Examination of Witnesses (Question Numbers
1-19)
MR JONATHAN
STEARN, MS
JENNY SAUNDERS
AND MR
NORMAN KERR
3 MARCH 2010
Q1 Paddy Tipping: Welcome. We are going
to start a few minutes early because there is a lot of ground
to cover and we have a lot of expert witnesses. Welcome to Norman
Kerr from Energy Action Scotland, Jenny Saunders from National
Energy Action, and Jonathan Stearn from Consumer Focus. It is
going to be a very short inquiry. We are pretty keen to try to
publish something before the end of March. Welcome and thanks
for coming. The Government has targets, they are pretty ambitious.
You tell us that they are not going to meet those targets but
what more should they be doing to try to make goings happen?
Ms Saunders: The
Government has an initial target, 2010, which clearly it is not
going to meet. It is nowhere near. We believe that it could meet
the 2016 target but it will require a different direction and
substantial new investment in resources. The Government itself
acknowledged that it had failed to do everything that it should
have done leading up to this deadline. We do not know what the
review is going to say about the new direction, but there are
clearly three strands. The first will look at the cost of energy
and social price rebates. We think there is certainly scope for
that to have an impact for some categories of people, but they
will have to step-up the energy efficiency side of things, hence
yesterday's announcement and the statements from other parties
for a similar type of approach, so that we start to focus much
more strongly on the energy efficiency of our homes and that longer-term
impact that will have on energy bills.
Mr Stearn: Obviously the 2010
target the Government is not going to reach. The 2016 target we
need to keep absolutely there and in mind, and to have that as
a target that this Government and any future government will aim
to reach. Clearly the three elements of fuel poverty are: prices,
energy efficiency, and income. We know what has been happening
to prices. We know that prices have increased by about 120 per
cent since 2003. Consumer Focus has always had issues, and indeed
Energywatch before it, in terms of the retail prices that consumers
are paying against wholesale prices, and we have constantly asked
for a Competition Commission into the sort of retail prices that
consumers are paying. We are particularly seeing that with consumers
who are paying through prepayment and paying their bills quarterly.
Clearly there is some competition in the market-place going on
around, for example, online direct debit, but that means that
people who are on prepayment and quarterly bill payers are now
paying, on average, up to £300 more for their energy and
we know that that is where the fuel poor are. About one in ten
people who pay through direct debit are fuel poor and that number
is obviously less for those who are online direct debit. Between
four and five in every ten households who pay their bills quarterly
are in fuel poverty and about one in every three on prepayment
meters. I think it is really important that we pay attention to
the prices that all consumers are paying. The other key issue
is around income. We know, for example, that over £16 billion
remains in the Treasury every year—although technically
it does not, you could say that—from unclaimed benefits
and tax credits. £16 billion a year. The other key issue
is energy efficiency. Energy efficiency has to be a central way
of tackling fuel poverty. It is the way you protect consumers
from price hikes, not just those from energy companies but, I
would have to say, from government as well, because a lot of climate
change policies are being paid for through consumer bills. Energy
efficiency is the way that we can protect consumers from price
hikes and therefore to some extent fuel-poverty-proof consumers.
Q2 Paddy Tipping: When you said,
Jenny, that we need a new direction and extra resources, presumably
you are talking about improved energy efficiency measures, and
more resources to back it.
Ms Saunders: I think it is the
way in which the current schemes have sometimes competed with
each other. They have been stop-start, so the tools that we have
had to use have changed, and it is difficult sometimes for people
who are vulnerable to know exactly what they are entitled to.
There have been problems in the energy companies having an obligation
to deliver the carbon savings in the cheapest way, and not having
as a focus the needs of individual households. NEA's concerns
are: what is the experience, and how are we meeting the needs
of people who are on low incomes and vulnerable to these price
hikes? If we were to take on a new way of delivering this, through
a local-authority-led partnership with the energy companies and
other bodies you can have an area-based approach, and then everybody
is offered something and is encouraged to take up what is on offer
and to know what they are entitled to. I think that would be a
much better approach for us to take.
Q3 Paddy Tipping: Prices to consumers
have in broad terms doubled over the past two or three years.
Against that context, is it sensible to set targets? Are they
meaningful?
Mr Stearn: I think it is really
important to set fuel poverty targets but it is key to see that
the way you deal with price hikes is through energy efficiency.
The fundamental issue is setting targets for the energy efficiency
of homes. For example, if we set an energy performance target
of band B, we know that over 80 per cent of people in fuel poverty
would no longer be in fuel poverty. We would reduce their energy
bills by 50 per cent and even up to 70 per cent. That is why energy
efficiency is so key in fuel poverty, but that is also why it
is so important to have a fuel poverty target. As I have said,
it is not just price hikes linked to fuel companies but it is
also the results of climate change policies as well.
Q4 Paddy Tipping: If you were to
look in the future, say in five years time, where do you think
we will be?
Ms Saunders: In terms of the numbers
of people in fuel poverty?
Q5 Paddy Tipping: Yes.
Ms Saunders: The demographics
and the characteristics of that group of customers may change.
It will depend substantially on gas prices, how the wholesale
market works. In the next two to three years, we would not anticipate
some of the additional environmental levies that we will see coming
in. They are going to be coming in over a longer period, so those
additional levies that will go on to bills may not impact as badly.
We keep talking about gas and electricity. Norrie will know better
than me that some people are outside these regulated markets—so
oil, LPG—and we do not know for that group of customers
quite what is going to happen because they have to purchase deliveries
upfront as well. We are not terribly optimistic about the numbers
at the minute, unless we see either more substantial subsidies,
which will be the quickest way for meeting the targets, and some
extra protection for the most vulnerable.
Mr Kerr: If we assume a business
as normal case then where we will be in five years is that fuel
poverty numbers will greatly increase. The Scottish Government's
calculations—and I know it is different for colleagues down
in DECC—show that for every one per cent rise in the cost
of energy another 8,000 Scottish households move into fuel poverty.
When we talk about energy efficiency, I think we need to be very
clear that just now we are talking about some very, very basic
measures: loft insulation and cavity wall insulation. Over one-third
of homes in Scotland do not have a cavity, a quarter do not have
a loft, one-third are off the gas grid, so for all the measures
that we talk about, those homes are being excluded from accepting
those measures. There will be a similar pattern, particularly,
in rural parts of England and Wales. We really need to define
what we mean by energy efficiency and how we pay for that.
Paddy Tipping: Let us talk a bit more
about energy efficiency, because that seems to be the key thing.
Q6 Dr Turner: Britain does not have
the most wonderful record on improving energy efficiency, certainly
compared to our European neighbours, but NEA has described the
current structure of domestic energy efficiency programmes as
"unfit for purpose in eradicating fuel poverty". Would
you like to tell us why and expand on that?
Ms Saunders: Because we are not
taking into consideration for fuel poverty the household make-up
and the property and the income. Putting all those three things
together is complex. We have proxies. In the energy efficiency
programmes we have, we are using quite loose proxies. For the
CERT programme to become available to anybody over the age of
70, irrespective of their income, irrespective of the health standard,
we do not believe is a very well-focused way of meeting fuel-poverty
targets, and also that reliance on people to come forward themselves
and identify themselves. As Norman said, there are different solutions
that will be appropriate to different household types and different
properties. We are not there yet. We have piecemeal programmes
and offerings. They do not consider, necessarily, the use of the
property, the number of people dwelling there and how people will
make use of some of these measures. Some, of course, are passive.
If the loft is insulated, that is it, that is all you have to
do. For others, we talk about energy efficient appliances and
they do not know how these things work, how to control them. I
think it is about having a more cohesive programme that is led
by local leaders who, even if the money is coming from different
sources, can set out in a more coherent way how these measures
should be applied in local areas.
Q7 Dr Turner: Of course it has been
said that we have too many schemes, none of which is adequate
by itself and there is a certain amount of fragmentation of the
effort. You have advocated a national energy efficiency scheme
that would adopt a street-by-street approach. Would this not be
like taking the current CESP programme and applying it nationally?
Ms Saunders: The current CESP
programme is a specific pilot and it is in the very poorest parts
of local authority areas. We hope to find lessons from the pilots.
It is too early to say whether that is correct, but we want things
on a much bigger scale. That type of approach, I suppose where
we are doing what we can within a local authority area, starting
in the poorest wards, is something that we strongly advocate,
but re-sourcing that is going to be a challenge if we depend on
the energy companies' obligations—which CESP does. That
is clearly a huge cost. If you are trying to do solid wall insulation
costing £10,000 a house and passing that on to all customers,
that CESP model is not going to be sustainable to the future.
Q8 Dr Turner: Do you think enough
funding goes into our Warm Front programme and other programmes?
Ms Saunders: The Warm Front programme
is a demand-led scheme and there is more demand than we have a
budget for. There is more demand than we would be able to meet
through that kind of programme in, I would say, probably 30 years.
It is whether or not we can find another more sustainable way
of dealing with broken boilers, replacement boilers and also energy
efficiency insulation measures that go alongside that. We should
have a longer-term commitment, because at the minute we have a
stop-start for the industry. The Chancellor announces a budget
and then there is a top-up in the Pre-Budget statement and there
is uncertainty around those budgets which is unsettling for the
industry. If we had something that was a higher level grant-aided
programme—we should not do away with that into the future,
but then make it linked to local authority programmes and targets—then
I think that is probably the way forward.
Q9 Dr Turner: Of course the problems
are compounded for poor families by the increase in energy prices.
Do you all feel that the Regulator has done all that could have
been done to control prices to the consumer?
Mr Stearn: I opened up by saying
that we think there should be a Competition Commission inquiry
into it, because we still do not think there is transparency in
terms of wholesale prices and retail prices and the prices that
consumers are paying. As we have said, we have seen a 120 per
cent increase in prices. That is the driver that keeps driving
up fuel poverty. It is essential that we get to grips with prices
and have a clear understanding of prices. At the moment, as far
as retail prices are going, there are signs of competition going
on, with energy suppliers trying to attract people on direct debit
online deals. They are clearly targeting a particular audience
with those deals. Even that shows there is real potential there
in terms of giving some consumers some better deals and we would
like to see that spread much wider to include quarterly bill payers
and those on pre-payment.
Q10 Charles Hendry: How important
do you think it is to have simplicity in the schemes which are
there, so that people who are fuel poor can understand what is
available to them? There is extraordinary confusion amongst the
schemes which are there, that, in addition to CESP and CERT and
Warm Front, we have local authority projects, we have the individual
schemes run by the energy suppliers and no member of the public
could possibly be expected to understand what is there. How would
you put the balance between having targeted schemes which deal
with a particular issue, which therefore require some degree of
complexity and a range of schemes, and the importance of simplicity?
Mr Kerr: The Scottish Government
attempted this last year when it brought forward this energy assistance
package that was entry for anybody through one portal, and, as
they come through that, it is important that that is simplified.
They have tried to use the Energy Saving Trust for the point of
contact. Someone approaches that and then the funding behind that
is sorted out. At the front, the individual sees one point of
contact, and behind that there is the opportunity to sort out
the funding. It still relies on the individual making the contact
in the first place. To make it simple there is a need to have
the area-based approach, similar to what we have through Warm
Zones, where there is an approach made on a door-by-door, street-by-street
approach and that difficulty is taken away from the householder.
The householder needs to know that there is something that can
be done. They do not need to know how much paperwork needs to
be filled in or how it is going to be paid for. They do need someone
to take, if you like, the hassle factor away, so someone completes
all the paperwork, gets the right funding, and applies the measure
for the householder. That makes it simple for the householder
to understand and accept. I think that is the point you make about
simplicity. If we put too many barriers in front of people, they
will become confused and they will not take any action. Make it
simpler, take away that, and they will obviously take action when
presented with that type of offer.
Ms Saunders: We keep talking about
the Government schemes, but obviously a lot of people will just
go to their local supplier or they will try to do the work themselves.
We are making an assumption that people are always waiting for
an energy company or a government scheme. Most people are not
doing that, they are going to their local builder or plumber to
get this work done. There is a big job for us to do if we want
people to do things to improve their homes. Those local suppliers
need to be skilled up, so that they know what these new products
are, they are engaged more. That is something else: we are assuming
that everybody has contact with their local authority. Yes, I
think we should have some very clear, strong messaging from government.
That is why we are advocating a communications message. The imperative
of doing this work is for people's health, for their wellbeing,
for their budgets, for the planet—some very strong messaging,
and then a local-authority-led initiative so that people will
know where to go, and you have good reliable sources whichever
scheme people will encounter. I think we will always have people
wanting to make their own improvements, but the fuel poor will
probably wait until a trusted individual, an intermediary, a charity
or a community agency or a local authority will go and help them
and take them through the process.
Mr Stearn: It is really important
to link up with the voluntary and community sector as well. We
need to be very joined up in this. If we are talking about the
insulation of people's roofs, for example, we all know what we
have up in our lofts. If you are an older person who has 70 years
worth of goodies up in your loft, you want to know what is going
to happen to that. That is where the link with the voluntary and
community sector comes in, to give people that support, so we
can have schemes where things can be stored, put back, sorted,
et cetera. That is why it all needs to be joined together really.
I think we need to get into the shoes of people and understand
where people are and where their starting point is.
Mr Kerr: I also think there is
a need for consistency. Every two or three years, we change the
message and we change the brand. Going back to the early 1990s
when we had Monergy, we had Billy the Dinosaur and a whole range
of things, and the public become confused: "Is this what
was on offer two or three years ago? Is it something different?
How do I interact with it?" A lot of good messages were out
there but just when they were starting to bite in, we decided
we were going to change the brand and move on to something else.
The public will take a long time to recognise a brand and to interact
with a brand and know that it is safe. Jenny used the phrase "trusted
intermediaries". We should not play that down, because people
who interact with vulnerable householders have a great deal of
power. I know you are taking evidence from Macmillan later on,
but people like Macmillan, people like home helps and community
nurses all have a part to play in getting a message across to
vulnerable householders which says, "This is okay and it
is right for you to take action." We need to do a lot on
consistency of message but also on ensuring that the message we
get out there is understood by everyone who is coming into contact
with households.
Q11 Charles Hendry: The Government
published its Household Energy Management Strategy yesterday.
From the initial assessment that you have been able to make of
it, to what extent does it address the problems which you have
just been highlighting?
Mr Kerr: I think it addresses
it in some ways. It is good to see that they are talking about
local authorities. I think we need some finer detail in the report,
because Scotland will have a different view on that and the lead
for local authorities will be different again in Scotland. It
is interesting to see that the Government is suggesting that loans
for high capital will come forward that will not impact on people's
fuel bills. I would like to see the final detail on that. It is
quite a significant challenge for the fuel suppliers and for others
to come forward with very low cost loans for big pieces of kit,
when we are talking in the range of £8,000/£10,000/£15,000.
How are we going to do that? I agree that attaching it to the
house rather than the consumer is an opportunity to encourage
people to take that up so that they can see the benefit, but the
assumption that is made is that everyone will take the benefit
and will reap the benefit in terms of reduced bills. Jonathan
was talking about band B housing being very good. If you use the
National Home Energy Rating Scheme, then a lot of the houses that
we are talking about in terms of an eco makeover will be band
2 or band 3. To bring them up to band 5 or band 6, which we are
probably talking about, the chances are they will not be able
to afford the fuel that they need to use. It is unlikely that
they will see savings because they are not heating their homes
just now, they are under-heating them. There is impact of that
on health. We will only be enabling some people to heat their
houses to what they need. It is unlikely that we will save everybody
money. We will save people who are already in medium to good homes,
but not the fuel poor. It is unlikely that we will save every
single one of them money.
Mr Stearn: There might also be
a missed opportunity. Jenny mentioned before the CERT scheme that
we have at the moment. Sixty per cent of that scheme goes to non
priority households; 40 per cent goes to priority households.
As Jenny said, that 40 per cent priority now includes older people
over 70 as well. There was this potential opportunity with pay-as-you-save
to see the son or daughter of CERT to then go further into reaching
the priority group. Just a quick read of it yesterday implied
that there is no intention at all of spreading that obligation
on suppliers in terms of priority groups, and that could well
be a missed opportunity for those who are not going to benefit
or cannot benefit from pay-as-you-save.
Paddy Tipping: You have led us to the
next subject, Jonathan: priority groups and targeting.
Q12 Mr Weir: At the moment the Government
uses receipt of benefits as a proxy for fuel poverty. As you yourself
have pointed out, about 40 per cent of fuel-poor households are
effectively excluded because of this, and the National Audit Office
found that nearly 75 per cent of households which qualify for
Warm Front are not necessarily in fuel poverty. Is there any alternative
method of targeting that could make sure it will reach those who
are really in fuel poverty?
Mr Stearn: One of the problems
is that we do not have one of the fundamentals we need, which
is a detailed understanding of the energy efficiency of all the
homes in the country. We do not have a national audit of the homes,
so that means we are missing one of the key components that we
need to be able to discuss each home individually. Until we have
that—and of course lots of us have been asking for that—we
do have to come up with proxies. We have done some proxies looking
at benefits and incomes against what we know about people's home
conditions. We think that one of the best proxies you can come
to is looking at the group which is eligible for Cold Weather
Payments. We also think—and others here might think differently—that
adding those people on very low incomes with school-aged children
as well would be a legitimate group, because that group is not
covered by Cold Weather Payments. In terms of looking at the information
we know about people's incomes against the generalised information
we have on the conditions of homes, that, for the time being,
looks like quite a good proxy, one of the best proxies we could
come up with in terms of fuel poverty, using that benefits income
data as the driver.
Q13 Mr Weir: You mentioned the audit
of energy efficiency. How realistic and expensive would it be
to set up such a national database?
Mr Stearn: There is some information
already collected. We have some of the least energy efficient
homes in Europe and it seems to be an absolutely basic mood is
to understand, to have this information on people's homes. We
have started to do it when people are selling their homes. We
need to extend that, to make sure that we have that data on everybody's
home.
Ms Saunders: What would be a shocking
mistake would be that we set out to audit people's homes and we
do not then offer something to them, there is no route for them
to take action, there is no grant aid. They do not want to know
they live in a band C property—so what? We would rather
we did not waste money just doing that. If it goes along with
an offering, and not just to find out the housing stock need,
that is important. Going back to the HEM document, there was a
little bit more of a positive sign in terms of dealing with the
different tenures, because the private rented sector standard
of housing has been shocking. We know there is a very high percentage
of people living in the private rented sector, as a percentage
of that tenure, in fuel poverty, in the least energy efficient
homes. If you target the different owners in different ways then
that is a way of also trying to get over what we have at the minute,
of individuals identifying themselves and coming forward for assistance.
If you put in some new legislation which said, "You're not
going to be able to rent out unless you get a certain energy efficiency
standard," and improve the decent homes in social housing,
and bring up that standard where again you have a lot of people
on low incomes living, then that is something we have to do into
the future.
Q14 Mr Weir: That raises problems
in itself. In many areas there is already a problem with not enough
rented property, and if you are putting more conditions on renting
property that could exacerbate that. I assume in what you are
saying that there would have to be a massive increase in the amount
available for upgrading homes to enable this to work. Who is going
to pay for that? Where is the money going to come from for that?
Mr Kerr: Landlords already have
an allowance that they can claim. We need to find a way of encouraging
them to take up that. If I can draw a parallel: you would not
be able to rent out a car as a car rental car company unless the
car was worthy for the road. We make very little assumption in
renting out a house in the private rented sector, where it is:
"You're able to stay in it" or it "You're not able
to stay in it." As Jenny says, the most inefficient houses
that we have, both in Scotland and in England, are in the private
rented sector, but we seem powerless, because the private rented
sector would tell us that they will simply take the houses off
the market. I do not believe that is a threat they would carry
through to any large extent. They need the income and they need
to rent out the houses. We need to place things in their way.
Mr Weir: You effectively believe it is
a tax incentive on the landlord to be able to do it that way.
Q15 Dr Whitehead: I would like to
pursue the question of a national database. The suggestion that
is current is that if you had homes with a SAP of 62 or more then
effectively most people would be able to afford the fuel that
would be required to heat those homes. Presumably, a national
database would pursue that sort of data. We have about four million
energy performance certificates in existence at the moment. What
would be the cost and effort involved in establishing some form
of national database and how might it be done?
Mr Stearn: The point Jenny was
making is quite good. We need to slide these two things together.
We can do this in an area-by-area approach. It is already starting
to be done when homes are being sold, but we need to develop a
strategy to link a drive to improve the energy efficiency of homes
with collecting knowledge about individual households and individual
homes. If we link the two together and look at an approach which
looks at areas region by region, we can do it in a comprehensive
way. It needs to be driven and pushed from central government.
Ms Saunders: We need to know who
needs this data and how are you going to use it. The concern at
the minute is access to data across the piece. The Government
knows what benefits people are on but the energy companies do
not. We can collect it up, but there then has to be access to
the agencies which need it. That local authority knowledge is
missing. Some are lacking information about their housing stock
for historic reasons, but others are rather better and have a
much better handle on what their local stock is like. I think
we should build it up. It is not something we should do overnight.
Warm Front has targeted some of the worst properties. They have
had a performance target to do that, and around 30 per cent of
their work has been in properties with a SAP less than 30. It
is how we drive it. Are we going to say, "We know these properties
have a SAP rating and therefore we will do something urgently
to help them"? Why are we keeping this data? It has to lead
somewhere.
Q16 Dr Whitehead: Would you agree,
generally, that if that data is not available and shared then
most of the effort that relates to eradicating fuel poverty relies
on rather shifting definitions in relationship to fuel prices
which appears then to remove the target as soon as it is set,
whereas getting that data and making it work sends the process
off in a different direction? Would you personally put a very
high priority on that sort of effort with the cost that is involved,
or do you think that is not appropriate at the moment?
Ms Saunders: I would say let us
get on and collect that data as we deliver the programmes, build
up the profile whilst we are going around the homes and then give
it to the householder and the local authority can keep it. But
lots of things can happen. How would it be updated? One of the
suggestions is that, like an MOT, every so many years you might
have to update that information. People do not like that kind
of bureaucracy or reporting, so I do not know how realistic it
would be to do it. Things break down and get replaced with a slightly
more efficient replacement. Also, the programmes used for SAP
change, the methodology changes. There is still a concern about
how it can incorporate some of the renewables, the small-scale
renewables, so it is not perfect yet in telling us what the real
performance of the property is with these new technologies being
added in. I think we should not over-egg the importance of data
collection.
Mr Stearn: In terms of costs,
I started off by mentioning the £16 billion that is unclaimed
from benefits and tax credits. It could well be imaginative thinking
in relation to fuel poverty that energy efficiency also can benefit
people on low incomes in terms of increased take-up. With, for
example, drives to make homes more energy efficient, coming with
that, as an example, is Warm Front. People come to Warm Front,
discover with Warm Front that they have not been claiming benefits
they are entitled to, and then go back again and can benefit from
Warm Front. We could get some information from that in terms of
use energy efficiency, use the idea that people can make their
homes more energy efficient and save on energy bills as also a
driver to people to collect those benefits they are not collecting
at the moment or the tax credits they are not collecting at the
moment. We could use this in quite an imaginative way.
Mr Kerr: You raise a couple of
interesting points. In terms of collecting a database at the same
time, you can also do a mapping exercise. The Centre for Sustainable
Energy did that for Cornwall and Devon. They used census data,
House Condition Surveys, a whole range of data, and you overlay
the map and you can show hot spots where there are likely to be
fuel-poor households. The Scottish Government did it as well,
but we have not used that to say that that is where we will then
put our endeavours and target households that we could probably
do an awful lot with. You can do that, and when you are doing
that, if you are in an area and working, you can collect the data
because there will be an assessment on the doorstep of what the
house needs. To add a couple of questions on, you can collect
the data. I would say there is a difficulty with SAP. SAP, as
Jenny says, does not take into account all the new renewable that
is on the market. It also assumes that every house is the same
in terms of its location; therefore houses in the south coast
of England are deemed to use the same amount of energy to stay
warm as a house in Arbroath. There is a flaw in SAP, in the respect
that it simply calculates water heating and does not take into
account the grade A data, the location of the property, and a
whole range of other factors. We need to be sure that the data
that we want to set against will be meaningful for us.
Q17 Sir Robert Smith: Could I remind
the Committee of my entries in the Register of Members' Interests
as a shareholder in Shell, as Honorary Vice-President of Energy
Action Scotland, and, probably relevant too, as Vice-Chair of
the Warm Homes Group. Jonathan Stearn, the main thing I want to
raise is benefit take-up. It does seem that all the experiments
have shown that one of the quickest ways of making a difference
to people is to get them to claim the right benefits. The other
thing the Government did say in 2008—to grab the headlines
in a crisis of rising fuel poverty—was "We're going
to have data sharing." Have they delivered that on the benefit
side yet?
Mr Kerr: The data sharing was
through the Department of Work and Pensions and was focused solely
on elderly people. We know that the majority of fuel poor will
be in that area but certainly there are huge swathes of fuel-poor
households that will not be subject to data sharing because they
are not of pensionable age. It has had some impact, but I would
say it was limited.
Ms Saunders: After I leave here
I am going for an update on social price support. The pilot that
is going on now will work out how easy it is for these data matches
to happen, because the name of the person paying the energy bill
may be different from that of the person getting the benefit.
We are all assuming there will not be a perfect match, but that
is no excuse not to try to do it. We know a lot of people do not
come forward to claim benefits. If this is an automatic payment
and we know that they are entitled and we know they are on the
lowest incomes, it seems like a really good idea, and then on
the back of that we can warm them up to energy efficiency offers.
I think it is definitely something that we should push for. We
can only do it for pensioners because the legislation was linked
to the Pensions Act, but we really hope that if it is successful
successive governments will look again at this and see whether
or not it can limit administration costs for dealing with individual
applications. It is a way of delivering a very simple rebate off
the bill going to those who will really struggle to meet that
ten per cent of income—whatever the housing standard is,
I am afraid—because if you are only getting about £6,000
or £7,000 a year, and average bills are going to be £700
or £800, if you can bring it down that far, they are going
to need some extra assistance probably going forward for some
time.
Paddy Tipping: Let us move on to talk
about the whole issue of social tariffs, Winter Fuel Allowances,
Cold Weather Payments.
Q18 Dr Whitehead: We have social
tariffs on a statutory basis now coming in the new Energy Bill,
assuming that it completes its passage. Do you welcome that? Do
you think that the basis for social tariffs being on a statutory
basis is wide enough in terms of whom social tariffs relate to?
Mr Stearn: What the Bill is doing
is giving the Secretary of State powers to introduce price support
mechanisms. There are obviously different ways you are going to
do this and I think the intention is to consult in the summer
about who should be recipients. At the moment the Government seems
to be minded to use its power to provide extra support to old
people and we think that is too narrow. As I said at the beginning,
the best proxy we can come up with for the fuel poor are people
who are eligible for Cold Weather Payments plus school-aged children
in families on low incomes. That obviously means extending who
the Government is minded to provide support for. One of the key
reasons for doing that is that that is going to leave anything
else again still to the whim of energy companies. At the moment,
for example, if the Government just mandates price support to
old people, you will find that at least two energy companies only
give their social tariffs to old people, so if you happen to be
a lone parent on a very low income in a damp flat in Bristol you
would not get any of this. This is why we think it is really important.
We feel it is absolutely key that the Government has done this
with a view to saying, "We're going to mandate and we are
going to tell companies who should be getting support" but
we want them to have a wider vision than the one they have. Of
course the other issue is what do we mean by price support. At
the moment the Government is talking about a fixed amount of money,
but that is different from a social tariff, which Ofgem has now
described as making sure that people get the lowest tariff. Those
two things are obviously quite different. When you have a separation
between the tariffs within one company, you are talking about
quite a difference in terms of the amount of payment that would
actually be made to particular households. Those are the two issues.
What does the price support consist of? Is it a social tariff
or is it a fixed amount? Who is eligible for it? Those are the
key issues. I have tried to explain why we think it should be
wider than what the Government is minded to do at the moment.
Ms Saunders: There is also another
issue, because depending on the amount that is agreed upon, and
the Chancellor announced he would expect the companies to be paying
out about £300 million worth of rebates by 2013, those costs
will come through to the customers. We have arrived at the conclusion
that that is a reasonable amount. There is a need for a social
rebate, but we would much prefer this to be met through the public
purse because it is regressive to do it via energy bills. It is
right that the Government sets the eligibility and puts things
on to a mandated footing—we accept that—but the criteria
that we have also come up with is Cold Weather Credit eligibility.
Because of vulnerability and economic disadvantage that has already
been assessed by government for those categories of people to
get the Cold Weather Payment, that would mean, to bring in all
of those people, a rebate of about £75 off their bills. There
are four million people in that category. To keep extending it
and the costs to come through to consumers does concern us. We
would much prefer that those rebates are met by the Government.
They should be supporting, as we used to have heating additions
and heating allowances.
Q19 Dr Whitehead: In your written
evidence you pointed out that, possibly as a result of these costs
falling on customers, more people will be driven into fuel poverty
as a result of additional prices in general than actually would
be taken out of fuel poverty as a result of CERT in operation.
That seems a rather fundamental criticism.
Ms Saunders: It is. We are looking
at the impact assessment that the Government itself has carried
out for some of the schemes. It is a matter of degree, I suppose.
We are talking about £15 being added on to the average energy
bill across the board, whereas some people in dire need are going
to get a much more substantial offering, and they are the people
who do need to have it most. It is the severity of fuel poverty
that will be tackled. It is difficult because we do not have this
clear mapping. We do not know about the properties that people
live in. That is why I think there needs to be a limit as to what
will come through on to energy consumers' bills.
Mr Stearn: It is also worth pointing
out that the same thing that we are talking about in relation
to price support is quite small in relation to climate change
policies that consumers are paying for in addition to this. Those
are certainly regressive. At least this one does have some ability
to give some money back to those who need some price support to
pay for the bills. Everything else is very, very regressive in
terms of people on low incomes disproportionately paying towards
it.
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