Examination of Witnesses (Questions 360-379)
JOAN RUDDOCK
MP AND MR
CHRIS LEIGH
14 JANUARY 2009
Q360 Paddy Tipping: Surely it should
be right that people know what they are paying for?
Joan Ruddock: Just for the record,
it is about £80 per household for dual fuel, and that includes
the EU emissions trading scheme; it includes the renewables obligation
and it includes all the energy efficiency measures—CERT,
and so on—and a very tiny contribution to Energy Networks.
As to whether people know, I know that it has always been a fact
that the bills have had to carry information about the renewables
obligations, and I am looking for help to find out if anybody
knows whether the companies are obligated to give this information
because I think they are not.
Mr Leigh: I do not think there
is anything in the bills.
Q361 Chairman: Do you think they
should?
Joan Ruddock: I think it is a
very interesting question, and we are looking at billing and making
it easier for people to understand all the business about changing
companies, and so on. Ofgem has a responsibility in this respect.
It is an interesting question which I can reflect upon.
Q362 Paddy Tipping: I wish you would.
The final question is: you have talked a lot about resources.
There are people who say that energy companies have done really
well; they have had a windfall out of carbon emissions—£10
billion. They are making a lot of money. What about getting more
money out of the energy companies? What is your view on a windfall
tax?
Joan Ruddock: The Government has
set its face against a windfall tax at this moment in response
to the profits of the companies. It is entirely possible that
this could be considered at some future date. What we want to
see is the energy companies make their proper contribution to
energy efficiency, to the relief of fuel poverty and, as I said
earlier, that they should behave responsibly and be accountable
and transparent. We can keep all of these things on the table,
frankly, but there is no decision made at the moment and, of course,
any decision that would be made would be for the Treasury and
not for me. We have demands which we have placed upon them and
we may put future demands upon them. I should just add to that,
Chairman, that one of the issues of why it is not so obvious just
to take money in a windfall tax is, of course, because we are
expecting them to invest very heavily in renewables, and it is
the need for huge investment that is very much in the minds of
Government Ministers.
Q363 Dr Strang: Before I ask a couple
of questions on Warm Front, I would like to come back to Mr Leigh
briefly on this statistic that there are 3.5 million people in
fuel poverty in 2006. That is a UK statistic. Do you have figures
for England, Scotland, Wales and Northern Ireland?
Mr Leigh: Yes.
Q364 Dr Strang: Do you have a regional
breakdown?
Mr Leigh: No.
Q365 Dr Strang: Thank you. Coming
to Warm Front, we have been told that in roughly 40 per cent of
cases the actual Warm Front grant is not sufficient to cover the
cost of the heating installation. I am not sure whether you have
any comment on that or whether you have received representations
that this grant has to be increased. I accept in some cases the
people do not pay themselves and get a supplement from elsewhere
and you have indicated it is the local authorities sometimes,
but the fact is that sometimes they do have to pay themselves,
and 40 per cent seems a very high figure. Can you comment on that?
Joan Ruddock: Again, this is one
of the reasons why I am reviewing all the aspects of the scheme,
because it is not unreasonable in some circumstances for people
to be asked to contribute something towards the cost of these
measures. There is not any doubt that since those levels were
set (£2,700 on the regular grant and £4,000 for oil)
there has been an increase in prices, and in the case of oil there
have been new regulations which have added about £1,000 to
the actual cost of the installation. I think what really matters
is: are there people who are unable to make the contribution required
of them and unable to get the money from any other sources? That
is what I am focused on, because what I do not want to have happening,
and I believe it is happening, is that there are people who are
unable to take advantage of the measures because they cannot make
the top-up. That is where I am focused, because I do not want
people to be in that position. However, it is absolutely blindingly
obvious that if we say increase the grant we then, within the
same pot of money, reduce the number of people that can be assisted.
I know that is why officials have not proposed in the past to
increase the limit on the grant, because it would mean fewer people
being helped. So it is a very, very careful judgment, but I am
now concerned that there are people who cannot afford to make
that, and although eaga, local authorities and charities—and
family members even—tend to pile in and make it up and give
them the money, if there are people (and, as I said, I think there
are) who are not getting that assistance and cannot have the measure
then I will have to do something about it, because that cannot
happen.
Q366 Dr Strang: Have you received
representations that higher prices are being charged by the Warm
Front contractors?
Joan Ruddock: People say that
and what usually happens is that a householder (and sometimes
they refer this to their Member of Parliament) is able to find
somebody who will give them a lower quote than the one they got
from Warm Front. All we can say about Warm Front, their prices
and the contractual arrangements is this: we have independent
consultants who have carried out a review and they have found
that the scheme, in general, is value for money. Also, when you
take the criteria that are required, which is about the reliability
of the company and all sorts of things that we have to have in
a government-backed scheme, if you take the companies and their
abilities to do the job, and so on, the prices that are being
charged through Warm Front are found to be at least the same as
the market or lower, not higher. That is a judgment that has been
made not by us but by independent consultants.[5]
We have to accept what they say, but it does not mean to say that
an individual householder cannot find a company that would do
it cheaper. We have to ask ourselves: is that a company that would
have met the approval process that eaga undertakes? I am not in
a position to say, or not.
Q367 Mr Cox: There are going to be regional
variations, are there not?
Joan Ruddock: Indeed.
Q368 Mr Cox: In a very rural area,
like the South West, you can find highly reputable companies who
will do it cheaper than somebody coming from South Wales, where
I am having reports of people coming down to Devonshire to carry
out Warm Front contracts. It does not make sense, Minister.
Joan Ruddock: All I can say, and
I know Chris wants to come in here, is if you know companies that
are reputable and can do the work then they, of course, should
be contacting eaga to see if they can become one of their approved
companies.
Q369 Mr Cox: As you know, they only
have periodic entries to their scheme.
Joan Ruddock: Indeed. I am not
disputing anything you say; I am simply saying do encourage those
companies to get into the loop because then if there really are
lots of companies out there that can offer lower prices then of
course the price will come down.
Q370 Mr Cox: I do not want to argue
because I know I am stepping out of turn, but the situation is
absurd at the moment because the local contractor who wants to
get on to eaga's scheme will have to go through all the bureaucratic
requirements that eaga wants, it may be 18 months before he can
do it and he will have to offer a certain amount of regional coverage,
whereas the truth is he may be a local town contractor who does
not operate outside 15 or 20 miles and does the job brilliantly
well. The system is bureaucratic and over-expensive; it has far
too many costs. Why not just give the money to the householder,
subject to some safeguards, and enable them to get the work done—subject
to safeguards.
Joan Ruddock: Yes. You say "subject
to safeguards" and that is the difficulty. How—
Q371 Mr Cox: You do not need a company
in Newcastle to do it in Devon.
Joan Ruddock: How do you take
100,000 tiny companies and say: "Go and do this"? There
could not be any safeguards, but I am going to let Chris come
in here because he is very anxious.
Mr Leigh: I would like to explain
briefly how the subcontracts that eaga have with the installers
were let. They were let on a regional basis three years ago. The
way that the prices were set was that they took the two lowest
suitable tendered prices and offered those tendered prices to
all the suitable contractors in the region, and any contractor
in the region that was prepared to do the work at that price was
then taken on to the books. That was three years ago. eaga have
just gone through a re-tendering exercise, so that would have
been an opportunity for these local contractors who say they can
do the job cheaper to say: "I would like to be part of this".
Q372 Mr Cox: They may not want to
be part of the entire assemblage of machinery and bureaucracy
that eaga requires.
Mr Leigh: We recognise that, but
I think it is also important to recognise that the service that
is provided through Warm Front includes guarantees on the work
and an after-installation service—
Q373 Mr Cox: I have heard all of
that from eaga and I do not buy it, because my local plumber will
turn up if my heating goes wrong. If I can just say on this, Minister,
you are absolutely right (if I can add my experience), there are
many people who cannot take advantage of Warm Front because of
the top-up; particularly in my rural area, I have people who have
not been able to take a shower in their own home for two years
even though they have been offered one of these grants. So the
system really does need re-examination. The centralised form of
the way in which Warm Front is being delivered I have grave doubts
about as to whether or not, frankly, it is needed. I do not see
why it should not be that the money is enabled as a grant to the
householder, subject to certain basic safeguards which could be
envisaged or supervised by the local authority, or something like
that. At least they would have a very intensely localised understanding
of what prices were like, and those people who would be able to
offer a good service. I am really encouraging you to review it
because I do think it is causing a problem.
Joan Ruddock: I am happy to hear
all—
Q374 Chairman: Is it Cox Central
Heating Services that we are about to—
Joan Ruddock: I am happy to hear
all opinions!
Q375 Mr Drew: Mr Cox has rehearsed
my arguments so I do not need to say very much. I understand why
we went for a more centralised model because there were significant
problems with some local contractors, and if you were in the wrong
area you really did hit a huge number of problems. All I would
say is, as part of your review, just look at whether we have gone
too far and we have actually crowded out some very good, local
contractors who are on the spot and who will not rip people off,
although they may be a bit more expensive. If that could be looked
at you would eliminate a great many of the bad stories that do
come out of eaga.
Joan Ruddock: Sure.
Q376 Chairman: Perhaps you might
like to write to colleagues in the House and ask them for all
of their experiences with Warm Front. I think you would get a
big postbag.
Joan Ruddock: If I may say so,
Chairman, I think they are flowing in at a pretty good rate, and
I apologise to anybody who has not got a speedy answer, because
in so many of them they are just popping up—
Chairman: Perhaps that tells you the
story as to why it is a good idea that you are reviewing it.
Q377 Lynne Jones: Before I go on
to my question, I would like to flag up that I hope we have a
more community-based approach to some of these installations;
doing block schemes rather than individual household schemes.
I think we would get much better value for money, but I will not
labour the point.
Joan Ruddock: I can say a lot
on that if you want me to.
Q378 Chairman: I would like us to
press on, but if you wanted to send us a little note to encapsulate
your thinking on that I am sure we would be genuinely interested
in hearing it.
Joan Ruddock: Let me say, as a
shorthand, that we are producing, as I said, three consultation
papers. One of them will be on the Community Energy Savings programme.
It would be good if Members were to look at that and give any
comments, because I agree it is where we need to go. However,
we need to make sure we know how to do it, and we have got some
evidence already from existing Warm Zones operations and CESP
is going to be—
Q379 Chairman: Can I just be clear
in terms of what you mean by that, because we have got a question
later that touches, for example, on the lessons learnt out of
Kirklees. When you talk about community-based energy, does that
type of model include itself in the consultation?
Joan Ruddock: Yes. What we are
saying in the consultation is we think there could be many models,
and that is why we are consulting. I had a meeting yesterday and
I heard about a local authority that had decided on a particular
geographic area for Warm Zones and then found, much to their amazement,
they had hardly any people in that whole area who were eligible
for Warm Front. They just got it all wrong. We know we have got
to look at all of this. Yes, it is all in the consultation and,
as I say, we will be glad to hear from people.
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