Scotland receives £4.5m to help families struggling with soaring heating oil costs

The funding, part of a £50m package for households across the UK, will be passed to the Scottish Government to deliver to affected households through existing programmes.

The price of kerosene – the fuel used for heating oil - has been particularly impacted by the conflict in the Middle East and is currently double that of crude oil.

Unlike gas and electricity customers, those who heat their homes with oil are not covered by the energy price cap, meaning they are exposed to more immediate energy price hikes.

Many, including some of the most vulnerable households, will need to pay an upfront lump sum to top up their tanks in order to maintain their heating and hot water.

Heating oil is different from other sectors in the energy market as it does not have the same consumer protections and is not regulated by Ofgem. The government said it intends to introduce new consumer protections for heating oil customers and is rapidly exploring new ways to step in and ensure households are better protected.  

This includes:

• An agreement secured with industry on a strengthened Code of Practice to rapidly provide enhanced protections to customers, including greater flexibility on delivery volumes and improving price transparency and formalising a Priority Customers Register – meaning all customers who are vulnerable are eligible for prioritised support in times of disruption.  
• Introducing stronger consumer protections in the heating oil market, which could cover dispute resolution, a greater variety of repayment options for those facing hardship, greater price transparency and enhanced protections for vulnerable groups such as the elderly.  
• Supporting the Competition and Markets Authority’s plans to carry out a more comprehensive examination of the UK’s heating oil industry.
• Exploring the creation of a new ombudsman or appointment of a regulator, such as Ofgem, to champion consumers, and taking powers to do so through the Energy Independence Bill.

Scottish Secretary, Douglas Alexander MP, said: “The UK Labour Government is delivering decisive action to ensure families are protected, today committing £4.5m to the Scottish Government for families struggling with soaring heating oil costs.

“The SNP-led Scottish Government must act quickly and decisively to make sure this money reaches the pockets of families as soon as possible.”

Energy consumers minister Martin McCluskey MP said:  “Heating oil prices have spiked sharply, and I know that for families in rural communities across Scotland, that is a real and urgent problem.

“This government is committed to fighting people’s corner and tackling the affordability crisis head on by putting over £4.6m of support to help people across Scotland who need it most.

“The funding will be passed to the Scottish Government and they now need to move at pace to deliver this help to families across the country. In England, this funding will be available from April 1st - people across Scotland should not have to wait any longer.”

New support ‘fails to meet scale of the problem’

Citizens Advice Scotland said the new package of support will not be sufficient to protect those in the most vulnerable circumstances in Scotland. 

CAS director of impact David Hilferty said: “Evidence from across the Scottish CAB network shows that surging heating oil prices are already severely impacting households in island and rural communities. People coming to our CABs about this are desperately worried.

“Those on the lowest incomes in rural and island communities who use oil heating also face other financial challenges like higher travel costs and fewer affordable options for buying essentials like food. The current crisis is another blow to their already stretched finances.

“Recent events have once again exposed the exposed the precarity that is baked into our energy system. The system is broken. Today the focus is on people who use oil to heat their homes, but for gas and electricity users too, the Ofgem price cap is not providing adequate cover and only guaranteed until July.

“The UK Government must do more. We desperately need an energy system that works for everyone. The need for long-term, consistent support that affords people financial stability and peace of mind is abundantly clear.”

CAS has called for a social tariff on energy bills and a robust energy debt write-off scheme.