Examination of Witnesses (Questions 1-19)
Wednesday 22 October 2003
Sir Brian Bender, Mr Jeremy Eppel; Mr Chris Leek,Mr
Garry Worthington, Warm Front, General Manager, POWERGEN UK, examined.
Q1 Chairman: Welcome to the Committee
of Public Accounts where we are discussing today the Warm Front
scheme. We are delighted to welcome back Sir Brian Bender who
is the Permanent Secretary and accounting officer at the Department
for Environment, Food and Rural Affairs. I will ask Sir Brian
to introduce his team but, before I do so, can I welcome a delegation
from the Ugandan Ministry of Finance? I hope that you enjoy our
meeting. Thank you for coming. There is also a delegation from
Nigeria, which will be visiting our Committee in stages. Sir Brian,
would you like to introduce your team?
Sir Brian Bender: On my left is
Jeremy Eppel, who is head of the Sustainable Energy Policy Division
in my Department. On my right is Chris Leek, who is the Operations
Director of Eaga Partnership, one of the scheme managers. On his
right is Garry Worthington, who is the General Manager of Powergen
Warm Front, the other of the two scheme managers.
Q2 Chairman: Perhaps you could start
by going to the central critique of this scheme. You can see that
set out on page 14 of the Comptroller and Auditor General's Report,
particularly in paragraph 2.8. What we have here is a scheme by
which 70% of Warm Front grants may go to people who are not fuel
poor and a third or more fuel poor households are not eligible
for Warm Front grants. In other words, there is a rather poor
mismatch. How are you going to improve the match between the eligibility
rules for Warm Front grants and those who are genuinely in fuel
poverty?
Sir Brian Bender: As the NAO Report
recognises, getting this right is a real challenge. When the scheme
was devised, it was decided in the light of consultation that
we should be aiming at the target groups that were best identified
through the receipt of benefits, and that importance was attached
to ensuring those who applied could easily understand the eligibility
criteria. As a direct answer to your question, first of all, we
keep the eligibility criteria under review. In the last month
or so, we have included pension credit and we have included child
tax credit and working tax credit to replace working families'
tax credit and disabled persons' tax credit with an income cut-off
point. Secondly, we will continue to look for ways to improve
targeting and what we will be looking at in the months ahead is
whether there should be a mix of criteria covering both benefits
and the SAP rating for property. That is our thinking on the way
forward, so that we would improve the proportion of those who
receive assistance being in fuel poverty.
Q3 Chairman: If we were having our
hearing in a year's time or two years' time, do you think we would
get a very different answer from what we read here, which is fairly
alarming, that a third or more fuel poor households are not being
reached at the moment?
Sir Brian Bender: I would hope
we would, through a mix of criteria, but getting this right is
enormously difficult. The risk must be that we create something
that is so complex we discourage applicants. We have also introduced
in the last few weeks through Eaga, and we are about to do so
through Powergen Warm Front, a benefits health check which is
also increasing the access of the scheme to participants.
Q4 Chairman: Can you look, please,
at page 25 of the Comptroller and Auditor General's Report and
particularly at paragraphs 3.20 to 3.22. You will see there, "Some
homes, however, receive significant (and costly) assistance even
though they are already energy efficient. . . . The funds available
under Warm Front would achieve most if focused on those homes
with a low SAP rating." How do you propose to direct a great
proportion of grants to those homes which are the least energy
efficient? That is what we should be about, is it not?
Sir Brian Bender: We do not select
households based on the energy efficiency of the property. It
is based on the need of the household and what is available under
the scheme.
Q5 Chairman: Does that mean that
there is something therefore wrong in the way in which this scheme
is devised? Surely, it would not be unreasonable to suggest that
if you were devising a scheme like this you would propose to direct
a greater proportion of grants to those homes which were least
energy efficient. Is that not what we are about?
Sir Brian Bender: We are trying
to direct the scheme primarily to vulnerable parts of society
and there may well be a mismatch between the vulnerable people
and the energy efficiency of their homes. Getting this match as
best we can is what the issue is about.
Q6 Chairman: But you are also not
hitting the vulnerable, are you? Do you accept that? A third or
more fuel poor households are not eligible, so you are not winning
either way.
Sir Brian Bender: We are hitting
more vulnerable people through the benefits health checks and
through the work we are doing on reviewing the eligibility criteria.
Q7 Chairman: We have had that answer.
Turn, please, to page 26. You will see that there are sizeable
delays. Look at paragraph 3.23: "In the first 22 months of
the new Scheme—to March 2002—half of all heating jobs
and two-thirds of insulation jobs took longer than the target
days." I have received a letter from my colleague, Siobhain
McDonagh, who is a Member of Parliament for Mitcham and Morden
and she has raised, for instance, a case of one of her constituents.
She tells me, "As you will see from her constituent's case,
the family quite rightly felt unable to operate without a central
heating boiler for the nine months it would take for it to be
replaced with the Warm Front scheme." What do you have to
say to Ms McDonagh's constituent?[1]
Sir Brian Bender: I would like
the scheme managers perhaps to answer that more directly. The
waiting time compared with 12 months ago has come down by about
17%, so things are improving. More skilled engineers are being
brought into the scheme.
Mr Leek: There is a widely accepted
under-resource of gas engineers able to do this type of work.
When you get an under-resource of engineers, it does mean that
there is a price pressure which has a strong influence over the
companies in the way in which they prioritise work. We continue
to apply pressure in this area to minimise the waiting times and,
if you compare to this time last year, we have seen a 17% reduction
in the average waiting time. This is the shortest it has ever
been. Despite the waiting times, every year, we have exceeded
the target that has been set for us in installing heating systems
into clients' homes and that scheme is very popular.
Q8 Chairman: Let us move on to the
government goal of eliminating fuel poverty for vulnerable households
by 2010, which you can see detailed on page 30 of the Report in
paragraph 4.9. This is an important commitment by the government.
Are you going to meet it?
Sir Brian Bender: We have a series
of comprehensive packages of measures designed to meet it. We
produce annual reports. The first was in March of this year. The
Fuel Poverty Advisory Group has provided independent advice on
progress. The government is determined to meet it. I cannot say
now that we will meet it.
Q9 Chairman: Are you on course to
meet it, given what we have been hearing in the first few minutes
of this inquiry already?
Sir Brian Bender: I believe we
are on course to meet it.
Mr Eppel: The fuel poverty target
for 2010 we are on course for.
Q10 Chairman: And eliminating fuel
poverty altogether by 2016?
Mr Eppel: That is some way off
and clearly we would need to see just how we are as we get closer
to that date. At the moment, there is nothing to indicate that
we would not be able to be on course for that as well.
Q11 Chairman: Look, please, at page
22. I am now asking about hard to treat homes dealt with in paragraph
3.8. These typically may be homes in rural areas which are not
on main line gas. They may have difficulty with cavity wall insulation.
Have you any plans to improve assistance to these hard to treat
homes?
Mr Eppel: We are certainly looking
at what more could be done for hard to treat homes. There are
a number of things that can be done, including putting them on
the gas network and other types of measures that can be taken.
A number of these are solid wall properties. Yesterday, the Carbon
Trust, which is one of the bodies that DEFRA sponsors, announced
that it was going to look into speeding up the technological developments
that could help with solid wall properties. There is a range of
possible technological and administrative things that one could
do.
Q12 Chairman: Let us look at page
23, paragraph 3.13. You will see that a fifth of all grants have
no significant impact on energy efficiency. Are you concerned
about this?
Mr Eppel: Yes. The measures nevertheless
can reduce people's bills and can have an impact on their overall
comfort. Energy efficiency measures may be needing additional
activity that is not necessarily tackled by those particular inputs
at that time.
Q13 Chairman: Are you concerned that
a fifth of all grants have no significant impact on energy efficiency?
Mr Eppel: The scheme is directed
essentially at helping vulnerable people potentially in fuel poverty.
It is desirable to try and improve energy efficiency so obviously
what we want to try and do, in developing and rethinking parts
of the scheme, is to try and improve that ratio so that as few
as possible do not have an impact on energy efficiency.
Q14 Chairman: Am I right in thinking
that a considerable proportion of these grants simply relate to
energy efficient light bulbs and the provision thereof?
Mr Eppel: As the Comptroller and
Auditor General's Report spells out, pretty much every household
that is treated and dealt with in addition to any other measures
always has energy efficient light bulbs—I think over 300,000
in the last year—but the bulk of households addressed also
have other measures which have a more substantial impact.
Q15 Chairman: Such as draught proofing?
Mr Eppel: Draught proofing is
one of the measures. Insulation and heating are installed in a
considerable number and have a significant impact in their own
right.
Q16 Chairman: It seems to me that
there is a lot we could achieve simply by talking to pensioners,
working out what they need and having a discretionary scheme which
would direct resources to those who most need them. I thought
this was the obvious way forward. I am told that there is a pilot
scheme that you are running called the Warm Zone Scheme where
you do precisely this. You go and talk to pensioners and find
out where people are, what they need and you try and help them.
Are we going to see an extension of the Warm Zone scheme which
seems to be far more effective?
Sir Brian Bender: We are waiting
to evaluate it. It is a three year trial in five zones. It took
a while to get under way. We are going to evaluate it and see
whether it is producing things that merit extension.
Q17 Chairman: You get my point, do
you not? We see from the Warm Zone scheme that you can direct
resources where they are most needed, to help those most in need.
Sir Brian Bender: If it is working,
it should be extended. It would be a way of joining things up
on the ground.
Q18 Mr Williams: We gather that Warm
Front costs 150 million a year of which 25% is on administration.
That is 37 million, approximately. Is that correct?
Sir Brian Bender: The 23% administration
covers some of what one might call the costs of the scheme such
as marketing, and not simply the administration by the scheme
managers.
Q19 Mr Williams: The NAO says on
administration and I assume it does not go into the end objective.
That means that on the non-administrative side there is 113 million
approximately.
Sir Brian Bender: The costs relating
to the household itself, survey measures and inspection, if they
are separated out, the resulting administration costs are 12%
rather than 23%. 11%, about half of the 23%, are measures in relation
to the household, survey measures and measures of inspection.
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