With soaring fuel prices and a predicted recession, Katie Mackintosh reports on the difficulties facing some of Scotland's most vulnerable people this winter
There is an overwhelming sense of déjà vu about the current economic difficulties. In the mid-1970s the UK was gripped by an oil crisis. Fuel prices rocketed out of control and low-income households struggled to keep up. The term fuel poverty was coined, defined as when a household spends more than 10 per cent of its income on gas and electricity. However, fuel poverty is not just about low income, poor quality housing stock inadequately insulated with inefficient heating systems confounded the problem. Those most vulnerable to falling into fuel poverty, such as the elderly, low income families and the disabled, were also the most vulnerable to its effects. Some chose to keep the heat on and fell into debt as a result. Others tried to cut down or even cut off their energy use, only to increase their risk of ill health and mortality.
And it appears history is repeating itself. In 1991 there were 7.3 million households in the UK that were deemed either fuel poor or considered vulnerable to suffering fuel poverty. By 2002 this figure had fallen to just over 2 million. However, as inflation, unemployment and energy prices continue to soar, this early progress is now in danger of being wiped out. Figures published by the UK Government last month showed that 1 million new households entered fuel poverty in 2006. Similarly, figures published in August by energy regulator Ofgem revealed that the number of electricity and gas disconnections for debt rose to 8,324 in 2007, up by 3,270 from the previous year. However, while these are the latest official statistics available, they do not reflect this year’s double-digit hikes in energy prices, some as large as 35 per cent.
In Scotland the most recent statistics available are taken from the
Scottish Housing Condition Survey of 2005/06, which estimated that
around a quarter of households in Scotland are fuel poor. However, it
also calculated that for every 1 per cent rise in energy prices,
another 8,000 households would become fuel poor. As a result, Energy
Action Scotland estimates that 850,000 households, 29 per cent, are
fuel poor in Scotland.
And all this at a time when we are meant to be moving forward. The UK
and Scottish Governments both have pledges to eradicate fuel poverty by
2016. However, the recent increases show that this laudable goal is now
in real danger of slipping away from them. The nearly £1bn package of
help unveiled by Prime Minister Gordon Brown last month is undoubtedly
a step in the right direction, but does it go far enough? As the
countdown to the 2016 deadline begins, is the target achievable?
The £910m package announced by Brown in September aimed to target the
three root causes of fuel poverty: the cost of fuel as determined by
energy prices; the amount of fuel required to heat a property as
dictated by the energy efficiency of a property; and the ability of the
household to afford the necessary fuel.
Key among the measures were promises of free cavity wall and loft
insulation for pensioners and poor households, a 50 per cent discount
on the cost of insulation for all households, a freeze on this year’s
bills for half a million poor consumers, and an increase in cold
weather payments from £8.50 a week to £25 a week for pensioners,
disabled people and unemployed families with children under five.
The Prime Minister said that it was the “right approach, giving
priority to permanent – not just one-off – changes, with the offer of
lasting benefits and fairness for all families, cutting bills
permanently every year.”
Others, however, are less certain. SNP Westminster energy spokesperson
Mike Weir MP says the energy measures are “far too little, far too
late.” While he has some praise for the energy efficiency measures
contained in the package, which he said are important for the long
term, he criticises the Prime Minister for failing to impose a windfall
tax on energy companies that could have provided immediate financial
assistance to fuel poor households. At a time when the Treasury is
receiving record windfalls from North Sea oil and energy companies are
recording record profits, he says vulnerable households are being left
behind.
“Action needs to be taken to give fuel poor households immediate relief
this winter,” he says. “It is no good telling someone already in
poverty, wait until next year. There are a range of things we can be
doing and need to do now.”
However, his censure is not reserved for the UK Government. He also
expresses his disappointment in the recently published Ofgem report on
its investigation into competition in the electricity and gas markets.
The report ruled that there was no evidence of collusion on price
increases between the UK’s “big six” power companies – although it did
also tell companies to stop charging customers different rates if they
pay by direct debit or pre-payment meters, the latter being the most
common method of payment for fuel poor customers. However, Weir says
the report merely “tinkers at the edges of the problem” and offers
little consolation to those suffering the effects of rocketing prices.
Trisha McAuley, head of services & advocacy, for the newly formed
Consumer Focus Scotland – the result of a merger by the Scottish
Consumer Council, energywatch Scotland and Postwatch Scotland – says
she would also like to see the regulator paying closer attention to the
market in Scotland.
“Ofgem needs to up the ante in Scotland,” she says. “They are a UK
regulator so they need to cross the border a bit more. At the moment it
is very hard to extract from the data what it means for consumers in
Scotland.”
However, what we do know shows us that the outlook is no less bleak in Scotland.
According to David McNeish, parliamentary and policy officer, Citizens
Advice Scotland, queries about utility bills is the fastest growing
area of inquiry for the service. “We’ve had 13,000 new inquiries this
year, a 37 per cent rise on the year before,” he says. He also points
out that research conducted by CAS in 2006 that looked at the problems
facing CAB clients who had an illness or disability found that 48 per
cent said that they had reduced their heating, lighting or cooking
because of difficulty paying for fuel. “So those most vulnerable to the
effects of fuel poverty are putting their health further at risk
because they can’t afford the price of fuel
those most vulnerable to the
effects of fuel poverty are putting their health further at risk
because they can’t afford the price of fuel 
” he says.
So what action is being taken to alleviate fuel poverty north of the
border? In May the Scottish Government published its review of fuel
poverty. In it, it admitted that the current fuel poverty programmes,
including the much praised central heating programme – a non-means
tested scheme that provides free central heating and insulation
packages for residents in Scotland who are aged 60 and over and whose
system is broken and beyond repair or who do not have one at all – are
not helping those most in need. Speaking at the time, Cabinet Secretary
for Health and Wellbeing Nicola Sturgeon said, “Too much of the money
invested in the central heating programme doesn’t help the fuel poor.
That’s why we need to overhaul the current programme to ensure it helps
those in most need.
“The evidence from the review suggests that the central heating
programme is not tackling fuel poverty as effectively as it could be,
and makes clear that, currently, many of those eligible for central
heating are not fuel poor.”
As a result, she also announced the reconvening of the Scottish Fuel
Poverty Forum, which it tasked with reviewing how to refocus the policy
and better use the resources available to achieve the target of
eradicating fuel poverty.
Earlier this month the forum published its report, in which it proposed
creating an Energy Assistance Package. This, it says, should include
advice on tariffs to address the energy prices people pay, a benefit
and tax credit check to maximise their income, and an energy audit with
follow up to provide physical means of reducing their energy use.
However, while optimistic that the package will make a real difference
to people who are currently struggling, the report adds that they do
not believe that the package alone will take us to the 2016 target.
While their remit had included the proviso, “within existing resource
levels”, the report also notes that current levels of funding are
“wholly inadequate, given the growing scale of the problem.” At present
Scottish Government spend on fuel poverty programmes is £45.9m per
year, of which to date, £40m was allocated to the central heating
programme. The report adds that if the target is to be reached, it will
require, “a step change in investment, as soon as is reasonably
practicable. Governments in London and Edinburgh must work together on
this with energy companies and others if we are to show that we mean it
when we say that fuel poverty is unacceptable.”
And the members of the forum are not the only ones concerned that
current efforts to alleviate fuel poverty do not go far enough. South
of the border, two charities are taking the UK Government to court
because they say not enough is being done to tackle high energy bills.
Help the Aged and Friends of the Earth have called for a judicial
review, alleging that the Government is breaking the law by not doing
everything reasonable to meet the 2016 target.
Where the difficulty for the Government lies is that the target is not
just a worthy goal, but a statutory commitment. The Warm Homes and
Energy Conservation Act 2000 required the UK Government to prepare and
publish a strategy that set out policies for ensuring, as far as
reasonably practicable, that people do not live in fuel poverty. The
subsequent strategy, which was published in November 2001, committed
the Government to ending the blight of fuel poverty for vulnerable
households by 2010, and for all households by 2016.
Dr Brenda Boardman, Emeritus Fellow at the University of Oxford’s
Environmental Change Institute, whose 1988 book, Fuel Poverty provided
us with the first definition of it, explains, “If there is a statutory
duty in an Act of Parliament does that determine Government budget, or
can they turn around and say we haven’t money to provide it? If the
latter is the case then the Act, and its promise, is redundant.”
How optimistic is she that the 2016 target will be met? “The real
trouble at the moment is that nobody has got a good strategy or costed
plan of action as to how they are going to do it,” she says. “We can’t
meet the 2010 target. There is just no way. 2016 is eight years away,
but we won’t do it by just nibbling away at the bottom.”
And what about the Scottish Government’s progress? Could it face a
similar legal challenge? “I have to say we have not looked into it in a
real way yet but in principle, yes,” says Elizabeth Gore, deputy
director, Energy Action Scotland. “The difference is England had an
interim target of 2010, so it is more of a pressing issue down south.”
The Scottish Government’s commitment is set out separately in the
Housing (Scotland) Act 2001, which pledges to ensure, “so far as
reasonably practicable, that people are not living in fuel poverty in
Scotland by November 2016.” However, Gore points out that under the
Scottish Act the Scottish Government is only directly responsible for
the part of the fuel poverty triptych relating to the energy efficiency
of households. “The other two causes,” she says, “regulation of the
energy market and income and benefits remain a reserved matter.”
If, in 2016 the SNP hasn’t got its way and Scotland remains part of the
Union with these issues still reserved, could this be used as an excuse
by the Scottish Government for not meeting its end of the bargain? “I
hope not,” says Gore.
Does she think the 2016 target realistic? “It is eight years away,
which might sound like a long way away, but when you consider the scale
of the challenge ahead, it doesn’t seem all that long. But it does seem
that the willingness is there to do something about it.”
Similarly, McNeish adds, “I think with current levels of investment
we’ve got no hope, we won’t get even close. But this is an issue that
has a lot of cross-party support and I’m still relatively optimistic
that investment will be forthcoming in the future. So I don’t think it
is game over, yet.”
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