Examination of Witnesses (Questions 80-99)
Wednesday 22 October 2003
Sir Brian Bender, Mr Jeremy Eppel; Mr Chris Leek,Mr
Garry Worthington, Warm Front, General Manager, POWERGEN UK, examined.
Q80 Mr Rendel: Why have you not thought
about it? Are you going to go away and think about it or do you
think it is not worth it?
Mr Eppel: Because of a whole range
of other measures including possible fiscal incentives. There
is currently a consultation by DEFRA and the Treasury and the
energy efficiency commitment in particular has been seen as more
likely at this point to have an impact, but loans are a possibility
and thank you for the suggestion. We could examine it further.
Q81 Chairman: You told us that if
you give an energy efficient light bulb to a pensioner that will
reduce their bills. If I want to give my 83 year old mother an
energy efficient light bulb for Christmas, how much would it reduce
her monthly electricity bill by per year?
Sir Brian Bender: £10 a year.
Mr Leek: That is based on an average
consumption for the vulnerable households that we are looking
at. I am not sure where that research came from.
Q82 Mr Jenkins: If you run a light
bulb for three hours a day every day of the year and the unit
price is 5p a unit, that would save you £4.03 a year.
Sir Brian Bender: We will provide
a written answer.[5]
Mr Eppel: Generally, we provide
two light bulbs.
Q83 Jon Cruddas: Can I come back
to the mismatch between the scheme and the strategy in terms of
combating fuel poverty which the Chairman and Mr Williams touched
on earlier on? It seems to me your problem might be getting worse
over the next couple of years. If you look at the figures here
on page seven, it says since 1998 there has been a 1.6 million
reduction in those in fuel poverty as a result of reductions in
fuel costs and the like but, as stated earlier on, of those 1.7
million 35% do not qualify for the scheme, even though they are
fuel poor. Therefore, if we assume that the 1.7 million will continue
to decline, the proportion who could not qualify for the scheme
who are fuel poor will rise proportionately. Would you accept
that? Would you accept that, that your difficulties will increase
over the next couple of years?
Mr Leek: Yes, absolutely they
will.
Q84 Jon Cruddas: At present, as page
14 says, 60 to 70% of those who are helped by the scheme are not
fuel poor, which we discussed earlier on. Therefore, presumably
you must assume that proportion will rise over the next couple
of years, ie those who are not fuel poor who benefit from the
scheme, which is about 65%?
Sir Brian Bender: That depends
on whether we improve the targeting.
Q85 Jon Cruddas: If everything else
is equal.
Sir Brian Bender: Yes, if everything
is unchanged then I think your logic must be right.
Q86 Jon Cruddas: As the ineligible
proportion rises in terms of the targets you are aiming at, yes?
On page 24 of the Report it states that your outcomes for 2001-02
were 303,000 households were helped and you assume that declines
over the next couple of years to 230,000 in 2002-03 and 200,000
in 2003-04. Why are you assuming that is going to decline?
Mr Leek: If you look at the first
year's figures that you quote, which is the 303,000 homes, that
was in the second year of the scheme. In the first year of the
scheme there were only nine months of the scheme by the time the
scheme managers, etc., were appointed and there was a surplus
of money left at the end of the first year which was transferred
into the second year. That enabled more homes to be done because
there was greater funding once this first year money had been
added to the second year money. As we rolled over into the third
year of the scheme then we came back down to the base level, but
when we got to about Christmas time additional funding was found
and, therefore, for the last three months we were able to increase
the rate at which we were doing it and, therefore, we were able
to do slightly more. What we are forecasting for this year is
the base rate based on a nominal £150 million funding for
the scheme.
Q87 Jon Cruddas: That is 230,000
helped and then it reduces further.
Mr Leek: That should be the base
rate then.
Q88 Jon Cruddas: In the Report it
talks about 200,000 helped between 2003-04.
Mr Leek: 200,000, yes. That is
where we are at now on this base rate of 150 million.
Mr Eppel: It is not because the
scheme is, as it were, being less effective in its own terms,
it is because it is related to the funding.
Q89 Jon Cruddas: I am going to come
to that in a moment.
Mr Eppel: It is in proportion
to the funding that was available.
Q90 Jon Cruddas: You see where I
am heading because, on the one hand, given, as we talked about
earlier, 60 to 70% of those you helped are not fuel poor and you
are going to have even more difficulty drilling down into those
who are fuel poor as a proportion of those ineligible for Warm
Front increases as the overall numbers of fuel poor decline, so
you accept, therefore, the 60 to 70% will probably rise then as
a proportion who are not fuel poor but who benefit from the system?
Sir Brian Bender: Unless we manage
to target it better. It comes back to the earlier exchange.
Mr Leek: It comes back to an answer
that I gave to Mr Jenkins which was that as we start to bring
on the networks that we have gradually built that confidence with,
we can target that area much easier. It has taken the two to three
years to actually build that confidence.
Q91 Jon Cruddas: At present you are
hit on both sides, on the one hand the numbers you help will decline
and proportionately within that the numbers who are fuel poor
who are eligible is also declining, so it is at a sort of standstill
and you will have to move faster. Given the problems that you
are dealing with that is a pretty tall order to actually stay
at 60 to 70% in terms of helping those who are fuel poor in the
system.
Mr Leek: It is, it becomes much
more difficult.
Q92 Jon Cruddas: Initially you talked
about the Warm Zones proposal, the pilot schemes, on page 16,
and you said you had no initial assessment of their relative effectiveness,
but then, Sir Brian, you talked about some evaluations you have
and obviously given the increasing difficulties you are going
to experience in terms of helping fuel poor people it would be
useful for the Committee to find out what initial evaluations
you have of that proposal.
Sir Brian Bender: Is that something
we will be able to provide in a note? Yes, we will do that, the
initial evaluation of Warm Zones.[6]
Q93 Jon Cruddas: I have just one
other question which is about regional variations on page 19,
2.22. The regional variations in terms of those you help are quite
significant, are they not? Do you just want to give us some comments
about why that is?
Mr Leek: The targets that were
in the original contract for 2000 were based upon a combination
that Defra or, as it was at the time, DETR, used, a combination
of English House Conditions Survey and an Index of Multiple Deprivation,
a combination of those two which tried to forecast how many homes
were likely to be in fuel poverty within those areas and those
targets were then set proportionately. We have done some further
research when we, as Eaga, have looked at what is the propensity
of people within each of these areas who are likely to be eligible
for the scheme as opposed to being in fuel poverty. When you compare
the correlation between those who are applying and those who are
likely to be eligible, which are those who apply, there is a much
closer correlation and we are very close to that target.
Q94 Jon Cruddas: Why is that so varied
regionally in terms of your relative effectiveness or ineffectiveness
in London and the South East?
Mr Leek: Because if you look at
the number of people who are eligible for the scheme, there is
a greater propensity in the northern areas.
Q95 Jon Cruddas: That just reflects
the distribution of fuel poverty, is that what you are saying?
Mr Leek: What it reflects is when
those targets were set it was trying to get a proxy for fuel poverty
based upon those two indices. What we have done is looked at what
is the propensity in those areas of people who will be eligible
for the scheme. When you look at those who would be eligible for
the scheme and what we have actually achieved, there is a very
close correlation.
Chairman: Thank you very much, Mr Cruddas,
that was a very interesting line of questioning which shows the
increasing problems for the future that you may face.
Mr Davidson: Can I just follow that point
up. Are you saying then that on graph 13 basically the targets
were wrong?
Q96 Chairman: Page 19.
Sir Brian Bender: They were a
first approximation and with further work with Eaga and Powergen
between us we have managed to get this better.
Q97 Mr Davidson: Was that a yes?
Sir Brian Bender: They were not
all wrong. They were a first approximation.
Q98 Mr Davidson: I asked were your
targets wrong basically and you gave us a long answer and I am
not sure I understood it. Either you got your targets wrong and,
therefore, your explanation to Mr Cruddas was basically justifying
the outcomes or what? Were your targets just wrong?
Sir Brian Bender: They were not
correct. They were a stab, they were an assessment, and—
Q99 Mr Davidson: That is wrong then.
In the Civil Service that is two words. Wrong will do for me.
Can I just clarify that the north-east and north-west overspent,
as it were, the target that had been established. How was the
money allocated? Did they have a budget or was there just a big
central pot from which people drew as they spent?
Mr Eppel: The contracts with the
scheme managers were based on an upper limit and then as the scheme
managers drew down on demand for their areas the payments were
made on a regular basis, monthly or quarterly. It was not, as
it were, allocated and then unavailable elsewhere but it was available
in the totality for the nation according to the areas that the
scheme managers covered and they were able to draw it down. The
exact distribution reflects where they actually spent the grants.
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