HPAG (14/15) 14
SCOTLAND’S SUSTAINABLE HOUSING STRATEGY – UPDATE
Purpose
1. At its June meeting, HPAG agreed that to ensure an appropriate level of
scrutiny, progress on Scotland’s Sustainable Housing Strategy would
become a standing item on the agenda, with a fuller discussion every six
months. This paper outlines progress to date on delivering the strategy,
including on climate change and fuel poverty.
Background
2. Scotland’s Sustainable Housing Strategy was launched in June 2013. It
sets out a route-map to 2030 for warm, high quality, low carbon homes
that contribute to the establishment of a successful, low carbon economy.
3. The strategy guides our efforts to meet two challenging statutory targets
set by the Scottish Parliament:

“to ensure, as far as reasonably practicable, that people are not
living in fuel poverty in Scotland by November 2016”

reduce Scotland’s emissions of greenhouse gases by at least 42%
by 2020 and 80% by 2050, compared to the 1990/1995 baseline.
Progress to date
Fuel Poverty
4. The 2013 Scottish House Condition Survey (SHCS) shows that fuel
poverty increased by four percentage points between 2012 and 2013 to
940,000 households (39% of households in Scotland), driven by a seven
per cent rise in energy prices. This increase was mitigated by government
interventions to improve domestic energy efficiency. Without the mitigating
effect of increasing incomes and improving energy efficiency, fuel prices
alone would have driven up fuel poverty by a further 45,000 households in
the last year. The higher fuel poverty statistics for 2013 also reflect
significant changes in underlying methodology. The 39% fuel poverty rate
may be compared with only 8% of households that reported that they
cannot afford to heat their homes in winter. This suggests that there may
be a disconnect between modelled fuel poverty based on the current
methodology and actual experience or perceptions of households about
whether they are fuel poor.
5. This Government remains committed to eradicating fuel poverty. We have
invested over £300m since 2009 on a raft of Fuel Poverty and Energy
Efficiency programmes. Scottish Government spending on domestic
energy efficiency, which is £94 million this year and next, has already
made hundreds of thousands of homes warmer and cheaper to heat and,
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as the Scottish House Condition Survey indicates, has helped to mitigate
the rise in fuel poverty.
6. Despite our investment, our efforts are being undermined by the sustained
increase in energy prices up to 2013 (up by over 180% since 2002 when
the target was set) and by the lack of a competitive energy market
delivering fair and transparent energy bills. If energy prices had only risen
by inflation since 2002 then fuel poverty would stand at 11% in 2013, as
opposed to 39%. Moreover, the statistics show that even if every
household in Scotland had an Energy Performance Certificate rating of
B/C – which could only be achieved through many billions of pounds of
further investment in energy efficiency - fuel poverty would still stand at
26% based on the current methodology. We continue to focus on
increasing the energy efficiency of homes in Scotland and have written to
UK Government, urging it to use its powers to increase the level of Warm
Home Discount and fund that through central resources. That would give
immediate relief to the lowest income households and those on benefits
and go some way to reduce fuel poverty this winter.
Climate Change
7. There are no sector specific targets for greenhouse gas emissions. Each
sector’s contribution is set out in the Second Report on Proposals and
Policies (RPP2). Emissions from homes have fallen by 10.8 per cent
between 1990 and 2012 indicating a long-term, positive downward trend
and reflecting a fall in domestic final energy consumption of 16.2% since
2005. Between 2011 and 2012, emissions from the sector rose by 11.1
per cent, due to an increase in demand for space-heating, as a result of a
harsher winter. Household emissions are closely linked to external
temperatures; it is the longer term trend that is important.
Sustainable Housing Strategy
8. Since the launch of Scotland’s Sustainable Housing Strategy good
progress has been made against its milestones on specific improvements
to the characteristics of Scotland housing, which are included in Annex A.
The strategy is centred around 3 interrelated and supporting themes:
Incentives, Standards and Regulation, and Market Transformation.
a) Incentives
9. Scottish Ministers’ aims are to secure around £200m a year of support for
measures to improve the energy efficiency of Scotland’s homes and
reduce their carbon emissions. In 2013-14 we estimate that investment in
Scotland by energy companies under ECO was approximately £170
million; when taken with budget allocations through Scottish Government
programmes such as HEEPS, Warm Homes Fund, and Green Homes
Cashback, this indicates total investment in the order of £260 million.
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Home Energy Efficiency Programmes for Scotland

Both national and area-based HEEPS schemes are in place supported by
£79m funding in 2014-15. This is in marked contrast to the position in
England, where there is no equivalent of either our national energy
assistance scheme or our area-based schemes.

Final allocations to local authorities for 2014-15 HEEPS area-based
schemes were announced on 4 June. Allocations for 2015-16 were
announced in December, which should expedite delivery in the next
financial year.

Latest statistics 1 show that more than 34,000 measures were delivered
through HEEPS in 2013/14, including insulating more than 12,500 solid
walls, installing over 5,000 gas central heating systems, and replacing
almost 5,000 boilers.

The new HEEPS national scheme is expected to launch in 2015 and will
be worth at least £16m per year for a minimum of 5 years. Procurement of
a managing agent for this scheme is well underway and the contract is
expected to be awarded in the spring.
Green Homes Cashback

The Green Homes Cashback Voucher Scheme was launched in
November 2012. It offered vouchers for a grant of up to £7,300 for energy
efficiency measures recommended in a Green Deal Advice Report. The
average voucher award was just under £2,500. The scheme was open to
owner occupiers, private and social tenants and registered private sector
landlords. The ring-fenced provision for social landlords is in contrast to
the equivalent English and Welsh scheme, which is open to social tenants
but funding is not given directly to social landlords to carry out larger
projects. The current (Phase 3) of the scheme (which had funding of
£15m) has been fully subscribed and is now closed to new applications.
Energy Company Obligation and Green Deal

Latest statistics from the UK Government show that 112,521 measures
(11.7 % of the total) were delivered under ECO in Scotland (Scotland has
9.3% of households in Great Britain). These figures include ECO
measures delivered in Scotland under HEEPS.

Across GB, 36.7 measures were delivered for every 1,000 households,
whereas in Scotland, 46.8 measures per 1,000 households were provided.

Following the changes to ECO the CERO target has been reduced by 33%
and the UK Government’s levelisation mechanism (which provided a
carbon uplift for measures installed before March 2014) has reduced this
1
http://www.scotland.gov.uk/Resource/0046/00466702.pdf
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further. The latest Ofgem compliance update shows that energy
companies are nearing completion of the March 2015 targets.

These changes to the ECO by the UK have the potential to significantly
reduce expenditure in Scotland for energy efficiency and fuel poverty
measures unless we can secure an even higher proportion of the overall
GB ECO ‘pot’. We have highlighted our concerns to the UK Government
that the changes to ECO will undermine investment in energy efficiency,
jobs in the insulation industry and progress in tackling fuel poverty and
climate change.

Ofgem has issued notifications of fines for 6 energy suppliers and
generators of a total of £55 million due to failure to meet CERT and CESP
targets. The companies have agreed proposals for payment with Ofgem,
forming proposed penalty notices. The payments are required to benefit
consumers across GB whom the CERT and CESP schemes were
designed to benefit. The notices were published online with an open call
for submissions on how the fines should be paid. We publicised these
consultations via our ECO Newsletter which goes to over 200 Scottish
stakeholders.
b) Role of Standards and Regulation

Consultation on energy standards for new build homes in January 2013
proposed a further 21% reduction in current emissions in new homes. This
equates to a 45% reduction in emission compared to the 2007 building
standards. Announced in September 2013 that proposals will become
policy in October 2015, later than originally anticipated due to economic
conditions and to enable further action to support successful
implementation.

The Energy Efficiency Standard for Social Housing was published in
March 2014. Social landlords are continuing to make progress towards
meeting standards set in the Scottish Housing Quality Standard (SHQS).

The independent Scottish Housing Regulator (SHR) published an annual
SHQS progress update on 21 March 2014. This update is based on data
reported by social landlords. The SHR report states “Social landlords
aggregate level of compliance with the Standard rose from 71% in 2011/12
to 82% in 2012/13. Around 94% of social landlords anticipate meeting the
SHQS by April 2015. […] landlords anticipate that 2,408 houses in total will
not meet the Standard, which is less than 0.4% of all social houses.” The
SHQS target is part of the Social Housing Charter and the SHR is
responsible for monitoring landlord’s progress towards meeting it, and if
necessary to intervene to secure improvements. SHR is engaging with
those social landlords who have anticipated that part of their stock may not
comply to seek further assurance on how they plan to comply with the
standard.
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
As part of our commitment in the Sustainable Housing Strategy, the
Scottish Government will be inviting stakeholders to a launch event
(provisionally 16 February 2015) for a Common Housing Quality Standard
Forum on key issues affecting house condition to inform recommendations
by the Scottish Government for a new common cross-tenure housing
standard.
Ministers will take account of the recommendations in
considering whether to take forward a formal public consultation on a
proposed common standard.

We have set up a stakeholder working group to consider minimum
standards for energy efficiency in private homes. The group has been
meeting regularly since April 2013 and we intend to consult in the spring
on proposals for minimum standards.

Proposals will be submitted to Scottish Ministers for approval ahead of
consultation, and at this stage are likely to include:
o that there should be a lead in time to the introduction of any
regulation
o that a standard should be set based on an EPC (letter) rating, and
what that rating should be
o that it apply at the point of sale or rental (with the option for the
seller to pass the responsibility on to the buyer, and for landlords to
rent property prior to meeting a standard in certain circumstances)
o that consideration also be given to whether there should be a
backstop date by which all properties should be required to meet a
standard
o and that the consultation should seek views on a trajectory for
increasing the standard over time.
c) Market Transformation
10. The Sustainable Housing Strategy identifies the need a market
transformation so that buyers, sellers and the property professions
recognise the value of energy efficiency; and so that the potential of
innovative design and construction techniques is maximised to transform
the market for new build homes and create export and other economic
opportunities. Market Transformation Action Plans were agreed at the
April 2014 meeting of the Sustainable Housing Strategy Group and good
progress is being made, including:

The Home Report Review concluded in December 2014. The review
found that the Home Report is supported and valued by buyers and
sellers, and that it is meeting its original objectives, which remain
appropriate. The Single Survey was noted as being the most useful
element of the Home Report, followed by the valuation. There were
concerns that buyers and sellers did not fully understand the scope of the
Single Survey, and around perceived conflicts of interest between the
surveyor and the seller, buyer, selling agent and lender. The Scottish
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Government’s proposed response to the findings and recommendations
made in the review will be put forward to Ministers in the next few weeks.

In November 2014, the 2020 Group published its research – a scoping
study – which recognised an initial link between energy efficiency and
house prices. A Homes for Scotland study found that lower bills or running
costs was a priority for most buyers, but noted that greener homes and
energy efficiency are not listed as priorities for most homebuyers,
suggesting a disconnect between the two,

There have been a number of developments since the publication of the
SHS including announcements on Building Standards and Greener Homes
Innovation Scheme projects starting on site. Funding for the Construction
Scotland Innovation Centre has also been announced.

We are committed to encouraging the use of modern methods of
construction and have commissioned Homes for Scotland to conduct
research into mainstreaming off-site modern methods of construction in
house building. We expect this research to conclude in March 2015.

We are funding two Saltire Fellowship programmes which contribute to this
agenda, providing Scottish off-site companies with entrepreneur training
and helping to promote Scottish off-site building methods internationally.

The Market Transformation Reference Group was launched in October
2014. The Reference Group is an online forum supporting both the New
Build and Financial Market Transformations.
The Scottish Housing Event
11. Sustainability was a key theme at the Scottish Housing Event, which took
place on 18th November 2015. The event and associated roundtables was
a productive forum, which has helped identify key actions that will
contribute to delivering the strategy and our commitments on fuel poverty
and climate change over the next three to five years, and the longer term.
The following actions have been identified and will be included as part of
the Joint Delivery Plan:
1. Develop a long-term plan covering climate change and fuel poverty
with more robust and measurable milestones
2. Develop a specific set of
rural/remote/off gas properties
actions
to
tackle
issues
with
3. Develop a long-term communications and marketing campaign to
change people’s perceptions of energy efficiency and energy use
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Smith Commission
12. Lord Smith of Kelvin has now published his recommendations, including
recommendations relating to fuel poverty, energy efficiency and energy
regulation. We have welcomed the transfer of those powers and we await
further clarity on the scope of the new powers. The agreement falls well
short of the Scottish Government’s devolution proposals on energy but the
Scottish Government will work jointly with the UK Government on the next
stage of the process, in line with the full and constructive part we have
played so far.
13. There is still a lack of information from the UK Government on potential
limitations on the freedom of policy development, and implementation as
well as potential limits on overall funding. However the proposals in the
Smith commission for greater control over the Energy Company Obligation
and Warm Homes Discount, as well as on certain welfare payments,
provide the opportunity undertake a potential major redesign of incentives
to better suit Scottish conditions. Timing of any such changes would also
need to take into account the current ECO regime and allow for full
engagement with partner organisations across Scotland, and are likely
begin to come into force from 2017-18.
Recommendation
14. It is recommended that:


this report on the recent progress of Scotland’s Sustainable
Housing Strategy is noted
HPAG consider whether this is a suitable format for reporting on
Sustainable Housing Strategy progress
Scottish Government
January 2015
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SUSTAINABLE HOUSING STRATEGY - MILESTONES
Milestone
Measures needed Progress to 2010
by 2020
1. Every home to
Every home to have Figures from the Scottish
have loft and cavity
loft insulation of at
House Condition Survey
wall insulation (where least 100 mm by
show that by the end of
cost effective/
2020.
2010 around 82% of lofts
technically feasible)
had at least 100 mm
and draught proofing
insulation and 36% had
measures such as
200 mm or more.
pipe lagging.
Every home to have Nearly two-thirds (62%)
cavity walls
of cavity walls had been
insulated, where
insulated.
appropriate and
technically feasible.
2. Every home
heated with gas
central heating to
have a highly
efficient boiler with
appropriate controls.
3. At least 100,000
homes to have
adopted some form
of individual or
community
renewable heat
technology for space
and/or water heating.
The RPP assumes
over 1,000,000
boiler replacements
over the period from
2008-2020.
The RPP assumes
large scale uptake
of solar thermal
panels; biomass
boilers; and heat
pumps by 2020.
Progress to 2011
Progress to 2012
Progress to 2013
Latest figures from the Scottish House
Condition Survey show that by the end
of 2011 around 86% of lofts had at least
100 mm insulation and 45% had 200
mm or more.
Latest figures from the Scottish House
Condition Survey show that by the end of
2011 around 88% of lofts had at least 100
mm of insulation and 54% had 200 mm or
more. Just under 2% of lofts have no
insulation at all.
Latest figures from the Scottish House
Condition Survey show that in 2013
91% of lofts had at least 100 mm of
insulation, 62% had 200 mm or more
and 24% had 300mm or more. 2% of
lofts have no insulation at all.
Two-thirds (66%) of cavity walls had
been insulated.
Two-thirds (66%) of cavity walls had been
insulated.
69% of cavity walls had insulation in
2013.
The Energy Saving Trust
estimates that more than
128,000 new gas boilers
were installed in Scottish
homes between April
2010-March 2011 and
around 120,000 between
April 2011-March 2012.
If this replacement rate
continues until 2020 well
over a million homes will
have highly efficient new
boilers.
The SHCS confirms this rate of gas
boiler installations and upgrades;
125,000 homes reported having gas
central heating installed or upgraded in
the last year (SHCS 2011).
(The SCHS may under-estimate the
number of homes which have had CWI
as CWI are becoming increasing difficult
for SHCS surveyors to identify, as over
time holes age, fade or are covered up.
Contractors are also getting better at
disguising their work).
Latest figures from the Scottish House
Condition Survey show that in 2012
163,000 homes reported having central
heating installed or upgraded in the last
year.
Around 13,000 homes
had some form of
renewable heat by the
end of 2010 (Scottish
House Condition
Survey).
Energy Saving Trust (EST) estimates
that 10,800 micro-heat technologies had
been installed by 2012. Space and/or
water heating can also be provided by
renewable electricity such as solar PV
and the SHCS estimated that around
20,000 homes used solar thermal
panels, biomass fuel or heat pumps by
the end of 2011.
Provisional estimates from EST are that
around 2,000 homes are connected to
renewable district heating out of around
6,000 homes connected to community
heating schemes.
[N.B. due to changes in the way SHCS
data is collected this figure is not
comparable to the figures reported in
previous years].
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Latest figures from the Scottish House
Condition Survey show that in 2013
156,000 homes reported having
central heating installed or upgraded
in the last year. [N.B. due to changes
in the way SHCS data is collected this
figure is only comparable to 2012].
Through SG programmes there were
10,945 central heating installations
and upgrades in 2013/14.
Through the Energy Company
Obligation there were 25,004 central
heating installations and upgrades in
2013/2014 in Scotland
As of January 2014, there were at
least 10,500 renewable heating
technologies on homes in Scotland.