that good work and making the basic right to a warm home seem out of reach for many. Indeed, campaigning groups are highlighting stark choices for households between heating and eating. I, along with other members in the chamber, have a long-standing commitment to the issue and many of us support organisations, such as Energy Action Scotland, that work on fuel poverty matters. The issue has cross-party support in Scotland and I wish that to continue.

Members will be aware that the First Minister has called on the energy suppliers to meet us and stakeholder groups, such as Consumer Focus Scotland, at a summit to discuss the situation. Consumer Focus Scotland has highlighted that the companies have a major role to play, alongside us all, in helping to make Scotland’s housing as energy efficient as possible. It described the initiative as having the potential to lead to an innovative response. I trust that we have the support of all members in the chamber for the summit, and I anticipate a positive outcome.

The Scottish fuel poverty forum was reconvened in 2008 to advise ministers on tackling fuel poverty and it played a major role in the establishment of the energy assistance package. I have considered ways in which the forum could be strengthened and how it could play a greater role in connecting its work with our commitments on climate change. I am pleased to confirm that Professor David Sigsworth will be the new chair of the Scottish fuel poverty forum. He brings a breadth of knowledge and experience in the energy sector and a commitment to tackling fuel poverty. I am also pleased to announce that Norman Kerr of Energy Action Scotland will support David Sigsworth in his new role by acting as vice-chair.

We are boosting the forum’s strategic reach by establishing links between it and the recently established sustainable housing strategy group, which will ensure joint action on fuel poverty, energy efficiency and housing quality. We have made excellent progress on energy efficiency through our energy assistance package. It has given energy advice to more than 200,000 households in Scotland, helped to reduce annual fuel bills by almost £12 million since 2009 and delivered heating measures for more than 21,000 homes—complete systems and boilers.

The programme continues to help older people, but it also provides valuable help to families. Since it was introduced, we have listened to stakeholders and extended to families with children the help that the programme offers. In March, we made help available to people with severe disabilities and those who are, sadly, terminally ill.

This week, we have laid regulations that extend assistance under the programme to people on carers allowance. That will provide much-needed help, and it recognises the pressures on family budgets as a result of higher fuel costs. It is estimated that up to 7,000 households throughout Scotland could benefit from the change.

I recently announced the allocation of £12.5 million of funding this year to 31 local authorities through the universal home insulation scheme. We wish to build on our strong relationship with councils throughout Scotland and put that at the heart of our future programmes for tackling fuel poverty.

Despite that, more needs to be done. The dramatic increases in fuel prices that were announced this summer could push up to 170,000 additional households in Scotland into fuel poverty, taking the total to nearly 1 million. We must consider how our programmes can work alongside the new green deal and energy company obligation when they come to fruition next year. For those reasons, I am instigating a review of our fuel poverty strategy to ensure that we are best able to assist fuel poor households. The Scottish fuel poverty forum will be integral to the success of that review and will lead it. There will be three strands to the review: a review of the nature of fuel poverty and its drivers; future options for our fuel poverty programmes and how we can maximise the leverage of external funds; and an examination of engagement on reserved matters. I will report back to the Parliament early next year with a statement of policy and an action plan resulting from the review.

The spending review this year confirmed that the Government is determined to tackle fuel poverty head on and made increased funds available to enable it to do so. I am very pleased to announce that funding for Scottish Government fuel poverty and energy efficiency programmes will be £65 million in 2012-13 and 2013-14, rising to £66.25 million in 2014-15. That is a 35 per cent increase on the £48 million that is being provided in 2011-12 and illustrates clearly the importance that we attach to supporting households that are affected by fuel poverty. More generally, that funding will also enable us to fund the domestic energy efficiency commitments in the report on policies and proposals under the Climate Change (Scotland) Act 2009.

The spending review also provided additional funding to establish the warm homes fund. That fund of £50 million over the course of this parliamentary session will assist those living in communities that are affected by fuel poverty. The fund will focus on the potential of renewable energy to provide a long-term, sustainable means to address fuel poverty. Development of the fund will be considered alongside the fuel poverty strategy review.

Finally, I am also pleased to announce an additional £5 million for this year, taking the total spend this year to £53 million. The extra £5 million will be for insulation and heating systems targeted at the most vulnerable and fuel poor people in our society.

We are proud of the action that we are taking and we are determined to do everything within our power to reduce and eventually eliminate fuel poverty in Scotland.

The Presiding Officer:

The cabinet secretary will now take questions on the issues raised in his statement. I intend to allow around 20 minutes for questions, after which we will move on to the next item of business.

Photo of Lewis Macdonald Lewis Macdonald Labour

I thank the cabinet secretary for an advance copy of his statement. I congratulate David Sigsworth on his appointment as the new chair of the fuel poverty forum and Norman Kerr on his appointment as its vice chair.

Mr Neil will recall the commitment and hard work of the previous chair of the fuel poverty forum, the Rev Graham Blount. Does he also recall the reasons for Mr Blount’s resignation earlier this year? Does he accept that an advisory group can fulfil its remit to advise only if it is fully informed of the thinking and policy intentions of ministers? Has he offered Professor Sigsworth the assurance that his predecessor sought, that ministers will take the advice of the fuel poverty forum in advance of making decisions rather than tell it about those decisions only after the event? If so, it would be good for ministers to start as they mean to go on.

I welcome Mr Neil’s announcement that he is to restore—at least in part—the funding to tackle fuel poverty that was cut in the current year, although greater transparency would be welcome. He mentioned that he has found an additional £5 million for the current year and said that £65 million will be allocated in the next two years and slightly more than that in the year following. Will he confirm that those welcome increases will still not return the funding to its position in 2010-11? Will he discuss that further with colleagues in the months that are ahead?

Photo of Alex Neil Alex Neil Scottish National Party

I, too, pay tribute—as I have done many times—to the work of the Rev Graham Blount as the fuel poverty forum’s chair. His resignation is now history, but I do not accept the record of events that Lewis Macdonald relayed to us.

We are making available as much funding as we can to tackle fuel poverty against a background of very substantial cuts from Westminster. Mr Macdonald might remember that his colleague Mr Darling cut capital spending by 36 per cent in real terms over four years in his last budget before the United Kingdom election. It is a bit rich of the Labour Party to complain if budgets are cut.

We can look at the totality of the money that we are spending not just directly on fuel poverty programmes but on our housing programme. Two weeks ago, we announced that 4,300 new warm homes would be built in the next two years. That is many more than were ever built in any one period under the Labour-Liberal Administration.

Photo of Alex Johnstone Alex Johnstone Conservative

I thank the cabinet secretary for advance sight of his statement. I welcome many of the measures in it. I draw attention to the extension of the energy assistance package to people who receive carers allowance. When limited resource is available, that small and inexpensive change will make a big difference to a significant number of people and I welcome it most sincerely. I also welcome the review of the fuel poverty strategy in Scotland, which is a major step forward.

However, Lewis Macdonald pointed out a trend in the statement—a fluctuation in support for many measures. What we have heard today is in effect a reversal of some previous cuts. The fluctuation in funding for practical measures to assist fuel poverty is beginning to deliver a problem with skills. In some areas, a failure to maintain the workforce requires to be compensated through making resources available to increase the number of people who have the necessary skills to achieve much of the work that must be done on Scotland’s housing stock to alleviate fuel poverty. Is the cabinet secretary confident that other Government departments will have the resource to ensure that Scotland has the skills—particularly in areas that have skill shortages—to deliver the changes that his funding is designed to provide?

Photo of Alex Neil Alex Neil Scottish National Party

I thank Alex Johnstone for his remarks welcoming the statement. I will assure him about skills. He raises a fair point of which we are conscious. I am sure that he will be glad to hear that ensuring that the skills are available is the job of not just the Government, but the private sector. Scottish Gas—the contractor that delivers the energy assistance package—has invested heavily in new skills and in establishing green academies in different parts of Scotland. We have supported Scottish Gas in its training and skills programme.

In working with local authorities and third sector organisations across the board on delivering programmes to relieve fuel poverty, we are keen to ensure that they make maximum use of the facilities for apprenticeships and other training places that are made available through Skills Development Scotland and other Government agencies.

As part of our contract for the EAP, we are also extracting from providers community benefit clauses that relate to training and apprenticeships.

The Presiding Officer:

I open the meeting to back-bench members to question the cabinet secretary. I remind members to keep their questions brief and I ask the cabinet secretary to keep his answers brief, too. In that way, we will get through everybody who wants to ask a question.

Photo of Aileen McLeod Aileen McLeod Scottish National Party

I thank the cabinet secretary for his statement. Given the importance of fuel poverty to households across Scotland, what recent engagement has the cabinet secretary had with the UK Government on such key energy matters and particularly on ensuring that we have a fair deal on energy for consumers in Scotland?

Photo of Alex Neil Alex Neil Scottish National Party

Last Wednesday I was in London, where I talked to a number of UK Cabinet ministers, one of whom was the Secretary of State for Energy and Climate Change, Chris Huhne. The main point of our discussion was the final stage in the passage of the Energy Bill, which provides new measures relating to the green deal programme and introduces the energy company obligation, which will replace the carbon emissions reduction target programme within the next 18 months to two years. The meeting was productive, and I pay tribute to Chris Huhne for his co-operation with the Scottish Government in developing the proposals and during the passage of the bill. Members will be glad to know that he accepted and endorsed every major proposal that I put to him regarding amendments to the bill to ensure that Scotland gets the maximum flexibility in its application when it becomes law.

Photo of Rhoda Grant Rhoda Grant Labour

I, too, welcome the extension of the energy assistance package to people who receive the carers allowance. The minister said in his statement that around 7,000 households would benefit. In 2008, 94,760 people received the carers allowance. How was the 7,000 figure reached? Will the minister consider assisting those who do not qualify for the carers allowance—the hundreds of thousands of people who will not benefit from the package?

Photo of Alex Neil Alex Neil Scottish National Party

The figure relates to the 7,000 who will be assisted every year by the programme. There is a capacity issue for the programme. Around £5 million of the programme has been specifically allocated for people on the carers allowance. That is a permanent feature of the programme. Over a number of years we hope to get through as many carers as possible who require, in particular, stage 4 assistance, which is central heating and insulation assistance.

Photo of Dave Thompson Dave Thompson Scottish National Party

I, too, welcome the cabinet secretary’s statement, which represents real progress.

I am sure that the cabinet secretary knows that there is a particular problem in rural areas, where people who are off-grid cannot take advantage of gas, for instance. Such people often have very low incomes, poor insulation in their houses, and very high heating costs for oil and other things. We are awaiting an Office of Fair Trading report—

The Presiding Officer:

Will you get to the question, Mr Thompson?

Photo of Dave Thompson Dave Thompson Scottish National Party

Yes. Will the cabinet secretary ensure that the review that is to take place will pay particular attention to consumers in rural areas who are off-grid?

Photo of Alex Neil Alex Neil Scottish National Party

I am very conscious of that problem. Indeed, over the past couple of years we have implemented a number of measures to ensure that, as far as possible, we do everything that we can to address the issue. It can be quite difficult to deal with rural areas, and in particular, with older properties in those areas. Loft insulation is a major problem in some houses of a certain age, for example. Alternatives and alternative technologies therefore have to be available. We have made alternatives available where we have been able to; whether we have done enough will be considered in the fuel poverty review. If we have not, we are prepared to do more.

Photo of Jenny Marra Jenny Marra Labour

According to figures obtained from the Scottish Government today, there was an underspend of £6.9 million in the cabinet secretary’s fuel poverty budget in 2010-11. Given that families in this country are choosing between heating and eating, where has that underspend of almost £7 million gone? Why was it not spent on tackling fuel poverty?

Photo of Alex Neil Alex Neil Scottish National Party

The money has been invested in tackling fuel poverty and recycled into the programmes.

Photo of Liam McArthur Liam McArthur Liberal Democrat

I thank the cabinet secretary for his generous remarks about my colleague Chris Huhne and for advance sight of his statement. Not all of his statement was a complete surprise to those who listened carefully to “Good Morning Scotland” this morning, but I welcome much of what he said, particularly in relation to the EAP extension to carers, the fuel poverty strategy review and the proposed summit.

Can the cabinet secretary confirm that Professor Sigsworth and his team will have full access to all the figures relating to the various fuel poverty initiatives? That was a source of some concern to the Rev Graham Blount.

Can the cabinet secretary update members on the regulation of minimum energy performance standards for houses in the private sector?

Photo of Alex Neil Alex Neil Scottish National Party

I give a complete assurance that Professor Sigsworth will have all the information that he requests and needs to do his job and that of the fuel poverty forum. In particular, we will be more than happy during the review to supply any information that they request. It is important for us to have a good, close working relationship with the fuel poverty forum and to allow it to do its work, not just in the review but more permanently.

On the standards in the private housing sector, one of the issues I discussed with Chris Huhne last week was the measures that are being taken down south, particularly in relation to the private rented sector, whereby it will become illegal for houses that are graded as an F or a G to be newly rented out to tenants. We are considering whether we need to do more in that respect in our housing bill next year. The issue will be included in the consultation on the bill at the turn of the year.

Photo of John Wilson John Wilson Scottish National Party

I, too, welcome the cabinet secretary’s statement. Has he considered reviewing the fuel poverty targets previously set by the Parliament? Also, what discussions has the cabinet secretary had with his UK counterparts regarding the winter heating allowance, in light of the fuel price hikes?

Photo of Alex Neil Alex Neil Scottish National Party

That is relevant to the debate that will follow this statement. We are continually lobbying our colleagues in London for more assistance for those who are vulnerable and who are in fuel poverty.

The fuel poverty targets, including the definition of fuel poverty, will be visited by the review. Luckily, our review can be informed by the conclusion of a similar review that has been taking place down south, which, according to Chris Huhne, is due to report within the next few weeks. That review has been considering the definition of fuel poverty and whether it needs to be updated. Obviously, any targets are contingent upon the definition of fuel poverty. The current definition in Scotland is that anyone spending more than 10 per cent of their disposable income on fuel is deemed to be living in fuel poverty.

Photo of Neil Findlay Neil Findlay Labour

Energy conservation is one element. Another element is renewables. Photovoltaic panels and other household renewables are a way of alleviating fuel poverty, but the problem is that the people most in need are those who can least afford the up-front payments to install the kit. Third sector organisations and councils are in a perfect position to do that. Will there be any money from the Government for such activity?

Photo of Alex Neil Alex Neil Scottish National Party

I hope that the review will consider that and make recommendations. It is not intended that the review will be a long review—I hope that it will report fairly timeously so that the Government can take any action recommended by it.

Photo of Joe FitzPatrick Joe FitzPatrick Scottish National Party

A large part of the problem faced by people up and down the country is high energy prices. That was recently highlighted by the Office of the Gas and Electricity Markets, which accused the big six of price fixing. Was that discussed at the cabinet secretary’s recent meeting with the UK Government? What steps can we take to ensure that unfair energy pricing does not place more households in fuel poverty?

Photo of Alex Neil Alex Neil Scottish National Party

I did indeed discuss that in some detail with Chris Huhne. As the member will know, Ofgem has been undertaking an energy market review of the retail market and has been considering the relationship in pricing between the retail market and the wholesale market. That review has been done in stages and it should be completed by the turn of the year.

I hope that, as a result of the review, we will see action by Ofgem to deal with excessive fuel prices and excessive increases in fuel prices where they are not justified. There is a dispute between the energy companies and Ofgem and others in relation to the justification for the massive increases, which allegedly—if we listen to the fuel companies—are on the back of massive increases in wholesale prices. However, as many people point out, when the wholesale price goes down, the retail price does not seem to go down simultaneously or by the same amount.

I hope that the Ofgem retail market review report, due in January, will help us to resolve that issue.

Photo of Patrick Harvie Patrick Harvie Green

The partial reversal of this year’s fuel poverty cut will bring the level next year back up to something slightly less than the equivalent of half a mile of urban motorway. There is still a question about priorities.

Will the minister tell us who will conduct the fuel poverty review? If it concludes, as countless cross-party committee reports in this Parliament have already concluded, that what is required is a step change in the level of public investment in our housing stock, will that money be made available?

Photo of Alex Neil Alex Neil Scottish National Party

The fuel poverty forum will carry out the review. It will report to the Government and, indeed, to the Parliament. I will have to see its recommendations before I will be in a position to decide whether we have the money to implement them all. It would certainly be more helpful if we did not have to suffer a 36 per cent cut in our capital allocation during the next three years.

Photo of Claudia Beamish Claudia Beamish Labour

I welcome the cabinet secretary’s statement. My question complements Dave Thompson’s question about rural households, which are twice as likely to be in extreme fuel poverty as urban ones. Taking into account the high cost of alternative energy sources for off-grid households, what actions will be taken in the context of the sustainable housing strategy group to encourage the development of cheaper new technologies, such as solar water-heating panels and heat pumps, which will reduce household expenditure on fuel?

Photo of Alex Neil Alex Neil Scottish National Party

Some of those technologies, such as air-source pumps, which are installed quite regularly, are available under the energy assistance package. We are conscious, however, of the need to ensure that the range of technologies that are really only useable for rural communities is made available through our various programmes. The first meeting of the sustainable housing group took place yesterday. We are looking at the kind of issues that the member highlighted.

I welcome the recent significant reduction in the price of solar electricity panels. Two years ago, the average price per unit was running at roughly £8,000; it is now down to £6,000 and is forecast to go down to £4,000. That means that the payback period is substantially reduced and, therefore, that the use of those panels is a much more economic measure now than it was perhaps four or five years ago.

Photo of Jim Eadie Jim Eadie Scottish National Party

Will the cabinet secretary take the opportunity to pay tribute to the work of the Energy Saving Trust in Scotland for the work that it undertakes in administering projects that have a direct bearing on alleviating fuel poverty, particularly in the areas of home insulation and energy efficiency? Will he give an assurance that he will continue to work with the trust to reduce and alleviate the fuel poverty burden on Scottish families and households?

Photo of Alex Neil Alex Neil Scottish National Party

I am happy to pay tribute to the work of the Energy Saving Trust and its energy advice centres. The trust runs the energy assistance package helpline and is also involved in marketing the package. It provides a very good service, particularly during stages 1, 2 and 3 of the package, which are more about advice, information, referral and counselling, but also about ensuring that those who deserve it get to stage 4. I am happy to endorse Jim Eadie’s comments.

Photo of Anne McTaggart Anne McTaggart Labour

What additional funding will the Government provide for training on fuel poverty for individuals and organisations that work closely with the general public and, specifically, with vulnerable groups?

Photo of Alex Neil Alex Neil Scottish National Party

We are very keen to work with third-party organisations, because they are particularly helpful in identifying the most vulnerable people in our community—that happens through such organisations and local authorities. One of the areas that I want the review to look at is how we can better penetrate local communities, because one of the problems that we face is that people are often not aware of the variety of programmes that are available. Regardless of how much you might spend on television or press advertising, I find that by far the best advert is word of mouth in those communities. I encourage every member to do everything they can to spread the word about the suite of fuel poverty programmes that the Government administers.