Examination of Witnesses (Questions 320-339)
JOAN RUDDOCK
MP AND MR
CHRIS LEIGH
14 JANUARY 2009
Q320 Chairman: You have put considerable
weight in your opening comments on the press effect, having floated
people back in. If we wind the clock back before the current 40
per cent increase if you like, year on year, in energy prices,
how many people did we have in fuel poverty then? I am anxious
to try and establish the relationship between the rates of change
of prices. For example, we have recently heard that some energy
providers are talking about price decreases. I do not know how
much they are going to be. If you cannot answer this now perhaps
you could let the Committee have the information. If we go back
a year ago, for every five or ten per cent increase in fuel prices,
how many people who were not fuel poor before became fuel poor?
I accept that the numbers may have gone up because of energy price
changes but I am not clear as to how much the problem is a price
effect and how much it is a problem because we have not yet got
to grips with the fundamental cohort of people who are living
in energy inefficient houses. Can Mr Leigh help us at all? He
looks as if he wants to.
Mr Leigh: I thought it would be
helpful just to explain how the statistics around the number of
people in fuel poverty are pulled together. We take as a starting
point the English house condition survey that looks at the quality
of the housing stock and look at the sample that is taken there
and estimate how many houses in the country are likely to be of
an energy efficient standard such that, if somebody was living
on a low income, they would be in fuel poverty. We then use those
numbers and look at energy price changes that have taken place
so that we can then come up with projections of numbers of people
in fuel poverty for the years that we are looking at. At the moment,
we only have projections for 2007 and 2008 because we base it
on actual information from the English house condition survey.
Q321 Chairman: The reason I am asking
these questions is that one of the things we are trying to understand
is how effective and successful EEC1 and 2 and CERT, which change
the ratio of people in fuel poverty that they target, have been
in contributing to removing the problem. It is not clear to us.
If you can supply us with some information on that, we would be
delighted to hear from you.
Joan Ruddock: We do know how many
people, because of these estimates that are done, were taken out
of fuel poverty but I have to stress to you that knowing it does
not take us much further because we can tell you four million
households were taken out of fuel poverty but then they can easily
go back in, sadly, because the condition of the property is just
one of the factors. There are three factors. One is the condition
of the property; the other is the income of the household and
the other is the cost of the fuel. If the fuel goes up as dramatically
as it has gone up, it will put people, especially the marginal
people, back into fuel poverty very quickly indeed and it has
done so.
Q322 Dr Strang: You said you started
with the English housing condition survey but you do cite UK figures.
For example, you say that in 2006 there are approximately 3.5
million households in fuel poverty across the UK. Do you just
take the English survey and say that they are roughly the same
in Scotland and Wales or do you look at the Scottish and Welsh
statistics as well? I am not sure how you jump from an English
figure to a UK figure.
Mr Leigh: I used the term "English".
We use the house condition surveys that are carried out across
the UK as a whole to determine the figure. Can I respond to the
point you made, Chairman? I think the Minister was talking about
the numbers of people that had been removed from fuel poverty.
In 1996 there were 5.1 million. That came down in 2004 to 1.2
million. That would have been achieved by a combination of reductions
in energy prices which happened during that time but also the
significant improvements that were being made through the various
measures to the housing stock. Since 2004, projections have gone
up. In 2005 it was 1.5; in 2006, 2.4. That is not because of any
deterioration in the housing stock because more work has been
done. That is purely on the back of the increases in energy prices
that kicked in at that time.
Q323 Chairman: You were mentioning,
Minister, looking at the 2016 target. Is your Department going
to be seeking a Public Service Agreement of its own on fuel poverty
once you have conducted your review?
Joan Ruddock: The PSAs and the
DSOs have not been determined for DECC. All I can tell you is,
first of all in terms of PSAs of course, there was a huge reduction
in the number of PSAs that were to be agreed across government
from I think 110 down to 30. It was entirely reasonable that certain
issues—and this was one of them—should come under
a PSA. In Defra, this issue of fuel poverty was being proposed
as one of the departmental strategic objectives.
Q324 Chairman: You have a clean sheet
of paper. Would you like it to be a PSA or not?
Joan Ruddock: If I say to you
that it was proposed as a DSO within both BERR and Defra, then
it seems to me that that is the kind of position that we are likely
to look at within DECC, but it would be entirely unreasonable
for me to say that it is going to become a PSA or a DSO at this
point because there is a huge amount of discussion to be had in
the Department before those issues can be determined. Of course,
we are the lead Department on climate change and what is significant
I think is that, in terms of the reorganisation of the Department,
we had two director generals, one from BERR and one from Defra,
who came to us. We have now appointed a third director general
and that third director general will cover climate change and
the fuel poverty agenda. That is the domestic climate change and
the fuel poverty agenda. I think that linkage is extremely important.
It goes to the heart of the kind of questions that you have asked
and I think it is an indication of the importance we attach to
it that a director general has been appointed with that combination
of responsibilities.
Q325 Paddy Tipping: You mentioned
you faced a tough challenge purely because of rising prices and
you then said you were reviewing the situation. What is the timetable
for the review?
Joan Ruddock: We have started
on it straight away. We appreciate that we need to make an appointment
of a new director in order to lead the work, although work is
under way already. We want to see that work done in the shortest
possible timescale, which means that I want to see the initial
findings by June this year, so real urgency.
Q326 Chairman: Mr Leigh, do you do
any comparison between fuel poverty in this country and similar
countries in mainland Europe and, if so, how do we compare?
Mr Leigh: I am not aware that
we do.
Q327 Chairman: Is it an issue elsewhere
in Europe?
Mr Leigh: I suspect it is an issue
but I suspect it is not quite the issue it is in this country
because there is so much of the housing stock in this country
that was built that much earlier than housing stock in other parts
of Europe.
Q328 Chairman: The reason I ask is
that sometimes the way that other countries deal with issues like
that can give helpful pointers, but it sounds to me as if this
is not something you have studied in depth.
Mr Leigh: We have not but I think
the UK is to the fore in dealing with fuel poverty and recognising
it as a policy area that needs attention. In large part that is
because of the relative age of the housing stock that we have
in this country and the poor energy efficiency of the housing
stock compared to equivalent countries in Europe.
Q329 Lynne Jones: Even if we do see
some reduction in energy prices because of the falling price of
oil, over the long term we can expect that there is going to be
an increase in fuel prices. We could only really regard this as
perhaps a benign fluctuation that we are lucky to have. What is
the balance that you are looking at between energy efficiency
and fuel prices in terms of combating fuel poverty? Although you
took credit for the reduction in fuel poverty over the first few
years, a large proportion of that must have been due to the fortuitous
reduction in energy prices rather than any positive impact of
government policies, although obviously there was investment in
fuel prices. Now that fuel poverty is going up, I think it is
perhaps a bit unfair to say that it is all because of energy prices.
It could be argued it is due to the lack of investment in energy
efficiency. When you are looking to the future, what evidence
are you looking at for the balance of fuel poverty programmes,
investment in energy efficiency and investment in income support
of some kind such as winter fuel allowances?
Joan Ruddock: It is fair to say
that we are pursuing a combination of all of those things. First
of all we had the increases that have been announced twice this
year, first in September with the Prime Minister's Home Energy
Savings Programme, which has quite seriously increased yet again[2]
on the increases that were made earlier in the year with the start
of CERT and the amounts of money that are going through the supplier
obligation which is now a very significant programme. We made
increases in September in the amount of money going to Warm Front
and then increased it again so that we now have about £950
million-worth of Warm Front programme available to us. We have
a total expenditure, when you take all of the programmes over
the next three years, of about 4.7 billion.[3]
Q330 Lynne Jones: Is that just on energy
efficiency measures, the 4.7?
Joan Ruddock: That is the combination
of all of the measures which are to do with energy efficiency,
the Warm Front, all of those measures together. We are pursuing
all of that. In terms of what we are requiring of the energy companies—and
we have announced we are bringing in the generators as well for
the first time and we will have secondary legislation on that
this year—we probably are at the limit of what we can get
out of that system under present arrangements, so as much money
as can be squeezed out of that, as many measures as are possible.
We anticipate six million households having measures within this
period, so that is running at a much higher level than ever before.
Because of high prices—and this was announced much earlier
in budgets—we had the increase in the winter fuel payments
for pensioners up to £400 in the case of the over eighties.
Fortunately, given that we have had this very cold start to the
winter, we nearly trebled the amount being made available for
the cold weather payments. It is a combination of all of these
measures. They are running at rates much higher than ever before.
I think that, in terms of finance and given the economic situation,
we have been very bold in the amount of money that we have made
available. The question is much more about targeting, about which
measures, about getting value for money and those are the issues
that need to be explored.
Q331 Lynne Jones: My question was
about the balance between government spending or energy company
spending on energy efficiency measures and the amount of spending.
One could say a large proportion is going into income maintenance
and yet in the long term it is not going to help when energy prices
continue to rise. Can I move on to this issue of the energy efficiency
rating of homes? As you probably know, we have had a lot of evidence
arguing that we should be aiming for a programme to raise the
energy efficiency of all housing to SAP 81. Under the Warm Front
programme I understand that the target is a SAP rating of 65 and
even then a lot of the time it does not achieve SAP 65. What is
your Department's assessment of the cost of achieving SAP 81?
Surely that is the only way in the long term, given that we are
going to have a continued rise in energy prices, to really tackle
this problem?
Joan Ruddock: First of all we
need to look at where we are in this country. In terms of the
house surveys that were referred to earlier, what we have found
is that only seven per cent of the stock had a SAP rating of 69
or higher and four per cent of stock had a rating of 20 or less.
This is as recently as 2006. Some 41 per cent of the housing stock
had a SAP rating of 39 to 54. To talk about a SAP rating of 81
is quite outside where the stock of this country is. There is
just a tiny proportion that is anywhere near that level at the
present time. We have to look at the reality of where we are.
That is why we believe that it is not unreasonable to have a SAP
rating target of 65 as a key performance indicator for the Warm
Front programme. The criticism which I gather was given in evidence
from the University of Oxford, the Environmental Change Institute,
was that the SAP rating of 65 would only be adequate if the people
were getting all the benefits to which they were entitled because,
as I have to keep stressing, there are the three factors concerned,
not just the condition but the income and so on. The Warm Front
programme contains within it benefits checks. The Warm Front programme
achieves for people the fact that they get all the benefits to
which they are entitled. That is part of the equation. We acknowledge
that and we have taken steps to ensure that it happens. Therefore
we think a SAP rating of 65 is realistic at the present time.
It is desirable—no one would refute that—to go to
81 but the calculation that I believe was made that it would cost
£7,500 for every household means that you are talking about
a programme in the order of £25 billion. Frankly at the moment
that is unrealistic.
Q332 Lynne Jones: The figure we had
from the Environmental Change Institute was 4.7 billion per annum
over eight years, which is the timescale we are talking about
to meet your target that you say you still want to meet. It sounds
a lot of money but it is a 50 per cent increase over the current
total package because of the cost of things like the winter fuel
allowance. The trouble is if you do not tackle the energy efficiency
problem are you not going to find that your costs in terms of
winter fuel payments benefits to meet your commitment on fuel
poverty are going to be even higher than that? Therefore, there
has to be some scepticism as to how committed the government is
to meeting that fuel poverty target. The government has decided
to make its child poverty target a statutory commitment. Why are
you not making the fuel poverty target also a statutory commitment?
Joan Ruddock: It is a statutory
commitment.
Q333 Lynne Jones: The government
is not legally bound. The fact is you are not going to meet the
2010 commitment so how can it be legally binding?
Joan Ruddock: A statutory commitment
is a statutory commitment.
Q334 Lynne Jones: It means legally
binding. The government is going to pass a law to make it a statutory
commitment to meet the child poverty targets which will require
legislation.
Joan Ruddock: This is a statutory
target.
Q335 Lynne Jones: A target but not—
Joan Ruddock: There are no absolutes
in government. The question is can it be challenged. As you will
know, we are being challenged in the courts and it is because
it is a statutory target that the challenge is possible.
Q336 Lynne Jones: The legal judgment
was only an aspiration. It was not a statutory target which is
why the case was lost.
Joan Ruddock: I have to be very
careful here because the case is being further challenged. The
argument that I think any government would put is whether, in
attempting to meet a statutory target, it is doing what is reasonably
practicable. That is the basis of any government's judgment about
anything which is in statute. There cannot be absolutes because
factors arise which are completely outside the government's control.
Q337 Chairman: Which Act contains
the statutory responsibility?
Mr Leigh: The Warm Homes Energy
Conservation Act.
Q338 Chairman: How is it defined?
Mr Leigh: That particular Act
requires the government to prepare, publish and implement a strategy
for reducing fuel poverty and to require the setting of targets
for the implementation of that strategy.
Chairman: I think the point that
Lynne Jones is making is that, whilst that tells you you have
to write down where you want to get to, there is not a statutory
obligation like there is in the Climate Change Bill about where
you are going to end up and what happens if you do not. In the
Climate Change Bill something happens at the end.
Paddy Tipping: Tell us what.
Q339 Chairman: In 2052 if you miss
the target the hapless Secretary of State has to write a letter
to somebody explaining why they have not done it. This is really
draconian stuff.
Joan Ruddock: I have no expertise
in this legal field but it seems to me that the target is set.
It is challengeable in the High Court. We have the proof that
it is challengeable in the High Court and indeed it is for the
court to make a judgment as regards the government's behaviour
and whether it has performed its statutory duties or not. One
can say no more about that.
2 By 20 per cent Back
3
Witness amended this figure to 4.5 billion Back
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