Select Committee on Trade and Industry Sixth Report


Problems of definition
Measuring the reduction of fuel poverty
(a)We agree that the Government has taken an important step in addressing the issue of fuel poverty and applaud the commitments it has made. But we cannot agree that the aim of reducing fuel poverty is the only important issue: what if, at the end of the decade, we discover that fuel poverty has been ended but at a cost to the public purse of ten times more than was actually necessary? Or if fuel poverty could have been ended, but was not for lack of relatively small amounts of funding? If it is impossible to measure with any accuracy the problem, or the degree to which solutions work, how can we know not only whether, ultimately, the Government has achieved its objective but also whether it has done so in a cost-effective manner? (paragraph 7).
Hard to reach groups
(b)Post 2010 the plight of [the fuel poor who are not in receipt of benefit], for the most part labelled "non-vulnerable", will have to be faced squarely. The limited evidence we received on this area suggests that identifying and helping these people may prove a far more intractable problem than dealing with fuel poverty among many of the more obviously vulnerable sections of society (paragraph 8).
Fuel cost
Extending the gas network
(c)We recommend the Treasury as soon as possible to provide the funding for pilot schemes to establish the feasibility of extending the gas network: further delays will significantly lessen the impact any such pilots could be hoped to have had by 2010 (paragraph 11).
Household income
'Receipt of benefits' criterion
(d)It is clear that putting one extra barrier in the way of assistance for those suffering from fuel poverty — that of insisting that no one can take advantage of energy efficiency measures until they are actually in receipt of a benefit rather than merely eligible for one — is not helping (paragraph 13).
Particularly vulnerable groups
(e)An increase in the level of benefits for particularly vulnerable groups is another obvious way of tackling fuel poverty. The Winter Fuel Payment has been of benefit to pensioners. We urge the Government to look at extending this to other vulnerable groups. For example, there is a powerful case for extending the winter fuel payment to disabled people whose condition requires extra spending on heating (paragraphs 9 and 14).
Prepayment meters
(f)Despite the cautious start to schemes testing substitutes for prepayment meters, we urge companies to continue to look at and promote other methods of payment for poorer households (paragraph 16).
Avoidance of debt
(g)We welcome the constructive thinking that is taking place on ways of preventing the less well-off from getting into debt in relation to fuel bills. The idea of a social obligation on energy companies seems to us to be worth pursuing. However, this will need to be thought through carefully, not least in the light of some of the problems with cross-subsidy and competition law that we discuss later (paragraph 17).
Energy efficiency
(h)At present, it is not clear how quickly the Government is progressing towards meeting its target to reduce fuel poverty, nor whether the means it is using to do so are the most effective and economical. We are also concerned that some uncontrollable but likely developments — such as rising fuel prices — could halt progress entirely, or even result in the number of fuel poor households increasing. We therefore believe that more attention should be focussed on the area which would help solve the problem once and for all: improving the energy efficiency of homes (paragraph 34).
Energy efficiency targets
(i)A target of a 30 per cent improvement in domestic energy efficiency was adopted by the then Government before 1997 although there was apparently little indication as to how this target was to be achieved. This experience should not, however, discredit the use of structured and achievable targets as a means of concentrating minds across Government on an issue of this importance (paragraph 31).
Problems of the private rented sector
(j)Government should consider whether mechanisms such as requiring a simple undertaking by both landlord and tenant to renew the tenancy in the improved property for, say a further 12 months, with only standard market rent rises in that time, would ensure that the energy efficiency improvements offered sufficient benefits to those for whom they are intended (paragraph 22).
Energy efficiency measures for 'difficult' properties
(k)Technological advances, for example those aimed at improving properties with solid walls, might appear to offer limited benefit to relatively few inhabitants at high financial and other cost, but if they prove the only option for those sorts of properties then the nettle must be grasped (paragraph 25).
Assessing industry-led efficiency schemes
(l)We consider that industry-led initiatives can contribute to lifting households out of fuel poverty. However, it is clear that they are not sufficient in themselves to have a major impact; and that the proliferation of schemes leads to confusion and inefficiency. We are also concerned by the lack of progress in making detailed assessments of their comparative strengths and weaknesses, and in spreading best practice. We look to Ofgem to carry this work forward as a priority (paragraph 30).
Difficulties in expanding industry-led schemes
(m)At present, the funding of energy efficiency schemes comes from both the public and the private sector, but we note the fears that in the private sector regulations relating to competition may be inhibiting the efforts against fuel poverty. Examples of this effect are the regulations on cross-subsidy relating to extension of the gas network or those requiring companies to charge individual PPM customers the full administrative cost relating to that payment method. We agree with Energywatch when they say:

      "we cannot say on the one hand, 'Let's take people out of fuel poverty who cannot [afford] to pay for their fuel' and, on the other hand, say, 'Never in any circumstances should there be any cross-subsidy' ... we have to decide what is our prime objective. I think an element of cross-subsidy is perfectly justified." (Paragraph 34).

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