Examination of Witnesses (Questions 180-194)
MR BRIAN WILSON, MP, RT HON MICHAEL MEACHER, MP, MR ROB POTTER AND MR JEREMY EPPEL
THURSDAY 23 MAY 2002
180. With respect, I think it is a matter for the Government as a whole. I would argue that it is an important issue, as many others have done, including Ann Robinson, the Chair of Energywatch, when she gave evidence. When asked whether she thought it was a good idea, she said that if she were in a slightly different position not only would she support the campaign, she would be happy to lead it. She believes that this is an important issue and you will be aware of her experience in relation to benefits in a previous incarnation. May I just make the point that the fuel poverty strategy is the Government's strategy? The Government have identified disabled people as a particularly vulnerable group and have rightly said that one of the reasons that some people are no longer in fuel poverty is because benefits have been increased. Given that the incidence of fuel poverty, certainly amongst severely disabled people, those who have difficulty moving or have mobility problems and serious care problems, is as important as amongst those over 60, would it not be possible for the Government to consider a winter fuel payment for disabled people who, for example, qualify for the higher and middle rate care components, the top rate mobility components, of that kind which would specifically target disabled people whom we all know incur extra costs as a direct result of their disability?
(Mr Wilson) You make a perfectly good point and you are obviously very active in this campaign across Government and it is a legitimate point to make in this context. Many of the schemes which we are discussing have a disadvantage that they are not specific to fuel poor. If you have a catch-all scheme for every category of people who are perceived to have disadvantages of one kind or another, including the fuel poor, then the cost of these schemes cumulatively is enormous. I should certainly be very interested to see the Fuel Poverty Advisory Group focusing in on groups of people who are fuel disadvantaged and who fall within these wider categories which we should do more to target. The way to pursue a particular issue of fuel poverty is not to focus on a huge group like the disabled, which clearly includes many people who are not in fuel poverty.
(Mr Meacher) I agree that it does need to be focused. There are the care and mobility components of the Disabled Living Allowance which are broad indicators of the extra costs the disabled person has. It is for consideration whether that should include heating, laundry, special diets. One can think of other factors. The issue is whether the cost of that is sufficiently well targeted to justify it as against the opportunity cost of using the money in other ways.
Mr Berry: I think everyone agrees with that statement. If this might mean that the Fuel Poverty Advisory Group considers it as part of its ongoing discussion, then I am happy I have raised the question.
181. I think all you are saying is that all of the inconsistencies you have identified could be identified in relation to the elderly who have been targeted as a vulnerable group who are in receipt of a one-off payment of a substantial character. The cynic might say that is to subsidise their pension and it has nothing to do with the fuel poverty, but I do not think any of us objects to the elderly getting it. We just think that if it is an intellectually dodgy case, it should be applied to other people who are just as deserving. We do not necessary ask you to comment on that.
(Mr Meacher) You make a very fair and diplomatic point.
Chairman: A pregnant paragraph is available to us.
182. I should like to ask a few questions concerning Government targets. I should like to start with a letter of 13 May which is on public record from Ron Bailey, the Partnership Organiser of the HECA Partnership to Jonathan Sayeed.
(Mr Meacher) I think Mr Djanogly is coming onto an issue which is specific to me and I should be very pleased to deal with it. I am probably past the point when I ought to leave so could I ask for any questions to be directed at me to be delivered now so that I can be released reasonably quickly.
183. Effectively they are maintaining their belief that the 30 per cent target, which was recently debated, is correct and they make the point that in Opposition Labour supported this seven times. Could you just explain why the Labour Party is no longer supporting this?
(Mr Meacher) There has been more misinformation and black propaganda on this issue than any recent issue I can think of. Almost everything which has been put out is actually the opposite of the truth. Point one: there has never been a Government commitment, either by the previous Government before 1997 or by our Government since, to a 30 per cent target. What is the case is that the Maddock Home Energy Conservation Bill was passed in 1995 and as a result of it the Conservative Government the next year issued guidance which referred to best endeavours to reach a 30 per cent target, but provided no money to achieve it, as guidance to authorities in drawing up their reports to improve energy efficiency in their housing stock. I entirely accept that a 30 per cent improvement in energy efficiency is desirable. It is quite another thing to require it. The previous Conservative Government did not do so. We shall not do so until we have the resources to back it. When we do have those resources, then if this Bill goes through as it has been modified, when the Secretary of State does set targets they will be targets which we can back with the provision of money.
184. What does "When we do have those resources" mean? Does it mean if the economy does better or if the Chancellor gives you more?
(Mr Meacher) What it means is that Government plans its legislation on the basis of very careful preparation not only of the legislative requirements but of the spending streams which are required to implement it. That is done on the three-year spending reviews. This is a private Member's Bill which is seeking in effect to direct Government expenditure, for which there was of course no provision in Spending Review 2000 and for which there is at the present time no commitment in Spending Review 2002 because this Bill has not actually gone through the House.
185. Will you be pushing for that to be put in place at the next review?
(Mr Meacher) I am keen to see an acceleration of the pace of improvement in energy efficiency in local authority and social landlord housing stock. I am very keen to see that. It is folly to think that a Private Member's Bill can lay down a statutory requirement without indicating where the money to enforce it is going to come from. This is an inter-sessional Bill between spending rounds. I shall be looking to provide resources where it is possible. I am keen to do this but I do not want to give any pretence of suggesting that one can just pass a Bill setting a target and it will simply happen. That is not the way Government works or has ever worked.
186. Even using your existing poverty commitment, which is to end fuel poverty for vulnerable households by 2010, and we have had discussions as to what that might mean, are you saying that the Government is going to provide the money for that to happen?
(Mr Meacher) This Bill, which I welcome, and it is still awaiting the conclusion of its report stage on 19 July, is welcome asI do not like this phrasea residual variable in this mosaic. We have the Home Energy Efficiency Scheme, we have the Energy Efficiency Commitment, we have the upgrading of local authority stock and there are other additional measures as well. The issue is how much is going to be achieved by the combination of all those other measures in order to meet the target in 2010 and how much extra and beyond, incremental, additional to those major schemes is necessary to meet the target. I do not know. Estimates were given in the course of the Bill proceedings that it might be as little as £29 million. My belief is that it is somewhere between £29 million and £1 billion from the estimates which have been presented to me. Probably the most likely figure is £200 to £300 million, but who can say how much will have been achieved in eight years' time by all of these schemes in combination and how much remains to be done. It is that amount which needs to be covered by this Bill. We do not know what it is and I do not have the income at the moment to achieve it. Hopefully, as we get nearer to 2010, we may have those extra resources.
187. One of the concerns I have, particularly after hearing the evidence this morning, is that there are more unknown factors than known factors. For instance, the cost of enabling people in remote rural areas to have reasonably priced electricity. Is there a commitment in the Government to resolve problems like that? We heard the problems but we did not hear how they were going to be resolved.
(Mr Meacher) We have committed ourselves. The two Departments, the two Ministers have absolutely made a commitment to end fuel poverty by 2010 for vulnerable households, those who are elderly, those who are disabled or long-term sick, those who are on low incomes with families. That accounts for about 85 per cent of all the fuel poor. That is a commitment which we have clearly made. That is the important point. How we achieve it by this combination of different schemes is a matter which can be left to us. It is our commitment to achieve it which is fairly important.
188. Will you also be setting some kind of measure by which at the time of the next General Election the British people can consider whether the Government have started to deliver on its promise?
(Mr Meacher) I am sure the Opposition would like to have a measure, an index, by which they could hold us to account and that is perfectly proper. As we have said, we will be providing annual data on housing stock, we shall in our review of HEES be providing the most detailed available evidence on both income series, we are proposing a domestic energy efficiency strategy which we shall be publishing at the end of this year or early next year. All of this data is going to be made available. There will be no lack of data to check whether we are on target. The important thing is that the Government have committed themselves to a target: ending fuel poverty. No previous Government, including the last Conservative Government did actually commit to a 30 per cent improvement in energy efficiency.
189. One last question which I think you would want to help us address. Is there not at the heart of this issue something of a paradox or a contradiction for you as the Environment Minister that there could be tensions between the Government's environmental goals which could increase the price of energy and at the same time you have the issue of ending fuel poverty. You make it more difficult to achieve that.
(Mr Meacher) Yes.
190. Does this keep you awake at night?
(Mr Meacher) It does not keep me awake at night, but you are absolutely right, you very skilfully put your finger on a significant point. I have responsibilities in terms of ending fuel poverty, I also have responsibilities in terms of dealing with climate change. The carbon valuation of emissions in the domestic sector is a matter of concern. The Government are dealing with improvements in energy efficiency in industry through the climate change levy and the agreements which have been made under it with 45 industry sectors. That is all in hand and clearly beginning to work on the evidence that I have seen. There is, I agree, a gap in terms of the domestic sector. If we were to find means to try to reduce those emissions, it could cut across our other goal, the social goal, of trying to reduce fuel poverty. I agree that there is an uneasy tension there and we have to find a way of trying to reconcile that as best we can.
191. We went to Holland a couple of years ago and we found that there they had the fiscal option, but we do not have that because we have badly insulated houses and a lot of very poor people who have been disproportionately affected by it. We have to box rather more cleverly than other people have to do.
(Mr Meacher) You are quite right that there is a tension there.
192. I realise there is probably a tension in your Private Office as well because of the length of time you have stayed. We are very grateful to you for the time you have taken and we look forward to receiving the notes which will help to fill in some of the understandable gaps we have had in the evidence so far this morning. Thank you very much. We have a couple more points for Mr Wilson. We had evidence from Scottish & Southern Energy saying that current partnership schemes ". . . require high level government support and detailed monitoring". Energywatch said that it ". . . does not believe that suppliers will invest sufficiently in tackling fuel poverty without firm direction from the Government and the Regulator". You are the Department which in some ways has responsibility for overseeing energy companies in conjunction with the regulatory process. We talk about joined-up Government, but it is a bit of a clicheĞ in some ways. Are you happy that you are going to be able to get the degree of co-operation you require from the private companies which are engaged in some of the partnership schemes?
(Mr Wilson) Yes, I detect a great willingness on the part of the companies to be involved in this whole agenda. I have to put my hands up on this one and say that an awful lot more work goes on in this field now than did in the pre-privatisation days and some of the companies have good schemes. We are evaluating these and hopefully we can get some consensus on best practice and companies which can look at what others are doing and we hold regular meetings in order to discuss progress on these. I am not generally critical of the companies on this, but working together we can do better. Part of the reason that the companies are co-operative on this is that there is a very clear steer from Government that this is a high priority for us. You mention Ofgem and there are not only environmental and social tensions within this area of policy, but of course there is also the drive for lower prices and how that imposes itself in that mix. There is a genuine effort to have joined-up government and to have consistency of approach but if you are going to achieve that it has to be within the context of the three legs of that stool: cheap energy but also the environmental responsibilities and the social responsibilities.
193. One of the things which comes out of the consultation document which you have produced, indeed it was in the PIU report and probably in our own report as well as an undercurrent, was that we are getting near the end of the age of cheap energy for a number of reasons. This will surely make your job in eliminating fuel poverty that much more difficult?
(Mr Wilson) I certainly do not think that the main instrument in getting rid of fuel poverty is to drive down the price, particularly of electricity. There is clear evidence from NETA that whilst the wholesale price of electricity has continued to plummet, the actual cost of domestic electricity has shown nothing like that reduction. The idea that this should be the main instrument of policy, which I do not think anyone here would put forward, is wrong. If we are going to get rid of fuel poverty, then the two most effective instruments would be by improving housing standards and by increasing people's incomes. That is the way to keep people out of both poverty and fuel poverty. In the interim period clearly there has to be a balance between our other objectives, particularly environmental ones and the fact that somebody has to pay for this. That is the balance we are trying to maintain. An instrument like the renewables obligation clearly has an implication for the cost of energy, but at a level at which society is prepared to accept. If you doubled or trebled that in a short space of time, then society would be thinking twice about it and that would be counterproductive in environmental terms as well as in social terms.
194. We were talking about the extension of the gas network. You suggested that the pilot schemes you had hoped to set in place were not going to be coming forward as a consequence of lack of funding. You mentioned the date 2004. Is that to suggest that in the next round of public expenditure negotiations, resources might become available in that year? I was not very clear what the significance of the year 2004 was.
(Mr Wilson) We did not obtain funding under the capital modernisation scheme for 2002-03 and 2004-05. So obviously other areas of funding are being explored at present to take forward the pilot schemes. A combination of trying to push forward the pilot schemes and also trying to identify a work programme for a wider scheme and the ways of funding it is not going to be done overnight. Hopefully if we can make progress in the pilots then we can be looking at a wider programme by 2004. The first thing is to make progress on funding the pilots.
Chairman: Thank you very much. You and I both travel the same routes and we know the difficulties. We appreciate the trouble you have taken to get here this morning and the extra time you have given us. Thank you very much.