Energy Bill [Lords]

Memorandum submitted by Local Government Group (EN 21)

Summary

· Energy Companies should be required, as part of their Energy Company Obligation (ECO), to partner with councils. This will enable the agencies that have a relationship with householders defined as vulnerable to fuel poverty (subject to the conclusions of the Hills Fuel Poverty Review [1] ) and on a low income to have access to resources, possibly via referrals, to improve the homes of people in their care or their clients. The emphasis should be on supporting existing agencies who work with the vulnerable, rather than giving this sensitive information to Energy Companies.

· Councils should be financially supported to facilitate the roll out of smart meters, particularly where householders are defined as vulnerable.

· Councils will need access to Energy Performance Certificates (EPCs) to monitor the improvement of energy efficiency (subject to amendments on the Home Energy Conservation Act or HECA) and to enforce against private landlords with F or G rated properties (subject to Government Amendments).

· The continuation of HECA should be considered as an additional burden and as such a full burdens assessment should be carried out with a commitment to resource the burden centrally.

· Councils should have every opportunity to provide, engage with, support and receive the Green Deal.

1. About the Local Government Group

1.1 The LG Group works on behalf of councils to support, promote and improve local government. The LG Group is the merger of six organisations: the Local Government Association (LGA), Local Government Improvement and Development (previously the IDeA), Local Government Regulation (previously LACORS), Local Government Employers, Local Government Leadership (previously the Leadership Centre) and Local Partnerships (previously 4Ps).

1.2 The LG Group is a voluntary membership body and our 419 member authorities cover every part of England and Wales. Together they represent over 50 million people and spend around £113 billion a year on local services. LG Group members include county councils, metropolitan district councils, English unitary authorities, London boroughs and shire district councils, along with fire authorities, police authorities, national park authorities and passenger transport authorities. The 22 Welsh unitary authorities are in corporate membership through the Welsh Local Government Association (WLGA) which retains full autonomy in dealing with Welsh affairs.

2. The Energy Company Obligation (ECO)

2.1 We agree that the ‘Carbon Emission Reduction Target’ element of the ECO should be dovetailed into the Green Deal finance package. Financial modelling undertaken by the Marksman Group and the Energy Saving Trust on behalf of councils, such as Birmingham City Council and Newcastle Council, has demonstrated that council-led provider models for the Green Deal will still require input from the ECO. Additional research that supports this has been undertaken by Haringey Council as part of their Local Carbon Framework Pilot activity and also through the Local Authority Finance Innovators Group (FIG).

2.2 We are interested in the proposals to set up a brokerage arrangement to ensure the ECO funds are available to Green Deal Providers beyond the Energy Companies. The way the ECO is set up places significant power with the Energy Companies in the design, implementation and success of the Green Deal, which may make it unattractive to other private enterprises. Measures should be included in legislation to enable ECO resources to be accessed more universally by a wide range of Green Deal providers.

2.3 The Home Heating Cost Reduction Target (Affordable Warmth Target) element of the ECO should not be tied to the Green Deal. Our forthcoming 2011 publication [2] "Warm and Healthy Homes: how councils are helping householders improve the energy efficiency of their homes to stay warm and healthy" sets out a series of case studies that demonstrate how partnership working between Energy Suppliers, councils and health agencies have been successfully improving the energy efficiency of the homes of those most vulnerable to the effects of cold homes and fuel poverty. The link between cold homes/fuel poverty and the health agenda is made clear in the 2011 Marmot Review [3] on the health impacts of cold homes and fuel poverty. We want to avoid a situation where a vulnerable person in their home, who may have just returned from hospital, has to deal with sales people for the Green Deal. These people should only have to deal with the organisations who are there to support and care for them.

2.4 We are concerned that emphasis is being placed on helping Energy Companies with an obligation to ‘find’ vulnerable people on low incomes, rather than encouraging Energy Companies to work with the agencies who support vulnerable and low income people. We should not be giving sensitive information to Energy Companies, but should be making resources available to the agencies who work with vulnerable and low income people on a regular basis, to enable them to refer their client to have their property improved.

2.5 With the low interest rates required to meet the Golden Rule under the Green Deal, it is unlikely that private companies will be able to secure a high enough return to make it attractive to provide the Green Deal in isolation. The advantages of being a Green Deal provider will be in continuing consumer loyalty and the opportunity to make additional sales of other products. With this in mind, it is unlikely that retailers will be interested in marketing the Green Deal at vulnerable and poor customers, unable to purchase other goods and services available from that retailer. This makes it essential for the Affordable Warmth Target to be separate from the Carbon Emission Reduction Target under the ECO.

2.6 Lessons should be learnt from the Energy Efficiency Commitment (EEC) and the Carbon Emission Reduction Target (CERT), particularly where efficiency-drives lead to ineffective interventions. In particular, the light bulb fiasco led to Energy Companies ‘efficiently’ executing their obligation to reduce carbon by purchasing millions of compact fluorescent light bulbs, which did not lead to an effective way to reduce carbon.

2.7 Government keeps reiterating its assumption that energy companies meet their obligations by funding them themselves, with no intervention from the public purse. This is not the case. Councils, Primary Care Trusts (PCTs) and the NHS have been funding energy efficiency programmes that enable Energy Companies to meet their carbon targets. The LG Group will shortly be undertaking a review into the amount and proportion of resources councils have invested in enabling Energy Companies to meet their obligations under the Community Energy Saving Programme (CESP), where some companies have been asking for as much as 80% [4] of the programme to be funded by local councils.

2.8 In addition to funding considerations for harder to treat properties, particularly solid walled properties that required external wall interventions, are considerations that lend themselves to an area-based approach. Despite the wealth of information that has been produced demonstrating that an area-based approach improves the efficiency and effectiveness of the uptake of insulation measures [5] , the Government has ignored this approach in its development of the Green Deal. In particular, planning considerations have not been integrated into the formation of the Green Deal. It is ludicrous to imagine that individual householders in a row of terrace properties will want to individually apply for the Green Deal, and possibly the planning permission associated with their required measures.

3. Smart Meters

3.1 The LG Group has lobbied for the roll out of smart metering to incorporate a partnership approach with local authorities that will facilitate the roll out of smart metering, providing local knowledge and support to overcome foreseen and unforeseen obstacles.

3.2 We have raised concerns that the roll-out of smart metering effectively opens the door to a number of bogus callers and criminals to take advantage of householders. This was evidenced in the Digital Switchover programme. More rigorous investigation of this problem and the impact on council trading standards and other support staff should be carried out.

3.3 Every household is different, and some may have specific needs that will need to be met to enable them to understand and take part in the smart meter roll out. For example, householders may not have English as their first language, may have learning difficulties, or may have a disability. Local councils are often familiar with these residents, and have experience in supporting their diverse communities. In particular, householders who may be vulnerable or have special needs will be being supported by social services or other council-led interventions, and they will need to be aware of any visits to their client’s homes. They may also have to be present, which will require resourcing. Working in partnership with local authorities, with a local plan for deployment, will assist in the smooth installation of meters to a range of residents and property types.

3.4 Local authorities should be recognised as key partners in the roll out of smart metering. However, there will be resourcing implications for local authorities. The roll out of smart metering does not lead to a direct financial or administrative gain for local authorities – unlike for energy suppliers. For local authorities it is about local leadership, assisting residents and meeting their needs, allaying their concerns, helping reduce CO2 emissions, and reducing fuel bills. Councils will be contacted by their residents about the programme, and will have to resource this. Resourcing a partnership approach with a local authority should be integrated into the costs for the suppliers – but the efficiency gains from utilising the knowledge and expertise of local councils should outweigh the minor additional costs.

4. Private-rented Sector

4.1 The LG Group is yet to see the details of the changes Government is proposing to the Energy Bill on the private-rented sector. However, we continue to push for a full burdens assessment, should there be an enforcement role for councils. Prohibiting the leasing of properties that are F and G rated will reduce the administrative burden on councils compared to the previous proposal, which placed the responsibility on councils to set out the measures the landlord was required to undertake.

5. Home Energy Conservation Act (HECA)

5.1 The Home Energy Conservation Act (HECA) was identified as an unnecessary administrative burden on councils and we are surprised at the Minister’s decision to retain this. If councils will be required to undertake any reporting on the Green Deal, then it is essential that Green Deal providers be required to submit regular information to councils on the number and location of Green Deal properties in their area. We do not want a costly burden that requires councils to knock on doors asking if residents have taken up the Green Deal.

5.2 Given that councils have long been assured that HECA was to be repealed, and were encouraged not to report on this requirement but to concentrate on National Indicator 187 on Fuel Poverty under the previous administration, this should be considered a new burden and a full burdens assessment should be undertaken accordingly, with a commitment from DECC to resource councils to meet this additional burden.

6. Green Deal and Councils

6.1 The LG Group wants to see clearer and legislative mechanisms and incentives to enable councils to play a part in the Green Deal.

6.2 Every householder and business in the country has a local council, and so having a clear role for councils to participate in the Green Deal would ensure everyone has equal access to the Green Deal. Not everyone has access to or uses large retail and energy companies, e.g. rural off the grid and/or off the gas network communities, island residents, and ethnic minority groups, etc. They all have a local council.

6.3 Councils are trusted by local people to be acting in their best interests, and not for profit. Research has shown that people expect their councils to be able to help them improve the energy efficiency of their homes and businesses [6] . People are familiar with property-related issues being within the remit of their local council.

6.4 Councils are best placed to link up the Green Deal with other local environmental initiatives, such as district heating, encouraging residents to take up more pro-environmental behaviours. This also ensures any ‘building work’ is in-line with strategic planning priorities for that area.

6.5 Councils can ensure the Green Deal is delivered equitably, efficiently and that the costs are transparent. CERT has demonstrated that costs for the delivery of energy efficiency improvements vary greatly across the country, and are particularly high in rural areas and dense cities such as London. As such, these areas do not currently receive the same level of service.

6.6 Councils can work with local community leaders to generate interest and take-up in the scheme. They can also use the green deal to stimulate the local economy through the generation of local green jobs, the involvement of local social enterprises, the third sector and ‘Big Society’. Birmingham’s ‘Energy Savers’ is an example of this approach.

6.7 Councils are best placed to assess sensitive information on the householder, such as benefits entitlement, that may mean they are able to access to additional support to bring down their fuel bills or increase their income.

June 2011


[1] 2011, Hills Fuel Poverty Review :

[1] http://www.decc.gov.uk/en/content/cms/what_we_do/consumers/fuel_poverty/hills_review/hills_review.aspx

[2] Publication imminent, please contact the LG Group if you are interested in a copy of the report.

[3] 2011, Marmot Review, The Health Impacts of Cold Homes and Fuel Poverty :

[3] http://www.marmotreview.org/AssetLibrary/the%20health%20impacts%20of%20cold%20homes%20and%20fuel%20poverty%20-%20marmot%20team%20foe%20-%20may%202011.pdf

[4] Source: LGA Press Releases May-June 2011

[5] For example, see:

[5] - 2009, LGA, Kyoto to Kettering : Local government’s manifesto for building low carbon communities.

[5] - 2010, Sustainable Development Commission, The Future Is Local: Empowering Communities to Improve their Neighbourhoods .

[5] - 2010, Ashden Awards, Power to our Neighbourhoods: towards integrated local sustainable energy solutions - Learning from success .

[6] 2009, LGA, Are there votes to be had in climate change

Prepared 15th June 2011