Examination of Witnesses (Questions 122-139)
MR BRIAN WILSON, MP, RT HON MICHAEL MEACHER, MP, MR ROB POTTER AND MR JEREMY EPPEL
THURSDAY 23 MAY 2002
122. Good morning. We are grateful to you for coming. Could we start off with some matters relating to the defining of the problem and knowing whether the strategy on fuel poverty is working? The fuel poverty strategy defines the vulnerable fuel poor as "older people, children, the disabled and those with long-term illness". It is suggested they number somewhere in the order of three million households, or some 85 per cent of the individuals living in fuel poverty. That would mean that somewhere around four million households are in fuel poverty, or one in six of all households. It is suggested that these definitions are somewhat problematic and I know you have made studies of these matters in other incarnations. We have the problem of whether or not to include housing benefit in calculating what percentage of a household's income is required for fuel, what constitutes "vulnerable" and even how many houses are likely, because of their condition, to contain households in fuel poverty. EAGA suggest we should have an annual balance sheet of fuel poverty. Would it be possible to produce that? You are setting targets but we do not really get the impression that they are going to be monitored that closely within Government until we get somewhere near the final date.
(Mr Meacher) I entirely agree with you. We have set pretty challenging targets, as is recognised, and it is very important that we remain on track. The only way we can be sure of that is to have regular monitoring. I was just checking whether we are proposing to do that annually as you propose or as EAGA suggested. I certainly believe that if it is not annually it should be every two years; we should certainly have that information to hand so that if we are not on track we can get back on track quickly.
123. It would also help to address the disputes over the definition, if you were finding that there was still a persistent hard core which you could not get at because they had not been defined properly. Many of us would maybe say that in the first year of the strategy you have other things to do than be too concerned about the monitoring, but I would have thought that by the end of year two you ought to be able to establish
(Mr Potter) May I break in there? The English House Condition Survey is on a five-year cycle at the moment. After the publication of the first annual report, which will be early next year and based on the 2001 English House Condition Survey, that survey will move to a one-year cycle, albeit with a smaller sample size. So every year we shall have an update on housing condition to which we can apply all the other modelling on income and fuel pricing. For all practical purposes we shall have the EAGA balance sheet. We shall have a headline figure of the number of fuel poor households based on actual housing survey data.
124. Provided that you can publish it in a form which is accessible. How long does it take to process the data?
(Mr Meacher) A smaller sample is proposed which should make it easier. The 2001 Household Survey will not be ready before the end of this year, so it is taking the best part of a year but the sample is coming down so it should be able to be processed more quickly. The other problem is that you have to relate that to income. It is not just housing condition and some of that income data has to be modelled on the best evidence we have. It will not be an annual survey.
125. We know there are difficulties in establishing which households are in fuel poverty. You are between a rock and a hard place, are you not, in the sense that if you do it with the largest amount of data you can get together it is going to take longer. If you do it with a smaller amount, then it is open to dispute. Is it maybe not better to try to have a more flexible form of definition, which might result in you having more households to take account of?
(Mr Meacher) I think we have. There is continual discussion about this which I sometimes rather liken to the disputations of the medieval scholastics about how many angels dance on the head of a pin. What we have said is that we shall publish data in accordance with both the main alternative definitions, namely to consider those households who are obliged to spend more than ten per cent of their income either including housing benefit and mortgage interest payments out of income support or excluding those. You can argue it either way. It seems to me best that we should publish data on both series andthis is really importantthat the Government intend to achieve their target of ending fuel poverty for vulnerable households by 2010 by either definition. That seems to me the really crucial point. We are often asked to focus on a definition based on income net of housing cost. If you do do that, you get the slightly anomalous result of including people on relatively higher incomethese are still low incomeswho will have more expensive and presumably bigger houses with the result that using the 1996 data up to one third of all households might be classified as being in fuel poverty. I would suggest that is rather counter-intuitive.
126. You said meeting the fuel poverty target by either definition.
(Mr Meacher) Yes.
127. Did you mean one or the other, or did you mean both?
(Mr Meacher) I meant both.
128. Thank you. Just for clarification. I thought so, but it may have been misinterpreted. By both.
(Mr Meacher) Yes.
129. The other thing we talk about is standards of "decent housing". It has been suggested that the definitions are insufficiently precise of what decent housing is. Are you confident that these decency standards are high enough to make a difference?
(Mr Meacher) Decent housing is obviously an utterly subjective concept. There is no authoritative way of saying what is decent or less than decent. Standards have recently been raised and all I think I could say in defence is that for an objective person, they are reasonable. Certainly they present the Government with quite a demanding target. I do not think I can in mathematical terms justify that particular definition.
Chairman: I am just trying right at the beginning to point up some of the evidence we have had where people have expressed anxieties as to what constitutes fuel poverty, how you define it, how you define the physical dimension within this equation which is accounted for by the housing stock and whether or not local authorities are well enough equipped to carry through the improvement in the housing stock to raise the properties which they have responsibility for to decent standards. Maybe later on we can talk about the Bill which is presently in the Housestalled is perhaps the best expression at the momentand get from you an indication of where that will go in relation to the private sector. We shall look at that in a minute. We should now like to move on to measuring results.
130. I should just like to look a little bit more closely at the definitions because this is the starting point. I did note that the Minister started off by mentioning ten per cent of income. I was therefore pleased that he did go on to look at the comparison between disposable income and total income, which is the basis of this. The change made by the Government is that rather than ten per cent of disposable income it turned into ten per cent of total income. You did mention that this is related to possible housing costs but one does wonder whether the extent to which an elderly person is freezing in a one-bedroomed house or a two-bedroomed house actually makes much difference to the reality of the problem. What is the case is that by making that definitional change, 1.5 million people were taken out of fuel poverty who were there beforehand without any change in their circumstances whatsoever. Is this being reviewed again?
(Mr Meacher) I have just said that we accept either definition. I did not say we have concentrated on one particular definition rather than another. It was not actually the difference between total and disposable costs, it was the difference between whether you include or exclude housing benefit and mortgage interest payments out of income support. The key point is that we are not making a definitional manoeuvre in order to make it easier for us. I repeat that there are alternative ways which can be argued for and I am not saying that one definition is necessarily better than the other. The important point is that whichever definition you choose, we will publish the data so you can keep track on movement under either definition and we do intend to achieve our target of ending fuel poverty for vulnerable households by 2010 on both definitions.
131. May I move you on to the measuring of results? You told us how you were going to have new data. When we talk about the strategy for the fuel poverty, EAGA has called for analysis to establish how many households might be expected to lapse into fuel poverty for each percentage rise in fuel costs or interest rates. I am just wondering whether the data will be reliable and whether it will be able to give us the answers on statistical information. How confident can we be that result will be correct?
(Mr Meacher) Of course if there are movements in the economic variables, in particular interest rates, if there are also changes in income, for whatever reason, for working households, those who are under 60 and those who might or might not be in work, all of that is going to influence the number who find themselves in fuel poverty, albeit maybe temporarily. When you ask whether we can rely on the statistical data, all that I can say is that we shall try, on the basis of the annual auditing we have already referred to, to produce the most accurate data we can. It is not going to be accurate beyond a certain margin of error, but the important point is that in my view it will be accurate, based on standard definition, show movement, show trends and that is what is really important. Is it going in the right direction, is it going in the right direction fast enough to achieve the target? It will be accurate enough for that.
(Mr Potter) In the fuel poverty strategy itself there were some sensitivities for gas and electricity prices which said that if those prices went up or down by a certain amount the number in fuel poverty would change by a certain amount. The figures we have produced so far and figures we shall produce in future are essentially based on the housing data modelled with income data and fuel price data to give you a headline figure of the number of fuel poor households. That is being done by DTI and the people who do it in DTI are members of the Government Statistical Service. I would contend on that basis that we have as accurate a figure as anybody is likely to produce when it comes to our annual reports.
132. It seems strange that EAGA have actually called for analysis to establish how many may come in or out of fuel poverty and it can be both ways. It is interesting that you have all this data which hopefully will give us the right result, but the problem is that we really do not know how much discrepancy will be in there, so will we ever know we have reached the Government's target in 2010?
(Mr Meacher) You have heard both of us say that this is the most comprehensive and detailed data that is available. Perfection in this area is not able to be achieved. I would put my money on the fact that it is accurate to a fairly small margin of error and the really important point is that so long as you keep to the same definitions and standard description over time it will illustrate trends and it will illustrate the speed with which those trends are unfolding and that is the important point, not whether you have it right to the nearest 10 or 20 households as compared to a few hundred.
133. When you say small percentage, is that five, ten, twenty, thirty? What are you working on?
(Mr Meacher) I do not know. I do not know whether DTI who are going to carry out this work can indicate how close we can get.
134. How do you measure failure or success unless you know what the percentage rate is?
(Mr Meacher) Plus or minus three or five per cent, something like that.
(Mr Potter) I have no idea. The bulk of the DTI team who are qualified statisticians are not here today, so I cannot give an answer. In so far as statistical measures give you varying degrees of confidence in a result, then we can be confident of the result. What we cannot be confident of is that we will capture every single household. Having said that, the mechanisms which will be developed over the next decade or so to find all the individual households in fuel poverty, which is a very difficult problem when most of them are in the private sector, will, I hope, actually achieve that objective of finding each and every one. But we cannot guarantee it today.
135. I want to put down one caveat. Some of us do not share your confidence in the effectiveness of Government statistical services across the board. In this case we might be proven right or wrong, but to say that something bears the stamp of the Government Statistical Service does not necessarily mean that what comes out will be any better or any worse than what we have seen from elsewhere. I put that caveat down to you, that your apparently touching faith
(Mr Potter) Not being a member of the Government Statistical Service myself, I can take that with equanimity.
136. As they are not with us, could we get a note with that information?
(Mr Meacher) I certainly can do that. If we are talking about a shift from four million let us say, down to around zero over the eight- to ten-year period, I do not think it matters whether you are accurate to 100 or 200; I really do not. It is achieving that target and seeing whether you are making significant and sufficient movement which really matters. I do have to say it was a bit of a slur on the Government Statistical Service. I know that we live in an era of spin and massaging and all of this but I do believeand I am not a member of the Government Statistical Service either so I can certainly say from outsideit is a rigorously and intellectually honest body which is completely beyond the reach of Ministers. If that gives it credibility, I think it deserves it.
137. We are not going to sword fence on this issue. Suffice it to say that past reports of this Committee have caused great discomfort in Victoria Street because we have pointed out how figures have been quite ruthlessly manipulated in ministerial offices in ways which sometimes bear little relation to the sterling work which is done by the Statistical Service. It may be that your Department is completely free from such charges and I should be happy that they are.
(Mr Meacher) I am innocent of this offence.
138. There are other Departments where people with dirty hands and fingerprints are seen from time to time.
(Mr Meacher) I could not comment.
139. May I come back to this decency thing? What I was talking about is that some of the evidence we received is about SAPs. I know it is not your Department specifically, but there is a suggestion that the ambitions for SAP ratings are a bit too modest to have any real impact. If we are talking about moving from the 40s to the 50s in SAP ratings, if you are really going to help people in fuel poverty you should be a bit more ambitious than that and try to get it up to the 70s. Would you like to comment on that?
(Mr Meacher) SAP ratings are of course a measure of the energy efficiency of the building and there is no doubt that there are very strong grounds for trying to improve it throughout the housing stock. If you are looking to end fuel poverty, that is an issue about the relationship between income and what is required to keep warm within the building. The SAP rating is related to the measures which are necessary, for example gas central heating, cavity wall insulation, possibly a shift to a cheaper energy supplier and a variety of other measures which will improve the SAP rating. To concentrate on a specific figure as necessary, does not take account of considerable variations which exist in different dwellings. It is useful, but I would not see it as an integral part of this exercise.
1 Note by witness: The English House Condition Survey is to be implemented on an annual basis from 2002. Previously it was carried out at five yearly intervals. This will enable the Government to meet its commitment, made in the UK Fuel Poverty Strategy of November 2001, to report annually on fuel poverty. Back