Examination of witnesses (Questions 160
- 179)
MONDAY 9 MARCH 1998
SIR JOHN
BOURN, KCB,
MR ANDREW
TURNBULL, CB,
CVO, MR
BRUCE SHARPE,
MR JOHN
CLOUGH, MBE
and MR FRANK
MARTIN
160. But it has not been particularly significant
in the first three months.
(Mr Turnbull) I think that is significant. Cavity
wall insulation has gone from zero to 14[8]
per cent.
161. In terms of loft insulation?
(Mr Turnbull) Loft insulation has come down from
about the mid-70s to 67 per cent[9].
162. It is 72 per cent in the report for
draught proofing and 73 per cent in the report for 1991-97 draught
proofing, so very little change has happened there. It just seems
to me that possibly you need new measures to actually encourage
the take-up of those. Would one of those possibly include targeting
the grant and skewing and weighting the grant more effectively
towards those more energy efficient aspects, for instance loft
insulation?
(Mr Turnbull) Possibly. The other measure I looked
at was to revert to the situation of allowing people to have loft
insulation and draught proofing rather than forcing people to
choose one or the other. The evidence is that people tend to choose
the comfort factor. If we could reconstruct the scheme to allow
both then we would certainly further improve the energy efficiency
of the scheme.
163. But one way of doing it would be to
possibly weight the grant more heavily towards those aspects which
make it more attractive for householders to opt for loft insulation.
That is a possibility, is it not?
(Mr Turnbull) It would not make any difference
to the householder because they are getting it for free. I think
what you are saying is do we give an incentive to installers by
making cavity wall insulation relatively more profitable than
draught proofing. We have not looked at that but that is one possibility.
164. Can I ask about the single tender arrangements.
I referred to it before in terms of the surplus situation. Maybe
again I should ask the Treasury about this just to get it clear.
I think it is paragraph 3.5 or 3.2. The Treasury have indicated
that you would like to see the Department extend the scope for
introducing competition to be reviewed at the end of the contract
period. Is that right?
(Mr Martin) Yes.
165. What would be the implications for
that? Would that mean that there is a possibility——
(Mr Martin) It is against the background that
we are very reluctant to agree single tender action. We were reluctant
on this occasion and it was only after probing the Department's
arguments carefully that we did so. The paragraph is entirely
accurate, as part of our approval we in effect said "this
time but not next time". We are looking to the Department
to take measures to introduce competition.
166. So next time hopefully there will be
a competitive tender situation.
(Mr Turnbull) That is recorded in the correspondence
between us.
167. Is that what will happen in 2001?
(Mr Turnbull) There were two arguments. One was
were there other contractors but the key element was this was
a point at which we——
168. No, I am sorry, I do not want to talk
about the history, I want to talk about 2001.
(Mr Turnbull) The special factors that were there
in 1996 we do not expect to be there and, therefore, we expect
to let this on a competitive basis next time.
169. Very interesting. Can we just look
then at the question of how the Department monitors the work of
Eaga, how they set targets and look at indicators, just to look
at the performance of the whole of the system. Paragraphs 2.20
and 2.21 suggest that there has not been any effective monitoring
by your Department, Mr Turnbull, in terms of the benefits of the
scheme. What is your reaction to that?
(Mr Turnbull) I am slightly puzzled really. We
get a quarterly report from Eaga which gives us an analysis by
type of measure, type of property, type of tenure and gives us
an estimate of the energy efficiency improvement that has been
achieved. One of the things that comes out of this report is whether
we are doing enough to establish not the energy efficiency but
the improvement in comfort, what people think about it. We think
from the customer surveys that are done that there is actually
a very high satisfaction rating there.
170. In terms of the extra research that
is needed, possibly an option for you, are you going to be researching
more the social benefits, the potential of the scheme?
(Mr Turnbull) There are two pieces of research
that have been commissioned. One is a market survey on the satisfaction
of customers. The other is the opportunity presented by the English
House Condition Survey, the data on which will start to become
available this year. That will tell us a tremendous amount. There
is a huge amount of data and analysis. That will tell us a lot
about the kind of property and kind of household.
171. In terms of setting targets and making
sure that you are reaching your objective, what about the question
of setting a target for scheme take-up? You have not really researched
the potential for householders to take up the scheme. Are you
planning to do that?
(Mr Turnbull) Since we are spending what is currently
allowed encouraging further take-up would not actually help us.
The previous discussion was about whether within the funds that
are made available to us we could be targeting those funds more
effectively.
172. So really you put a cap on the number
of people who will take up this scheme?
(Mr Turnbull) We have a cap on the size of the
programme at about £75 million.
173. So you are not particularly ambitious
about extending the scheme?
(Mr Turnbull) I would love to have more money
but that is the nature of the negotiations, that is what has been
negotiated in the successive survey rounds.
174. Why do you not suggest that Eaga use
the reserve to do that?
(Mr Turnbull) I do not hold the reserve.
175. Let us face it, it is effectively the
scheme's reserve. I do not want to quibble. Why do you not use
that to extend the take-up?
(Mr Turnbull) That then comes back to the question
of whether an operating surplus is a reasonable feature of the
scheme.
176. This concept that you are capping the
number of people's take-up by saying the budget is limited and
yet there is money sitting there in the bank with the potential
for the use of extra take-up, are you not even looking into seeing
how you might be able to use that?
(Mr Turnbull) That assumes that it is our money.
177. Yes.
(Mr Turnbull) This is money that has been earned
by the contractor.
178. So you do not see that as being your
responsibility?
(Mr Turnbull) Our responsibility is to see that
the operating surplus they earn year by year stays within reasonable
bounds.
Mr Leslie: Okay. Thank
you.
Mr Williams
179. Mr Turnbull, I have been reading your
biographical note with great admiration. You are exceptionally
experienced in the disciplines of public finance, are you not?
(Mr Turnbull) I spent a long time in the Treasury.
I had three spells in public finance.
8 Note by Witness: The percentage should, in
fact, be 14. Back
9
Note by Witness: The figures given were those for draught
proofing. The figures for loft insulation to the latest quarter
were 18.2 per cent of the grants given, 25.5 per cent of money
spent. Back
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