Response to the Scottish Fuel Poverty Advisory Panel’s request for views on: cash vs money off bills for fuel poverty support

Reducing the amount of money that households spend on energy through energy efficiency and clean heating improvements has a number of advantages compared to increasing household income alone. While financial support provided by reducing fuel bills directly or providing a more general income-related benefit can provide important short-term relief for households facing high bills, long-term reductions in energy demand are key to permanently bringing down bills and shielding households from future price rises.

Importantly, investment in energy efficiency and, in many cases, low carbon heating delivers long terms reductions in energy bills and reduces the need for ongoing subsidy. These improvements result in people paying less to heat their homes to the same level of comfort year after year. Even if energy prices rise and bills increase overall, households with energy efficiency measures installed should always pay less than they would have without them. For households that previously underheated, bills may go up when they start heating to a healthy level, but those bills will still be lower than they would otherwise have been without the improvements.

Evidence from the Scottish House Condition survey shows that for both fuel poor and extreme fuel poor households, lower rates of fuel poverty are associated with higher energy efficiency standards. Thirty two percent of households living in properties rated EPC band C or better were fuel poor, compared with 48% of those living in properties in bands F or G. While there continues to be welcome progress in the number of homes reaching a good level of energy efficiency in Scotland, a substantial proportion of homes in Scotland do not achieve an EPC rating of C – 50% of homes in the private rented sector (PRS), 35% of homes in the social rented sector and 52% of owner occupied homes do not achieve this standard. 

Reducing energy demand provides a lasting benefit for household budgets, because it tackles one of the root causes of unnecessarily high energy demand in homes, unlike financial measures (such as reducing fuel bills directly or providing a more general income-related benefit) that tend to offer only short-term relief.

Reducing energy demand through energy efficiency and clean heating can also support wider policy objectives, including improved health, climate change mitigation and greater security of energy supply.

Our preference is for reducing the amount that households spend on energy through improvements to energy efficiency and clean heating.

This is because, as noted above, it provides a solution that lowers bills permanently and reduces the need for repeated intervention. However, we recognise that financial measures (such as reducing fuel bills directly or providing a more general income-related benefit) remain essential for addressing immediate hardship.

Yes, we think that, to some extent, fuel poverty requires a distinct approach.

This is because fuel poverty is not driven by income alone, but by the interaction of four factors, household income, energy prices, the energy efficiency of the home and how energy is used in the home. This means that there are levers available in fuel poverty policy that are not available for other forms of poverty.

No response.

We don’t have any additional evidence beyond what is already widely available in the public domain. We are not aware of any specific studies that the Panel would not already know about.

However, if the Panel would find it helpful, we can provide indicative fuel bill savings for different energy efficiency and clean heat measures across a range of property types. Please let us know if this would be of interest.