Select Committee on Trade and Industry Minutes of Evidence

Examination of Witnesses (Questions 87-99)




  87. I have to declare an interest here in that I am a Vice President of Mr Kerr's organisation. I am not sure that appears in the Register of Members' Interests because it is not a pecuniary one. Nevertheless, it is one I have to declare. Mr Gillis, perhaps you would introduce your colleagues then we can begin.
  (Mr Gillis) My name is William Gillis. I am Chief Executive of NEA, the National Energy Action Charity. On my right is Norman Kerr, who is Deputy Director of Energy Action Scotland, standing in for Ann Loughrey, who cannot be with us today. On my left is Michael King of the National Right to Fuel Campaign.

  88. May we start off with definitions and statistics? The National Right to Fuel Campaign argues that the difficulties with definitions are compounded by the official definition taking no account of the degree of poverty suffered by households. "A low income, middle aged lone adult . . . not termed vulnerable . . . but in severe fuel poverty, may in practice suffer a significantly higher risk of a severely cold home and consequent ill health, than a member of a so-called vulnerable household that is only marginally fuel poor". You point to two definitions in general use: one which includes housing benefit (the definition used by the Government) which you say falsely inflates the level of income and the other which is net of housing costs, which is preferred by Energy Action Scotland. The three of you, each in your own way, have concerns about definitions. Could you give us assessments of the numbers of fuel poor, vulnerable fuel poor and marginally fuel poor and whether this has changed over the last five years?
  (Mr Gillis) May I make a quick comment on definitions before we answer the specific question? All three organisations support the use of a definition which excludes all housing costs because of the distortions that including housing costs introduces into the equation.
  (Mr King) Our principal objection to the two definitions being used by the Government is that money which is devoted to meeting housing costs is not available for expenditure on fuel. Whilst they are working to two definitions, one of which excludes housing benefit and income support for mortgage interest, that does not recognise people who may be not on benefit but are actually having to pay mortgages, rents and what have you. The reasons we think this is important are threefold and I shall just run through those. Firstly, in terms of the absolute numbers, looking at the English House Condition Survey, so talking of England alone, the full income definition gives a total of some 4.3 million households, whereas a full disposable income, that is after mortgage interest payments, rents and what have you are paid, is that it is as high as seven million households. That is important for a number of reasons, not least of which is that level of households, some one in three, does warrant resourcing and a very, very proactive and energetic strategy to eradicate that, to overcome that. The Government's argument in that sense, is that this would include people who do not materially regard themselves as being in poverty. However, I would counter that by pointing out that recent work which has been undertaken to map one of the traditional plumb lines of fuel poverty, what is known as excess winter mortality, finds that this does not necessarily coincide with deprivation. Indeed studies from the London School of Hygiene and Tropical Medicine, looking at this particular issue, would indicate that in fact professional classes are equally at risk, if not more, from excess winter mortality. It is more about being a public health issue than simply a poverty issue. The second reason is in terms of regional distinctions. Of course housing costs vary across the country and if you are including people's housing costs, that artificially skews the amount of money that they have available to spend on fuel. The last and most important issue is that the different definitions actually change the distributional effect on the type of household that is affected. On the full definition some 40 per cent of multi-adult households are in fuel poverty whereas only one third of lone parent households are. If one uses the disposable income, some 66 per cent of lone parent households are in fuel poverty. You will appreciate that if you are engaging in targeting these people in fuel poverty to try to deliver solutions to them, it is very, very important you know whom you should be going for.

  89. That is a very clear and comprehensive answer. There is the point that the Government has said they might not agree with you but they will publish the statistics in a form which meets your criticisms. Is that a partial victory on your part?
  (Mr King) Not really, because they are only going to publish it on the two definitions of full and basic and they reject the argument that disposable income should be used as a definition, for the reasons I have given, because it would include so many households, seven million in England alone but eight million UK-wide.
  (Mr Kerr) It not only skews the definition of who, but also tenure. You asked the witnesses from the Electricity Association about the private rented sector. A lot of the poorest people live in the private rented sector and a lot of people who are fuel poor live in the private rented sector. If you then include housing benefit and all the other benefits into that, you will take that sector of fuel poor out of your definitions. What you then need to look at is where you are delivering your schemes. Whereas you might be publishing two figures, the actual delivery of the schemes will be aimed at a group which is not included in the definition of fuel poverty. That is what we have to be wary of as well. It is easy, to take the expression "low-hanging fruit" used earlier, to get the schemes that are easy to put into the social rented sector, but if you also take the private rented sector, a lot of which is pre-1919 with solid walls, they are hard to heat homes anyway, the makeup of the scheme then becomes completely different. That is a danger when we move down a particular road of going for "Yes, we will publish the two sets of figures but our scheme construction will be to what the Government see as their priority group".
  (Mr King) May I return to your original question about the changes which have occurred? The basic causes of fuel poverty are an interaction between low income, poor housing stock and relative fuel prices. The Government reports to us that there has been an overall drop in the absolute numbers in fuel poverty due to downward fuel price movements, yet this does not actually explore some of the underlying trends in that because it is only addressing the fuel aspects. It has had no impact on those people in severe fuel poverty, defined as those who are needing to spend up to 30 per cent of their disposable income. It has really only affected people in marginal fuel poverty, that is having to spend up to ten per cent of their disposable income.

Sir Robert Smith

  90. All three of you agree in different ways in your evidence about the chances of the Government reaching their targets even under their definition. Energy Action Scotland says that current schemes alone will not be sufficient to achieve the 2010 target. NEA say that the measures set out in the UK Fuel Poverty strategy are not adequate and the National Right to Fuel Campaign say that even on its own terms the Government target is unlikely to be achieved. Do you all have a common view as to why you are pessimistic or are there three different causes of the pessimism?
  (Mr Gillis) First of all, whilst welcoming the target and the fact that the Government has come out and provided itself with such a challenging target, what we are saying is that current schemes alone will not achieve that target, that more needs to be done. There was a discussion earlier on about the impact of the energy supply companies' schemes to lift people out of fuel poverty. No-one can actually say the extent to which the Government's main schemes are lifting households out of fuel poverty. We would suspect that the proportion lifted out of fuel poverty is not great.

  We have grave doubts about whether existing schemes with the existing level of resources will achieve the Government's objectives.
  (Mr King) In our submission the issue we try to get across is that where we feel that things are failing is the inability within the strategy to integrate the three areas of activity, namely investment in energy efficiency, income and regulatory issues and fuel prices. If you just focus on one to the exclusion of the other, you are not going to do it. You have to bring the three together in a very, very focused way. Every household is individual and designing schemes which are one-pattern-fits-all is extremely difficult.
  (Mr Kerr) What is interesting about the Warm Zones is that there is actually an element of co-ordination in the use of money. What we have at present are things like the Warm Front and EEC, or in Scotland the Warm Deal and EEC, often competing for the same customer. Who knocks on the door first gets the hit. There is no co-ordination there. One of the major points about not hitting the targets is that nobody is co-ordinating that on a local level. That is where the Warm Zones and in Scotland the community energy partnerships go for that. The other difficulty which we talked about in our submission is that 28 per cent of houses in Scotland have solid walls and another one per cent have non-traditional construction types. Twenty-nine per cent of houses in Scotland will not receive loft insulation or cavity wall insulation and we shall be back to Mr O'Neill's offer of light bulbs, which he seems to have a passion about.


  91. I think a number of companies are using them as a most ineffective fig leaf.
  (Mr Kerr) I am surprised that the Electricity Association and others did not come back to say that it is regulation which ties their hands with regard to the measures they are able to offer. There are some very good things they could do but cannot do because of the pence per kilowatt hour and exemplary mix which they are tasked with in their savings. If they were to work better with the lobby groups, we would move that argument forward. Anything with photovoltaics in it is a no-no under the energy efficiency commitment, yet we know that for hard-to-heat homes photovoltaics or solar energy are ways of starting to tackle the issues there. They are not allowed to do that by regulation. Their hands are being tied. We have the answer and what the electricity companies have to do is develop the formula which gets the answer, not the other way about. The easiest way to do it is by low energy light bulbs.

  92. The Scottish experience in terms of national targets. Could you share with the Committee something about the ambitions of the central heating of the homes of the elderly which is taking a national campaign a slightly different way in Scotland from down South. Could you comment on that for us?
  (Mr Kerr) There are two things about the Scottish campaign. The first is that it is an average grant, not a maximum grant. The managing agent has the opportunity to look at fuel mix and heating systems. In rural areas, where there is no gas, it might be an oil fired system which is more expensive to instal, but conversely in the inner city where economies of scale come into play, the systems might be cheaper so there is an average grant. One of the criteria which makes the scheme so attractive is that it is not means tested, therefore to qualify you simply need to be over a certain age and without a heating system. You are not having the stigma of somebody coming forward to say they are fuel poor or they are poor. That is difficult for a certain age group who do not want to define themselves as that. Fuel poverty in itself is a stigma in that people do not associate themselves with being poor or being fuel poor. If you ask them whether they are cold in their home, they will say yes. If you ask them whether they are fuel poor, the answer might be completely different.

Sir Robert Smith

  93. Age obviously targets people who on the whole tend to spend a lot of time at home. There is a lot of frustration therefore in groups representing people with long-term disabilities which are also forcing them to be housebound and in a sense they would be another category which should fall into that non-means-tested loop.
  (Mr Kerr) Indeed. Unfortunately the scheme is cash limited by the amount the Executive have put forward. Doing the sums via the Scottish House Condition Survey in 1996, that was the easy group to target. The waiting list is somewhere in the region of over 9,000, which is a year's target. Without any marketing of this scheme, people have come forward because they think there is something positive on offer.

  94. On the point about solid walls, a builder said to me once at an energy efficiency meeting that people came up to him all proud of their nice solid granite house and he said that between them and the outside world there is half an inch of plaster and lath. Until we tackle the solid walls, or have a strategy for the solid walls, presumably the targets are never going to be met?
  (Mr Kerr) Correct.

Linda Perham

  95. I should like to ask you about the one-stop-shop proposals which at least two of you have put forward. The NRFC advocates a single one-stop-shop national scheme for the fuel poor and Energy Action for Scotland recommends a single point of entry via a national energy efficiency help line. Could you expand on how those schemes might work?
  (Mr King) Essentially the idea is that to overcome this lack of co-ordination and help individual consumers, individual householders overcome the confusion caused by the plethora of initiatives available, both as Government schemes, industry schemes, income maximisation and others, if one were able to bring this all together and provide them with a tailored service to their particular circumstances, that would be far more effective. However, one has to recognise that it will also be incredibly expensive. One way that is being piloted in this respect is the Warm Zones initiative; I believe there is one in your constituency. To roll that out nationwide will be very, very expensive. Nevertheless, it is the most effective way of doing it.
  (Mr Kerr) I agree wholeheartedly. We are looking for a long-term strategy here in terms of the one-stop shop or a single point of entry. What people in the community need is a single point of access. You have seen in some of our submissions talk of about 30 possible schemes. People do not know what they are entitled to, they do not know where to go for that single help. The Government through the energy savings trust have done a lot of good work in terms of the energy efficiency advice centres. I could argue the difference between advice and information, but they do a very good job in giving information to people on assessing how they fit into particular schemes. They may not all do that and that is the local knowledge that individual groups have got together. The Scottish Executive's "Do a Little. Change a Lot" campaign, which has been going for some months now, sits not within Housing, but sits within a completely different department. So we have two departments running initiatives on tramlines. They will never meet. It needs this joined-up co-ordination. If we have to have a single point of access, then it can be a nationally recognised telephone number. The energy efficiency advice centres have that now and it is not beyond the realms of possibility that you could expand that service to take in that type of co-ordination. Where is it locally? What help can I get locally? What am I eligible for locally? That needs to be resourced and the people who are operating that system need a lot more training. It cuts through all of the red tape and the Warm Zones are attempting to tackle that by bringing everything together so that when they do a street-by-street approach and knock on the doors, what they are really saying to the person is that they are the point of access and no matter what the circumstances are, they will try to access a grant that is right for that person. That is the important thing.
  (Mr King) It also helps to overcome the issue of people who are marginally above benefit levels or are not on benefit due to the fact that they are not claiming, as is the case with many pensioner households. If you actually focus in on somebody because you can see that their housing conditions are poor and their internal temperature is low, then you can introduce some sort of flexibility around income levels.

Sir Robert Smith

  96. May I go back to these solid walls? Is there any strategy on the horizon which could start to tackle the condition of houses with solid walls?
  (Mr Gillis) There has been a number of suggested initiatives. There are technologies which enable you to insulate walls, either internally with dry lining or with external cladding. The difficulty at the moment is that those methods of insulation are more expensive than cavity wall insulation and the current grant maximum just would not accommodate that kind of measure. That is one of the reasons why we are saying that we want more flexibility within the grant schemes and also more resources.

  97. So it is more a cost problem than a technology problem.
  (Mr Gillis) It is for some properties. There are some issues such as listed buildings.

  Chairman: This is where Sir Robert comes in. Is this one of your baronial piles?

  98. No, it is just that a lot of Aberdeen is made of granite which is a great way of holding up the roof, but it is not a great way of keeping the heat in. Aberdeen City has done an experiment but it is quite a lot of disruption for people.
  (Mr Kerr) It is. A housing association in conjunction with Aberdeen City have used millennium money won by Energy Action for Scotland to undertake a small project. We have said that it is a time of major disruption: they have decanted the tenants, they are completely refurbishing a block of granite houses, they are putting in dry lining, they are putting in other energy efficiency measures in terms of looking at the insulation between flats in various levels, so flats which do not have a roof. It is disruptive and it does cost a fair bit of money. What you have to remember is that that is a pilot project and it is dealing with around ten to 12 houses. It is not on the scale of Warm Front or Warm Deal where we are talking about serious economies of scale.

  99. Did it produce a real difference to the tenants?
  (Mr Kerr) Yes.
  (Mr King) Insulation is not the only way to tackle the issue of solid walls. You can actually put in a more effective heating system. In rural areas, away from the gas network, they could be based on renewables. You have already heard mention of solar technologies. In dense urban areas such as London or Aberdeen, one could put in community heating based schemes. I do know that Aberdeen City Council are doing an initiative along those lines with tower blocks under their control.


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