Tackling climate change with warm homes for all

If we don’t take action now, a zero-carbon energy system will remain a pipe dream for decades to come.

I was listening in on a focus group discussion the other day, run by a friend in the industry. When they got around to climate change the young people in the group gave this as their primary concern and were very clear that as a country, we were not doing enough.

This response didn't surprise me, but what did make me sit up was the response of the older people in the group. They said we had a duty to bequeath a clean planet to the next generation. My friend noticed this trend across several sessions and showed me data that older people had significantly changed their position on climate change action. 

While concern about climate change had risen across all age ranges, the increase was lower amongst middle-aged men. They cited concerns about the impact on jobs and some of the other lifestyle changes they would need to make.

That is why today's policy announcement on Labour's 'Warm Homes for All' is so important. It takes practical action on climate change, cutting carbon emissions by 10% by the year 2030. It also reduces energy bills, particularly for low-income households, by an average of £417 a year. In Scotland, it will create at least 18,500 direct and 16,600 indirect jobs – directly addressing the concerns of the focus group.

The buildings sector makes up nearly a quarter of Scotland’s emissions, and residential buildings made up the bulk of this at 73%. Fuel Poverty affects 613,000 homes in Scotland, and thousands die every winter due to the effects of living in a cold, damp home.

The Scottish Government has switched resources for fuel poverty off and then on again with a range of programmes. They will no doubt say that this is due to Tory austerity. What is now clear is that the election of a UK Labour Government will create the opportunity to put a transformative scale of investment into seriously tackling this issue.

I have campaigned on fuel poverty for many years, sat on working parties, written reports, and supported many worthwhile initiatives. I have heard UNISON members in social work, and health care describe their frustration at helping people, only to send them home to buildings that exacerbate their conditions. This new plan is on a scale that could eradicate fuel poverty in Scotland.

It is also only one part of a broader plan that Labour calls a 'Green Industrial Revolution'. I am not a great fan of political soundbites, but I have been impressed by the detailed work being put in by the Labour team working on this issue. The recently published 'Thirty by 2030' report shows how we can put the UK onto the path of zero-carbon energy and boost the economy at the same time. They describe a plan that could boost the UK economy by £800bn, creating 850,000 new jobs, increasing household incomes and avoiding 6,000 deaths per year through improved air quality. Not to mention the wider health benefits.

Tackling climate change isn’t easy, but all too often, the opportunities are ignored. The UK could be the world's climate leader while improving the lives of the many. What’s been missing is the political will. Today’s announcements show that the political will is now there – we just have to vote for it!   

Eliminating fuel poverty requires more than a process

As the statutory target to eliminate fuel poverty in Scotland has come and gone, will a new strategy do any better?

The Scottish Government has published a consultation paper on a new fuel poverty strategy for Scotland. The consultation looks at the existing approach and legislative framework and sets out proposals for a new Fuel Poverty Strategy in Spring next year. Targets will be enshrined in a Warm Homes Bill later in 2018.

The number of households in fuel poverty fell slightly in the latest Scottish House Condition survey thanks to falling fuel prices. However, still almost one third of homes suffer under the current definition and the numbers are likely to rise again with the latest fuel price increases. 

 The new definition excludes housing costs and is intended to focus attention on low income households, rather than the 47% of the current fuel poor who are not income poor. There will still be challenges in reaching the standard heating regime because households self-disconnect, due to low incomes. Cuts in social security will exacerbate this. While the new definition is certainly more complex, it does target efforts on the right group. Although with insecure work, varied incomes are more common and many households are likely to fall in and out of the definition.

There are three main elements to tackling fuel poverty - the price of fuel, energy efficiency/use and household income. The first is largely reserved, although energy policy is a factor. Energy efficiency is devolved and household income has devolved and reserved elements, including social security.

This means the strategy rightly has a focus on energy efficiency. Ambitions are fine, but investment is better. The Scottish Government cut funding to £45m in 2007/08; largely because they thought the problem had been resolved. It has now recovered to £129m, although this is well below the £200m Energy Action Scotland warned was needed to meet the 2016 target.

There are some particular challenges in Scotland. Not only are we a cold country, but fuel costs in rural areas are significantly higher. Typically, £2,200 in remote rural areas, compared to £1,400 in the UK as a whole. There are particular challenges in island communities. We also have large areas off the gas grid, which matters for heating. 

It is also important that we retain efficient area based schemes that strengthen communities, rather than just micro targeting individual households. The proxies used to identify fuel poor households generally work, but need to be flexibly applied to reflect local needs.

The consultation paper is again strong on ambition. Objectives like 'Households are able to enjoy a warm home' is hard to disagree with. Achieving this apparently requires plenty of partnership working and linking in to other strategies. While this is probably true, it does feel rather process driven - hard targets, programmes and investment are in short supply.

A number of the organisations currently working in 'partnership' complain about short term funding. They build up expertise and services and then the funding comes to an end. Publicity, online and telephone services have their place, but for hard to reach households it requires an advisor in the household. There has been an improvement in skilling staff like social workers and community nurses, since some of the early schemes UNISON did with the Keeping Scotland Warm partnership. However, we could do more in signposting people towards specialist advice. Local authority services are under particular pressure due to cuts.

The new statutory target is to eliminate fuel poverty (new definition) by 2040, with a review at 2030. There is considerable scepticism of the description of this as 'ambitious', given the long timescale. We should have learned a thing or two during the past 16 years, to make another 23 year target a bit excessive.

The problem is that achieving this target depends on a range of variables, particularly fuel prices and incomes. None of these are likely to be addressed without a serious political commitment to eliminate poverty more generally. 

We need a new strategy to end fuel poverty

The Scottish Government has missed the statutory target to eradicate fuel poverty this year by some distance. So, new reports on fuel poverty should be welcomed, but only if they are quickly followed by a new strategy.


According to the latest statistics (2014), there are 35% or around 845,000 households living in fuel poverty in Scotland, and 9.5% (229,000 households) living in extreme fuel poverty. This high rate of fuel poverty is largely unchanged since 2009, and has doubled since the Scottish Government‟s fuel poverty target was set in 2002.


The Scottish Fuel Poverty Strategic Working Group and Scottish Rural Fuel Poverty Task Force reports have been published alongside a Scottish Government research paper on the likelihood of being fuel poor in rural Scotland. This is to help identify and target households in rural Scotland who have a high risk of being in fuel poverty.


The Strategic Working Group has made 4 high level recommendations:
• The fuel poverty strategy should be firmly based on the principle of social justice and creating a fairer and more equal society.
• The fuel poverty strategy must address all four drivers of fuel poverty: income, energy costs, energy performance, and how energy is used in the home.
• Strong leadership and a joined up approach across several portfolios within national and local government are required to develop and implement the strategy.
• The Scottish Government should review the current definition of fuel poverty and establish a policy objective and monitoring programme that addresses all four causes of fuel poverty


Housing Minister Kevin Stewart said:
“Everyone should be able to heat their home and keep themselves and their families warm, therefore tackling and eradicating fuel poverty is vital and we must make sure action we are taking is making a difference to those that need it most."


Scottish Fuel Poverty Strategic Working Group chair David Sigsworth said:
“The report explores why current programmes have failed to eradicate fuel poverty and concludes that experience over many years has shown that energy efficiency improvements, whilst important, are not enough. Recent increases in underlying costs of fossil fuel, due to devaluation, will exacerbate this situation.”


It would be hard to disagree with the recommendations in these reports, although it is strange that the Scottish Government chose to highlight a review of the definition of fuel poverty in their press release. The definition probably does need reviewing, but leading with that gives the impression that the problem can be wished away with a new definition.


High level recommendations are fine, but the test is in the delivery. That requires a new action plan. As Energy Action Scotland director Norman Kerr said:
“There is a wealth of information in the two reports which Ministers must now consider in order to review the fuel poverty strategy for Scotland. The Scottish government, and all political parties in Scotland, acknowledge the problem of fuel poverty and must be given credit for tackling the problem and continuing to fund programmes to that end. However, to meet their ambitions to end the blight of cold, damp homes, more action must now be taken. People across Scotland will want to know that one day the right that everyone has to be able to live in a warm, dry home at a price they can afford will be a reality.”


The acid test of today's announcement will be if Scottish ministers use these reports to set out a new fuel poverty strategy, which includes a new target date to eradicate fuel poverty in Scotland.

Municipal energy - time for radical action

Despite the best efforts of successive governments to create an energy market, it remains notoriously uncompetitive. In Europe, municipal energy is commonplace and growing - we should do the same in Scotland.

 

The so called market is dominated by the big six utility companies, whose pricing practices have been criticised by the competition watchdog. Consumer trust in the market is low and they are reluctant to switch suppliers for a better deal given the hassle of switching. In fairness, the Big Six are often unfairly criticised and new entrants have been guilty of some pretty poor practices as well. The fault is in the system.

 

The IPPR, has made a convincing case for local authorities to set up municipally-owned energy companies that can supply electricity and gas at competitive prices and don’t have to distribute profits to private shareholders. By targeting those on low incomes, they can also help tackle fuel poverty. The local authority “brand” may also encourage otherwise reluctant low-income households to switch suppliers and save money. Nottingham and Bristol have followed this model and London, under a new Labour Mayor, looks likely to follow.

 

In Scotland a slightly different model is being adopted. Our Power is a community benefit society established and owned by a number of local authorities and housing associations. It too aims to tackle fuel poverty through the supply of affordable energy, focusing on social housing tenants, and seeks to buy a minimum of 30% of its energy from renewable sources. The Scottish Government is also at least considering setting up its own energy company, although details are limited.

 

The problem with these models is that they are simply playing the failed market and are relying on the same wholesalers. An alternative approach is for councils to establish genuine energy companies that generate renewable electricity and help households to install energy efficiency measures, funded from the long-term savings in their energy bills.

The APSE research paper, 'Municipal Energy: Ensuring councils plan, manage and deliver on local energy’, found that:

• For every £1 invested in renewable energy schemes there is a further £2.90 in cashable benefits
• 17 jobs can be created from every £1 million in energy saving measures on building
• Energy efficiency and renewable energy can create 10 times more jobs per unit of electricity generated than fossil fuels
• The local government sector annual energy bill of £750 million could be reduced by up to half by leveraging in spending power and using readily available and low cost technologies existing buildings.

Fife Council has done some of this with its £1.3 million turbine at the council’s recycling and resource recovery facility near Ladybank. This is expected to generate enough electricity to power 200 homes. They also generate clean energy from garden and food waste at the council's anaerobic digester and from landfill gas. Aberdeen has similar projects as well as the city's district heating scheme. A number of councils use solar photovoltaic panels.

 

Glasgow City Council is in the process of setting up an energy services company which will oversee the creation of renewables and low carbon projects in the city. It has mapped sites, but progress has been slow.

 

A more radical plan for the city has been proposed by Jim Metcalfe, based on research carried out by the Energy Saving Trust. This would involve the creation of a locally-owned company which would be able to reinvest profits from power generation on improving building insulation and reducing fuel poverty. The council should be leading on this, using council bonds, available at historically low levels, to finance the plan.

 

While electricity generation is important, we also need to make progress on heating homes. This is where district heating schemes come in. The Energy and Climate Change Select Committee heard in January that the £300 million government scheme to develop district heat projects needs a “regulatory investment framework” during this parliament to support future growth. District heating is a 50-80 year long investment and so you want to attract the lowest possible cost of capital to ensure the lowest cost for consumers. Councils are again in the best position to do this. In Scotland, work has begun on tapping into geo-thermal heat from disused mine workings.

Governments could help more by making energy efficiency a national infrastructure project. In Norway, the introduction of legislation to support district heating has shown a 150% increase in the installed capacity over the last 10 years. This has helped make it possible for the city of Drammen to create a district heating network that supplies several thousand homes and businesses with clean, affordable heat. This system didn’t rely on Scandinavian engineering, but the expertise of Glasgow-based Star Renewables.

 

There are a number of interesting municipal energy projects in Scotland and the rest of the U.K. However, they are patchy, small scale and not nearly radical enough. We need councils to take the lead, establishing full scale energy companies that can provide energy efficient homes with cheaper electricity and heat. They would also generate desperately needed revenues.

This would be municipal enterprise of the sort councils in the 19th Century created to revitalise our towns and cities. We now need 21st Century municipal leadership to take this forward.

Time to improve energy efficiency in buildings

Governments must do more to reduce energy bills by improving the energy efficiency of new and existing buildings.

MPs on the Westminster Energy and Climate Change Committee report that the energy efficiency supply chain has been affected by inconsistent and unpredictable policy signals, as various schemes have been chopped and changed. Last year the UK Government announced an end to the Green Deal and reneged on a long-standing commitment to require all new homes to be zero carbon from 2016. The zero carbon homes policy would have saved future homeowners money on their energy bills. They recommend that it should either be reinstated or the Government should set out a similar policy that will ensure that new homes generate no net carbon emissions and are inexpensive to heat and light.

In the Agenda pages of The Herald, Sam Gardner from WWF makes the case that energy efficiency should be an infrastructure priority in Scotland. He uses the example of a new investment model in the Netherlands, known as Energiesprong. This scheme is retrofitting entire streets in a matter of days to create net-zero emissions (energy-neutral) homes and regenerating entire neighbourhoods. He says: "There is much that we could learn from the scale and ambition of this approach as the Scottish Government turns its commitment to a national energy efficiency programme into a programme of works. If we are to cut the emissions from our housing sector and tackle fuel poverty all homes must be supported to reach at least an Energy Performance Certificate of C by 2025."

He also argues that a Warm Homes Act would bring clean and affordable warmth to households and businesses, by supporting the growth of district heating and renewable heat, while improving the energy efficiency of our buildings. It would reduce heat demand, cut fuel bills and create jobs in a new district heating industry. He says: "By making the improvement of energy efficiency a long-term national infrastructure project, no one in Scotland would have to live in a hard to heat, draughty home by 2025. Public investment in energy efficiency could create up to 9,000 new jobs around every part of Scotland, and ensure 1.25million homes in Scotland will be made warm, affordable to heat, and lower carbon."

District heating is unlikely to attract enough investment without a level playing field. In an evidence session to the Westminster Energy and Climate Change Select Committee ADE’s director Dr Tim Rotheray welcomed the £300m of government support, but said the government needs to develop a “regulatory investment framework” to support future growth. He said district heating needs a framework comparable to that which electricity and gas already have so “institutional investors” can compare options.

Rob Raine from the University of Sheffield argues that we need to do more to prevent valuable energy being lost to the environment as heat. He points out that it's not just draughty buildings – power stations lose a vast amount of heat through their cooling towers or dumped into waterways, equivalent in the UK to a third of final energy use, while UK industry wastes enough heat to warm more than two million households. Storing this heat can even help us manage renewable energy – at lower cost than batteries.

Scottish Labour has highlighted the Scottish Government's Budget cut on spending for fuel poverty measures by £15 million – a 13% cut to the current budget. They say this is short sighted and leaves 200,000 'out in the cold'. Communities spokesperson Ken Macintosh MSP said:

“Labour will deliver a ground-breaking Scottish Warm Homes Act. This will deliver the changes we need to see in planning and building regulations to tackle fuel poverty. The SNP may miss the 2016 target, but Scotland must not give up on ending fuel poverty."

Action on energy efficiency is a clear win-win. It helps individuals in fuel poverty, boosts the economy and helps tackle climate change. It's time for action.

 

Cross posted from Utilities Scotland.

 

Time to get serious about energy prices

Every seven minutes in the UK an older person dies of cold.

As Geoffrey Lean recently put it in the Independent; “people will die of cold in their own homes – in this, the world’s fifth-largest economy – because they cannot afford to pay the high prices charged by energy companies.”

He was highlighting the disconnect between the falling price of wholesale gas and the much smaller fall in household energy prices. If this were a competitive market, which reflected the 45% fall in wholesale prices seen over the last two years, the average dual-fuel consumer in Britain would be paying £850 or so a year, rather than the £1,100 charged to most customers on standard tariffs.  Analysts at ICIS expect that wholesale gas prices will continue to fall in 2016.

The Prime Minister meekly said that bills were “not falling as fast as I would like”. The Energy Secretary has written a stiff letter to the energy companies and Ofgem has wrung its hands as usual. Dermot Nolan, the watchdog’s chief executive said; “we really should be seeing bigger retail cuts. Bills should be cut by around £300 for the majority of people”.

And his solution? People should switch. Unsurprisingly, this was also the energy industry’s response on the BBC. The spokesperson there went as far as blaming consumers for not switching.

The much-vaunted Competition and Market Authority’s investigation into the energy market has been delayed for a second time, with provisional remedies now due in March and the final report in June. This follows the six month delay announced last September.

Maybe they are checking their sums after SSE chief executive Alistair Phillips-Davies publicly accused them of getting their sums wrong last summer when it said the big six suppliers were overcharging customers by £1.7bn a year.

Which? and Citizens Advice have been more robust: “The industry as a whole urgently needs to step up to the plate - suppliers need to play fair with customers and start passing on the major savings they have been making from cheap wholesale costs.”

The problem is not limited to the Big6. A personal disappointment to me as a member of the Co-op Party was that Co-operative Energy has attracted the most customer complaints ever recorded by Citizens Advice in its quarterly ranking of the best and worst suppliers. The company received 1,584 complaints per 100,000 customers - 40 times more than the best performer, SSE.

Sadly, this came as no surprise to me. After very poor customer service I reluctantly switched from the Co-op. The final meter reading was then hugely overestimated and they took more than £2,500 too much from my account through Direct Debit. It has taken months to resolve and so it is easy to see why people are reluctant to switch. In fact seven out of ten consumers don't regularly switch and would rather have a model that offers them an honest tariff, as Patrick Collinson argues in today's Guardian. 

With fuel poverty in Scotland increasing rapidly the independent experts at the Scottish Parliament Information Centre (Spice) have confirmed that the final fuel poverty budget for 2015/16 was £119 million. This is due to fall by £15 million in 2016/17 under the draft Scottish Government budget - a cut of 13%.

This is the year that fuel poverty is supposed to be eradicated by law. Scottish Labour’s policy response is what they describe as a; “ground-breaking Scottish Warm Homes Act. This will deliver important changes in planning and building regulations to further help Scotland tackle fuel poverty. We will also adopt energy efficiency as a National Infrastructure Project and we will look at ways to better support the most vulnerable insulate their homes.”

While this may address energy efficiency, I would point to another solution to rising prices – municipal ownership. Municipal engagement in energy supply could also unlock the potential of local generation and generate a much needed new source of income for local authorities. Last year, IPPR published City energy, a study of this emerging new trend. It showed that many councils are already starting to play a substantive and innovative role in Britain’s energy market – tackling fuel poverty, investing in local clean energy and benefitting the local economy.

The energy market has failed. Municipal energy as well as action on energy efficiency is the way ahead for all consumers, but most of all for those dying from fuel poverty.

(cross posted at Utilities Scotland)

Eliminating fuel poverty by Nov 2016? I think not.

Given the short term thinking that bedevils much political thinking, we can be forgiven for looking cynically at government targets that stretch long ahead of the political cycle. However, sometimes they catch up with governments. One such legislative target is the eradication of fuel poverty in Scotland by November 2016.

This target is given some focus for me today, as I am chairing a session at the annual conference of the fuel poverty charity Energy Action Scotland. UNISON Scotland is affiliated to this campaigning charity that also delivers a wide range of practical actions to help alleviate fuel poverty.

Fuel poverty is defined as a household having to spend 10% or more of its income on energy to maintain a warm home. When I first got involved it was almost exclusively an issue for the elderly - no longer.

A recent report by Citizen's Advice Scotland told the story of a father of a two-week old baby who was left without any money for gas and electricity, after being told he had to wait two weeks for a Universal Credit payment. Another case in the east of Scotland involved a couple with a nine-month-old baby girl being left without any money for food or gas and electricity. Their benefit was stopped by the Department of Work and Pensions after it claimed a sick note had not been received - even though it had been sent the previous week.

According to CAS, the number of Scots in 'fuel poverty' has soared by 130% in the past five years, with shocking cases of struggling households being left for months without any means of heating or cooking. They dealt with 28,000 cases involving energy issues in 2014-15 – an increase of a third from the previous year and up 130% since 2011.

Energy Action Scotland's Director Norrie Kerr, has also said that they see a lot of younger people in fuel poverty who are on the minimum wage or less than the minimum wage, who are really struggling just to make ends meet: “It is not just about pensioners any more, it is about in-work poverty. When you are being squeezed like that there is the very real dilemma for people between heating and eating. In some cases foodbanks are being asked for food parcels that don’t require people to heat anything, because they are frightened to put on the cooker to boil a pan of pasta or heat a tin of beans."

So, are we going to meet the legislative requirement to eliminate fuel poverty by November 2016? Based on what we heard at today's conference, almost certainly not. Are we making sufficient effort to try and reach this target? Again probably not.

One particular disappointment is the Scottish Government's decision to postpone a consultation on energy efficiency measures in private sector housing. This is the fastest growing housing sector and landlords need help and support, and tenants need protection against unjustified rent increases. CAS covered this issue well in their report 'Coming in from the Cold'.

Funds have been made available for fuel poverty, but it simply isn't enough. We heard about a some measures and more task groups and reviews. As with other policy areas we are very good in Scotland at analysing the problem - less good at making difficult decisions to solve them. Equally the UK government programmes are also inadequate, but as some are to be devolved, we have an opportunity to bring programmes together and do some things differently.

Energy efficiency is only one aspect of the measures needed to tackle fuel poverty. The other two are the price of energy and income support. Action on prices have been limited with the cost going up by 180% between 2002 and 2013. If prices had gone up with inflation fuel poverty in Scotland would be below 11% of households, instead of 39%. It has only been helped very recently by the drop in wholesale prices - rather than government action over the failed energy market.

Government's put great emphasis on switching supplier and there has been some increased take up recently. However, it is far from a smooth process. I recently switched supplier and was presented with an absurd estimated opening gas reading that was almost double my last bill. As a consequence I was presented with a bill for £3,600!

On income support, the U.K. Government's slashing of social security is having a devastating impact on low income families in and out of work. We should also not forget the cut in real wages over a decade or more. This is something the Scottish Government could do more on, including the living wage for care workers. As Jackie Baillie reminded us today, the £1300 cut in Tax Credits is the equivalent of the average annual fuel bill.

If the same number of people suffering from fuel poverty had an illness or disease we would be crying out for the government to take action by pouring resources into the NHS. It's time to treat fuel poverty with the priority it deserves.