Disclosure of State Pension Credit Information (Warm Home Discount) Regulations 2011

Tuesday 12th July 2011 Grand Committee

Considered in Grand Committee

17:41

Moved By

[Lord Marland]

That the Grand Committee do report to the House that it has considered the Disclosure of State Pension Credit Information (Warm Home Discount) Regulations 2011.

Relevant document: 25th Report from the Joint Committee on Statutory Instruments.

[The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Lord Marland)]

I feel slightly like something on a treadmill. There is only one more measure after this, noble Lords will be pleased to know. I will try to keep them entertained for as long I can, then we will rush off for a Statement.

I shall speak to the draft Disclosure of State Pension Credit Information (Warm Home Discount) Regulations 2011 for Great Britain. Noble Lords will recall considering the Warm Home Discount Regulations 2011 on Tuesday 29 March. That instrument enabled the warm home discount scheme to take effect on 1 April this year. The regulations to be discussed today allow for rebates to be targeted at the core group of low-income pensioners that I mentioned in March by allowing information to be lawfully shared between energy supply companies and government. The Warm Home Discount Scheme Regulations 2011 require that these pensioners are provided with a rebate off their electricity bill from their energy supply company. This rebate will be worth £120 this winter, rising to £140 by winter 2014-15.

This winter, we estimate that about 800,000 pensioners will receive this rebate. We estimate that this figure will rise to more than 1 million pensioners for the subsequent three years. In total, rebates worth more than £580 million are expected to be provided to this group over the four years of the scheme. To help energy suppliers to identify which of their customers is a low-income pensioner and to provide them with this rebate, we need to allow the suppliers and the Government to share information. Sharing sensitive and personal information in this way, without seeking individual consent first, requires a legal gateway. The instrument the Committee is considering today is made under Section 142 of the Pensions Act 2008, which confers power on the Secretary of State to make regulations allowing for such information sharing. These regulations also set out what data may be shared and what it may be used for, and put in place robust offences to protect the data and prevent their misuse.

I will explain each of these areas in more detail. In terms of information sharing, this instrument allows the Secretary of State to disclose name and address information of pension credit customers to participating electricity suppliers, and allows participating electricity suppliers to provide name, address and meter point administration number information about their domestic electricity customers to the Secretary of State. These records will then be compared—a process sometimes called data matching. Where there is a match, the Secretary of State will tell each supplier which of their customers to provide with a rebate. Where there is not a match, we will write to those pension credit recipients to ask them to contact a government call centre and confirm their eligibility. If they are eligible, the energy supplier will be required to provide them with a rebate. The key advantage of data matching is that most customers will get the rebate automatically, without claiming. This will help to ensure that the most vulnerable receive the support that they need.

17:45

As to keeping this information safe and secure, before any data transfers take place, very stringent DWP security standards will have to be met. In addition, the regulations set out an offences regime for unlawful disclosure of information. If a person is found guilty of one of the offences, they will be liable to an unlimited fine or a prison sentence of up to two years.

The instrument also sets out whose information can be shared in any particular year and, from this, the eligibility for the core group. The eligibility criteria must be met by the DWP and energy company customers on a certain qualifying date. The date will be set annually and made public in advance. This year we expect the qualifying date to be 11 September 2011.

In year 1 of the scheme, only those in receipt of the guarantee credit element of the pension credit will be eligible. As I mentioned, we expect that about 800,000 poorer pensioners will receive this winter’s rebate. In subsequent years, people in receipt of the savings credit element as well as the guarantee element of the pension credit will be gradually brought into the scheme, starting with the oldest first. By winter 2014-15 all those who receive the guarantee credit element of the pension credit will be included. The value of the rebate will increase annually, from £120 this year to £140 by winter 2014-15.

In all cases, the rebate will be available only where the pension credit recipient or their partner pays their own electricity bill and is with a participating energy supply company. The six major UK energy suppliers will participate, and other, smaller suppliers can also choose to be part of the core group and include their customers. The rebate will be provided on electricity bills to ensure those off the gas grid can benefit.

Finally, to make sure that this shared information is used only to help customers, the instrument sets very tight parameters to limit its use to the provision of the rebate and the offer to customers of advice and assistance, for example on energy efficiency or debt and disconnection, to help them with heating their home.

The instrument is vital to allow legal data-sharing to take place between energy companies and the Government, and to enable supplier-funded rebates worth £580 million to be provided to low-income pensioners over the next four years. On that basis, I commend it to the Committee.

[Lord Teverson]

My Lords, I remember many discussions in the Moses Room about rationalising this system, and frustration on all sides of the Committee that people in need of help with their energy bills were not being able to take it because it was impossible to share information. This was for good reasons, but we knew that because information was not being shared, a number of the most vulnerable people in our society were not able to take the benefits that they needed in such a vital area of their lives. Therefore, I welcome the regulations, because at last we seem to have a solution that gets around the problem.

That is good, although I think that all of us in this information age are concerned about the sharing of data. Data security is always an area of difficulty, and the fact that this information will be held according to government standards is some reassurance. However, the key issue is what happens in practice and who leaves which laptop or USB where. There are always risks in this area.

The one area where I pricked up my ears was that of data matching. I am lucky enough to be going on holiday to the United States this year, and I almost worry that I will be data matched with an Iranian terrorist and will be unable to come back for the October Session. My Whip would be particularly unhappy about that.

[Noble Lords]

September.

[Lord Teverson]

I am not going until October—but let us move away from my domestic arrangements to those of the more vulnerable in society. Could the Minister clarify that, once the data-matching process has occurred, if there are “leftovers” the Government will ensure that everyone who is entitled receives their entitlement? How are we going to check that the matchings that have occurred are correct? A number of people may receive these discounts when they are not entitled to them. They will thank their lucky stars that the discounts have arrived and that will be that. The issue is not one of following up the data that have not matched but of ensuring that the matching that has taken place is effective, given that those who do not receive their entitlement are not likely to follow this up for the old reason that they did not know that they were eligible in the first place. However, I welcome this measure as a breakthrough for the more vulnerable in our society.

[Lord Whitty]

My Lords, I welcome this for the same reason as the noble Lord, Lord Teverson. This has been a long-running saga, but I hope that we will get the ability to match data in the nicest possible sense in order to ensure that the benefit goes to those for whom it is intended and to whom the provision of the warm homes discount applies.

My query arises from a wider concern about the Government’s strategy in relation to fuel poverty. There is no relationship between the warm homes discount and any improvement in the energy efficiency of the home itself. The Government have cut significantly the former direct payment through Warm Front and related schemes and are relying on a variation of the eco-mechanism to redirect money back into energy efficiency. This is distinct from the previous approach of a social tariff—which may have been flawed in many ways—in that there is no mechanism for ensuring that the bills next year, for those people who will benefit from the discount this year, will be any lower, because there has been no nudge in the direction of improving the energy efficiency of their homes.

However, the Minister encouraged me in his closing remarks when he referred to the possibility of using the data to identify those who may be targeted for advice on improving energy efficiency. As long as only a discount is provided, the problem of fuel poverty will continue, and the Government will have to continue to override the tariffs structure by providing discounts, rebates and special tariffs, with all the complexities and requirements to identify individuals that that implies. However, if the policy were linked to one of improving energy efficiency, perhaps through the same supply companies, that would be a more constructive way to go forward.

The question is: beyond the giving of advice, would it be possible to gear some of this discount—on the discretion of the recipient—to improvements through the Green Deal or other provisions fronted by the supply company, rather than providing a straight discount? If that is possible, could it be made apparent to the recipient that this is not just a cash saving this year, but a step towards reducing energy consumption and therefore towards reduced bills in future years? That would be a more coherent approach and would not require any greater disclosure of data or data matching than these regulations require.

[Baroness Smith of Basildon]

My Lords, we have previously discussed the Warm Home Discount Regulations in Committee at some length and the regulations before us follow from that. When we discussed them before, the Minister was generous enough to acknowledge that the Labour Government were very clear when they brought in the voluntary arrangements that should they be successful, they would bring in legislation for compulsory support. Today’s regulations add to that compulsory support. What we did not envisage was that this would happen against the backdrop alluded to by my noble friend Lord Whitty: a drastic two-thirds cut in warm front grants. The Minister is very aware of our concerns and our opposition to those cuts. As welcome as these discounts are, my fear is that with the very substantial increases in bills for next year that have been announced, next winter’s bills will be so much larger that the impact of the discount, which will be extremely welcome to those who receive it, will be less than envisaged when the level was first set.

I have two questions for the Minister, and I have given him notice of them. One is to seek confirmation on a point which my noble friend Lord Whitty also made. It is about the use for which companies can contact recipients of grants. I want to be assured that when the Secretary of State discloses information to an electricity supplier it can not be used for the purposes of sale or promotion by that company. Sub-paragraphs (b) and (c) of Regulation 5(1) state that the reasons for giving the information are,

“enabling the supplier to so provide that rebate”,

which is entirely reasonable and welcome, and

“enabling the supplier to offer relevant assistance to that customer”,

which is also entirely reasonable and welcome. However, in Regulation 5(3), there is a very broad definition of relevant assistance including:

“energy efficiency measures, thermal efficiency measures and advice and assistance relating to energy and thermal efficiency … advice and assistance relating to the generation of electricity or heat produced by microgeneration or the production of heat produced by any plant which relies wholly or mainly on wood as a fuel”,

and the list continues. Energy companies can contact the recipient on such a broad base, and they may use that to try to promote sales growth. I am not sure that that is what is intended, so if the Minister could be clear that the broad definition is not a sales pitch for energy companies, it would be helpful.

On the previous regulations, we discussed the reconciliation mechanism that will be in place to make sure that the information shared is accurate. I am not clear whether there will be further regulations on that. I understood that second and third statutory instruments will be coming through. If they will not, will the Minister tell us how that will be funded? When we discussed this before, I think there was an issue about who would be responsible for funding the reconciliation mechanism. If he can give us an answer on that today, it will be very helpful. However, we broadly support the regulations with those two caveats on which we would like answers.

[Lord Marland]

I thank noble Lords, as always. The noble Lord, Lord Teverson, was first in to bat. Funnily enough, Teverson is not a natural terrorist name, I feel. You do not think that with that name—a Cornish name, no doubt—he is going to be immediately arrested at the airport for some data matching. The data-matching issue is very important. There is no great science. Indeed, we have trialled it. We have trialled 340,000 people on the pension credit and, luckily, we hit the jackpot with about 205,000. There is a gap, and it is very important that we follow up the people who we could not access through the matching, but we have made substantial inroads into the number.

The noble Lord, Lord Whitty, has great expertise in this area, particularly on the subject of fuel poverty. We all know that both Governments, particularly our Government, are determined to attack this dreadful feature of our society which is exponentially going off the dial in terms of numbers, despite the best intentions of the previous Government and, indeed, the much better intentions of this Government to try and sort it out. In truth, the House is unified in dealing with this dreadful problem. It is fundamental that we get to grips with it and I know that we will carry it out. As your Lordships will know, we have instructed Professor Hills to carry out a fuel poverty review. It is an independent review and we are looking forward to seeing what suggestions he comes up with.

18:00

The noble Lord, Lord Whitty, asked how we can connect this to energy efficiency measures in some form. Indeed, that joined-up thinking is no doubt the secret of his success. There is an element of joined-up thinking because we can use this data for targeting CERT, which is a temporary measure. It then may become a mechanism which we can make work with the Green Deal, as he rightly says. We have to recognise that the Green Deal is a big picture deal. We are trying to get into millions and millions of homes, not just those in this core group that we are representing, so as the Green Deal evolves we will doubtless be able to work in some joined-up thinking in that regard. However, there is indeed a gap until the Green Deal takes off, once the legislation passes through. Unfortunately, because there have been endless debates on alternative voting and reform of the House of Lords, we have not been able to get the legislation through which we perhaps required.

[Baroness Smith of Basildon]

My understanding is that the Energy Bill, which has completed its stages in this House, is being delayed in the other place, which has not been having debates on the alternative vote or the House of Lords. In fact, if he is able to enlighten us on why there is no date set for the final stages of the Energy Bill in the other place, that would be gratefully received because many of us in this House, who fully supported so much of that Bill, are very disappointed that it does not seem to be going any further.

[Lord Marland]

Indeed, no more disappointed than I am. Of course, one has to take into consideration all the legislation going into the other House. We genuinely tried to persuade the other place to allow it to come in, but it is so log-jammed with legislation. I am not sure whether it is entirely true that the other place has not debated Lords reform, or indeed alternative voting. However, I take the noble Baroness’s point and no one is more disappointed than our department in not being able to get the Bill through.

The noble Baroness, Lady Smith, made a very good point, as always, about the parameters. Broadly speaking, this is not to be used as a method of mis-selling.

[Baroness Smith of Basildon]

Nor of any sales promotion.

[Lord Marland]

Yes, nor of any sales promotion, let alone mis-selling—a subject that we debated extensively on the Green Deal. We must be vigilant that that does not happen. Let me state this absolutely categorically; indeed, I will go through the notes because I do not want to have any doubt. This instrument sets very tight parameters around the use of information, limiting it to requiring electricity suppliers to give their customers an automatic rebate on their electricity bills—it is limited to that—and to being able to offer their customers advice and assistance in specified areas on energy and thermal efficiency. Any other reason, such as sales promotion, is not permitted and would be unlawful. I hope that that clarifies that issue in words of one syllable.

There is not going to be a further order on the subject of reconciliation. We accept that pensioners who will benefit may not be evenly distributed between the energy supply companies. As a result, we have put in place a reconciliation mechanism to allow the costs of the scheme to be distributed fairly between energy suppliers, based on their market share. Regulations to allow for this came into force on 1 July 2011. I hope, with that, I can commend these regulations to the Committee.

Motion agreed.