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Publication - Report

A Scotland without fuel poverty is a fairer Scotland: four steps to achieving sustainable, affordable and attainable warmth and energy use for all

Published: 24 Oct 2016
Part of:
Housing
ISBN:
9781786525413

Report by the Scottish Fuel Poverty Strategic Working Group proposing a fresh approach to delivering affordable warmth and energy use in Scotland.

105 page PDF

1.6MB

105 page PDF

1.6MB

Contents
A Scotland without fuel poverty is a fairer Scotland: four steps to achieving sustainable, affordable and attainable warmth and energy use for all
5. Governance

105 page PDF

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5. Governance

5.1 Overview

Successful national and local government programmes and policies are based on strong leadership and a clear understanding of policy objectives and how progress will be measured. They also include resources to match the ambition, and transparent processes of accountability, scrutiny and stakeholder engagement.

These governance processes are vital to ensure the programmes and policies are credible and supported by those who will help in their delivery. In relation to the new fuel poverty strategy, we believe that the following governance issues are important:

  • Definition, policy objective, and targets
  • Accountability and scrutiny
  • Consumer protection
  • Monitoring and evaluation
  • Leadership and resources

The Scottish Government's commitment to a Warm Homes Bill [93] , with a focus on fuel poverty, provides the legislative vehicle for statutory provisions relating to the new fuel poverty strategy arising from the recommendations in this report.

5.2 Definition, policy objectives and targets

5.2.1 Scottish fuel poverty policy and definition

The current fuel poverty action plan is designed to help meet the Scottish Government's statutory target to eradicate fuel poverty by November 2016. This target is based on the fuel poverty definition set out in the Housing (Scotland) Act 2001: "a person lives in fuel poverty if that person is a member of a household with a low income living in a home which cannot be kept warm at a reasonable cost." This general definition is clarified in the Fuel Poverty Statement (2002): "A household is in fuel poverty if, in order to maintain a satisfactory heating regime, it would be required to spend more than 10% of its income (including Housing Benefit or Income Support for Mortgage Interest) on all household fuel use." Extreme fuel poverty means a household would have to spend more than 20% of its income on energy use.

The definition of a 'satisfactory heating regime' is based on recommendations from the World Health Organisation. 'Household income' is defined as income before housing costs, to mirror the definition used in the UK Households Below Average Income ( HBAI) Statistics.

It is now nearly 15 years since the definition was set in Scotland, and some have questioned whether or not the definition is still fit for purpose. In response to these concerns, in 2014 the Scottish Government commissioned, on behalf of the Scottish Fuel Poverty Forum, a review of the evidence in relation to the assumptions underpinning the definition of fuel poverty (e.g. heating regime, under-occupancy, vulnerability and definition of household income) in Scotland. The Forum decided that the conclusions of the report did not "support informed reason to change any of the underpinning values of the definition at this time." [94]

The SWG was asked to consider a Scottish Government analysis paper [95] on fuel poverty and income poverty. The paper demonstrates that 42% of the fuel poor are also income poor, while 58% of the fuel poor are not income poor. Some commentators have suggested this paper could have implications for targeting of government resources and setting government policy objectives and targets for the eradication of fuel poverty. The government's poverty advisor, Naomi Eisenstadt, noted in her report Shifting the Curve [96] :

"However, questions have been raised about whether the definition of fuel poverty is helpful in terms of targeting this spend at the poorest. I have seen analysis that indicates that over half of all 'fuel poor' households probably wouldn't be classified as 'income poor' in terms of relative poverty measure. This suggests to me that the fuel poverty definition needs to be looked at again - so that future programmes focus more specifically on helping those in fuel poverty who are also in income poverty."

This fits with her overall recommendation on fuel poverty: "Ensure fuel poverty programmes are focused to support those on low incomes."

However, others note that the government response to fuel poverty already uses benefit eligibility or low council tax bands as proxies for low income and so already directs resources to those that can be described as poor or in poverty. And some are concerned that targeting on the basis of a simple 'fuel-poor, income-poor' matrix may lead to unintended consequences for those on the margins.

5.2.2 Review of current definition

Recommendation - Governance 41: A review of the current fuel poverty definition is required and warranted due to concerns that the current definition is too broad and impedes targeting assistance on those most in need.

Through our investigations and engagement with stakeholders, we have determined that a review is timely and warranted given the Scottish Government's plans to develop a new fuel poverty strategy and respond to the failure to meet the statutory target to eradicate fuel poverty by November 2016.

The review is also needed to give a comprehensive and robust response to the issues that have been raised by stakeholders through our investigations and through the Scottish Fuel Poverty Forum. These concerns are listed below.

Table 3: Concerns with current fuel poverty definition [97]

General
  • There is confusion between fuel poverty as a concept, definition and a measure.
  • The definition is too broad and can impede targeting and measurement of government resources intended for those most in need.
  • All conclusions are theoretical and drawn from SHCS statistical analysis which is distant from reality on the ground.
  • The term 'fuel poverty' is too imprecise to cover the range of circumstances to be measured and tends to lead to a focus on incomes and prices at the expense of other kinds of vulnerabilities to fuel poverty.
Income
  • The definition is based on income prior to housing costs rather than disposable income after housing costs which may result in mortgage-free owner occupiers being more likely to be considered as being in fuel poverty than private tenants with high rents.
  • The definition does not have a maximum income criterion, so wealthy people in inefficient houses can be classified as fuel poor.
  • The definition might not reflect what society today considers reasonable expectations for household expenditure on energy as a proportion of income. However, there is a stigma associated with identifying oneself as poor and struggling to pay bills.
Energy costs
  • The definition is too sensitive to changes in fuel prices alone.
  • Modelling of energy prices may not reflect actual costs incurred by households.
Energy performance
  • Temperature regime requirements may not necessarily be appropriate for all age groups - though the evidence is lacking. However, there is good evidence that certain groups may require a greater level of thermal comfort at home, although with the introduction of heating zone controls [98] this may not be applicable to the whole home throughout the day.
  • The definition does not directly measure levels of thermal comfort that households deem appropriate for themselves, nor whether those levels are achieved. However, it is based on World Health Organisation ( WHO) recommendations (1987) which provide an evidence base.
  • The definition is more a measure of fuel efficient homes rather than a measure of fuel poverty as it affects health. It leads to a predominant focus on energy efficiency measures as the means to tackle fuel poverty.
How energy is used
  • There is no attempt to measure or monitor 'actual' energy use by the disadvantaged and to compare that to actual household income.

The SWG also considered the advantages of the current definition of fuel poverty in Scotland.

Table 4: Advantages of the current definition of fuel poverty

General
  • The 10% definition is easy to understand for stakeholders and the public, though its underlying assumptions are complex.
  • The rationale for the 10% definition as set out by Brenda Boardman in 1991 still stands (twice the average expenditure on fuel against the average national income - which is now 5% [99] ).
Income
  • It recognises fuel poverty as an issue related to, but distinct from, income poverty.
  • It highlights disadvantage, poverty and exclusion in rural Scotland.
Energy performance
  • It focuses attention on making homes more fuel efficient, with positive consequences for climate change and potentially household incomes and health.

We also identified some potential risks associated with changing the definition which should be taken into account when undertaking the review. For example, focusing resources only on those who are income and fuel poor may have unintended consequences on the health of individuals, because the measure of income poverty does not always reflect the income requirements to meet basic needs. Also, a change in definition could simply be seen as removing numbers from the problem, while transferring the financial burden to other areas of the public purse (notably the social care system), but not actually solving the problem of not being able to afford heating and other energy use.

Recommendation - Governance 42: A new definition should focus on the desired outcome - affordable and attainable warmth and energy use that supports health and wellbeing; acknowledge fuel poverty as a manifestation of wider poverty and inequalities in society; and be easy to understand and measure.

We believe the fuel poverty definition should meet the following criteria:

  • Recognise and name the problem in a way that is easy to understand and measure, and reflects the lived experience of fuel poor households.
  • Make clear the desired outcome and/or the solution to fuel poverty (e.g. affordable and attainable warmth and energy use).
  • Allow the problem to be quantified and progress measured.
  • Help to target resources towards those in most need.
  • Reflect current society in terms of minimum requirements for an acceptable living standard in terms of energy use.
  • Acknowledge fuel poverty as a distinct problem, set within the wider poverty / inequalities /wellbeing agenda.

The definition should encompass a 'rights-based' approach, acknowledging that every household has the right to a healthy, dignified life that allows them to participate fully in society. This in turn means that every household should be able to afford to use adequate levels of fuel to sustain a warm and dry home and a healthy dignified life that allows them to participate fully in society.

The inability to achieve affordable and attainable warmth and energy use amounts to the denial of a basic right, and may be considered as 'affordable warmth deprivation', of equal importance to other forms of deprivation currently measured by the Scottish Government.

Recommendation - Governance 43: The Scottish Government should commission a review by independent, academic experts as soon as possible with a clearly defined timetable for completion. The Scottish Fuel Poverty Forum should give input to the final research brief and drafts of the review documents.

The review should be a comprehensive review undertaken by independent experts with input from service users and advice agencies who will have a legitimate and practical view on how any definition might guide action.

The research project will need to be sufficiently resourced to ensure the result is credible, robust and thorough. The emphasis should be on agreeing a new definition (or refreshing the existing definition) that is fit for purpose, that will help us know if we are solving the problem and achieving the objective, and has a strong evidence base. We expect the process of review and response by the government would be complete by the end of 2017. Further delay will hold up progress with the new fuel poverty strategy.

The SWG suggests the following components should be included in the research brief:

  • Define the desired outcome to be achieved and what indicators [100] could be used to measure progress towards the outcome.
  • Ensure that all four drivers of fuel poverty are considered: income, energy costs, energy performance, and how energy is used.
  • Review existing statutory provisions for the Scottish fuel poverty definition and its current application through national and local government policies and programmes.
  • Consider how income should be defined. We are sympathetic to the view that any minimum income standard should take into account the costs of meeting basic needs to participate in society and consider minimum income requirements after both housing and energy costs. The fuel poverty definition should also clarify what is included in household income and if an upper threshold should apply.
  • Income measures that reflect the size and nature of the household in relation to energy needs.
  • Examine the additional challenges faced by some households, e.g. in rural areas or private rented sector tenants who may have a relatively high income but an energy inefficient home, and families with young children.
  • Review the advice on temperature regime and consider consumer perspectives on the temperature regime and what is affordable and attainable warmth and energy use.
  • Carry out a health inequalities impact assessment [101] on the fuel poverty definition and strategy, including a consideration of what is 'vulnerability'.
  • Consider potential unintended consequences of any proposed changes to the definition (for example shifting the problem elsewhere).
  • Include consideration of international examples, as well as the Hills definition used in England [102] . Review evidence from England to see if a focus on low income households has helped to target resources for better impact. Take into account previous research for the Fuel Poverty Forum.
  • Recommend what further research is required.

Recommendation - Governance 44: The review process should result in a new definition and target with a statutory basis. The Scottish Government should provide for transitional arrangements using the current definition while the review of the definition is underway, so as not to delay progress on helping the fuel poor.

The Scottish Government should, in liaison with the Scottish Fuel Poverty Forum, respond to the review's findings within a short, but reasonable timescale (as noted above, we would expect a response by the end of 2017) with recommendations on the definition and key indicators for consultation. Any change in the definition should be done for good cause and not to 'define away' fuel poverty.

To avoid any confusion, the government should make a commitment to use the existing definition to guide policy and for measuring progress until the review process is complete. Within this context, we believe it would be appropriate to focus on those in extreme fuel poverty and those in groups and geographies known to be most at risk, e.g. rural, benefit dependent, pensioners, and homes with poor energy performance.

5.3 Accountability and scrutiny

5.3.1 Current framework

Current accountability arrangements were established in the Housing (Scotland) Act 2001, which included the fuel poverty target and a requirement for the Scottish Government to issue a fuel poverty statement to parliament, which must be reviewed every four years. The first fuel poverty statement was published in 2002. It clarified the definition of fuel poverty and how it would be measured, and set out how the government plans to meet target by November 2016. The most recent statement was published in December 2014.

In terms of scrutiny, the Scottish Government established the Scottish Fuel Poverty Forum [103] in 2008 with the following remit:

  • Monitor the implementation of the Scottish Government energy efficiency schemes.
  • Advise Ministers on further actions required.
  • Liaise with the Fuel Poverty Advisory Group for England to develop an appropriate link that will ensure Scottish interests are fed into reserved policy areas.

There are 16 members of the Forum, with representatives from organisations working on poverty, housing, energy efficiency, consumers, vulnerable people, utilities, and observers from Ofgem and the Distribution Network Operators. In 2014, the Fuel Poverty Forum published a review of the Scottish Government's fuel poverty strategy [104] .

Beyond the publication of the fuel poverty statement, the issue of fuel poverty is often discussed in parliament, usually in relation to the funding and effectiveness of the fuel poverty and energy efficiency programmes. The Scottish Parliament Economy, Energy and Tourism Committee undertook an inquiry into fuel poverty issues and rising energy prices in 2011/12.

5.3.2 An accountable new fuel poverty strategy

Recommendation - Governance 45: The Scottish Government should work with local councils and other stakeholders to design and implement accountability arrangements for national and local government and other agencies working in collaboration on fuel poverty (e.g. poverty, health, energy and housing). The arrangements should include a statutory basis for the fuel poverty strategy, including targets with requirements to measure progress.

The new fuel poverty strategy should be given a statutory basis and set out clear targets and milestones with regular requirements to measure progress towards fuel poverty eradication. These targets should be developed and agreed with local authorities and other agencies working together to eradicate fuel poverty.

The new target should encompass all aspects of fuel poverty - energy efficiency, incomes, energy costs and how people use energy in their homes. The target should be based upon the definition agreed following the review of the current definition and be developed with national and local partners who will be responsible for delivery.

The strategy should be set in the context of the government making full use of current and new devolved powers, and where the government does not have the relevant powers, exerting as much influence as possible at a UK level to ensure progress is made.

The strategy should be accompanied by a legislative framework which provides for adequate scrutiny including the following:

  • The submission of annual progress reports to the Scottish Parliament against the strategy by the Scottish Government.
  • The submission of delivery plans every 5 years to the Scottish Parliament by the Scottish Government. These delivery plans should be linked to reporting on Community Planning Partnerships and Single Outcome Agreements.

Recommendation - Governance 46: Establish robust and transparent scrutiny and advisory arrangements to oversee progress of the new fuel poverty strategy so as to enhance trust and credibility.

We believe the following advisory and scrutiny functions are required:

  • Exchange of information and best practice to inform and amend programmes.
  • Independent advice to Ministers on meeting the fuel poverty target and on the design and implementation of the fuel poverty strategy.
  • Independent scrutiny of progress on the fuel poverty strategy.
  • Ongoing research to better understand the operation of the four drivers of fuel poverty and how they are impacted by the strategy and individual measures therein.

There have been concerns expressed by stakeholders and members regarding the Fuel Poverty Forum's ability to provide these functions to a sufficient level. These concerns are summarised in table 5.

Table 5: Summary of concerns - Scottish Fuel Poverty Forum

Lack of information
  • Insufficient consultation with the Forum by government on policy initiatives.
  • Lack of monitoring and evaluation of the impact of interventions on fuel poverty making it difficult to evaluate the strengths and weaknesses of the strategy and draw lessons for the future.
Remit too narrow
  • The Forum, like the policy itself, is focused on energy efficiency schemes as a surrogate for an overall fuel poverty programme that should look at all drivers of fuel poverty.
  • Expertise on the group does not cover all drivers of fuel poverty adequately.
  • Limited ability to address co-benefits from addressing fuel poverty.
Level of influence
  • Not truly independent from government, which provides the secretariat and drafts most reports.
  • The existing work plan envisages the Forum playing a delivery function which can make it difficult to fulfil a scrutiny role as well.
  • Limited capacity from members to provide independent and innovative thinking.

We believe the key principles for a scrutiny body are:

  • Independence
  • Adequate resources, capacity to undertake research
  • Ministerial commitment
  • Focus on advice and scrutiny rather than delivery
  • Statutory basis
  • Parliamentary role in scrutiny

It is important that these functions are carried out in an efficient and constructive manner that helps achieve the fuel poverty target and does not become a disproportionate administrative burden. We recommend the following approach for the new strategy as shown in table 6, including the establishment of a statutory body to provide advice and scrutiny and a mechanism for regular exchange of best practice.

Table 6: Scrutiny proposals

Mechanism Role Comments
Statutory body Advice to Ministers on meeting the fuel poverty target.
Scrutiny of progress on the fuel poverty strategy.
Liaison with SEEP Programme, Delivery Board and the Joint Housing Advisory and Delivery Group.
Independent
Resources for independent research
Advice linked to statutory requirements
Linked to Poverty Commission
Regular reporting by Scottish Government to Parliament Regular opportunity for parliamentary scrutiny of progress towards milestones and targets.
Scrutiny of alignment between budget and targets.
Reporting should be in partnership with Community Planning Partnerships.
Could be overly burdensome if too frequent.
Could include Parliamentary Committee inquiry and taking evidence from stakeholders.
Fuel Poverty Exchange Regular exchange of information amongst policymakers and practitioners.
Learning from best practice.
Lessons used to inform the fuel poverty strategy and SEEP programme.
Regional forums for exchange of information (local authorities, HES, CABs, etc).
National standing conference on fuel poverty on a regular basis.

A good governance arrangement should lead to a more successful programme that stays on course to meeting its targets. It will also be more credible and trusted amongst stakeholders and delivery agents.

Recommendation - Governance 47: The existing Scottish Fuel Poverty Forum should be given an important transitional role to any new arrangements for advice and scrutiny and should oversee the development of the new fuel poverty strategy

The Fuel Poverty Forum will have an important role to play in advising national and local governments on the implementation of the recommendations in this report and the report of the Scottish Rural Fuel Poverty Task Force. It will also need to provide oversight of any review of the fuel poverty definition. To help perform these tasks, we believe the membership should be reviewed to ensure it provides expertise on addressing all drivers of fuel poverty and the local wellbeing approach to delivery we have recommended. The Forum should also discuss the concerns raised in this report about its access to information and independent status.

5.4 Consumer protection

5.4.1 Why consumer protection is important

In order to address fuel poverty, consumers - often those in vulnerable situations - need to be able to access services to reduce their energy costs. A robust and easy to understand journey, with appropriate protections throughout, is needed to support individual consumers when taking these actions.

Any lack or failure of consumer services and protections can have a direct impact on exacerbating fuel poverty. The impacts on consumers can be immediate, such as when vulnerable consumers receive large bills that leave them with major debts, or longer term, if consumers receive poor or insufficient information and advice.

Poor standards of service can also undermine trust in the energy sector in general, and a range of surveys [105] have indicated that levels of trust have been very low for some time. In turn, this can undermine trust in more specific aspects of the energy market. Ultimately, this results in a lack of competition which means that disengaged consumers - often those at greater risk of fuel poverty - pay higher prices for their energy.

Recommendation - Governance 48: The future Consumer Scotland Agency should have a particular duty to consider the needs of fuel poor consumers and take actions to address fuel poverty.

The Scottish Government has new powers for consumer advocacy and advice under the Scotland Act 2016 and will establish a new agency - Consumer Scotland - over the next 2-3 years. This Agency will be able to set up mechanisms to assess the energy market and build an evidence base, and ultimately refer issues to the CMA. There are also plans to review the effectiveness of advice provision, which will support our recommendations in section 4 on collaborative partnerships.

5.4.2. Supporting vulnerable consumers

Section 3.2.1 provides recommendations on the need to provide a comprehensive third party or neutral switching service to ensure all consumers are getting the cheapest and best tariff to suit their circumstances. The section also recommends that fuel poor households should be offered support on billing and debt relief.

These support mechanisms need to reflect consumer concerns and lack of trust in the energy sector. Currently, gas and electricity suppliers are required to meet certain standards of service for their customers [106] . However, Citizens Advice research [107] , taking into account statistics published by Ofgem, shows that the experience of consumers does not necessarily reflect these standards, with high levels of complaints and evidence of consumer detriment in the sector.

The Citizens Advice report, The Lost Decade [108] , found high levels of failure to meet the current service standards, the majority of which relate to poor billing practices. Price rises above inflation also had a negative impact upon trust in the sector [109] and Ofgem reported that consumer satisfaction fell from 40% in 2012 to 30% in 2014 [110] . Finally, it found that the most vulnerable consumers are the most likely to be disadvantaged by poor service in terms of billing.

Recommendation - Governance 49: The Scottish Government should support a single contact number for consumers concerned about any aspect of delivery of energy efficiency measures in their homes provided by the public sector or through energy suppliers obligated by the public sector.

Research [111] has indicated that the delivery landscape for energy efficiency at the UK level is currently complex, with multiple energy efficiency and fuel poverty schemes which can be confusing for consumers. As a result it may be unclear to consumers (or others in the supply chain) where the responsibility lies for the installation of measures.

All consumers should have a single point of contact responsible for addressing any concerns. This would help to develop a more robust delivery regime which can uphold consumer protections. Home Energy Scotland goes some way towards providing this 'one-stop-shop' for energy advice.

The new fuel poverty strategy, working through local partnerships, provides an opportunity to simplify the delivery landscape for all four drivers of fuel poverty through a stable, long-term programme.

Recommendation - Governance 50: Monitoring and evaluation of the consumer experience of fuel poverty interventions is essential to confirm that high standards are consistently met during programme delivery.

Consumers need confidence that energy efficiency measures are being promoted and installed in ways which will meet their needs, and effective support should be part of this process. This is particularly important when new technologies, such as renewable or district heating, are involved, and there is evidence that a lack of robust consumer protections can undermine their development [112] .

As upgrading the energy performance of the housing stock continues, and as less traditional, more complex and more expensive energy efficiency measures are promoted and installed, it is critical that appropriate consumer protection measures are in place to ensure lack of consumer confidence does not create barriers. The main concerns are to ensure that:

  • Measures are installed to required standards.
  • Measures deliver benefits in practice, and it is clear who to contact if problems arise.

PAS 2030 is the standard to which all ECO installers of energy efficiency measures must be compliant. However, it only sets out minimum standards, and research by Citizens Advice has highlighted perceived problems with it, including shortcomings in the auditing of installers and inconsistencies in accrediting installers [113] . At the same time, PAS 2030 may not be appropriate for small installers, particularly those operating in remote areas or for measures installed in traditional properties.

In terms of the efficacy of measures in practice, there is some evidence [114] that consumers need support beyond installation, particularly where non-traditional heating systems like heat pumps are used. Without support, there is a risk that the benefits of new systems will be lost for individuals in the short term (see section 3.4).

In all of the above cases, a robust monitoring and evaluation framework which covers the experience of individual consumers in practice would be helpful. This is addressed further in section 5.5.

Recommendation - Governance 51: The Scottish Government should explore ways in which protection could be improved for consumers using unregulated fuels, particularly including those using district heating as well as traditional off-gas fossil fuels.

Fifteen per cent of households are not on the gas grid, and are therefore reliant on off-gas fuels. There is a lack of statutory protection for consumers using alternative forms of heating, such as heating oil, LPG or solid fuel, though there are voluntary industry safeguards and oversight by the CMA and Trading Standards. The Ofgem report Insights report on households with electric and other non-gas heating [115] provides a useful summary of potential concerns: lack of protections for consumers in debt, lack of access to a mandatory Ombudsman, lack of Priority Services Register type services and no requirement to provide energy efficiency information or advice.

Citizens Advice internal research suggests that consumer satisfaction with the supply of these fuels is generally high. However the payment requirements commonly required mean that cost is a concern for some consumers, and the lack of parallel standards to those for gas and electricity means that consumers can lack protection when things go wrong [116] .

The former Office of Fair Trading conducted a study of the off-grid energy market [117] and concluded that the UK energy market is working well, though not all areas are served by a sufficient number of competitors. Citizens Advice research has found that voluntary protection schemes are not always being implemented to a good standard and there is evidence of significant price variations. [118]

The SWG believes these concerns warrant further investigation and propose three areas for action on unregulated fuels:

  • Assess how the voluntary protection schemes are working in Scotland.
  • Conduct a market assessment and if appropriate, ask the CMA to look at the issue again but with a focus on areas where there is no competition e.g. remote rural Scotland.
  • Explore a principles-based option to reflect the different business structures and sizes.

There is also a lack of statutory protection for consumers using district heating. This is of particular concern as a central driver for district heating is the alleviation of fuel poverty, and it is often used as a replacement for electric heating, to which existing standards apply. District heating and community heating are also unregulated, a situation which should be rectified, especially as we are recommending an expansion of this sector in the future (see section 3.2.4.3).

The Scottish Government Special Working Group on Regulation [119] has made specific recommendations on regulation to support the development of the district heating sector and to introduce a statutory licensing regime for district heating operators in Scotland. The Heat Trust [120] is pioneering a voluntary scheme of customer protection to be adopted by district heating operators with many joining. This may provide Scottish Government with experience and guidance, and act as a bridge to a statutory scheme of regulation. We believe regulations should be introduced as part of the government's commitment to introduce a Warm Homes Bill in this parliament.

5.5 Monitoring and evaluation

Monitoring and evaluation (M&E) of government fuel poverty programmes is important for learning lessons and informing the development of existing or new programmes. It provides important evidence to support continued investment, helps us understand why people are still in fuel poverty, and what is working to alleviate and eradicate fuel poverty (or not).

There is concern that current M&E efforts associated with Scottish Government fuel poverty and energy efficiency programmes are inadequate and do not measure the impact of these programmes on fuel poverty (see table 7 for summary of concerns). Current M&E tends to measure activity (numbers of measures delivered, numbers of calls to Home Energy Scotland ( HES), numbers of referrals, etc) rather than outcomes (did the activity lift the household out of fuel poverty). There are also estimates of the 'gain in household income' associated with the measures and estimated carbon savings based on modelled savings for the schemes.

There has not been a structured approach to sharing best practice and lessons learned among local authorities. Furthermore, there is little measurement of impact relating to efforts to address the other drivers of fuel poverty - income, energy costs and how energy is used. There have been recent attempts to address these gaps, for example with an evaluation of the value of benefits secured by people referred by HES [121] . However, this is only for HES referrals, so would not take into account referrals from other agencies such as CABs, community groups, and other intermediaries. The Scottish Government is also funding a pilot programme on supporting behaviour change with heating controls which should yield interesting results.

Table 7: Current monitoring and gaps

Current monitoring Gap/Issue
The fuel poverty programme is mainly defined as an energy efficiency programme, so monitoring is focused on installation of measures.
  • Does not measure impact on eradicating fuel poverty.
  • For the most part monitoring does not encompass activities related to income maximisation, reducing energy prices, and improving how energy is used.
The data used to inform policy and scheme development is modelled rather than actual.
  • There are significant differences between modelled and actual outcomes. This is exacerbated in Scotland by its diversity of geography, climate and housing stock, which does not lend itself well to standard modelling. [122]
Local authorities take different approaches to M&E.
  • It is hard to compare results and learn best practice.
Programmes have often been designed quickly to respond to fiscal year constraints
  • Inadequate time to design in proper M&E.
Impact on health, jobs and other co-benefits are not routinely monitored.
  • Lack of evidence to support added value of fuel poverty interventions.
There is sensitivity over spending government funding on M&E rather than on measures. Monitoring and evaluation (particularly of impacts) can be expensive and demanding of staff resources.
  • Getting the right balance of effort between activities on the ground and measuring and learning from the impacts of that activity.
  • Robust evidence on impacts and outcomes is scarce.

We welcome the Scottish Government's recent efforts in this area including the intention to conduct a full evaluation of HEEPS to help inform the design of future schemes. We also welcome plans for local authorities to measure the impacts of investment for a sample of homes in the 2016/17 HEEPS programme and plans to evaluate the SEEP pilot programmes.

There is also some evaluation work to assess the co-benefits of energy efficiency upgrades on homes and home occupiers. For example, the Energy Agency is working in partnership with the NHS in South and East Ayrshire to investigate the benefits of external wall insulation. The project will assess impacts in terms of energy performance, fuel bills, but also health and wellbeing [123] .

A summary of useful background information is provided in appendix 8. It includes a brief description of current monitoring and evaluation for the HEEPS schemes, a summary of international experience of monitoring energy efficiency and recommendations for best practice.

Recommendation - Governance 52: A monitoring and evaluation framework should be established for the new fuel poverty strategy and for SEEP and results should be reported to the fuel poverty advisory and scrutiny body on a regular basis. It should be developed at the start in partnership with the bodies that are delivering the programme.

The monitoring and evaluation framework should have the following objectives:

  • Achieve continuous measurement of improvement.
  • Understand the impact of different energy efficiency and fuel poverty interventions.
  • Measure all co-benefits of any interventions to address the four drivers of fuel poverty.
  • Build the business case for interventions to address the four drivers of fuel poverty.

The monitoring and evaluation framework should be based on an overview of what information is needed to understand if (and how) the strategy is achieving the objective of 'affordable and attainable warmth and energy use', looking at all four drivers of fuel poverty. The framework would include quantitative indicators that are monitored on a regular basis, and qualitative measures which are evaluated on a periodic basis (see table 8). These indicators should follow the fuel poverty strategy and be developed in partnership with the bodies that are delivering the programmes.

A coordinated M&E programme is likely to require more funding than is currently allocated to M&E. However, if well-designed, it should more than pay for these costs by identifying the most effective and resource-efficient ways of eradicating fuel poverty. It will also provide evidence for future funding of fuel poverty programmes.

An example of the kinds of indicators that would be required is set out below. It needs to follow the fuel poverty programme design, and should be developed in partnership with the bodies that are delivering the programme at the start. Reasonable time periods for measurement should be set - in other words, not all schemes would be assessed every year against all outcomes.

It should also involve ongoing and periodic quantitative research, e.g. to examine health and wellbeing outcomes before and after person- and property- interventions. It might also involve linking individual health records with service records over time.

Table 8: Measures for a new M&E framework

Monitoring (quantitative, regular) Evaluation (qualitative, periodic)
Moved out of fuel poverty Moved out of fuel poverty
Energy efficiency measures installed Customer satisfaction
Energy saving advice given and acted on Health impact
Referrals Local economy impact
Benefits maximisation Behaviour change impacts
Income maximisation
Actual and theoretical fuel bill savings

A list of potential components of the monitoring framework is provided below:

  • Activity and impact measures.
  • A combination of national and local measurements that can be compared.
  • Long term studies to measure impacts on and of behaviour change.
  • Sampling should be included to see if there is a 'performance gap' - do the real savings / impact match with modelled?
  • Partnership approach to monitoring that matches the integrated, collaborative approach necessary to address fuel poverty, and measures the impact of interventions on all four causes of fuel poverty - energy performance, income, energy price and behaviour.
  • Other aspects of the fuel poverty programme that should be monitored / assessed include: targeting, eligibility requirements, leveraging of ECO and private investment, appropriateness and quality of works, impact on supply chain and skills.

5.6 Leadership and resources

5.6.1 Scottish and local governments leadership

We have proposed a new approach to achieving affordable and attainable warmth and energy use. There is no doubt this will challenge existing ways of working, and will require strong leadership from the First Minister and her cabinet to be successful. The Scottish Government is strongly committed to addressing fuel poverty as part of its wider poverty and inequalities agenda. Already the SEEP programme is bringing together the housing and energy divisions to work on energy efficiency. Our recommendations go further, bringing together the talents, expertise and resources of the health, communities, and social justice portfolios to bear on eradicating fuel poverty.

Recommendation - Governance 53: The new fuel poverty strategy should be led by a cross-departmental ministerial group, making fuel poverty eradication a clear component of the health, communities, inequalities, social security, housing, and energy portfolios, with one cabinet secretary accountable for the delivery of the strategy.

This approach is consistent with the Scottish Government's vision for public service delivery which foresees collaboration across organisational boundaries and a focus on prevention and early intervention.

Recommendation - Governance 54: The cross-portfolio approach should be matched at the local level through local wellbeing partnerships with strong leadership from Community Planning Partnerships, local authorities and Health and Social Care Partnerships.

Local government, working with its community planning partners, should be champions for the wellbeing partnerships, making the person-centred approach a priority for all services. Senior management teams should mirror the collaboration and coordination expected on the ground, with success measured against improvements in wellbeing, including affordable and attainable warmth and energy use.

Partnerships should include local Directors of Public Health who have a leadership role in health improvement and reducing health inequalities. For example, the Scottish Public Health Network ( ScotPHN) is developing Fuel Poverty Guidance for Directors of Public Health.

Local political leadership and governance is also vital, and this should be recognised in any national arrangements for the fuel poverty strategy. This will ensure accountability to local communities and bring together knowledge of the wide range of local services which interact with fuel poverty policy.

Recommendation - Governance 55: The new fuel poverty strategy should be costed based on requirements to meet its desired outcome - affordable and attainable warmth and energy use for everyone in Scotland - and adequate resources (funding and capacity) made available at a national and local level on a multi-year basis.

The new fuel poverty strategy represents a different way of working and will need to be costed and budgeted accordingly. This will require transparent investment in the local wellbeing approaches to identify and engage with the vulnerable, and direct interventions to help with maximising benefits, switching tariffs, upgrading energy performance of homes, and supporting management of energy - all tailored to the household's needs.

It has been estimated that bringing the energy performance of all homes in Scotland to an EPC band C or above over ten years would cost approximately £10bn with £4.5bn coming from the public sector. [124] We strongly believe that fuel poor households should not be expected to pay for energy efficiency improvements to their home.

The strategy will also require investment in more strategic efforts to raise incomes (e.g. living wage, local economic development) and create more affordable sources of energy supply. Public sector investment, regulation and incentives can also be used to lever private funding to achieve the total level of spend required.

Ultimately, this means resources will need to come from several parts of government - the capital budget, health, communities, energy, economic development, housing and local government. This is already happening to some degree with the SEEP programme and will need to be extended to realise the benefits local wellbeing partnerships can bring. This is why the establishment of a ministerial led cross-portfolio group is essential.

5.6.2 Leadership from Ofgem in Scotland

Recommendation - Governance 56: The Scottish Parliament should request an annual strategy and work plan for Ofgem's activities in Scotland, addressing particular Scottish issues and concerns, including fuel poverty. Ofgem should be recognised as a key contributor to the new fuel poverty strategy.

Under the Scotland Act 2016 Ofgem has new accountabilities to the Scottish Parliament and must "submit reports to, and appear before, committees of the Scottish Parliament". While Ofgem is already active in relevant stakeholder groups and appears at parliamentary committee sessions, we believe these new powers offer a useful context to broaden Ofgem's accountability to Scottish society, while maintaining its position as the GB's independent regulator of energy markets.

For example:

  • Ofgem should be recognised as a key contributor in the new Scottish fuel poverty strategy. As part of this effort, Ofgem should produce a report on its activities and plans to address fuel poverty in Scotland developed in partnership with stakeholders.

As ongoing objectives:

  • Ofgem should pro-actively build fuel poverty alleviation into the developing principles-based regulation - so that it is evidenced throughout the whole of the electricity and gas supply chain including the regulation of renewable transmission and distribution.
  • Ofgem should facilitate and promote alternative business models for energy supply in Scotland as discussed in section 3.2.4. Ofgem's review of innovation funding should include any specific Scottish issues, and the potential for including alleviation of fuel poverty as a criterion for funding in the future.
  • Ofgem should act quickly on the final findings of the CMA energy markets review and ensure, and be seen to ensure, that remedies are working for consumers in Scotland and the fuel poor in particular. If gaps emerge, Ofgem should work with stakeholders to identify further solutions.

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