EAS Policy Position Statement – Fuel Poverty

Fuel poverty should not exist. It is a fundamental necessity in every person’s life should be to have a warm, dry home which is affordable to heat. Energy Action Scotland believes that having a warm, dry home is a human right, which the Universal Declaration of Human Rights Article 25 makes reference to. In this day and age, people should not have to decide between heating their home or feeding themselves and their family.

There used to be three causes of fuel poverty but as our understanding of the issue grows we now accept that there are four recognised causes of fuel poverty in Scotland which are: high energy costs, poor energy efficiency of homes, low income and how energy is used in the home. The latter of these is linked to behaviour of the occupants and is often referred to as behaviour change.

High Energy Costs

Around 50% of a gas or electricity bill is attributable to wholesale energy costs. Wholesale energy costs are largely affected by global energy rates and it is difficult to influence change in this market. However, the rest of the energy bill is made up of a mixture of network costs, supplier costs (including profit), VAT and climate change and social levies.

The UK Government’s levies on energy bills are largely regressive. It is inherently unfair that energy use and ability to pay are not taken into consideration when green taxes and other levies are placed on a consumer’s bill. These taxes hit the poorest the hardest as they pay proportionately more of their income on energy than any other demographic.

Energy Action Scotland  believes that all this is creating an uneven playing field and, as everyone pays roughly the same, you will pay more if you are an all-electric customer, it creates a regressive tax mechanism where the fuel poor and vulnerable customers pay just as much as those better off customers who don’t need to worry about the cost of energy. It is quite a ridiculous system where those vulnerable consumers eligible for the Warm Home Discount credit pay £12 each year towards the cost of the operation of the same scheme.

Energy Action Scotland is aware that there are critics who say removing levies from bills may well cast into doubt energy efficiency and fuel poverty initiatives which are currently being funded by the public purse. This funding could therefore become susceptible to annual budgetary negotiations and the flux of political and policy priorities. Energy Action Scotland supports the need for reform of the levy system and asks all parties to sign up to remove all additional charges on consumers’ bills and move these to general taxation.

Poor Energy Efficiency of Homes

Good energy efficiency and a high standard of housing are essential to help mitigate increasing energy prices and reduce fuel poverty. Energy Action Scotland believes that there needs to be a continued push to improve housing standards and domestic energy efficiency so that no household needs to waste energy just to maintain a healthy temperature standard. This is good for consumers, who end up using less energy and therefore spend less on their bills. It is also beneficial for the environment by saving carbon emissions; it also lowers energy demand thereby reducing the strain on energy networks. As we move towards a low carbon economy and supporting that “Just Transition” we need energy efficiency to become more of the norm, and not seen as additional measures within homes.

Housing standards should be strengthened, in Energy Action Scotland’s opinion.  We support energy efficiency standards for private sector and owner occupied homes, as proposed under Energy Efficient Scotland. The national policy should be to prioritise the worst-performing properties so that they no longer put people into fuel poverty.  These standards should be brought forward and implemented in order that they can in particular help the thousands of private tenants who struggle to pay higher than necessary energy bills. Energy Action Scotland also feels that building standards for new build homes also need strengthened to bring net-zero into the next revision of the standards.

Low Income

One of the main causes of fuel poverty is low disposable household income. Energy Action Scotland is concerned that Universal Credit as well as ongoing welfare reform is impacting negatively on many household incomes. Any changes to welfare should, in our view, be made in the framework of allowing people to have a minimum standard of living.  However, fuel poverty does not only affect recipients of social security entitlements. The number of people who are working but are poor is rising and Energy Action Scotland is therefore a supporter of the real Living Wage Campaign. Everyone should be paid at least the Accredited Living Wage, which will help them to afford a decent standard of living. As a minimum, all employees working for public bodies or on publicly funded contracts in Scotland should expect at least the Accredited Living Wage.

How Energy is used in the Home

The Scottish Government has now adopted energy use in the home as the fourth driver of fuel poverty, as it was recognised that many households are not getting the most value out of the amenities that energy provides in the home e.g. heating, lighting, bathing, cooking, laundry or from the energy saving measures that are being installed. Energy Action Scotland supports post-installation energy advice visits, and believes that more emphasis needs to be placed on face to face energy advice in the home. This in turn will help occupants live more sustainably within the home, not wasting energy and helping play their part in moving to a low carbon economy.