THURSDAY 23 MAY 2002
Mr Martin O'Neill, in the Chair
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.
(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.
(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.
(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.
(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.
(Mr Meacher) Yes.
(Mr Meacher) I meant both.
(Mr Meacher) Yes.
(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 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 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.
(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.
(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.
(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.
(Mr Potter) Not being a member of the Government Statistical Service myself, I can take that with equanimity.
(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.
(Mr Meacher) I am innocent of this offence.
(Mr Meacher) I could not comment.
(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.
(Mr Meacher) Of course.
(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 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.
(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.
(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.
(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.
(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.
(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.
(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.
(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.
(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.
(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.
(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.
(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 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.
(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
(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.
(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.
(Mr Meacher) Do you mean the cost of improving the quality of housing stock for the fuel poor or nationally across the country.
(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.
(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.
(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.
(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.
(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 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.
(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.
(Mr Meacher) I see what you mean. Yes; that is absolutely true.
(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.
(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.
(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.
(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.
(Mr Potter) We have had no expressions of interest.
(Mr Potter) We have not.
(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
(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.
(Mr Wilson) The price of LPG is still relatively low, but inevitably there are market factors affecting it, as there are for other fuels.
(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 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.
(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.
(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.
(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.
(Mr Meacher) You make a very fair and diplomatic point.
Chairman: A pregnant paragraph is available to us
(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.
(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.
(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.
(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.
(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.
(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.
(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.
(Mr Meacher) Yes.
(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.
(Mr Meacher) You are quite right that there is a tension there.
(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.
(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.
(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.