House of Commons - Public Accounts

Select Committee on Public Accounts Forty-Fifth Report

DEPARTMENT OF THE ENVIRONMENT, TRANSPORT AND THE REGIONS: THE HOME ENERGY EFFICIENCY SCHEME

ACHIEVEMENT OF ENERGY SAVINGS AND IMPROVED COMFORT

4. From the start of the Scheme in 1991 to March 1997, the main period covered by the National Audit Office investigation, over 2.1 million households benefited from the Scheme. By September 1997 total grants had reached £367 million, covering the provision of energy efficiency measures to 2.34 million households.[2]

5. The Department told the Committee that the Scheme had greatly increased the take-up of energy efficiency measures, received very high satisfaction ratings from those who benefit, and had made a significant contribution to the Government's target to reduce emissions of carbon dioxide.[3] Of the 2.1 million households benefiting from the Scheme up to March 1997, 1.67 million households were on benefit and 0.47 million were over 60s households not on benefit.[4] This level of take up since 1991 represents 26 per cent of eligible households on benefits and 11 per cent of eligible over 60s households. The Department explained that the reason take up was not higher was that the Scheme has been cash limited, and that if more money had been made available then almost certainly they could have found more homes to benefit. In 1996-97 in particular there had been an embarrassing over-subscription.[5]

6. Until July 1997, the Scheme provided draught-proofing and loft insulation only, with the choice being left to the householder, but since that date the Scheme has been expanded to provide a wider range of measures including cavity wall insulation.[6] However, draught-proofing still represents the most popular measure, representing around 70 per cent of grants both before and after the changes to the Scheme introduced in July 1997, even though it is the least energy efficient.[7] We asked the Department if they were satisfied that enough was being done to promote those measures which were most energy efficient. The Department told us that there had always been an element of choice for householders and that improved comfort, which draught-proofing provides, had been regarded as a valid benefit of the Scheme.[8]

7. The Department confirmed that since July 1997 their primary concern had been to shift the balance of the Scheme towards more energy efficient measures, such as loft and cavity wall insulation rather than draught-proofing; but they deliberately did not give absolute priority to the most energy efficient measure, which would have dictated what measure the householder should take.[9] Draught-proofing had always been popular. For the 30 per cent of households who lived in flats draught-proofing might be the only option they could have chosen, and in the 1996 consultation exercise many people had pressed the Department to keep draught-proofing as one of the measures available. Over time the Department expected a swing towards cavity wall insulation, which was more energy efficient.[10] In the first three months of the new Scheme, cavity wall insulation accounted for 14 per cent of grants and 23 per cent of expenditure. Nonetheless, draught-proofing still represented over 70 per cent of all grants.[11]

8. We asked what incentive there was to ensure that the energy efficiency measures carried out were those which were best for the householder, rather than those which best suited the installer. The Department told us that by seeking competitive tenders for different types of work, they hoped there was not a greater profit margin on one measure than another.[12] Eaga told us they strongly believed the best way to advise vulnerable clients on the choices available was for the installer to discuss these with the householder face to face. To supplement that, Eaga were now reviewing the information and advice sheets they produced for installers to photocopy and leave with householders, which provided advice on the benefits of each measure.[13]

9. The Department added that they were now going to review the Scheme, and in particular the ranking of measures according to their energy efficiency, whether to allow people an extent of choice or to give more guidance, and whether to allow people to have both loft insulation and draught-proofing rather than forcing them to choose one or the other.[14] Under the previous version of the Scheme it had been possible to receive both measures. When the Scheme was revised in July 1997 an explicit decision was taken to maximise the number of homes rather than treat a smaller number of homes to a higher standard, and people were required to choose between draught-proofing, with its immediate comfort benefits, and loft insulation.[15] The evidence suggested that people tended to choose comfort, but if the Department were to reconstruct the Scheme to allow households to have both measures then this would improve the energy efficiency obtained.[16]

10. We were interested to learn whether the Scheme was reaching those most in need amongst those eligible to receive its benefits. The Department told us that whilst the Scheme was improving the energy efficiency of the housing stock, it was not necessarily improving the energy efficiency of the worst stock; it was going to people who had some measure of fuel poverty, who were poor but not very poor. There was also a feeling that some people who could benefit were missing out. Take-up in the private rented sector, where probably the poorest people live in houses with the worst energy efficiency, was very limited; three quarters of the take-up was by people in local authority housing or housing association properties. The Department assured us that the question of how best to reach the private rented sector was an important element of their current review.[17] Eaga told us that the main barrier to greater take-up in the private rented sector was obtaining permission from absentee landlords. Eaga added, in relation to reaching those most in need, that research done by the Building Research Establishment in 1993 and 1996 indicated that 85 per cent of those benefiting from the Scheme were from social groups D and E, and were on low incomes compared to the UK average. Eaga also told us that they had done and continued to do work with the Benefits Agency to make information about the Scheme available to some of those in greatest need, for example those on Fuel Direct, a scheme whereby fuel payments are deducted and made direct from benefit entitlements.[18]

11. The Department told us they would be conducting a review to find out more about the housing stock and who was benefiting from this Scheme. This would allow them to target the available funds more effectively, if Ministers wanted to make a change of that kind. Data from the 1996 English House Conditions Survey were now becoming available, which would tell them more about the housing stock, and what people were spending on energy and energy efficiency. This new data would give the Department a better feel for where the Scheme's clients might be.[19]

12. Prior to July 1997 the Department did not routinely measure the energy savings achieved by the Scheme. The Department told us that the earlier Scheme did not have a target for energy saving because its objective was simply to increase the take-up of measures. Since then the Department had set a target for the improvement in the energy rating of each house in which Scheme measures were installed.[20] We asked whether the Department's target of an improvement of five points in the energy rating of each house, using the Standard Assessment Procedure, was sufficiently demanding, and whether it could be improved upon further. The Department believed that a five point increase represented a significant improvement which in practice would deliver savings of at least £1 a week.[21] In addition, the Department told us that they had now commissioned a customer satisfaction survey to establish the improvement in comfort, rather than the energy efficiency, delivered by Scheme measures.[22]

Conclusions

13. The Scheme has provided energy efficiency measures in the homes of some 2.34 million households on benefits, the disabled and the over 60s. However, the Department should consider whether more could be done to reach those in greatest need, particularly in the private rented sector and in the poorest households. It is welcome that the Department will be carrying out more research and considering the scope to target Scheme resources at those who may need it most and where it can be most effective.

14. The Scheme enables installers to promote the energy efficiency measure most convenient or profitable for them, rather than guide the householder to choose the most appropriate measure. The Committee find it surprising that more has not been done to promote those measures which are most energy efficient, and that despite changes to the Scheme in July 1997 draught-proofing still accounts for around 70 per cent of work done under the Scheme.

15. The Department should do more to measure the energy efficiency and benefits in terms of warmth and comfort delivered by the Scheme, and we note the further work the Department now propose.

2 C&AG's Report paras 1.4-1.5 Back

3 Q 55 Back

4 C&AG's Report para 2.3 Back

5 Q 56 Back

6 C&AG's Report para 1.2 Back

7 Q 2 Back

8 Qs 2 and 14 Back

9 Qs 155-158 Back

10 Qs 2 and 157 Back

11 Qs 2, 12 and 46-48 Back

12 Q 49 Back

13 Q 50 Back