Select Committee on Environmental Audit Minutes of Evidence

Examination of witnesses (Questions 539 - 559)




  539.  Good morning. Could I invite Sir Dennis to say a few words?
  (Sir Dennis Pettitt)  Thank you very much. As you can probably tell from my croaky voice, I am suffering a little bit from asthma this morning, so my misfortune is your good fortune because you do not have to listen to me for very long, and I have to go to another meeting very shortly anyway. May I say sincerely on behalf of Nottinghamshire County Council we welcome you all to County Hall. We are especially delighted to welcome MPs representing the House of Commons Environmental Audit Committee who have taken the time to visit us and to receive evidence at first hand on the many energy efficiency initiatives in our region of the East Midlands. I am sure the decision to come here reflects our national reputation for innovative energy work and we welcome this opportunity to help shape a national energy policy. As we reach the end of the millennium it is crucial that we are successful in shaping an energy policy to take us into the next century, and in the famous words of the former Vice President, Dan Quayle, of the United States, "If we don't succeed, we run the risk of failure"—one of the most profound statements he ever made. Shaping an energy policy that places care for our environment at its core, encouraging sustainability of energy conservation, depends on developing partnerships between business and the public sector. Local authorities are uniquely placed to provide such a lead in the regions. Working in partnership with other local authorities and charitable organisations, we have already formed a successful Energy Partnership of local authorities in Nottinghamshire and Derbyshire. The success of this Partnership has now extended beyond the boundaries of our two counties, into Europe indeed. With funding support from the European Commission, the Newark and Sherwood Energy Agency is now achieving even further success for that Partnership. A great deal of hard work has gone into establishing and achieving this success to date. If we are to achieve our vision of a sustainable energy future it is vital that this work is continued, with the assistance and financial support we need to develop even more radical solutions. You will hear today of just some of the many innovative projects that are in progress and also new initiatives that we wish to see developed in this region. I am sure you will be impressed by what you hear. May I conclude by wishing you a most productive and enjoyable day. Thank you very much indeed.

  540.  Sir Dennis, may I thank you very much, on behalf of all my colleagues and my team, for receiving us here today. The Environmental Audit Committee's role is to look at the policies and programmes of the Government and to see what effect they are having on environmental protection and sustainable development, and to look at what targets the Government is setting itself and see whether they are living up to what they have committed themselves to. Dan Quayle might have a few words about that, too. John Prescott likened us to terriers snapping at the heels of Government. As an aficionado of "One Man and his Dog", I prefer the idea of the sheepdog intelligently shepherding the Government towards appropriate goals on climate change and environmental topics. We are at the moment looking at energy efficiency. This is the subject of our current investigation and we therefore decided obviously to see the German Government, the Danish Government and Nottinghamshire and Derbyshire County Councils. That was the obvious nature of our remit and we had heard about what you were doing in the two county councils and, therefore, you are our third visit—Bonn, Copenhagen and Nottingham. We are delighted to be here and we look forward to a very productive session and to hear all that you are doing and for you to make a contribution, we hope, to what the Government is doing, because we shall certainly be pressing on the Government anything of value that we see in the direction of better energy efficiency and a contribution towards reducing CO2 emissions and all the rest of it in the course of our work. So thank you for your hospitality. I am sure the message will get back to London through us.
  (Sir Dennis Pettitt)  Thank you. I must depart now but I hope to meet up with some of you at least at lunchtime. Have a good morning.

  541.  We will begin our formal session, Cllr Green, and, therefore, may I first of all, before we begin asking questions of you on the basis of your submission to us and the document you have given us, ask is there anything you or your colleagues would like to say to us before we begin the questioning session?
  (Cllr Green)  Thank you very much, Chairman. First, with your permission, I would like to introduce the panel to you, if I may. On my left I have Alan Allsopp, who is the Principal Energy Management Officer for Nottinghamshire County Council. Alan is the Principal Officer, as I say, for us. He has helped to develop a Partnership for the benefit of all 19 local authorities in Nottinghamshire and Derbyshire and has been the Chair of the Officer Partnership Working Group since its establishment in 1996. As Energy Adviser to the Local Government Association, he has contributed to a local government position report entitled, "Energy Services for Sustainable Communities". On my right I have David Pickles, OBE, Chief Architect and Energy Manager to Newark and Sherwood District Council. An architect by profession, David has been with the Newark and Sherwood District Council for 20 years and is currently seconded to the European co-funded Newark and Sherwood Energy Agency as its Director. An effective advocate of the social, economic and environmental benefits of housing energy efficiency, he was recently awarded an OBE for services to energy efficiency and sustainable housing. On my far right I have Dick Huskinson, Borough Technical Service Officer of Chesterfield Borough Council. In addition to his position as Borough Technical Service Officer, Dick is also Chair of the Local Authorities' Energy Partnership Renewables Task Group. He is also largely responsible for the success of the PEACH, that is, the Poolsbrook/Erin Area Community Heating Project, having successfully secured and co-ordinated funding for this work. The concept of the PEACH project is to put in place the infrastructure for an energy from waste community heating project with combined heat and power utilising recovered landfill gases. On my far left I have Sara Batley, Research Fellow at De Montfort University, Policy Adviser to the Local Authorities' Energy Partnership. Sara has been responsible for the development of the 2020 strategy document and has also completed other research work for the Partnership. Currently Sara is carrying out work for Leicester City Council looking at energy efficiency for the fuel rich and, for Newark and Sherwood Energy Agency, completing a renewable audit for the district. These two work contracts are combined with her PhD on electricity liberalisation and the impact on renewables. Myself, I am Cllr Derek Green, I am Joint Chair, of LAEP; I am also the Vice-Chair of the Resources Committee at County Hall here and the Energy and Building Sub-Committee. If I may, I would like to add that the LGA position statement indicated that 150,000 new jobs could be created through a comprehensive energy efficiency programme. This would also result in an improvement to the United Kingdom balance of trade, £2.5 billion. There are 8 million people living in fuel poverty in the United Kingdom with an estimated 30-50,000 excess winter deaths as a direct result. That equates to 1,020-1,700 in Nottinghamshire and Derbyshire. There is, therefore, enormous potential for employment, health and economic benefits and that is why we formed the Partnership. Before we formed the Partnership local authorities were working together on a range of initiatives, including energy conservation, Local Agenda 21 and the regeneration of the coalfield communities. We therefore had a good foundation on which to start. The County Council had already developed excellent initiatives with Newark and Sherwood District Council and we originally wished to extend this through Nottinghamshire with opportunities from the deregulated energy market and our desire to eradicate fuel poverty. I am pleased to say that not only all the authorities in Nottinghamshire joined but also all our colleagues in Derbyshire. I would like to ask Alan to add a few words to that, if I may, Chairman.
  (Mr Allsopp)  Yes, I would like to. As Cllr Green has indicated, the initial driving force behind the Partnership was the opportunity to maximise savings from the deregulated energy market from bulk discount savings, and also to invest those in energy efficiency through what is now the concept of the Warm Homes Bill. There was also a very timely piece of legislation called the Home Energy Conservation Act and that certainly focused attention to the Partnership and, as housing authorities, we had to prepare reports to the Secretary of State. That focused the attention of the Partnership basically because we were able to work together in a Partnership to meet very tight deadlines to prepare those reports, and the real opportunity to deliver action in the Partnership was certainly the funding that came in the establishment of the Energy Agency co-funded through the European Commission and, indeed, the financial trust fund from the Energy Saving Trust to deliver HECA action. I think as a summary of how we have evolved, my summary would be the very successful Energy Partnership is certainly driven by legislation and regulation, local strategies with a national policy. Funding to deliver action is absolutely essential, and the opportunities that that may provide for innovation and, in particular, local exemplar projects that we can replicate throughout the nation, which you will hear about this afternoon. Finally, probably the most driving thing we have to do is to influence a cultural change in the nation.
  (Cllr Green)  Chairman, I would fully endorse those views. It is befitting that we are here today because it was three years ago in this very chamber that LAEP was started. We sat around and discussed and decided to go forward with it. We feel we have achieved a great deal but we also know that there is a great deal more to achieve yet. That is why we have come up with our strategy and based it towards the future. Chairman, with your permission, when you question us is it perfectly all right for my fellow people on the panel here to come in?

  542.  Yes, feel free, no problem. Thank you very much indeed for those opening remarks. As you said, Mr Chairman, and Mr Allsopp said in particular, national legislation and regulation are very important in this context. We would like to lead off with that particular topic and I will ask Mrs Walley to come in there.

Joan Walley

  543.  May I also thank you for making all the arrangements for our Committee to visit and I am very pleased to be here. What you started three years ago we hope we can help together in partnership to take forward. Having said that, could I kick off our questioning by asking you about the Local Government Bill which is currently going through Parliament, the "best value" Local Government Bill. You talked a great deal in your introductory remarks about the importance of Partnership and the importance of having resources and the importance of having duties. Do you feel that the "best value" Local Government Bill is giving you the tools that you need to push this agenda forward, and if not, what changes, if you had a chance, do you think could still be made in its stage currently going through Parliament?
  (Mr Huskinson)  I will take that. As far as the concept of best value is concerned, I think everyone in this room accepts that it is an excellent concept. The business of questioning, challenging, what we do, the four `c's etc., is obviously the right way forward. It is right that we look at what we do, it is right that we look at why we do it, or even should we do it, and it is right that we should look at who would do it as well, better, can we do it in partnership? Can we give it to someone else to do? The concept of value is very much accepted. The fact that there is now a Bill going through Parliament ostensibly to allow that to take place is welcomed. One of the major shortcomings we fear in the Bill as it stands at the moment is that there are no powers whatsoever for us to set up an energy services company. You will recall that the Minister was asked that at some stage through the Bill and promised a written reply, which I understand basically says, "We will consider it." Well, our view is really that legislation is now, legislation comes very infrequently; this is the time to insert a clause which gives specific powers for local authorities and local authority Partnerships like ours either to operate energy services companies ourselves or in conjunction with either private sector energy companies or voluntary sector. At the moment there are no powers within the Bill as it stands at this stage.

  544.  Thank you, that is very helpful. Certainly if you wish to send us a little note on that in addition to the verbal evidence today I am sure the Committee will be pleased to receive it. May I slightly move on and say that there is further local government legislation coming before Parliament in respect of the new duty for local authorities to "promote the economic, environmental and social well-being of their areas". Do you see that duty as still being on the cards and would that formula assist the ability of local authorities and Partnerships to integrate the consideration of policy issues and in respect of the joined-up thinking that you really want to see?
  (Mr Huskinson)  In a word, yes. We want to see this duty which has been promised because what it effectively does is it requires local authorities to think in a holistic form about everything they do, which means that energy no longer becomes a peripheral matter, it is part of everything we do. So if energy is considered in quite literally every single one of our policies, then it will receive the level of importance that it deserves. As you know, the climate change document tries to raise the profile and I think the duty to meet those three requirements is going to be a very useful thing but it still needs this power that I referred to previously.

  545.  In view of that reply, could I ask you to comment on evidence that the Committee received some months back from, I think, Sutton Borough Council in London, who felt that we should not really have statutory duties in terms of Agenda 21 issues being taken forward by local authorities but we should have Local Agenda 21 policies being taken forward on a voluntary basis. Could I ask you how you would square the voluntary nature of the challenge that there has been, and which I think the Prime Minister as well made in respect of Local Agenda 21, fitting alongside duties which perhaps some of us would like to see as well?
  (Mr Huskinson)  The voluntary element of Local Agenda 21 I think you will find certainly most of the authorities in this partnership have taken on board. I think we already have met the Prime Minister's target for our Local Agenda 21 strategies. Yes, it is right that there should be voluntary requirements or a voluntary element in that because we are trying to change attitudes and you will hear later that we are very big on attitude change. But part of the problem with local authorities is that we are only allowed to do what the law says we can do. Therefore, if we want to do something, if we want to do it effectively, what we actually need is a duty which is imposed by Parliament.

  546.  Finally, in terms of that duty, do you see that as being linked to having financial resources to spend on doing the work that you would want to do, and if so, how?
  (Mr Huskinson)  Yes, we do, and obviously you will hear more of that later.

Chairman:  No doubt.

Dr Iddon

  547.  We are about to legitimise a new tier of government in the regional development agencies. From evidence we have taken from Government, these would appear to be primarily to promote economic activity and this particular Committee is worried about that in that we see little evidence that they are there also to promote environmental considerations and social considerations. Do you have a view on that?
  (Mr Huskinson)  Our view is that with the new regional development agencies we do not actually see a difference between economic development and environmental development because environmental development properly applied leads to economic development. One of our objectives in the Partnership is to achieve economic development through the use of energy management, energy conservation efforts, so we actually bring the two together. We do feel that within the regional development agencies there is a very good opportunity to start to influence the thinking because the RDAs obviously have a big impact in regional planning guidance. If energy management, energy efficiency, renewable energy, whatever, is featured very highly in the regional planning guidance it will appear in structure plans, it will appear in local plans and it will become a useful vehicle for achieving this change of mindset that we are all so keen to achieve.

  548.  Does your Partnership already have a dialogue with your RDA?
  (Mr Huskinson)  Not yet, no. It is only just getting itself formed, but it certainly will come in.
  (Mr Allsopp)  I think the Partnership itself has a regional dimension and we do, in fact, work in partnership on a regional basis and have had some success recently with a regional funding bid to the European Commission, where we established funding to carry out a renewable study for the region. Impacting from that, what we propose to do is tailor that down from a regional basis. We are not taking the national guidelines on renewables but we are taking a local focus and identifying the potential in this particular region based on that study. So we do work on a regional basis but it is not as yet formalised.


  549.  One of the problems with the regional development agencies is that they have four main duties and that does not include the environment. The environment is an appendage, if you like, so that anything you do you must do with an eye to environmental protection. You may find yourselves, despite the fact that you are two counties working together, in conflict with an RDA which takes a rather more economic, strictly economic, narrow economic, view of things. That is going to be a problem, I suspect. That is the problem with not having words in the RDA formulation which include sustainable development. Would you see that as a problem?
  (Mr Huskinson)  I would see that as an opportunity for the two counties and all the districts within the two counties to show that there is a concerted political will to ensure that environment is given its right level of importance in RDA directives.

  550.  So you would hope that, having established the partnership between Derbyshire and Nottinghamshire, the other counties in the region could be pulled along behind, so to speak?
  (Mr Huskinson)  Yes. We already have links into Leicestershire. The Partnership itself is Nottinghamshire and Derbyshire but there are already links into other East Midlands counties.

Mrs Brinton

  551.  As somebody who actually spent all my childhood and grew up in Derby and obviously spent a lot of time in Nottingham, I am absolutely delighted to be here today and to be observing such an excellent Partnership approach, but following on really from what the Chairman has said and taking the Government's objective as making links, joined-up Government, how can we promote joined-up thinking on energy efficiency at local government level? I am asking you here how we involve all the players, voluntary, private and business?
  (Cllr Green)  I think our own energy strategy is an excellent example of joined-up thinking initially. We certainly considered the impact of energy on a wide range of issues—environmental, economic and social. We feel we need Government support to move it forward to deliver our joined-up action and our joined-up spending, and there will be a need to have a political dimension in it, we feel, and a need to discuss with other areas how we are going to move forward. That is one of the biggest problems we feel we face at the moment politically, meeting and networking with other areas to put forward concerted action.

  552.  Absolutely. I think we would all agree with that on this Committee, but could you give us any idea as to what lead and guide you would like from central government on this, what model and structures, and also how this would mesh in by regional structures? We have talked about RDAs and the problem would primarily be seen only in economic terms, but what structures would you want from central and regional government?
  (Ms Batley)  I would refer back to the previous question with regard to the duty to consider economic, environmental and social benefits, the duty that is being considered to be imposed on local government at present in the Bill that is passing through Parliament. So I would say that, as far as particular support for joined-up thinking is concerned, there is provision in the Bill already. The other assistance that central government could offer is in relation to capital investment for schemes which are revenue-earning, so that a revenue-earning scheme would not have to pay back its capital. That revenue could then be invested in further energy efficiency works.

  553.  On a final point on this section, could I ask what measures you yourselves have taken to inform other local authorities, not just neighbouring ones but also national, and if you have actually thought of inviting Government Ministers to come along and convene meetings of neighbouring authorities on this?
  (Cllr Green)  We have not done that as at the present time, I must admit. This is something which, as you said, will need to come forward. I think it is a priority issue that we need to take on board. We want to move the Partnership forward.


  554.  Coming back to the point that Ms Batley made in response to Mrs Brinton, you are saying you would be content if this additional duty were placed upon you as local authorities to promote economic, environmental and social well-being in your areas. If that duty were laid upon you in the forthcoming Local Government Bill, that would meet your requirements?
  (Ms Batley)  That would meet the requirements in terms of making local authorities think in a joined-up way on energy efficiency, but I think we would also need some co-ordination of funding sources and to consider the capital investment requirement in order to deliver joined-up action, not just joined-up thinking.

  555.  So there needs to be some money as well?
  (Ms Batley)  Of course.
  (Mr Huskinson)  I wonder if I might point out one of the problems with funding is that we are all used to seeking funding wherever we can get it and these days it has to be grant money. It includes the National Lottery, it includes European Union, it includes landfill tax. All these funding regimes have different outputs, they all have different timescales, they all have different deadlines, and putting together a basket of funding requests is what we have to do each time we come to a major project and that is extremely difficult. The other thing which is extremely galling to those on the receiving end is that, to take an example, the landfill tax credit scheme is a lovely example where there are £130-odd million available of landfill tax credits and every year there are tens of millions which are not spent because it is not co-ordinated and it goes back to Customs and Excise, and at the same time other projects which have the backing of the regulatory body ENTRUST and which have the backing of a particular landfill operator cannot proceed because that landfill operator has run out of his little bit of the landfill tax credit scheme. So what we are saying is yes, there is obviously a need for additional moneys in terms of capital but some of that could come from co-ordination of existing funds.

Joan Walley

  556.  If I may follow that up, if you have not already done so would it be possible for you to give the Committee the details of the different funding sources you actually have so that we have the complete picture of where the bits and pieces of money are coming from to have that understanding of the fragmentation that needs to be replaced, if that has not already come in in our evidence?
  (Mr Huskinson)  Yes.

Mr Loughton

  557.  If we can get away from this horrible phrase "joined-up" thinking and "joined-up" government for a while and move on to energy services, you talked about some of the briefs we have had about energy services for sustainable communities. Could you talk a bit about the actual provision by local authorities in delivering energy services, perhaps your wish-list, and then how you are restricted in doing that by the current scenario?
  (Cllr Green)  We feel that we have a duty to promote a holistic focus to the energy services under the new Local Government Bill and the Partnership sees education to be a vital focus of our work and that is where we want to progress into the future.
  (Mr Allsopp)  From my experience, we do have a role in role-setting for the social agenda and this could be facilitated by an energy services company. Currently, this would only be a facilitating role but our preferred view is that we try to develop this through the local authorities route. Last year we were funded from the Energy Saving Trust to develop such an initiative. We seem to be in the area in local authorities where the private sector can do almost anything unless it is forbidden. Local authorities need specific powers to enable them to do so. Our own local authorities' ESCO came to an unfortunate termination because we have no specific powers to enable us to do it, and because of the funding regime with the Energy Saving Trust we run up to the Funding deadline. We would hope there will be this facility in the "best value" Local Government Bill in order to remove that obstacle and to enable local authorities to have the facilities to be able to deliver sustainable energy for the benefit of the community. I think that is what is really required—joined-up thinking on a local basis delivered by an energy service company.

  558.  Can you explain exactly how you would envisage an energy services company working? I know there is a dichotomy at the moment between the utility companies, who make money from selling energy and make more money from selling more energy. How do you work in partnership with them, as I think you are suggesting, and various other agencies to promote energy efficiency whilst at the same time keeping the utility companies interested?
  (Mr Allsopp)  The original concept behind our original scheme was to take the financial savings from deregulation basically and those would have been in the order of £60 to £70 per household, and then to encourage that householder to try and ring-fence that pot of money in order to pay the loan charge of the investment on energy efficiency measures. For example, we estimate that an investment of about £400 per household would be required to deliver a 20 per cent. CO2 reduction. So if we could ring-fence that money and maintain the actual revenue expenditure for the household the same, that money could then be used to pay off the loan charge for that investment, such as cavity fill insulation, condensing boilers, etc., so that it would be revenue neutral to the household. The household would then receive the benefit of lower energy bills into the next millennium and beyond and receive obviously comfort conditions. What we were intending to do for our role model was obviously to form a partnership on a preferred bidder status with the utility supplier for gas and electricity, and the ESCO would have a revenue income stream for that. The operating surplus would then be targeted specifically at the eradication of fuel poverty. So we would then link that into the HEES schemes and other initiatives and negotiate bulk discounts with energy efficient providers. So the concept would be to deliver the Warm Homes Bill. That was our original intention.

  559.  So you would buy bulk power from the utility companies and then apportion it across fuel poverty households?
  (Mr Allsopp)  We would not actually buy the energy. We would negotiate on a preferred bidder status, so the regional energy company or any preferred bidder would still be supplying the energy, just in the same way as they would now, but we would have facilitated that to happen under an honest broker-type approach, and the commission that would have given us in operating surplus we would have ploughed that money back into an affordable warmth strategy. Basically it was a not-for-profit organisation.

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