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OPINION: Let's end the misery of fuel poverty

by Michael O'Brien, CAS energy policy officer.

This article was first published in the Herald on 9 September 2020.

“Lang may yer lum reek” is a toast commonly heard at Scottish gatherings. Its sentiment – may you always have fuel for your fire and the good health this brings – evokes a bygone era and reflects the hardships of life in a cold climate. However, any time I hear it, I can’t help but think it has a contemporary relevance.

OK, the image of chimneys spewing thick grey smoke into the air is one that jars with our modern sensibilities. But think about this: 25 per cent of Scotland’s households are currently defined as fuel poor. So that old proverb is a reminder that tackling the adverse effects of the cold is an ongoing struggle, one which is rooted in our national identity.

As such, fuel poverty is a key area for Scotland’s Citizens Advice network. Our clients tell us about it every day; about dreading the arrival of the fuel bill they know they can’t pay, or about the stress of falling into fuel debt. We have an Extra Help Unit which deals with the most extreme cases of fuel poverty, like people on pre-payment meters who self-disconnect because they can’t afford to top up their meters, or people who regularly sit in the cold, or go without food in order to put the heating on. Again, one in four Scottish households are in this kind of position, including pensioners and families with children.

We and others have been telling both the UK and Scottish governments for years that this is not acceptable. And lately there has been some renewed determination to tackle the issue.

Last year’s Fuel Poverty (Scotland) Act re-defined fuel poverty and set the Scottish Government a series of targets towards its eradication by 2040. The new definition, simply put, says that a household is in fuel poverty if it spends over 10% of its income on energy but still can’t maintain an adequate level of heating. This, we believe, is a more accurate description than the previous one and enables solutions to be better targeted at those most in need.

Meanwhile, one of the best schemes run by the UK Government is the Warm Home Discount (WHD): a one-off £140 deduction to your bill which your energy company can give you if you are struggling financially. There is a “core group” who automatically receive the WHD, and a “broader group”, which consumers can apply to be part of. The WHD is one of the most important practical mechanisms for supporting people in fuel poverty. But does it actually reach all of those who need it?

We recently published a report which considered that question. Its shock finding was that, while just under a third of Scottish households are eligible for the WHD, fewer than 10% actually receive it. That means a significant number of fuel poor households in Scotland are missing out on vital support.

This situation arises from two common complaints about the WHD: the fact that the funding pot is limited, and the significant variance in the eligibility criteria of the participating suppliers.

Because of these flaws, the “broader group” has always been problematic in that a household can apply for the scheme, be told they are eligible, but still not receive the rebate because that supplier’s WHD fund has been depleted.

In a society where we are encouraged to raise our hand if we are struggling, this doesn’t seem fair. We are calling for the funding of WHD to be increased, to extend access to more households.

Our analysis of how well the WHD actually tries to target fuel poor households revealed similar concerns. Of those defined as fuel poor but not eligible for WHD, 68% were working-age households. This suggests a problem with how the current criteria captures this particular demographic.

So we are calling for a better alignment of the WHD with Scotland’s new fuel poverty definition. We would also like to see energy suppliers review their eligibility criteria and improve application support, particularly for vulnerable consumers.

On the plus side, our report includes interviews with people who do receive the WHD and say it makes a huge difference, improving their lives considerably. So we want the scheme to continue, but we’d like to see its flaws ironed out so that this – and any similar schemes in the future – do a better job of targeting support to those who need it.

It is maddening to think there are families out there who are suffering the cold when this kind of solution is there waiting for them.

Fuel poverty is part of life in Scotland, and fighting it is in our DNA. We need to work constantly to make sure it is finally eradicated, and talk of reeking lums becomes nothing more than a quaint reference to a time long gone.