Examination of witnesses (Questions 539
MONDAY 29 MARCH 1999
and MS SARA
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
visitBonn, 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
(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
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
(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,
(Mr Huskinson) Yes, we do, and obviously you will
hear more of that later.
Chairman: No doubt.
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
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 issuesenvironmental,
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
(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
(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.
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
(Mr Huskinson) Yes.
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 requiredjoined-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.