The next item of business is a statement by Alasdair Allan on “Tackling Fuel Poverty in Scotland: Periodic Report 2021-2024”. The minister will take questions at the end of his statement, so there should be no interventions or interruptions.
14:24
Today is a key milestone, as we publish our first three-year fuel poverty periodic report, in line with the Fuel Poverty (Targets, Definition and Strategy) (Scotland) Act 2019, setting out the progress and steps that we are making in Scotland, with the limited powers at our disposal, in tackling fuel poverty.
This statement is timely, because Ofgem’s latest energy price cap rise comes into effect at a United Kingdom level today. The price cap rise marks the third increase in a row, and it means that energy bills will be 9.4 per cent—or £159—higher than they were this time last year, despite the new UK Labour Government having promised that it would bring energy bills down by £300.
Nothing could be a starker illustration of the necessity that drives the Scottish Government’s action in this area or of how policies that are driven from outwith Scotland sometimes run counter to what we seek to achieve in this Parliament. I know that the implications of that are being felt keenly by consumers across Scotland. All that said, the fuel poverty statutory periodic report sets out the real and important progress that has been delivered within the limitations of our devolved powers, such as the actions that we have taken to raise household incomes, reshape our social security system and provide financial support through our heat in buildings schemes.
The report crucially highlights two important points as to why the fuel poverty rates have increased since the fuel poverty strategy was published, in December 2021. First, the volatile nature of energy price increases has outweighed gains in energy efficiency and household incomes, which has led to increased rates of fuel poverty and extreme fuel poverty. Secondly, it is only the UK Government that can and must act to use the fundamental policy and fiscal levers at its disposal, especially in relation to fuel prices, in order to help to eradicate fuel poverty in Scotland.
The global events that we have witnessed in the past three years, which continue to unfold, have had a substantially negative impact on the progress that was being made in tackling fuel poverty. Together with that, an enduring cost of living crisis has led to a sharp rise in our energy bills, alongside the cost of other essentials, which has impacted all households across the country and worsened the poverty premium that is faced by those on the lowest incomes, who are at the sharpest end of price rises.
Our published scenario modelling reinforces the impact of high energy prices on fuel poverty rates in Scotland. To emphasise that point, the modelling shows that, under a scenario in which 2023 fuel prices remained at 2019 levels, the fuel poverty rate would now, with all other factors being equal, be around 19 per cent, which is 472,000 households. In other words, if fuel prices had not gone up since 2019, the efforts that we are making in Scotland would have led to a decrease of 15 percentage points—around 389,000 households—from the current fuel poverty rate of 34 per cent, which is 861,000 households. To put it even more simply, fuel poverty would now be going down were it not for the rise in fuel prices.
However, the average weighted index price of fuel in Scotland almost doubled between 2019 and 2023—it increased by 96 per cent—which is why we invested more than £63 million in short-term crisis support through the fuel insecurity fund, to help with household energy bills. We continue to provide on-going support through the Scottish welfare fund and have committed to the further delivery of our islands cost crisis emergency fund in order to support our island communities.
That is together with our collective policies in support of raising household incomes, with more than £3 billion to tackle poverty and the cost of living crisis for households this year. The package spans a range of support for energy bills, childcare, health and travel, and social security payments, such as the Scottish child payment, that is either not available anywhere else in the UK or is more generous here.
Despite those challenges, we are committed to tackling fuel poverty. We want to build on the success of the warmer homes Scotland scheme and the area-based schemes delivery programmes. That is why, this year, we are investing £300 million in improving the energy efficiency of our housing stock. In total, 56 per cent of all households now have an energy performance certificate rating of C or above.
More than £65 million is being provided across our three winter heating benefits this year, which will provide vital support with heating costs to more than 630,000 people. Crucially and relevantly, we will introduce a universal pension-age winter heating payment of £100 for every Scottish pensioner household that is not in receipt of relevant benefits, with those in receipt of a relevant low-income benefit receiving £200 or £300 depending on their age.
We know that tackling fuel poverty requires a long-term, sustained effort and a whole-sector approach with suppliers, consumers, the regulator and, most importantly in this context, the UK Government. Making changes requires the use of fundamental policy and fiscal levers—which only the UK Government can use and which the previous UK Government continually failed to use—to protect household energy bills and address the legacy of soaring levels of energy debt.
Over the past six months, the Scottish Government has been working closely with the energy industry and consumer organisations. That work has involved co-designing a deliverable social tariff scheme that would rise to the challenge and actually make a difference. I am pleased to update members that the social tariff working group’s final report has now been shared with the UK Government. The group’s outputs demonstrate to the UK Government the strength of cross-sector commitment to delivering a targeted bill support scheme. In addition, I have set out a clear set of asks of the UK Government as it undertakes a review of its fuel poverty strategy and targets. I am committed to working closely together on delivering that crucial policy, alongside wider fundamental UK Government policy actions, as a matter of urgency.
The fuel poverty progress report that we have laid in the Parliament today only reinforces the point that, although considerable strides have been made, the fuel poverty rate in Scotland being at 34 per cent is largely due to inaction to date from the UK Government on the fundamental issue that affects everyone: fuel prices. We will continue to engage with a range of stakeholders across Scotland, including the Scottish fuel poverty advisory panel, and we will duly consider the recommendations in its report when it is published.
Like other members across the chamber, I am all too aware of the human consequences of fuel poverty and rapidly rising energy bills. Despite the formidable factors outwith our control that I have mentioned and the sometimes counterproductive policies that have originated elsewhere, the Scottish Government is committed to countering, mitigating when possible and, ultimately, tackling fuel poverty, which affects the lives of so many families across our country.
The minister will now take questions on the issues that were raised in his statement. I intend to allow about 20 minutes for questions, after which we will move on to the next item of business.
Frankly, it is no surprise that this devolved Government is trying to play the people of Scotland for fools by shirking all responsibility. The Labour Government’s decisions have been absolutely disastrous, but the rise in fuel poverty has the Scottish National Party’s grubby fingerprints all over it. Thanks to the SNP, across Scotland today, council tax is up, rail fares are up, ferry fares are up and water bills are up.
Labour’s callous decision to ditch the winter fuel payment coupled with the shared disdain of Labour and the SNP for our domestic oil and gas industry means that the cost to families of simply keeping warm will only increase. Those two left-wing Governments are choosing to squeeze household finances with more and more taxes, and the people of Scotland are worse off as a result.
What assessment has the Scottish Government made of the impact that the growing tax burden will have on households in fuel poverty? Does the minister have any clue when the energy strategy will be published? The 2021 report “Tackling Fuel Poverty in Scotland: A Strategic Approach” promised an increase in the number of whole-house retrofits for households in fuel poverty. How many whole-house retrofits have been completed so far?
In among that rhetoric, there were some important questions that I will try to address.
At the outset, I point out that, in all of that, Douglas Lumsden overlooked the fact that the single biggest factor in driving fuel poverty is the cost of fuel—otherwise, it would not be called fuel poverty. As a result of the increase in the cost of energy, a massive counterbalancing factor has been employed against everything that the Scottish Government has been doing to increase the incomes of the very people to whom Douglas Lumsden referred.
For instance, the figure for those who are in extreme fuel poverty—who spend 20 per cent of their income or more on keeping warm—would now be down to 7 per cent. That would still be too many people, but it would mean that we were on target to meet our ambitions to deal with that in Scotland.
The inaction of successive UK Governments—
The war in Ukraine.
The member mentions the war in Ukraine. I do not deny the importance of that, but the inaction of successive UK Governments to deal with the fundamental issue, which is the cost of fuel, is why we have fuel poverty.
I thank the minister for advance sight of his statement. The update follows the debate that we had on the issue just a few weeks ago. What came out of that debate was a solemn realisation across all parties of the stark and numerous pressures and changes that we have seen across the globe. Indeed, the minister acknowledged global events in his statement to some extent, but we have seen the war in Ukraine, wider inflationary pressures and now the challenges of a changing global economic order, not least in the United States in the past five months.
Although the minister’s modelling seems to want to wish those things away, we cannot escape the reality of those five months. The minister might wish to face both ways, but we cannot ignore the positive steps that the UK Labour Government is taking today to raise the national income wage, for example, to give a pay rise to 200,000 of the lowest-paid Scots to deal with the low pay that he speaks about in his statement.
The Scottish Government has more to do against the global challenges. It was the Scottish Government that ended the fuel insecurity fund at short notice in the middle of the reporting period, removing critical support from those who are most at risk of fuel poverty. Has the Government done any analysis of that and of how many people would not be experiencing fuel poverty if the fund had not been cut?
Secondly, in previous years, the Government has also cut energy efficiency budgets and massively underspent the £1.3 billion that it intended to spend over the reporting period. Has the Government done any analysis of that and of how many people would not be experiencing fuel poverty if the Government had lived up to its commitments?
As I said a moment ago, I would not attempt to take away from the important international events to which the member refers, not least the illegal full-scale invasion of Ukraine. However, not very long ago, the member’s party told us that fuel bills would be coming down by £300.
The member asks what the impact on poorer groups would be, and it is relevant to say that the impacts are aggravated by the winter fuel payments situation that pensioners have faced. As I have mentioned, the Scottish Government is attempting to undo some of that impact as best we can.
I come back to the statistics that I mentioned in my statement. The efforts that the Scottish Government and the wider Scottish body politic are making to bring down fuel poverty are having beneficial effects, but they cannot outweigh a lack of action at the UK level to deal with the fundamental cause, which is the cost of energy.
During the general election, the Labour Party pledged to cut household energy bills by £300. Instead, we have seen price hikes, the cap rise and household bills rise by almost £300. We have also seen the slashing of winter fuel payments for our older folks, and we are about to see Labour benefit cuts.
I was pleased to hear in the statement that the energy social tariff working group has finished its work and that the minister intends to pass on its findings to the UK Government. Has the UK Government been interested in looking at a social tariff to help those folks who are the poorest and most vulnerable in our society, so that they can afford their bills?
Despite the significant criticisms that I have made of the UK Government, I have to say that we have had a good conversation and, more than that, good co-operation with the UK Government in attempting to progress the issue. However, as I mentioned, what was significant about our conversations about a social tariff is that people want it to be based on a simple system, not an applications system that, almost by definition excludes the most vulnerable people. They want it to include factors such as income, rurality and benefit entitlement. The most important thing that came through, however, was that the system must not be based on an applications process, because that will simply exclude the very people who need it.
Roughly 900,000 Scottish pensioners were denied access to the winter fuel allowance last year because of decisions taken by the UK Labour Government and the SNP Scottish Government. Has the Scottish Government made any assessment of its failure to pass on the devolved pension-age winter heating payment and the impact that that has had on pensioners living in, or on the cusp of, fuel poverty?
The Scottish Government’s attempts to mitigate the worst of the UK Government’s actions in this area have brought 800,000 people within the benefit of our scheme, so I do not feel any need to apologise about that.
It is worth saying that no Scottish Government can ultimately mitigate every act of vandalism that the UK Government performs against Scotland, but we do our best in the areas where we feel we have the resource and where we wish to prioritise it.
What engagement has the Scottish Government had with the UK Government regarding Ofgem’s standing charges proposals, given concerns from charities that a more complex billing system will disadvantage vulnerable people?
There has been a consultation on Ofgem’s standing charge option within the price cap. The consultation suggests that any changes will not fix the fundamental issue with the standing charge system. Failing to address the unfair cost of standing charges and overcomplicating bills is perhaps not an effective way of dealing with the ever-increasing debt in the system. It is worth adding that it is doubtful that much of the energy debt will ever be paid.
We welcome Ofgem’s original consultation on standing charges. Many people are continuing to struggle with high energy bills, and standing charges of more than £350 not only contribute to higher levels of fuel poverty; they also undermine energy efficiency improvements. We would look for reform in that area.
More than half of older people in Scotland live in homes that have poor levels of energy efficiency, with an EPC rating of D or below. Why is awareness of the Scottish Government’s energy efficiency schemes so utterly woeful? According to the Chartered Institute of Building, just over a third of people—39 per cent—have not even heard of any of the schemes, and awareness is lowest among people over 55. It is little wonder that the Government consistently underspends on those schemes and leaves so many older people unnecessarily in the cold.
The Scottish Government is investing £300 million in our heat in buildings energy efficiency delivery schemes. The Scottish Government is always open to finding new ways of sharing information about those schemes, but the evidence is that the people who take up that option are pleased with the schemes that we have. They see a difference in not only the carbon footprint of their house but their energy bills. The Scottish Government will continue to put resource into that area as a priority, as it recognises that it is one where policy on fuel poverty and policy on carbon go hand in hand.
A third of residents in the Highlands experience fuel poverty, similar percentages do so in the Argyll and Bute, Orkney and Shetland council areas, and as many as 40 per cent of people do so in Na h-Eileanan an Iar. Does the cabinet secretary agree that it is outrageous that communities in energy-rich parts of Scotland, which are the linchpin of our renewables capabilities, have such high levels of fuel poverty and that Scotland does not have the full powers to remedy the situation?
The Scottish Government is certainly conscious that the current wholesale electricity market is not fit for the delivery of our net zero ambitions or, as the member highlights, for tackling fuel poverty.
Electricity market reforms and wider energy policy interventions must have the aims of reducing costs for Scottish consumers and businesses, ensuring that communities feel the benefit of the energy transition, protecting investment in our renewables industry and supporting decarbonisation.
We are determined to address the higher levels of fuel poverty that are found in rural communities such as the one that I live in, and we have already taken action to ensure that our energy efficiency schemes seek to achieve that end by spending more per head on installations in those areas where we know that costs are higher.
The minister seems to acknowledge that, fundamentally, the crisis is driven by volatile fossil fuel prices, yet his statement comes just two days before the Government is widely expected to dilute, downgrade, delay or ditch the only serious policy measure that it had among its proposals—to get Scotland off the gas grid and, instead, to use cheap, clean, renewable electricity for our heating. There seems to be no chance of reaching the £1.8 billion investment target that the Government previously committed to. With fuel poverty rising and climate targets being missed, most rational people would say, “Let’s speed up.” Why is the SNP slowing down?
Patrick Harvie is right to point to the volatility of fossil fuel prices. I myself have referred to that issue and pointed to it as one of the primary reasons for fuel poverty. He will appreciate—indeed, he has indicated this—that there is not much that I can say two days before the statement on the heat in buildings bill, other than to pick up on one of the questions that he asked. There will be a bill and, as the Acting Cabinet Secretary for Net Zero and Energy has indicated, that bill will have to meet twin objectives: dealing with the very real climate crisis that Patrick Harvie alludes to and ensuring that we do not put people in fuel poverty.
I thank the minister for providing early sight of his statement. I certainly look forward to seeing how his strategy of blaming fuel poverty entirely on the UK Government, while talking up his chances of working collaboratively with UK ministers, pans out.
On the issue of area-based energy efficiency schemes, which have proved effective in reducing bills, heating homes and cutting emissions, the minister will be aware of concerns that local authorities have raised about a lack of notice of funding allocations, which has led to an estimated underspend in the budget of around £60 million. What steps is the Government taking to increase the notice period that is given to councils or to enable funds to be reallocated in time to allow councils in areas with the highest levels of fuel poverty and extreme fuel poverty, such as Orkney Islands Council, to do more?
I am happy to correspond with Liam McArthur on the issue that he raises specifically on Orkney. I acknowledge the point that he makes about island areas having among the worst fuel poverty rates in the country, so I will happily try to be of help.
On Liam McArthur’s first point, I do not see a contradiction in seeking to work constructively with the UK Government where we can on issues such as a social tariff, while pointing out the error of the UK Government’s ways. Its inactivity on the cost of fuel is leading directly to making people fuel poor.
The minister and colleagues across the chamber will be aware that electricity regulation, generation, transmission and distribution are reserved to the UK Government, so the Scottish Government cannot legislate to require the provision of shared ownership from renewable energy developments. Has the Scottish Government undertaken any modelling of what the impacts would be on levels of fuel poverty if Scotland were able to mandate community offerings from renewable energy developments?
That is another area in which we have had constructive conversations with the UK Government. We continue to call on the UK Government to explore mandating community benefits from renewable energy developments to maximise a just energy transition. Only the UK Government has the power in law to change that. However, the greatest impact will come from introducing a social tariff mechanism in the short term, to ensure that energy consumers are protected against high costs. Stuart McMillan’s point is well made.
I return to the rural issues that were discussed in earlier questions. What action is the Scottish Government taking to ensure that the roll-out of smart meters increases? Frankly, in rural areas, it is pretty appalling.
Liz Smith has my sympathy on that point. The Scottish Government is more than disappointed about that, not just because of the slow roll-out in some areas of smart meters, but in relation to radio teleswitch service—RTS—meters. There are more than 140,000 of those in Scotland, as she will be aware, yet we have little idea how they will operate after the proposed ending of the signal to them in June.
Obviously, those are matters over which the Scottish Parliament and Government have no legislative power, but I assure the member that I am not slow in raising them with energy companies and with the UK Government, because we must get a solution to the issue before June.
High energy prices remain the single greatest driver of fuel poverty. This year, the SNP Government will reinstate universal winter fuel payments for pensioners to help them with their bills, following the reckless decision by the UK Labour Government to scrap that lifeline policy. Will the minister set out how the reintroduction of universal support for older people will help to tackle fuel poverty in Scotland? Does he agree that the British energy market should have zonal pricing, which the chief executive officer of Octopus Energy said could result in Scotland having the lowest electricity prices in Europe, given our levels of renewable energy production?
On the member’s first point, introducing the universal benefit to which she refers will, as I said, provide around 812,000 pensioner households with support each winter from an investment of £101 million, although it is clear that a number of pensioners who are not eligible for pension credit or other low-income benefits also require additional support.
On the member’s point about zonal pricing, we recognise that there are trade-offs and complexities in the debate on that subject and are aware that it must be introduced in a way that does not have significant impacts for all market participants. However, as I also said earlier, the current system is not fit for purpose and requires urgent reform.
The Scottish Government supports the adoption of heat networks to improve energy efficiency and tackle fuel poverty, but such systems are not covered by the Ofgem price cap, and my constituents report that developers are increasing prices by 150 per cent. On the issue of fuel poverty, can the minister advise us how the Scottish Government is protecting residents who use heat networks from being overcharged by developers or factors? Will the Scottish Government raise the issue with Ofgem or the UK Government?
I sympathise with some of what the member says. There is clearly a need to ensure that heat networks are regulated. As he suggests, that power lies with the UK Government and its agencies, but we make that point to the UK Government, because, if we are to see an increase in the use of heat networks across Scotland, as I hope we will, we must also undertake the work that is necessary to reassure consumers that they are dealing with a fair market and not one that is subject to the problems that the member has mentioned.
That concludes the ministerial statement. I will allow a moment for front-bench members to organise themselves.
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