Members present:

Mr Martin O'Neill, in the Chair
Mr Roger Berry
Richard Burden
Mr Jonathan Djanogly
Mr Lindsay Hoyle
Dr Ashok Kumar
Sir Robert Smith


Memorandum submitted by Department of Trade and Industry

and Department for Environment, Food and Rural Affairs

Examination of Witnesses

MR BRIAN WILSON, a Member of the House, Minister of State for Industry, Energy and the Environment, Department of Trade and Industry (DTI), RT HON MICHAEL MEACHER, a Member of the House, Minister of State (Environment), Department for Environment, Food and Rural Affairs (DEFRA), MR ROB POTTER, Head of Fuel Poverty Policy, Energy Policy Directorate, DTI and MR JEREMY EPPEL, Head of Sustainable Energy Policy Division, DEFRA, examined.


  1. 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.
  2. (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.

  3. 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 -
  4. (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.

  5. Provided that you can publish it in a form which is accessible. How long does it take to process the data?
  6. (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.

  7. 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?
  8. (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 and - this is really important - that 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 income - these are still low incomes - who 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.

    Roger Berry

  9. You said meeting the fuel poverty target by either definition.
  10. (Mr Meacher) Yes.

  11. Did you mean one or the other, or did you mean both?
  12. (Mr Meacher) I meant both.

  13. Thank you. Just for clarification. I thought so, but it may have been misinterpreted. By both.
  14. (Mr Meacher) Yes.


  15. 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?
  16. (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 House - stalled is perhaps the best expression at the moment - and 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.

    Mr Djanogly

  17. 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?
  18. (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.

    Mr Hoyle

  19. 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?
  20. (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.

  21. 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?
  22. (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.

  23. When you say small percentage, is that five, ten, twenty, thirty? What are you working on?
  24. (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.

  25. How do measure failure or success unless you know what the percentage rate is?
  26. (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.


  27. 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 -
  28. (Mr Potter) Not being a member of the Government Statistical Service myself, I can take that with equanimity.

    Mr Hoyle

  29. As they are not with us, could we get a note with that information?
  30. (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 believe - and I am not a member of the Government Statistical Service either so I can certainly say from outside - it 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.


  31. 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.
  32. (Mr Meacher) I am innocent of this offence.

  33. There are other Departments where there are people with dirty hands and fingerprints are seen from time to time.
  34. (Mr Meacher) I could not comment.

  35. 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?
  36. (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.

  37. The point is that the higher the figure, the more people are going to benefit from it.
  38. (Mr Meacher) Of course.

  39. The point I was making was that at around 55 or so it is still rather modest as far as the ambitions are concerned and I just wanted to register the point that we have evidence which suggested that perhaps a greater degree of ambition on the part of Government might not be a bad thing here.
  40. (Mr Meacher) The average SAP ratings of the housing stock in general are relatively low, much lower for example than Sweden which has much colder winters and much more self-contained and warmer dwellings. That is undoubtedly true. It does not just apply to the fuel poor, although in general they live in the draughtiest least well-insulated dwellings.

    Mr Djanogly

  41. I was speaking to a builder quite recently and he told me that the main difference between this country and other countries is that the building regulations here work in such a way that homes are meant to last 1,000 years, whereas on the continent the regulations are such that homes are built to last for 30 or 40 or 50 years. The point is that whatever the figures are, in this country there is a presumption that homes are meant to last and that is being put in place at the expense of things like proper insulation which is concentrated on in other countries where you have homes which are built for shorter periods of time but which are made to work better. Would you like to comment on that?
  42. (Mr Meacher) The only building I am aware of which has lasted 1,000 years in the UK is Westminster Hall or Westminster Abbey. I am being facetious. I take your general point. I am rather surprised to hear that houses are constructed for a shorter lifetime abroad. I should be very surprised it that were the case. The building regulations I would have expected in countries like Sweden are actually tighter and more stringent and the lifespan of most buildings is actually in general longer abroad than it is here. One of our great problems is that far too many of our dwellings, not just 1960s dwellings, become below the level of adequate for human habitation within 40 or 50 years. A hundred-year lifespan is unusual in this country, or at least unusual in a building which has proper conditions for satisfactory human living.

    (Mr Potter) Most of our Victoria housing stock was built with a speculative life of 30 years for renting purposes and most of it now is inhabited by the middle classes who love those houses dearly and will never let them perish but in energy efficiency terms they are awful and cannot ever be made good.

    (Mr Meacher) You do raise an important point of SAP ratings and we have touched on building regulations. They are an issue which will certainly be covered in the domestic energy efficiency strategy which we are proposing to publish and the Energy White Paper which we are preparing for the end of the year, both for the fuel poor and for others. These are going to be looked at systematically.

    Chairman: That is very helpful. I think what you are really saying is that further attention will be paid to this issue and we appreciate that. We look forward to it.

    Richard Burden

  43. I should like to move on to the issue of targeting. I am not going to ask you for statistical answers on this. I think everyone acknowledges that targeting different groups accurately is really difficult. There is still the problem that you have people who are fuel poor who do not get assistance and they end up with schemes which may well help those who are not in fuel poverty. A target group which is often talked about, which the current schemes are not reaching, is those who just come above the benefit level, but are actually then too poor to make the financial contribution necessary for insulation or home improvement and so on. Some people have said that things like the Home Energy Efficiency Scheme (HEES) and the Energy Efficiency Commitment (EEC) not only do not address that, but can make it worse by making what amount to unreasonable financial demands on people in those categories. How would you respond to that?
  44. (Mr Meacher) Wherever you draw the line there will always be someone on the wrong side of it. With any income related benefits there will always be people who are deserving or who regard themselves as deserving but are just excluded. Having said that, I do think the targeting is pretty good. The Home Energy Efficiency Scheme is concentrated on those householders who are fuel poor, whose income is dependent on benefit. I take your point of course that there will be people - and this is true - who would be entitled to HEES if they claimed a benefit but for whatever reason have failed to do so. That is a problem. There is the Energy Efficiency Commitment which is again concentrated on the poorest. Fifty per cent of the energy savings have to go to those on lower incomes. The priority low income groups gain about 15.50 a year compared to the average which is 11. They are reasonably well concentrated but I agree that there will always be some people at the margin who are excluded. There are very badly disabled people living in households where the householder then believes they should be entitled to HEES but because it is aimed at householders and the householder does not qualify, they cannot benefit from the scheme, although they can get assistance from the Energy Saving Trust Helpline or from the Energy Efficiency Advice Centres. There are other sources of assisting these people. It is not possible to have a system which is totally foolproof against the exclusion of others, but even if excluded there are other ways by which they can be helped.

  45. I accept your point that you cannot design a scheme which is foolproof. Maybe one of the tricks is to design schemes which either mesh together or are sufficiently flexible that when problems come to light that were not necessarily anticipated or were not assessed properly or accurately at the time the scheme was designed it is sufficiently flexible to cope with that. Do you feel that either HEES or EEC is sufficiently flexible?
  46. (Mr Meacher) They are quite precise. This is not a scheme where the criteria for eligibility are loose. It would be impossible to run a scheme on that basis. They are very clear and the criteria are perfectly sharp and precise, but they have to be. What I am saying is that I think the number of people who are excluded on those definitions is really small to tiny and even for them, I repeat, there are other ways by which they can be assisted. You do raise in particular the question of people having to make their own contribution. The grant maxima for the Home Energy Efficiency Scheme were raised in the early part of this year to 1,500 for those below 60 and 2,500 for those above 60. The only reason they would be asked to make a contribution would be if the requirements of the house were so great that the total cost exceeded 2,500. Two and a half thousand pounds is sufficient for the installation of cavity wall insulation and a gas central heating system. If more were still required, then they would be asked to make a contribution. It is not a condition of the scheme that anyone should make a contribution at all.

    (Mr Eppel) On the issue of fuel poor or potential fuel poor who do not necessarily fall within the scope of one of the two main schemes the Minister has mentioned, this is one of a number of issues that the new Fuel Poverty Advisory Group is looking at and will be advising the Government on. It is exactly for that sort of reason, to make sure we can identify whether there are any gaps in programmes or ways in which their co-ordination or coverage could be improved, that we have this group. You have already heard from its Chairman, Peter Lehmann at an earlier stage.

    (Mr Meacher) The real problem is those with solid walls, which are hard to heat and those without loft space, those outside the gas network. Those are problem areas and indeed we set up the Fuel Poverty Advisory Group precisely to advise us how those gaps in provision should most cost effectively and best be met.

  47. Do we know, you may have given us some information already, when the Advisory Group may be coming forward with proposals for changes?
  48. (Mr Eppel) They are going to report annually. They have had two meetings already. They meet about every two months. They have some work to do, because they have quite a programme of areas they are interested in before they put anything firmly to Government. So it will be a little while yet, but they are already showing that they have quite a valuable contribution to make.

    (Mr Potter) We are going to place on the DTI and DEFRA websites a record of the discussions at their meetings. The first two have been drafted and will be cleared with the Chairman when he gets back from his cycling holiday in France so that people can see what the Group have been talking about. We shall not necessarily be publishing papers or the actual detail of discussion because that might inhibit that discussion, but we shall regularly be putting out information about what the group has been discussing.


  49. We did take evidence from them and they were a pretty formidable lot. You may well have made a rod for your own backs by appointing some of these people.
  50. (Mr Meacher) We think it is really going to assist us. It is a high quality advisory group and we think they will come up with very useful suggestions which we will take very seriously. May I make one further point to Mr Burden on the Warm Zones initiative which is different from HEES which is dependent on referral from other sources in order to find those who may be fuel poor? In the case of Warm Zones, this is an attempt over a three-year period and five pilots to find everyone who is fuel poor in those areas. That is another related initiative to get round this problem of people being excluded.

    Richard Burden

  51. May I ask you one specific thing? You may not have the answer immediately to hand but perhaps you can let us know and just move on to a couple of more general points. On the specifics, have you had any problems or are you aware of any problems in terms of HEES with landlord co-operation? Let me give you an example on that? The actual tenant qualifies under all the criteria of HEES, but the landlord is then the one who gets in the way of that person getting the grant. Why? Maybe because they do not want to commit themselves to having another tenant of that category in the future. That could effectively get in the way of the tenant ever getting assistance. Has that problem come up?
  52. (Mr Meacher) Yes, I am aware of this problem. If you ask about problems with HEES I would say instantly and hold my hand up: shortage of gas engineers for installation. We are trying to deal with that. Eaga and Transco have taken on 400 and there are training programmes and there is a national shortage which is sizeable given the way the scheme is taking off and the level of demand which is growing all the time. On the particular problem you raise, again one of the requirements, which are perfectly reasonable requirements, is that as a result of this improvement in the quality of the housing there shall be no rent increase for a period of time. The landlord has to agree that and the problem is that some landlords, for whatever perverse or other reason, are not willing to do so. On that basis the work cannot proceed. I do not know how we get round this. If we give way on that and the necessary improvements are made and then there is a significant increase in rent, for which the landlord has provided no funding whatsoever, that is unfair. So we are caught there. We cannot force the landlord to agree to this. On the other hand I think it would be wrong to allow him to impose a rent increase for which he has made no contribution.

  53. I would agree with that but it may be worthwhile just working out what the extent of that problem is because if people are being stopped who would otherwise benefit because of landlord non co-operation, albeit unreasonable non co-operation, that could be a quite significant problem for the scheme.
  54. (Mr Meacher) I am sure we could give you a rough indication of the numbers. I do not think it is large, but it is not negligible either.

  55. There are those who say that a number of schemes, EEC being one, actually would be ultimately a lot more effective if you targeted principally the condition of properties rather than the individuals. How would you respond to that?
  56. (Mr Meacher) The EEC does target properties; it does very specifically target properties. What it is saying to the electricity and gas suppliers is that in order to meet their energy efficiency obligation, which is 62 terawatt hours, they are incentivised to provide improvements for customers. It is very specifically targeted on properties.

  57. The basis of it is providing a service to all kinds of customers. Would it not in general terms be better to focus attention on raising the condition of properties and making that the target, albeit, in doing so, perhaps helping individuals and families who are not strictly fuel poor? The impact of that might ultimately be greater than focusing on targeting particular sorts of individuals.
  58. (Mr Meacher) I hope we are agreed that it is targeted on properties. I think what you are saying is that it could be more targeted on the properties of low income groups. At least I thought that was what you were saying. The fact is that already 50 per cent of the energy benefits and 60 per cent of the programme costs of the Energy Efficiency Commitment are focused on low income consumers. We estimate the average benefit to a consumer to be about 11 a year by 2005 and in the case of low income consumers it is about 15.50. It is oriented to give disproportionate benefit to low income groups. One could of course take that further. We think on balance that is about right.

  59. In terms of the different schemes which exist, do you think there is too much overlap? It is a problem for an individual family, individual tenant, individual householder, trying to find their way round the schemes. Maybe the existence of a number of schemes might do what we earlier said they might do: if one does not work another one may kick in and work. Can the overlap not lead to duplication, lead to inefficiency? At the end of the day if you brought things together in a more unified whole, you might actually achieve this.
  60. (Mr Meacher) They all have interrelated objectives and I must say my mind boggles at the idea of having a single monolithic scheme which is designed to deal with this problem. There are many angles, many dimensions to this issue because it is the relationship between income and property that we are talking about. The Home Energy Efficiency Scheme is specifically focused on those who are receiving income-related benefits. It is specifically aimed at poor people. The Energy Efficiency Commitment is geared to assist to a greater degree than average those on low incomes but not wholly so. There is the upgrading of local authority stock to decent standards and much of that is going to benefit people on low incomes. If we did concentrate entirely on low incomes I am sure your next question would be: what about the ten per cent of people who are in not much better accommodation and get nothing? The key to this is local engagement and partnership between different schemes.

  61. I do not think it was anyone arguing for one scheme, it was more things meshing together. NEA have said that there is an element of "ad hocery" about the whole thing, that actually if things do not link together into a national strategy, they can end up cutting across each other, duplicating each other and so on. Do you think that is a problem? Can anything be done about that?
  62. (Mr Meacher) I generally do not believe it is. It certainly has not been raised with me that we are falling over each other in our determination to help this particular group and its over-concentration on a limited number of households and others being excluded. That has not been raised with me is all I can say. The Fuel Poverty Advisory Group or indeed Eaga or Transco, may perhaps come up with a different view. It has not been raised so far and it is not obvious when you look at the structuring of the scheme why that should happen.

  63. In paragraph 29 of your memorandum you mention a survey of energy companies. Actually I am going to break my own rules here and ask you for statistics. Any idea when that may be available?
  64. (Mr Meacher) It reads, "The DTI has recently introduced a survey of energy companies aimed at identifying the impact of such schemes in tackling fuel poverty".

    (Mr Potter) We have started a monitoring survey of company initiatives, but we have not yet received returns from all the companies. We shall be doing some analysis of that and that analysis will appear in the annual report which should be out around the turn of the year.

    Mr Djanogly

  65. In 1999 the Government did their review of HEES and came up with a whole list of problems and tried to address that in 2000. One of those was that only 17 per cent of HEES grants were going to the most needy and 40 per cent were going to the non fuel poor households. Are you able to give us an update on how that has changed following the 2000 changes?
  66. (Mr Meacher) The review was indeed designed to concentrate more on those in real fuel poverty and the criteria which now apply must mean there has been quite a turnround compared with those figures you quote. I cannot give you immediately what the latest figures are. We shall have to drop you a note on that. It is very different from that picture now. The very fact that it is concentrated exclusively on those on income related benefits whilst the energy efficiency commitment does include, for example, those on working families' tax credits, those on disabled persons' tax credits as well. That is not the case with HEES and it is very exclusively concentrated. I accept that there will be some who are eligible for HEES who are not in the fuel poor definition but that will be a very tiny number.

  67. When you give me the figures I should be grateful if they could be done on a disposable and total income basis.
  68. (Mr Meacher) We can give them on the two bases I am referring to. You keep referring to different alternatives. We shall give it on all the available data we have, yes.

    Sir Robert Smith

  69. The vast majority of the written evidence has suggested to us that improving Britain's housing stock is the most rational and sustainable approach to tackling fuel poverty, yet probably much of the success to date has come from improved benefits and reducing prices of fuel. We are wondering what sort of accurate up-to-date information about the state of the housing stock you have at the moment.
  70. (Mr Meacher) You are right that the improvement in the situation of fuel poverty has to quite a large degree resulted from the fall in fuel prices. Our best evidence at 2000 is that there were four million fuel poor households in the UK, but perhaps 2.8 million in England. There have been some income improvements, notably winter fuel payments for pensioners since then and that may have reduced to below 2.5 million fuel poor households in England by now and the number of vulnerable households may be no more than two million. You are right that half of the 1.5 million reduction in fuel poverty 1996-2000 was due to falling fuel prices. It has been quite dramatic. Electricity was at its cheapest in real terms since 1970, gas cheaper in real terms than at any year between 1970 and 1999. That is quite dramatic. That is not a bad thing, it is a thoroughly good thing, but it does mean that the impact therefore in terms of improving the housing stock has been limited. HEES was launched in June 2000, with a budget of 600 million for the period to 2004, with a target to assist 800,000 households by that date. We are on track to achieve that. Three hundred and fifty thousand households have been assisted and the rate of installation of central heating systems which started slowly, I recognise, has now trebled. By December 2001 3,500 new central heating systems were installed each month in households over 60. We are beginning to concentrate more on that side now.

  71. The question was more about the size of the problem. Do you have up-to-date information on the state of the housing stock which is having to be tackled?
  72. (Mr Potter) We do not know with any certainty. The base data is the 1996 English House Condition Survey. There was a small follow-up survey in 1998 but the last comprehensive survey was 1996. Effectively the reductions in fuel poverty since then have been based on income and fuel price modelling against that 1996 base line. What that means, as the Minister has said, is that new HEES has been going for a couple of years, local authority housing expenditure has ramped up quite a bit, but we do not have a statistical measure yet of the impact of that. The figures the Minister has given arguably overstate the degree of fuel poverty since it does not effectively allow for energy efficiency improvement in the housing stock. That will come from the 2001 House Condition Survey.

  73. Do you have some kind of global figure of the cost it would take to raise the stock to a sufficient level of energy efficiency to lift the average household currently in fuel poverty out of it? Do you have any idea?
  74. (Mr Meacher) Do you mean the cost of improving the quality of housing stock for the fuel poor or nationally across the country.

  75. For the fuel poor, although I suppose the two figures would be handy.
  76. (Mr Meacher) I do not think we do. One of the problems is extending access for those who currently live outside the gas network and one rule of thumb is that bringing 100,000 such households within the gas network might cost 50 million. It is quite an expensive way of doing it.

    (Mr Potter) The other element is that for any given household what it would cost to make them non fuel poor can be as little as loft insulation or cavity fill and for others it is may be an awful lot more than that.

  77. I was just wondering whether you had a grasp yet of the challenge. One of the strong bits we got in the oral evidence was that by tackling the housing stock across the country you have tackled one of the major pillars. There is the income of the people and there is the cost of fuel and then there is the condition of the house. The point was made to us that with people's circumstances changing from year to year, people can drop in and out of fuel poverty and at least if the housing stock is finally up to some kind of reasonable standard, then you have provided a baseline for the other strategies.
  78. (Mr Meacher) The implication of that is that you need to raise the quality of housing stock, not just for those who today are fuel poor, but more generally. To do that would be very good, but it would also be very costly.

  79. In a sense, will it not be part of the strategy? Are we reaching the point that having had the fuel prices come down and the benefits creep up, the crux point too is that you do the easy things such as the loft insulations and the cavity walls, and solid walls were raised in the evidence, some of these schemes are going to have to be quite expensive if we are going to take the existing stock up? That is where my question might differ from Jonathan's in that new build is probably up to a reasonable standard for energy efficiency, though it could always be better, but how do you get the older stock up?
  80. (Mr Meacher) There will be a residue of difficult areas, hard to heat homes, those with solid walls, no loft space, those outside the gas network. We do not have simple cost effective answers to that problem at the moment. That is exactly why we asked the Fuel Poverty Advisory Group to suggest solutions. There are ways of dealing with those problems but they are very costly and what is the best cost-effective way of doing it.

  81. As we come further into the strategy and further towards the target it is going to become more challenging and tougher.
  82. (Mr Meacher) Yes.

    (Mr Eppel) The discussion you had about the links between addressing the homes of the fuel poor and addressing the wider housing stock is very, very relevant and a domestic energy efficiency strategy which the Government are beginning to develop and will feed into the Energy White Paper round the turn of the year will pick up many of these issues, but there are other ways of addressing the housing stock. There are seven million homes with solid walls and they would be very difficult to deal with.

  83. It can be done.
  84. (Mr Eppel) We do not yet have an ideal thin film technology to put on the walls without causing considerable disruption costs. If such a technology were ultimately able to be developed it could have a very big impact on those. There are other input technologies such as micro combined heat and power which could have an impact on fuel poverty. I do not want to over hype that at this stage. There are some technological and commercial barriers still to go through on that front but if that realised the kind of potential that some have been arguing it could have, then we could see really quite an interesting combination of the effect of new heating systems without necessarily having to do some of the very costly measures on solid wall housing. There are several options in one's back pocket.

    Mr Hoyle

  85. We have mentioned gas and those households which do not receive gas and at the moment that is difficult because of gas. Transco has told us that the DTI has applied for funding for pilot schemes. If the pilots prove effective, is the Government prepared to extend them? What timescale is envisaged for the pilots? What action do the Government want to take next?
  86. (Mr Wilson) May I first acknowledge the correctness of the analysis that the lack of availability of gas in many areas is a big factor in all of this? There are 900,000 households in England alone which are classified as fuel poor which do not have gas, therefore it would seem logical that an extension of the gas network could play a significant part in addressing the problem. The costs involved in doing that are very substantial and it is absolutely true that we are looking for funding just now or for pilot schemes directed at the fuel poor households in non gas areas with an initial list of priority communities in England which have been prioritised on a combination of deprivation indices and Transco data. To get 100,000 households out of fuel poverty in this way might cost about 50 million so the cost per unit is very high. Nonetheless we are looking for money for pilots. We have not secured that money yet. We are talking to the companies, but in terms of a wider scheme to extend the gas network, there is no immediate prospect of that happening and we are looking at 2004 at the earliest.

  87. Have the Treasury been sympathetic to proposals for money?
  88. (Mr Wilson) Dialogue continues. It is not as though nothing is happening. There are many areas on the map which do not have gas where for instance if the local authority takes the initiative in bringing in Transco, then other householders in that area can benefit. For example, that happened in my own constituency where, for historic reasons, there was a whole housing scheme which did not have gas and the local authority took the initiative and that problem has now been resolved. There are specific initiatives by the companies and by local authorities or housing associations which can eat away at the problem, but certainly the large-scale expansion of the network as an instrument to combat fuel poverty is not immediately on the horizon. We certainly do hope to have money for these pilot schemes within the foreseeable future.

    (Mr Potter) The gas network working group discovered that in quite a few cases of rural fuel poverty, other forms of central heating and decent insulation could take people out of fuel poverty. Gas is not in every case the only answer. In many cases it cannot possibly be the answer because people live 20 miles away from the nearest gas pipe and there are only three houses. Gas is not the only option and one of the things the Fuel Poverty Advisory Group will be looking at is the scope of the schemes we have and the sorts of things they might offer to broaden their appeal in terms of relieving people from fuel poverty who are not already on the gas network and do not have a home with cavity walls you can put stuff in.

    (Mr Meacher) The potential for renewable energy is obviously considerable here. If the 6,000 installations of micro CHP which we are planning over the next three years work, that is a much more cost-effective answer for very isolated groups of houses.


  89. They still need gas to fuel CHP, do they not? Are we talking here about CHP which is fuelled by gas?
  90. (Mr Meacher) I see what you mean. Yes; that is absolutely true.

  91. With respect, what you are telling us is that there is this brilliant idea which might work but it is going to cost an awful lot for the three houses which are 20 miles from the gas pipeline. You are to an extent at the mercy of a monopolist. If they do not see it as profitable and they do not get money to do it, then there is nobody to pressurise them to do it. Is there going to be competition?
  92. (Mr Wilson) Referring to the previous point, it is not quite as daft as it sounds. There is the option of LPG, it does not have to be mains gas.

  93. It would have to be distributed, like oil.
  94. (Mr Potter) The economics of LPG are not good because LPG is more expensive, but if the LPG works through a micro CHP system which produces some of your electricity, they might be improved. That is one of the things we will have to look at. So LPG could become more affordable than it is now.

  95. I come back to the other point. Is it simply because it is too expensive or is it because it is too much bother for a monopolist to provide this additional service? Has any work been done in taking to bits the economics of it from the point of view of Transco?
  96. (Mr Wilson) A great deal of work has been done on the whole issue of extending the gas network and issues of funding are currently under discussion. It is pretty obvious that Government are not going to fund that in its entirety and it is pretty clear that Transco is not. The rules which stand under Ofgem actually prohibit them from cross-subsidy of that nature, taking money out of their existing business and putting it into expansion of the network.

  97. Is there anyone else outside Transco who might be interested in digging the holes, putting in the pipes and providing gas?
  98. (Mr Wilson) I am not aware of any.

    (Mr Potter) There are other public gas transporters, but I do not think any of them conceive of themselves as a big enough operation to take on a really wholesale extension of that sort.

  99. Is that both international and UK? Has a trawl been done?
  100. (Mr Potter) We have had no expressions of interest.

  101. Have you sought it?
  102. (Mr Potter) We have not.

  103. It is understandable then that you have not had any. When you are faced with a monopolist and they are doing quite nicely thank you and this is a pain in the neck to them, it is quite understandable that they are not going to be interested, but if it were attractive for somebody else to come in, if there were clusters of households -
  104. (Mr Potter) There is a raft of issues which bear on this. First of all there is the question of who can actually do the work, which is the particular issue you are addressing with international engineering consortia who could do such a thing. There is the other issue of who is going to pay for it and how that money is to be collected. That is the difficulty. The current rules on competition prohibit cross-subsidy of extension by existing gas users, which is effectively what used to happen under British Gas and no doubt Ofgem could give you more detail on that. Then there are other issues such as whether potential suppliers to new gas areas might be willing to give a contribution except that the 28-day rule means that the new customer could switch away to another supplier as soon as they hit the deck. There are difficulties in there and Ofgem will have views on the rightness of their competition rules and Transco will no doubt have views on ways round that; fortunately they are both appearing today.

    Sir Robert Smith

  105. LPG came up and it does affect people in rural areas and currently there is a lot of concern about the price of LPG and certainly concern about the market working in LPG. Do DTI have any views about what is happening to the price of LPG and what factors are at work?
  106. (Mr Wilson) We have looked at this and we have also looked at in the context of motoring costs. We do not have evidence that the price of LPG is higher than it should be or higher than the market reasonably dictates. There are no grounds for an investigation of the price of LPG, but it is certainly something we keep an eye on because we are very anxious to promote the use of LPG.

  107. Do you have some indication of what factors have driven up the price? Is it very much linked to the market in oil or is LPG of limited availability and as the market grows this is inevitably going to ... ?
  108. (Mr Wilson) The price of LPG is still relatively low, but inevitably there are market factors affecting it, as there are for other fuels.


  109. It is a fuel of which in world terms there is quite a considerable supply. We could increase our consumption without necessarily pushing up the price.
  110. (Mr Wilson) I would say that the normal laws of the market would say that if you increase consumption you tend to drive down the price.

    Chairman: Depending on what the supply is.

    Mr Berry

  111. May I ask a question about the co-ordination within Government Departments in relation to this? As it happens, the Department I have in mind is not represented here this morning so you can toss a coin to see who speaks for the Department for Work and Pensions. A number of schemes specifically address the question about whether people are claiming the benefits to which they are entitled. Eaga for example told us that "20% of applicants who go through the benefits health check process are able to claim an additional benefit". So the checks they do discover one in five people who can claim additional benefit. On an average that is worth an extra 25 per week. Should this not be what the Benefits Agency is doing?
  112. (Mr Meacher) The answer to that must probably be yes. I see the force of the question, because if they were claiming benefit, then they would be eligible for the scheme and there would be substantial gains flowing from it. The other way of addressing the problem would be to allow access to HEES for those people who qualified in terms of low income but were not actually claiming an income-related benefit. That could be a matter for review, or indeed a matter on which to get advice from the Fuel Poverty Advisory Group.

  113. Can something be done to address the culture here? I do not know about the experience of other Members of Parliament but constituents I have who want to have a benefits check, do not go to the Benefits Agency, they go the CAB or they come to me. We all know about this as Members of Parliament and I think the figures Eaga produced do suggest there is cause for concern. I hope this matter might be further considered. May I raise another issue which Eaga raised with us? They have said in their submission that "... encouraging the Department for Work and Pensions to become involved in publicising the Warm Front Team, where access to the scheme is dependent upon receipt of a designated benefit, has been very difficult at an operational level". Can we not do something to overcome these operational difficulties? Eaga are trying to do the best they can. They are saying a Government Department is an obstacle to what they are trying to do. Can this problem be addressed?
  114. (Mr Meacher) I am sure it can. Since we make endeavours to achieve joined-up government, you make a very fair point. That should obviously be addressed to DWP and I do not know exactly what operational difficulties they are referring to. It does seem to me that there are always leaflets which are available in their offices for people who want to test their entitlement to various schemes. There seems to me to be no reason why that could not include a short, well-written, comprehensible leaflet on HEES. I shall pursue that point with colleagues in DWP.

  115. In the Government's fuel poverty strategy a number of vulnerable groups are identified including disabled people. We have talked about the difficulties of targeting some of the more vulnerable groups. Is the Government prepared to consider winter fuel payments for severely disabled people in the same way that we have winter fuel payments for those over 60?
  116. (Mr Meacher) That is a matter for the Exchequer. Our prime objective under the fuel poverty strategy is to benefit people and particularly in terms of improved insulation of housing, but they are also assisted by falling fuel prices and, I agree, by increased benefits. Increased benefits, whatever category you choose, will go more widely than the fuel poor. There are disabled persons under 60 who are not fuel poor. Whether it is cost effective to extend winter fuel payments to them is a matter for the Treasury.

  117. 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?
  118. (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.


  119. 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.
  120. (Mr Meacher) You make a very fair and diplomatic point.

    Chairman: A pregnant paragraph is available to us

    Mr Djanogly

  121. 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.
  122. (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.

  123. 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?
  124. (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.

  125. What does "When we do have those resources" mean? Does it mean if the economy does better or if the Chancellor gives you more?
  126. (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.

  127. Will you be pushing for that to be put in place at the next review?
  128. (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 intercessional 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.

  129. 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?
  130. (Mr Meacher) This Bill, which I welcome, and it is still awaiting the conclusion of its report stage on 19 July, is welcome as - I do not like this phrase - a 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.

  131. 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.
  132. (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.

  133. 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?
  134. (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.


  135. 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.
  136. (Mr Meacher) Yes.

  137. Does this keep you awake at night?
  138. (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.

  139. 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.
  140. (Mr Meacher) You are quite right that there is a tension there.

  141. 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 cliché 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?
  142. (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.

  143. 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?
  144. (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.

  145. 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.