The Scottish Government announced a £10m extension of its Fuel Insecurity Fund in May 2023, according to Consumer Scotland, the statutory body for consumers in Scotland1. The fund directs consequentials from the UK Government's Household Support Fund to vulnerable households, with energy debt support administered through the Home Heating Support Fund1.
Energy debt write-offs in the 2022-23 iteration of the fund totalled £6.08m, with an average pay-out of £7331. Ninety-three per cent of payments from the Home Heating Support Fund in that period went to suppliers in the regulated market, according to statistics provided by Advice Direct Scotland, which delivers the fund1.
A second initiative funded through the Fuel Insecurity Fund, the Social Housing Fuel Support Fund, issued 15,986 fuel vouchers to July 2022 at a total value of £783,314, according to statistics provided by the Scottish Federation of Housing Associations, which delivers that fund1. Figures for the third round of the Social Housing Fuel Support Fund were due to be published in July 20231. Statistics for another Fuel Insecurity Fund initiative delivered by Home Energy Scotland were unavailable at the time of writing1.
Consumer Scotland set out the fund's role in its response to an Ofgem call for input on the debt-related costs allowance in the price cap, published on 17 May 20231. It said non-repayable discretionary credit from sources such as charities and the devolved administrations is likely to affect debt-related costs, and that the Fuel Insecurity Fund is one such source within Scotland1.
"In May 2023, the Scottish Government announced its own £10m extension of the scheme."
The same response reported that the most recent price cap period allowed for debt-related cost representing 6% of typical dual fuel standard credit bills, 1% of typical dual fuel direct debit bills and 0.4% of dual fuel prepayment meter bills1. Consumer Scotland's own data found that 46 per cent of standard credit consumers reported it was difficult to keep up with their energy bills, compared with 30 per cent of direct debit consumers and 62 per cent of prepayment meter consumers1. It also found 45 per cent of standard credit consumers had cut back on food shopping to afford energy bills, against 33 per cent of direct debit consumers and 53 per cent of prepayment meter consumers1.
| Payment type | Share of typical dual fuel bill allowed for debt-related cost | Consumers finding it difficult to keep up with bills |
|---|---|---|
| Standard credit | 6% | 46 per cent |
| Direct debit | 1% | 30 per cent |
| Prepayment meter | 0.4% | 62 per cent |
Source: Consumer Scotland1
Why it matters for households
The Fuel Insecurity Fund is one route by which energy debt in Scotland can be written off rather than carried by the household, and the £10m extension continues that route into a further period1. The average write-off of £733 in 2022-23 gives a sense of the scale of individual support, though the fund's total is small against the wider debt picture1. For a household in arrears, a non-repayable credit of that kind reduces what is owed to a supplier without adding to future bills, unlike a payment plan that spreads the same debt over time.
The figures also show how payment method shapes the risk a household carries. Standard credit customers pay a larger share of debt-related cost within the cap than direct debit customers, yet report more difficulty keeping up with bills than direct debit customers do1. Prepayment meter customers report the greatest difficulty of the three groups, while carrying the smallest debt-related allowance1. Consumer Scotland said this structure does not reflect a principle of fairness, and that it would like to see parity of debt-related allowance between direct debit and standard credit consumers1. It added that it would not want any increase in the debt-related cost allowance for prepayment meters1.
For households, the practical link is that the price cap allowance for bad debt is recovered through bills, so how that allowance is distributed between payment types affects what each group pays. The Fuel Insecurity Fund sits on the other side of the ledger, reducing debt that suppliers might otherwise recover through those same allowances1.
What happens next
Figures for the third round of the Social Housing Fuel Support Fund were due to be published in July 20231. Consumer Scotland said it is comfortable with Ofgem working towards an October 2023 cap adjustment, if that is the decision taken1. No further detail on the timing or allocation of the £10m extension has been reported.