Written evidence submitted by Comhairle Nan Eilean Siar (COL0013)
RESPONSE BY COMHAIRLE NAN EILEAN SIAR
SCOTTISH AFFAIRS SELECT COMMITTEE: INQUIRY INTO THE COST OF LIVING'S IMPACT ON RURAL COMMUNITIES IN SCOTLAND
1. The present costs of living crisis is having a disproportionately high impact on island communities such as those in the Outer Hebrides.
2. One reason for this is that household energy costs are already higher in island areas, where houses are generally larger, older, poorly insulated, difficult, and costly to retrofit with insulation. Across the Hebrides there are few properties connected to mains gas.
3. The Outer Hebrides consistently has the highest level of fuel poverty in the United Kingdom. The Scottish House Condition Survey (SHCS) 2017-19 showed that the Outer Hebrides had the highest levels of fuel poverty at 40% (Scottish average 24%). Extreme fuel poverty was at 24% (Scottish average 12%). These findings were obtained long before the massive energy price increases since then.
4. Analysis by Auxilione, published in August 2022 predicted that average bills would soar from
£3,316.58 in April 2022 to £7,171.21 in January 2023 in the Outer Hebrides.
5. The most recent research done into fuel poverty in the Outer Hebrides was a mapping exercise undertaken by Energy Action Scotland. This mapping exercise was done after the price increase of March 2022, and again in October 2022. Therefore, Tighean Innse Gall (TIG), the local housing agency, estimates that currently 70% - 80% of the homes in the Outer Hebrides are in fuel poverty.
6. The usage figures that are used for the energy cap for the average householders require 12,000kwh of Gas and 2,900kwh of Electric costing £2,500. If we equate this to the Outer Hebrides using an all-electric air source house, this will result in costs of £5,112.34 at 33.07p a unit. In order to escape fuel poverty this would require a household income of over £50,000.
7. TIG have received funding to undertake a fuel poverty survey to all homes in the Outer Hebrides, anticipating that the survey will be issued before March 2023.
8. Fuel Poverty is caused by three primary drivers – the ‘Fuel Poverty Triangle’ - and the Outer Hebrides are severely impacted by all three. These are:
a) Poor Energy Efficiency – larger, inefficient homes built with older methods of construction that are difficult to adapt for energy efficiency, therefore, higher heat loss;
b) High Fuel Costs – fuel costs on average more in the islands as we are at the end of a long supply chain and consumers invariably end up paying more than those in mainland Scotland; and
c) Low Incomes – Outer Hebrides incomes have historically been below the Scottish and island averages and are now the lowest in Scotland.
9. Research consistently shows that households living on the lowest incomes, in the least efficient homes, are being hardest hit. ONS annual survey of hours and earnings shows that the Outer Hebrides had the lowest gross weekly pay in Scotland in 2022. Alongside this, the Outer Hebrides had the 9th lowest Gross Disposable Household Income in 2020 of all International Territorial Levels in Scotland.
10. SHCS shows that 88% of owner-occupied households are off grid in comparison to 17% in Scotland. The percentage of owner-occupied dwellings with a high Energy Rating of B or C was 9%, in comparison to 45% in Scotland. Coupled with the ageing population profile, and the age and estimated condition of stock, the outlook for many older households is stark. Older households are more likely to live in extreme fuel poverty, as they have fixed incomes and tend to live in hard-to-treat properties.
11. The biggest relative decrease in the average household size since 2001 was in the Outer Hebrides, decreasing from 2.32 to 2.02. The population is ageing more in rural and island areas. The Outer Hebrides has the highest percentage of those aged 65 and over at 27% (Scottish average 20%).
12. Scotstat have just released an announcement regarding the SHCS Local Authority 3 year estimates. This states that due to the fact there is no 2020 data available, and enforced changes for 2021, they cannot produce 2019 to 2021 data. They aim to publish the next three-year average for 2022 to 2024 in early 2026. They appreciate there is a user demand for local authority estimates from the SHCS and until they get back to the usual approach in 2026, they will explore other options for providing local authority estimates and will update users in due course. This contributes to an unclear picture in relation to condition etc.
13. Given the current cost of living crisis, especially in the island areas, providing up to date information on e.g., fuel poverty, house condition etc is essential. Current estimates of the levels of fuel poverty are being provided by Energy Action Scotland and consultants, e.g. Auxilione and Cornwall Insight.
14. Schemes such as Home Energy Efficiency Programme: Area Based Schemes (HEEPS:ABS) and Warmer Homes Scotland have been crucial in assisting households in fuel poverty. The Comhairle’s main external partner in Fuel Poverty work was The Energy Advisory Service (TEAS), which is delivered by Tighean Innse Gall (TIG). TEAS provided an energy advice service to the local community, along with training to individuals and community groups, with a view to improving the awareness of energy efficiency matters. The work carried out by TEAS helped contribute towards the aims and objectives of the Local Housing Strategy. The Comhairle supported TEAS with grant funding since it was established in 1994. The following table highlights the organisation’s performance between 2017/18 – 2021/22.
TEAS Impact 2017/18 – 2021/22
Source: CNES Reports to Communities & Housing Committee, Sustainable Development Committee 2018-2021
15. In addition to the above, 139 households were referred to the Comhairle’s Financial Inclusion Team in 2021/22, and 287 were referred to other agencies. Client financial gain (Warm Home Discount applications, prepayment energy vouchers and white goods via the Wellbeing Fund) was £186,248 in 2021/22 and £112,537 in 2021/21.
16. These critical works to alleviate Fuel Poverty levels in the Outer Hebrides have slowed recently partly owing to the COVID-19 Pandemic, but also by the new PAS2030:2019:2035 standard, which must be met for all energy efficiency works from 30th June 2021. The new Standard stipulated that staff must have the appropriate certification relating to the type of work they are involved in, for example, certification is now required for staff who must perform the roles of Retrofit Advisor, Retrofit Assessor, Retrofit Coordinator, Designer and Evaluator. Previously these roles would not have required separate certification, so the new PAS requires a substantial (and costly) amount of retraining. This can be challenging for smaller firms, particularly In Scotland, where there is a lack of Training Centres which can deliver the required certification for the new Standard. The cost of travel and accommodation to get the workforce trained can also be prohibitive.
17. Delivery of the 2020/21 HEEPS:ABS programme (which was extended to October 2021 due to the Covid-19 situation) was already running below anticipated spend due to issues relating to the Pandemic. With the implications of the new PAS requirements the out-turn for 2020/21 the 2021/22 HEEPS:ABS programme is likely to see a standstill (and underspend) until PAS issues are resolved.
18. The impact of the above has meant that TIG which ran TEAS, has been forced to restructure its business model, and make 14 out of 28 members of staff redundant. The loss of this service in our islands has been a considerable pressure point on our housing market in terms of skill, experience and knowledge of energy efficiency works, and it stopped critical works recommencing post-Pandemic. We are currently awaiting a replacement business model to restart and anticipate works may recommence in early 2023.
19. One issue is the percentage of houses off (main gas) grid. There is no price cap for heating oil and there is concern that households which rely on it for heating are affected by the large price rise. The Government has said that households not on mains gas and using other fuels such as oil or LPG will receive a £200 Alternative Fuels Payment this winter. To date, households are still waiting on this payment, although £200 is not sufficient for Outer Hebrides residents, suffering from low incomes, high prices, inefficient homes and a colder climate. In the islands in particular, winters are typified by high winds rather than very low temperatures, but winds can add greatly to the energy required to keep a house warm.
20. Urgent access to funding is needed to provide assistance in upgrading properties in order to decrease living costs, to meet net zero targets and improve health and wellbeing for households in island areas. As illustrated, these issues are affecting the majority of households in the Outer Hebrides. There is an urgent need to reduce domestic heating costs in the islands in order to help sustain populations in rural areas who are dealing with lower wages and increased costs.
21. The following link, Cold Homes and Fuel Poverty Maps | The Existing Homes Alliance | Scotland (existinghomesalliancescotland.co.uk) shows a map from The Existing Homes Alliance Scotland which highlights that the Outer Hebrides, along with Orkney and Shetland, have the highest percentage of properties, between 77-92%, rated in EPC bands D - G.
22. A UK Parliamentary briefing dated January 2023 gave the following average price heating oil price - in mid-November 2022, as around 85 pence per litre. However, in December, in the Outer Hebrides, the unit price was 92.95 in Lewis, having recently decreased from over 100.0. Costs in Uist and Barra tend to be higher still.
23. Another issue for our island areas is the use of the Scottish Index of Multiple Deprivation (SIMD) as the main tool to highlight areas of deprivation and therefore support funding claims. None of the 15% most deprived data zones are in the Outer Hebrides, Orkney and Shetland. The index looks at concentrations of multiple deprivation, however, deprivation in rural areas is not clustered but can be spread over considerable distances and can be found adjacent to affluence. Not all deprived people live in deprived areas, and not everyone living in a deprived area is deprived.
24. Of the 38 indicators used in the SIMD there are no indicators used which reflect e.g. fuel poverty, cost of living or housing condition. There are two that look at incomes - % income deprived and % employment deprived; again, low wages not addressed. There are no indicators which suitably reflect the issues that islands face in terms of the energy crisis and fuel poverty. In addition, there are no indicators which reflect the higher costs of food, fuel, deliveries, and travel costs for island areas.
25. Island and rural areas are being left behind as indicators which could evidence some of the issues affecting island areas, are not being used in the SIMD. This issue has been highlighted over many, many years and yet the SIMD remains the same.
26. A report produced for Highlands and Island Enterprise rural-and-regional-disadvantage-in-the- highlands-and-islands-executive-summary.pdf (hie.co.uk) has highlighted that the UK Shared Prosperity Fund (UKSPF) is not providing the opportunities that the EU Structural Fund did. Not only is Scotland as a whole receiving less through the UKSPF than it did through EU Structural Funds, but the proportion of Scottish funding allocated to the Highlands and Islands is significantly lower than received through previous EU Funds.
27. The Highlands and Islands is estimated to be receiving around £18m less over three years than it would have done if the funding allocation of UKSPF was proportionate to previous ESF / ERDF allocations (using allocations in the ERDF / ESF Programme Documents). Again, as with the SIMD, one of the issues is how well the indicators used capture rural and regional disadvantage,
e.g. there is a focus on unemployment rather than lower wage employment which means that rural disadvantage is not fully captured. It does not, e.g. take into account poor access and high cost of services. Several concerns with the indicators and methodologies used persist.
28. A minimum income standard report, A MINIMUM INCOME STANDARD FOR REMOTE RURAL SCOTLAND: A POLICY UPDATE was produced by Loughborough University, in 2013 and updated again in 2016. The report estimated how much more it costs, as a minimum, for households to live in remote rural Scotland in comparison to the rest of the UK.
29. The report found that one of the problems was: “Everyday groceries cost around 10% more at small-town supermarkets than in larger urban areas, and over 50% more at convenience stores. Although most people in remote rural Scotland are close enough to a town to do a weekly shop with only top-ups at the local stores, those in the remotest island locations may have to buy all their food there. Other goods can also cost more locally, and may incur substantial delivery charges, especially to island destinations. These issues constrain the ability of households to make choices, including buying cheaper products.”
30. High grocery prices and delivery charges continue to be a problem, with some companies still not delivering to the islands. One of the report conclusions in 2016 was that “The cost of living in remote rural Scotland continues to be far greater than in other parts of the UK. Falling energy costs have to some extent eased the burden recently”. Sadly, the reverse is now true as soaring energy costs are now having an even bigger impact than normal on the cost of living in remote rural areas, and impacting on the health and wellbeing of islanders.
31. A recent Highlands and Islands Business Panel Survey carried out October / November 2022 highlighted that almost all businesses, 99%, had experienced cost increases in the last 12 months, with 83% experiencing substantial cost increases. The most impactful cost increases were in electricity and gas. This will inevitably lead to increased costs for customers. 23% of businesses felt unable to plan more than a month ahead. 87% of businesses had financial concerns, while 51% were currently using or planning to use some form of finance. 75% had delayed or postponed plans because of costs increases. Sadly, 79% of business owners/senior management reported impacts on their wellbeing, while 62% reported impacts the cost crisis was having on their staff.
32. BBC Scotland has produced various articles on the rural cost of living crisis providing case studies of how the cost of living is impacting on households and businesses, links to the articles below:
Hebrides: Life on beautiful islands with the UK's worst fuel poverty - BBC News
How the rising cost of living is hitting islanders - BBC News
February 2023