Glasgows Fuel Poverty Strategy

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					                         Glasgows Local Housing Strategy

     Report to Joint Stakeholder Working Group on 29th October 2004

                          Glasgow’s Fuel Poverty Strategy.

1.      Background.

The requirement to produce a Fuel Poverty Strategy stems from the Housing (Scotland) Act
2001. Section 88 of the Act requires Scottish Ministers to produce a Fuel Poverty Statement,
and section 89(b) requires that Local Housing Strategies must set out policy that “ensures so
far as is reasonably practicable, that persons do not live in fuel poverty”.

The Scottish Executives Fuel Poverty Statement was originally produced as a consultative
draft in March 2002, with the final version being produced in August 2002. It follows on from
the UK Statement, which was produced the year before. Similar documents are required from
the Welsh and Northern Ireland Assemblies.

Guidance on the production of Fuel Poverty Strategies was produced by Communities
Scotland in August 2003, which was too late for it to be incorporated in our original LHS. The
Fuel Poverty Strategy will now form an integral part of our revised strategy for April 2005.


2.      Scottish Executive’s Fuel Poverty Statement.

The Executives Fuel Poverty Statement is a very useful document in that it describes in great
detail much of what is happening, and what is being proposed, to alleviate fuel poverty in
Scotland. In one important aspect it is, however, disappointing, and that is in its definition of
fuel poverty.

There are a number of competing definitions of what constitutes Fuel Poverty, but the one
chosen by the Scottish Executive and used in the Scottish Fuel Poverty Statement (August
2002) is “a household is in fuel poverty if it would be required to spend more than 10%
of its income (including Housing Benefit or Income Support for Mortgage Interest) on
all household fuel use”. This reflects the definition in the UK Fuel Poverty Strategy.

In Glasgow’s response to the Consultative Draft (a response that reflected the views of the
vast majority of Scottish Local Authorities) we asked that the definition be changed to net
disposable income, which would have excluded all housing costs, including housing benefit
or income support for mortgage interest. This, of course, would have had the knock on effect
of producing a larger number of households in fuel poverty, though it would be a more
accurate reflection of what fuel poverty really means to an individual household.

36% of all households in Glasgow are in receipt of housing benefit, twice the average for the
rest of Scotland. The inclusion of housing benefit therefore understates the real extent of fuel
poverty in the city.

As a concession, the Executive has agreed to monitor progress on the eradication of fuel
poverty on the basis of the definition contained in their statement, and a second definition that
excludes housing benefit and income support for mortgage interest, which is closer to our
preferred definition.

The Scottish Executive’s Fuel Poverty Statement goes on to say that “Our overall objective
in relation to fuel poverty is clear. We are committed to ensuring, so far as reasonably
practicable, that people are not living in fuel poverty in Scotland by November 2016.”
This target also reflects that set out in the UK Fuel Poverty Statement.
This is an incredibly challenging target, and Local Authorities are expected to play a key role
in delivering it.

Two milestones have been set to measure progress on this target:

        By 2006 – to have achieved a 30% reduction in the total numbers of people in fuel
         poverty in Scotland as shown in the 2002 Scottish House Condition Survey.
        By 2010 – to have achieved a further reduction in the total numbers of people in fuel
         poverty in Scotland between 2006 and 2010 – target to be quantified once 2002
         SHCS data becomes available.


3.       Communities Scotland Guidance on Fuel Poverty Strategies.

Communities Scotland Guidance emphasizes the importance being placed on this issue by
Scottish Ministers, and recognizes that it is “a strategic issue requiring involvement from a
wide range of internal departments”, and that it will be “led from the top with ministerial
direction.”

It expects that this commitment will be reflected at local authority level with councilors giving
policy direction at an early stage and implementation being managed at Corporate Team
level, with a corporate commitment to the objective.

It goes on to make a number of suggestions on how to produce a fuel poverty strategy
particularly on the gathering and use of data to determine the extent of fuel poverty within
local authority areas and for the collection of information to allow local authorities to measure
their own progress, suggesting that they may wish to set up their own surveys. Though their
suggestions are very useful, it is debatable how practicable some of them may be, or whether
all LA’s have access to the level of resources that would be required to produce the
appropriate results. For example, in the past there have been some considerable difficulties
obtaining data from utilities because of perceived problems with data protection legislation
and commercial confidentiality. In determining whether an individual is in fuel poverty,
property information and income information has to be overlaid, as is done in the Scottish
House Condition Survey. Matching different data sets from different sources is unlikely to
produce this level of detail, though it may allow some general targeting.

The Energy Savings Trust (EST) is currently developing a fuel poverty mapping system for
use by LA’s, based on deprivation indices, which should provide useful information.

One of the key roles that local authorities are expected to play is as coordinator for the
various local and national agencies working to eradicate fuel poverty in their areas.

Fuel Poverty Strategies are expected to be designed to cover the three key issues that
contribute to Fuel Poverty:

        Energy Efficient Homes.
        Income levels (including benefits and welfare advice, as well as economic initiatives)
        Fuel Costs


4.       The Scottish House Condition Survey.

The Scottish House Condition Survey 2002 (SHCS), produced by Communities Scotland, has
provided a large amount of data on Fuel Poverty across the country, and, because of the
relatively large sample size for Glasgow, we have now also been able to obtain some useful
data specific to the City.

Within the SHCS use is made of a measurement of energy efficiency for dwellings referred to
as NHER. This stands for National Homes Energy Rating and is a relative indication of the
energy efficiency of a house. It is a scale running from 0 (very poor) to 10 (excellent) and can
be considered as a sort of miles per gallon equivalent for houses. It relates to the total energy
use per square metre for all purposes in the home. An 80 m² home with and NHER of 6
would therefore use less energy than a 100 m² home with the same NHER. The SHCS uses
a banding system of NHER 0 – 2 = poor, 3 – 6 = moderate and 7 or greater = good.
Key findings from the SCHS for Scotland are:

       Using the Executive’s definition of fuel poverty, an estimated 286,000 households
        (13%) are fuel poor. Of these, 24% (69,000) are in extreme fuel poverty (ie. would
        have to spend more than 20% of their income on fuel to maintain the standard
        heating regime). Most of the extremely fuel poor are single person households.
       By changing the definition to exclude housing benefit and income support for
        mortgage payments this figure rises to 363,000 (17%).
       By changing the definition to exclude all housing costs from the definition (Glasgow’s
        preferred definition) the number in fuel poverty rises to 445,000 (20%).
       Approximately half of the change in fuel poverty since SHCS 1996 can be attributed
        to increases in household income - largely changes to the benefits regime since 1998
        and general economic growth. 35% of the change is due to decreased fuel prices
        and only 15% to improvements in the energy efficiency of the housing stock.
       A theoretical modeling exercise was undertaken to look at the impact of fuel price
        changes. This indicated that for every 5% increase in average annual fuel prices an
        estimated 30,000 more households over and above the current figure of 286,000
        would become fuel poor (the reverse being true for a decrease of 5%). This analysis
        used average annualised fuel prices across all suppliers and does not reflect specific
        pricing policies from individual energy suppliers. This is particularly important given
        the current rises, and projected future rises in fuel prices. Recent price rises are
        likely to have increased the numbers in fuel poverty to approximately 346,000 or
        16%.
       166,000 households are in marginal fuel poverty, spending between 8% and 10% of
        their income on fuel. Of this group, 32% are single pensioner households and 85%
        are owner-occupiers.
       Households living in privately rented accommodation have a higher risk of being fuel
        poor than do those living in other tenures. Single adult householders have a higher
        risk than others.
       The NHER of the housing stock has improved from a median score of 4.1 in the 1996
        SHCS to 6.0 in 2002. The greatest improvement has been in local authority sector,
        and the least in the private rented sector.

Key findings for the SHCS for Glasgow are:

       9% (24,000 units) of Glasgow’s Housing stock is poor compared to 13% (9,000 units)
        for Dundee, 12% (11,000 units) for Aberdeen, 7% (15,000 units) for Edinburgh, and
        8% (176,000) units for Scotland. 14% of Scotland’s poor NHER houses are in
        Glasgow.
       The largest proportion of NHER poor houses in Glasgow (13%) were built within the
        1965 – 1982 age group. The poorest stock type is MS blocks with 18% being NHER
        poor. The poorest tenure is private rented with 20% being NHER poor. 17% of
        single adults live in NHER poor houses.
       In the social rented sector 13% of GHA stock is NHER poor by comparison to 4% in
        the rest of the social rented sector.
       A lower proportion of GHA (61%) houses have full house central heating compared to
        other social rented (83%), owner occupied (85%), and private rented (66%). A much
        higher proportion of GHA houses rely on electric central heating (22%) than other
        tenures.
       There are 72,000 pre 1919 properties in Glasgow (27% of the housing stock) where it
        will be either extremely difficult or impossible to insulate external walls.
       Using the Executive’s definition of fuel poverty, 15% of households in Glasgow are in
        fuel poverty compared to 13% for the rest of Scotland.

Though it would appear that the Executives first milestone will be met fairly comfortably the
later targets are likely to be considerably more difficult to achieve.
5.       The Key Issues and Challenges for Glasgow.

There are three principal factors that determine fuel poverty,

     A. The energy efficiency of the home,
     B. The cost of fuel,
     C. The level of income of the household.

A comprehensive strategy for Glasgow must be capable of addressing each of those issues,
though it must be acknowledged that only the first point is a matter devolved to the Scottish
Parliament.

                           A.      Energy Efficiency in the Home:

In a fuel poor household it is almost always the case that the bulk of their expenditure on
household fuel is on space heating and hot water. Much of the thrust in our strategy must
therefore aim to deliver on this area, particularly through improved heating systems and high
standards of insulation. Improving energy efficiency in the home is the only means of future
proofing households against fuel poverty.

        Will the GHA investment programme be able to eliminate fuel poverty for their
         tenants?
        The new Scottish Housing Quality Standard, which all social landlord will have to
         achieve by 2015 includes central heating and insulation standards, but defines “full”
         house central heating as “whole dwelling or rooms representing 50% of the floor area
         of the dwelling with heating controlled from a single point”. The standard only
         requires a minimum NHER rating of 5. Are these standards sufficiently high to
         eradicate fuel poverty?
        The private rented sector is by far the worst performing and the most problematic to
         deal with. Can the new Private Housing Bill provide opportunities?
        Though much has been done to improve energy efficiency in the social rented sector,
         but the owner occupied sector has not made significant improvements. How can we
         encourage the uptake of improvement measures in this sector.
        There are 72,000 pre1919 homes across all tenures in the city, many in conservation
         areas. These are largely red or gray sandstone properties and as such the
         installation of adequate wall insulation is almost impossible. What alternative
         solutions can we offer to resolve this problem?
        From 2001 census data, there are substantial pockets of private housing in the city
         with no central heating, inner South Side (Strathbungo, Battlefield, Langside, Mount
         Florida, Pollokshaws, Cathcart, Govanhill, Pollokshields East, Kingston and Ibrox)
         inner West End (Hayburn, Hillhead, Partick and Kelvingrove) and northern East End
         (Milnbank, Dennistoun, and Carntyne). The ward with the largest number of private
         households without central heating is Strathbungo (1,360 households). Can we use
         this data to target grants for energy efficiency improvements?
        An 80 m² flat (2 bedroom) with an NHER rating of 5 (Scottish Housing Quality
         Standard) would cost £12.50 a week for all fuels. On benefit level income a single
         person under 25 receives £44.05, a married couple receives £87.30 a single parent
         with one dependent child receives £114.02 and a single pensioner £105.45. All of
         these household types would be in fuel poverty by Glasgow’s preferred definition.
        Though the sample size for the SHCS was too small to directly link ethnicity with fuel
         poverty it is known that there are concentrations of ethnic minority groups within the
         poorer and older private housing sector in the city, and will therefore be likely to be
         disproportionately affected by fuel poverty. What steps can we take to target this
         group?
                                  B.       The Cost of Fuel

Fuel prices have been steadily increasing over the past 18 months, with the two main
providers in the Glasgow area, Scottish Power and Scottish Gas, raising their prices by
around 16% on average, a trend that is likely to continue. Tariffs can vary considerable
between the different utilities, and even within an individual utility dependent on how you
choose to pay for the product. Fuel poor households tend to be less aware of how to obtain
the most advantageous tariff, and for various reasons, often end up using the most expensive
tariff, prepayment meters. As an illustration a family in a house with gas central heating with
a total annual fuel bill of £1000 using the two primary suppliers in the Glasgow Area, Scottish
Gas for gas and Scottish Power for electricity would save in excess of £250 per annum by
moving to the best available tariff (check out http://www.uswitch.com). Assisting fuel poor
households to access the best available tariff will therefore require to be a key element of any
strategy.

       Energy prices will continue to rise across the board in the immediate future. Output
        of gas from the North Sea is starting to decline, and the UK is now importing
        increasing amounts of natural gas, with prices being more closely aligned with those
        in Europe, which are, in turn, linked (artificially) to the price of oil. Current world
        demand for oil, and energy in general, continues to grow, increasing pressure for
        price rises.
       22% of households in the City do not have access to a bank or building society
        account and therefore cannot access best tariffs, can further development of Credit
        Unions help in this area?
       Can one stop advice centres where energy, financial, housing and general consumer
        advice are offered be expanded to help in this area?
       Can pressure be brought to bear on utilities to reduce or eliminate the differentials on
        the cost of energy from prepayment meters?


                           C.      Increasing Household Income.

One of the reasons for relatively high levels of fuel poverty in Glasgow is the high deprivation
levels. Of the 10 most deprived wards in Scotland 8 are in Glasgow, of the 30 most deprived
wards 22 are in Glasgow, and of the 100 most deprived wards 41 are in Glasgow. In
Glasgow 36% of all households are in receipt of housing benefit, twice the average for the
rest of Scotland. Despite the fact that in excess of 400,000 work in Glasgow, there are in
excess of 100,000 citizens of the city who are unemployed. Tackling the problem through
increasing employment levels and improving employability by increasing skill levels in the city
are already a key objective of the council. Allied to this maximisation of benefit for those who
are not in work and for those who are on marginal incomes will also be key elements of the
strategy.

       Given the high level of employment in the city, are we doing enough to provide
        employment opportunities for those who are less skilled?
       Benefit maximisation can help lift many out of fuel poverty, social landlords have done
        much to help the situation for their tenants with welfare benefits advice, but there is
        limited advice available for those in the private sector. How can we improve this
        situation?
       There are skills shortages in various areas, particularly in sections of a currently
        booming construction industry. Can we target training more effectively to create
        better opportunities for unemployed to fill these shortages?
       Glasgow City Council through its Building Services runs an effective apprenticeship
        scheme, but other major employers in the construction industry do not match this.
        Are there ways we can improve this situation?