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It may be helpful if I give a quick summary of how the scheme will operate. The DWP and the energy suppliers will pass the relevant data to the data-matching organisation to perform the match. Where there is a match between the two sets of information, the energy supplier will be notified and will automatically award a rebate of £80 to that customer's electricity account. We expect most people to receive the rebate without needing to do anything. The rebate will appear as a credit on their electricity bill.
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Lord Jones: Is the Minister able to give an estimate of the number of people that we are looking at regarding the guarantee credit element of the state pension credit?
Lord McKenzie of Luton: I shall be very happy to supply that information but perhaps I may formally complete my introduction to the regulations and deal with my noble friend's question in my winding-up speech. However, it is a very pertinent question and one with which I hope I can help.
There will be cases where we believe that people should qualify but their data have not matched. This might be because they do not have an electricity account, or because of weaknesses in either the data presented for matching or the matching process itself. In these cases, we will do our best to ensure that those who qualify still receive the rebate. We will write to them advising what they need to do to get their rebate, and a dedicated helpline will be available to deal with those calls.
Matching and sharing data in this way is a new frontier for government and for energy suppliers; it has not been done before. Although we have done our best to estimate what the outcome will be, so far as concerns the number of people who might receive the rebate, for example, we cannot be precise.
Before the full data-matching exercise is conducted, we will undertake a test phase using live data. This will enable us to test the data-matching process and make any technical adjustments that might improve the match rate. The test phase will also help us to make decisions on who exactly should qualify for the rebate. We want to reach people who are responsible for paying their own fuel bills and who do not already receive help, through a discounted tariff, with their electricity bills. It is our intention therefore to exclude people who receive a discounted tariff from this scheme, but this may depend on the numbers involved.
The DWP and energy suppliers are working together to set up a communications strategy to ensure that people who might qualify are aware of the scheme and its benefits. After the matching exercise, the DWP will write to people whose details have automatically matched to tell them about the rebate and when they can expect the rebate to appear on their electricity bill. Information will be made available on the internet and to customer representative groups before the scheme comes into operation.
The energy rebate scheme will last for one year only. It is a pilot. The lessons that we learn from this scheme will be invaluable in helping us to design the mandated scheme from 2011.
My honourable friend the Minister of State for pensions and the ageing society has made a statement in the Explanatory Memorandum to the regulations that, in her view, the statutory instrument is compatible with the European Convention on Human Rights. I confirm that that is my view too. I commend the regulations to the Committee. I beg to move.
Lord Freud: My Lords, we welcome these regulations. They set up what will helpfully be a small, cheap and effective scheme to target support towards those who need it most. I thank the Minister for his helpful draft
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We have all felt the cold in the past few weeks. This winter has been particularly harsh and it will add a significant amount to the energy bills of those least able to afford it. The Government have missed many opportunities on fuel poverty. They have missed all their targets and are likely to miss the next one, but this is a small step in the right direction, so that is something.
Despite the explanatory document, I still have a few questions about the scheme. Paragraph 16 of the draft scheme sets out that the Government's current intention is to exclude from the scheme those customers who are already receiving a discounted tariff for their electricity supply. This seems sensible and would avoid giving some people a double discount. However, the paragraph goes on to say that if the overlap is very large, the Government will ignore this policy intention and continue to offer a rebate in order to ensure,
- "that the number of people assisted by the scheme is not so small as to make the administrative cost and effort required disproportionate to the benefits".
That seems a very strange way to offer support; to say that they have taken so much time and money to establish that you do not need help that they are going to give you some more money anyway does not seem the best use of public funds. Of course administrative costs should be kept as low as possible, but the way to achieve that should not be to expand the overall budget so that the proportion falls.
Speaking of costs, can the Minister confirm how much he expects this system to cost? Ignoring the final sum of the rebate offered by the energy suppliers, which will depend on the number of matches found, how much will HP Enterprise Services charge for this year's work? Who will bear the cost? Will it be the Government or the energy suppliers? The Minister in another place identified HP Enterprise Services as,
- "the recognised and authorised information technology provider for the Department for Work and Pensions".-[Official Report, Commons, Ninth Delegated Legislation Committee, 13/1/10; col. 4.]
That unfortunately does not inspire as much confidence as it should. Can we be assured that we will not, once again, be presented with an example of the Civil Service's inability to negotiate rigorous contracts with the private sector? What measures of success are being demanded to deliver this system accurately and cheaply?
I am glad to see the criminal offence around unlawfully disclosing data in these regulations, but I would like to confirm that at the end of the year HP Enterprise Services will also be required to wipe its systems of any data. At the moment, the explanatory document confirms only that energy suppliers and DWP have to purge their systems of the information shared between them.
I should like to address other areas that the Government should be looking at to help those suffering from fuel poverty. I do not expect the Minister to perform a U-turn today and accept the Conservative policy of providing a loan to home owners to upgrade the energy efficiency of their homes by simple means such as loft insulation and so on. However, does he
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Finally, I should like to push the Minister on what his department is doing to improve the worryingly low uptake rate of pension credits. In another place, the Minister claimed that the uptake rate was better at the lower levels of income, which is something, but unless the Minister thinks that pension credits are being offered to those who do not need them, it surely is not the point.
Despite my wider concerns about the Government's approach to fuel poverty, I welcome the regulations and I very much hope that they achieve the matching that they are intended to.
Lord Oakeshott of Seagrove Bay: My Lords, we on these Benches share the general support that the noble Lord, Lord Freud, has given for these measures, as far as they go. Like him, I have a number of mainly factual questions.
Some 3.25 million households are estimated to be in fuel poverty and 2.25 million of them, according to Age Concern, are older households. How many pension credit recipients just of the guaranteed credit covered by the regulations do the Government believe are over 70? What is the total pool of people among whom help could be distributed? How many people are excluded-people over 70 who would otherwise be eligible-by the exclusion of people on the savings credit? There is obviously a problem of limited resources, but it seems very hard to give no help at all to a pensioner over 70 who is perhaps receiving only a few pence or a few pounds of savings credit or is benefiting from it.
Why does the scheme cover only electricity and not gas bills? The question is fairly obvious. How was the qualifying date of 26 March 2010 chosen and, given the considerable problems with take-up of pension credit and the delays in processing claims, will that lead to many pensioners who would otherwise be eligible missing out? Citizens Advice, which knows more about these matters than anyone, states:
"Problems in relation to Pension Credit are now a leading social policy issue ... The most common problem continues to be the length of time it takes to process claims, and in some cases this is being exacerbated by the loss of papers relating to individual claims";
with delays of more than a year in some cases. That is obviously shocking, not only in relation to this particular additional help but also in relation to qualifying for desperately needed pension credit generally.
Those are our main questions. However, even after the Minister's generally full and helpful introduction and studying the background papers, which I found helpful, I am still not sure of what is the best estimate of the number of people who will benefit. My honourable friend in the Commons, Steve Webb, said that he estimated that only about one-tenth of pensioners on pension credit would be helped. Perhaps the Minister will comment on that.
We thank the Minister for the time and trouble he has taken to explain the regulations, and we would welcome detailed answers to our questions.
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Lord Jenkin of Roding: My Lords, I apologise to the noble Lord, Lord Oakeshott of Seagrove Bay, because I sought to intervene before I should have. I hope that he will recognise that it was an honest mistake.
The Minister has explained the purposes of this order very clearly and, like my noble friend Lord Freud, I welcome it. It is the first tangible, visible effort by the Government to solve a problem to which I drew the attention of the Grand Committee, and later that of the House, two years ago in January 2008-that is, the flaws in the CERT scheme, the carbon emissions reduction target scheme. I have alerted the noble Lord to the fact that I am going to refer back, very briefly, to those debates. I asked the Minister yesterday whether a DECC Minister would be supporting him, but he has got the best thing available with some extremely able DECC officials sitting behind him, whom I know well.
The point of my argument in 2008-which is entirely relevant to this order, as the Minister explained, under paragraph 5-is that 40 per cent of the savings under the carbon emissions reduction target have to come from what is called the "Priority Group"-which, essentially, is a large number of different categories of people claiming benefits-which, under that order, included for the first time all pensioners. I immediately declare an interest as a pensioner. However, nothing was done at that stage to help the energy suppliers to identify the households that would be eligible for the various benefits available, notably the insulation of their homes. At the time, the noble Lord, Lord Rooker, who dealt with the order, firmly announced that if they did not meet their target of getting 40 per cent of their savings from the priority group, the suppliers would be liable to fines up to one-tenth of their total turnover. It was no small matter.
The noble Lord, Lord Rooker, freely acknowledged that the problem of identifying the priority group households was a serious one. He said that it was being addressed through what I have to say were extremely small pilot schemes, to which I shall come in a minute. But we are grateful for this order, because it is the first tangible expression of being able to allow the energy suppliers to identify the people who should benefit. I understand that most of this order is dealing with the energy rebate scheme, and I listened with interest to the Minister's remarks on that. Of course, we shall return to this issue on the Energy Bill, when we discuss what he called the social price support scheme. There are enabling provisions in that Bill to be supported later by regulations, which I am told are likely to be consulted on during the summer.
4.15 pm
I declared an interest a moment ago. I have had my house very recently insulated with loft insulation and cavity wall filling under the CERT scheme. It was perfectly clear that I was part of the priority group. I have to say that it has been a truly horrendous experience. The day when the firm turned up and did the work was not a problem, but I had to go through months of hassle to get this working at all. I tried to do it first through the Energy Saving Trust, having had a circular, which I was asked to fill in, on the nature of
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At that point, I got in touch with the noble Baroness who deals with this in Defra. I asked her what was going on and how someone could run out of money for a scheme of this sort. She wrote me a very apologetic letter and said that it was perfectly clear that all the people that I dealt with in the Energy Saving Trust and Coldbusters did not understand the scheme. At that point, I washed my hands of it and started again and went back to my energy supplier, British Gas. Here, again, I had a very considerable problem, which I eventually had to resolve with the help of Ofgem, which was extremely helpful; it is responsible for administering the scheme.
Eventually we got the work done, but it took months-and it has totally vindicated my belief that the biggest single barrier that DECC faces in taking this scheme forward is the sheer hassle faced by householders. I was lucky, because I could write to a Minister and got the answer that the problem was total incompetence, and that the people in the government bodies running the scheme did not understand the scheme. I had to write to Ofgem to put a bomb under British Gas to get on with it. In the end, I got senior people involved. But, my Lords, that sort of thing is simply not open to the ordinary citizen, certainly not to the elderly people who are probably the most reluctant to embark on having their houses insulated. It has been a very sobering reflection on how one has to deal with officialdom in cases like this. I hope that perhaps DECC will take this back to see what can possibly be done to improve the ordinary citizen's experience.
Most of this instrument, as the Minister said, deals with the voluntary energy rebate scheme, the details of which he set out very clearly. As I said, I welcome it because it means that for the first time energy suppliers are to be given the names and addresses of the people to whom they need to give this credit.
The details of the eventual scheme will, as I said, be set out in secondary legislation and there will be a consultation in due course. We can of course return to this matter on the Energy Bill, but I hope that the Minister will be able to tell us when the consultation on the new social price support scheme is going to happen. It is sometimes referred to as a "mandated" scheme, but that actually means a "compulsory" scheme. It is all part of dressing up the scheme with the right words in the hope that that will make it more acceptable.
At this stage, I say only that I will require some persuading that it is right to expect the energy suppliers, which are in competition with each other and are facing having to supply electricity in a competitive market, to subsidise some of their customers who may be fuel-poor. I say that merely because I think that we will need to discuss this issue. It may be the most effective way forward but, as the Minister said, we
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We come now to regulation 5 of this statutory instrument, which deals with the CERT scheme. Paragraph (3)(d) of that regulation indicates that the purpose of this data-matching is,
- "to contact domestic customers who have received an automatic award with a view to ... offering energy efficiency measures ... delivering or helping to deliver energy efficiency measures",
and, as the Minister said, to place their names on the priority list. That is all under the CERT order of 2008, which I do not think has always been immediately obvious. One person from whom I took advice on this said, "Oh no, you shouldn't raise CERT under these regulations; it has nothing whatever to do with them". So I wrote back to him saying that he was quite wrong; it does arise under these regulations, and there it is in regulation 5(3)(d). Indeed, the Minister has explained why that should be so.
I, too, have some questions but, unlike, I think, the noble Lord, Lord Jones, I gave the Minister notice of them. My first question is similar to his: how many consumers, or perhaps consumer households, will be covered by the regulations? I appreciate that the DWP cannot yet say how many will receive the automatic energy rebate because, as the Minister explained, many of them may already be getting a discount from their supplier. The intention is that that should not be duplicated but, as the Minister said, it may turn out that there is such a big overlap that that has to be the case. However, I am not asking how many people will get the rebate; I am asking how many consumers or consumer households are entitled to the guarantee pension credit and so come within the purview of these regulations.
My second question derives from that and was, I think, asked by the noble Lord, Oakeshott: what proportion does that number represent of the 11.2 million priority households that are eligible for insulation help under the CERT scheme? The noble Lord, Lord Oakeshott, said that he had been advised by his colleague in another place that it might be 10 per cent. My guess is that the figure may be substantially lower than that but I shall await the Minister's answer.
I am sure the Minister will be briefed on my third question. Do the Government realise that electricity companies are still getting little or no help under any of these schemes to identify the rest of their consumers in the priority group who should be getting help with the insulation of their homes? What proposals do they have to deal with this problem? What progress has been made with the pilot schemes that I mentioned at the outset of my speech, which were referred to by the noble Lord, Lord Rooker?
I refer to a brief that I received from the Equality and Human Rights Commission. Like the rest of us, the commission rightly welcomes the scheme as a contribution to solving the problem but, under a heading "Use of Data", it states:
"The Commission notes that the Regulations have been amended following consultation to allow suppliers to contact matched customers to seek consent for them to be added to the list for priority services - as the result of suggestions in the consultation".
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I am not in the least surprised that those suggestions emerged from the consultation because it is a sensible thing to do. It goes on:
"Although we recognise and welcome longer-term measures such as increasing energy efficiency, we believe that the data in this scheme should only be used in order to process and apply the specific credit from the energy supplier. We are keen to ensure that data should not be used by energy suppliers for other purposes, such as direct marketing, without individuals pro-actively opting in".
How does the commission think that energy suppliers are going to reach these 11.2 million households unless they are given some information about which they are? I can tell noble Lords how they reach them at the moment. They have a variety of methods, some of which may be more effective than others. A lot depends on identifying an area of a town or city in which they might expect to find a higher than average proportion of these customers. They then knock from door to door, finding out who these customers are and whether they have had any help under Warm Front or whether they qualify for help under the CERT scheme. They have told me that it is still a very expensive operation because it is like finding a needle in a haystack. They knock on a large number of homes and find that they are not eligible for help under the CERT scheme for a variety of reasons.
Two years after the original CERT order, and after we have complained bitterly about threatening the companies with fines if they do not reach their 40 per cent target, we are still not telling them who their target households are. All we have is this first-and I say again, very welcome-effort to try to tell them to whom they should be giving the rebate and whom they should be telling that they are entitled to help under the CERT scheme. What is happening to these pilot schemes? When can we hear something else coming out of that?
Finally, I note that there has been a significant change in the scheme as a result of an amendment order passed last July. Among other things, the amendment order states that they were:
I had to ask what CFLs means: it means compact fluorescent lamps. Why can they not be called "high-efficiency light bulbs" or "low-energy light bulbs"? Why do they have to be given this fancy name? It is nothing to do with the Minister, but it is how these things sometimes get tangled up in jargon invented in Whitehall, which nobody understands. The main point I want to make about them is that in the last update of the carbon emissions programme, dated 6 November, very nearly 30 per cent of the savings achieved by then had come from lighting. Now those are illegal-they are not now allowed to be promoted by direct mail, as that has been banned, but can be through retail outlets.
There is a clear recognition that there will be a very substantial fall-off in the proportion of the savings coming from lighting-the CERT makes that clear-and that that will have to be made up by increasing the savings got from other sources. I do not expect an answer to this at the moment, and certainly not from the noble Lord, Lord McKenzie, but how on earth are they to do that? They are working as hard as they can
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This whole scheme, worthy though it is in intent-to judge by the figures produced by Ofgem, it is certainly making some progress-is still making relatively little progress compared with the need of trying to get millions of older houses properly insulated and protected against the cold. We will no doubt wish to explore this point further when the Energy Bill reaches this House but my question, which is the same as that put by other noble Lords, is: how many are covered by this scheme? It is not about who will get the automatic rebate, but about the individuals or households covered by it. Also, what proportion does that represent of the 11.2 million?
4.30 pm
Lord McKenzie of Luton: My Lords, I thank all noble Lords for what I believe is their support for this order, even though it comes with quite a few questions which I will try to address. In so far as I miss any of those, I will be very happy to write to noble Lords. I think that all noble Lords focused on the numbers of those who will be helped here; the noble Lords, Lord Oakeshott, Lord Freud and Lord Jenkin of Roding, and my noble friend Lord Jones did that. I want to stress that people are eligible if they are on the guaranteed element of pension credit only and aged 70 or over. We believe that something like 0.6 million people are on savings credit only and that 2.7 million people are on some form of pension credit. Of those 2.7 million, we believe that something like 333,000 are eligible under this scheme.
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