Energy Bill
Debate between Lord Whitty and Baroness Maddock
Baroness Maddock
Before the Minister sits down, can I apologise to the House for not declaring my interest? Like the noble Lord, Lord O’Neill of Clackmannan, I am a vice-president of National Energy Action, which is a charity that works towards eradicating fuel poverty.
Lord Whitty
My Lords, I also omitted to declare an interest. I am chair of a charity that deals with research into fuel poverty.
I am a bit disappointed by the Minister. It is correct that the Government have a number of policies coming on-stream that are directed at dealing with fuel poverty. Unfortunately the start of their period of office saw a substantial reduction in support given to tackling fuel poverty through the abolition of the Warm Front scheme, which was taxpayer-funded. For the first time in 30 years we are without a taxpayer-funded scheme to deal with fuel poverty. In so far as the objection to the ECO and other green tariffs is valid, it is partly because they are made on a poll-tax and not a progressive-taxation basis.
While the Government’s strategy has some commendable features that I hope move it in the right direction, it is not a sufficient answer to the failure of successive Governments to meet the targets that were set—as the noble Baroness, Lady Maddock, said—back in 2000 to eliminate fuel poverty in general. It was actually by 2016 rather than 2010, so we still have two years to do it, but we definitely need a new strategy, which Clause 136 recognises. In view of how the Minister has portrayed the current schemes dealing with fuel poverty as being adequate, I suspect that we will have a few arguments when we come to Clause 136. I am glad that it is there.
I hope that the Minister will go away and think about the point that I am making: electricity is the main form of energy that the fuel poor use. They rely on it disproportionately for their heating. Any electricity market reform part of this Bill should reflect that interest. The way that we deliver electricity, the choices that we make in terms of the source of that electricity and the kind of tariffs and levies that we impose on that electricity make an enormous difference to the way that they impact differentially on the fuel poor. It is correct that we are concerned about the cost to consumers in general—that is already in the Bill—but there is a differential effect depending on the nature and the mix of the policies that fall on the fuel poor. Before we leave electricity market reform, that should be reflected there.
I shall not push this tonight because I am not sure that my amendment fully reflects what I am saying, but I hope that the Minister will think about, at the beginning of the major section of this Bill dealing with electricity market reform, saying that one of the things with which we are concerned is the minimisation of fuel poverty. I beg leave to withdraw the amendment.
Energy Bill
Debate between Lord Whitty and Baroness Maddock
Lord Whitty
I, too, thank the Minister for getting fuel poverty into the Bill. Throughout the Commons proceedings, and the earlier stages of the proceedings in this House, there was considerable criticism that one of the major areas of concern in energy policy—fuel poverty—was not reflected in the Bill. We now have a clear indication of the way the Government are going on this. I also join the noble Lord, Lord Jenkin, and others in thanking the Minister and her officials for trying to explain this somewhat complex position to us last night. The penny may have dropped but I am not sure the shillings have yet on all of it.
Indeed, some of it is not clear and cannot be clear until the Government, in six or eight months’ time, come up with a strategy and the secondary regulations. I understand that. On the other hand, there are some problems with the approach as so-far revealed. The Minister said she wants to display a rigorous and flexible strategy under these provisions. There is a slight danger of being too rigorous and complex on definition and target issues and too flexible and unclear on what the actual strategy will deliver. I will come back to some of those points.
I thank the Government for getting us here. However, we should not ignore the fact that this is, for those of us who have been engaged in fuel poverty and those who suffer from it, quite a sad point. Although most of us have recognised that this has been the situation for some considerable time, we have now explicitly recognised that the statutory ambitions set, with all-party support, in the legislation originated by the noble Baroness, Lady Maddock, and the follow-through of that, have failed. That has implications for other targets that we set in this area. There is a necessity to be rigorous in not only setting targets but also checking, enforcing, reporting and adapting to any failure to meet those targets, however difficult that might seem.
This is also the point where we have accepted that achieving those statutory targets is not easy. Previous statutory targets talked about the eradication of fuel poverty. We have now abandoned that ambition and substituted reduction, and a reduction that will be made in order of priority. I understand why that is the Government’s position, but in terms of the campaign on fuel poverty it is quite a serious retreat. It might be inevitable. From now, we need to treat it as inevitable and ensure that the new policy, strategy and less ambitious targets are achieved but we should not let this pass without recognising that it is a quite a profound change in our approach.
It is also more of a technologically significant change in the measurement. We debated this and others have commented on it. Some of us had the suspicion when the Treasury, when obliging DECC to look at this area, hoped that the redefinition would define the problem away. Whatever else one may say about Professor Hills, he has definitely reinforced and underlined that fuel poverty is an important and distinct area of policy, one that requires rigorous and effective measures to tackle it. Even with his measurement, which excluded a number of things, we have 2.5 million households in England alone suffering from it. We owe Professor Hills a debt for his report. We are now trying to turn that into some measure of reality.
The first complication it presents is that we now have an English target which measured differently from that in Scotland, Northern Ireland and, probably, Wales. That makes a UK approach to it difficult. Indeed, there was some advance on the basis of the old measurement, which was relatively easily understood, even though it was itself quite complex. It was relatively well established and we were about to adopt it on a pan-European basis. Europe will also have to think again about any co-ordinated approach on this.
Let us accept that the Hills definition will be one of the main measurements. I cannot remember the exact reference, but quite near the beginning of the report that I received yesterday, it says that from now on the Government will establish the figures only on the basis of one of the Hills measurements—namely, the low-income/high-cost measurement. At least for a few years, we need not only to take in the other Hills amendment, relating to the depth of fuel poverty—which in some ways is a useful and more understandable measurement—but to continue to measure it on the old scale. That is the normal approach in a lot of statistical series. Eventually, we may not need that, but for the next five years the credibility of this strategy requires us to look at what we previously defined as fuel poverty, and what our colleagues in devolved Administrations are probably going to go on using as the definition, in order to see how well we are doing. On a purely statistical basis, we ought to retain that.
It is of course also true that many points in Professor Hills’s strategy are not yet fully reflected in the Government’s actions. We will come back to that as we go on over the next few months. As expressed in the documentation now before us, there is clearly a triangle of effects on fuel poverty: household income, the energy efficiency of the home and the appliances within it, and the price of energy. All three are open to government intervention. The strategy shown by the Government so far focuses very much on intervention on the energy efficiency of homes. I am strongly in favour of such intervention but there is a danger of ignoring the other two sides of the triangle and the forces that define whether fuel poverty is going up or down.
It is important that we find a way of conveying the narrative on all three fronts to the population. Fuel poverty itself, the measurements involved and the nomenclature of the various intervention schemes are complicated enough, and we must find a clear narrative to explain what we are doing on all those fronts. At the moment, as the Commons Select Committee said only a few weeks ago, the Government are unable to convey what they are trying to do and why they are trying to do it when it comes to fuel poverty and energy efficiency interventions.
The new definition, as I say, has some advantages. It probably excludes a number of Members of the House of Lords who are on a reasonable income but live in rather draughty castles. I commend it from that point of view. However, although the Minister may contest this, it does not obviously take us hugely further forward in terms of operationally identifying precisely who those people are. It is pretty sound statistically but, operationally, we have no further clue as to whether such and such a house in such and such a town or village is actually suffering from fuel poverty or not. At one point, as mentioned last night at the briefing, the document refers to assessing the condition of housing at a local level. However, we do not actually have a register of the condition of every house—we only have a broad idea of what the SAP rating of certain kinds of housing is—nor do we have the identification of the household structure and the household income within it. I am not sure that we ever can have that. However, to make this provision work most cost-effectively, we need to see whether local authorities, or other local bodies taking the lead on this, can pin down the priority areas more precisely in terms of streets, houses or type of persons.
Baroness Maddock
I thank the noble Lord for giving way. When I introduced the Home Energy Conservation Act, that was one of the things we were trying to get local authorities to do. In the early days, they were quite innovative. For example, Sutton had infra red photographs in its local library which showed where the relevant houses were. I agree entirely with the noble Lord that we need to be able to do that but there are other things that we can do and there is legislation to enable people to do them.
Lord Whitty
Yes, but this has not been a priority for local authorities and in the present period of austerity is unlikely to become so unless the strategy that the Minister comes up with in a few months’ time places that obligation on them and provides resources to enable them to carry it out. At the other end, the income end, the data-sharing arrangements which were introduced in legislation—two Energy Bills ago, I think—have not fully worked in enabling suppliers to identify which of their customers are likely to be on benefits, which, itself, is only a very rough proxy of the fuel poor.
The document and the Minister have indicated that we need to be more targeted in our approach. Indeed, there is a significant element of prioritisation, so if we need to identify, first, those who are in deepest fuel poverty and take action with them initially, we need to have more detailed information, at least in broad terms. If we are to have an area approach, there is a bit of a conflict between that and a prioritisation on grounds of deepest fuel poverty or, indeed, the other priority identified in the document of serious health problems, which poses even more difficulties and is subject to data protection problems.
Given the Government’s emphasis on intervention in regard to energy efficiency, it is important to obtain clarity about the resources being put in by the Government or being diverted from consumers’ bills to deal with this. I asked the Minister whether the Government could indicate the total amount to be spent on fuel poverty determined energy efficiency interventions over, say, the next five years. The figures that NEA has come up with, comparing 2010-11 to this year, show a significant drop in intervention because not only did Warm Front, which was taxpayer-funded, end completely at the end of last year, although some schemes are still being completed, SERT and CESP were dropped and we all moved onto the ECO. We have another group of amendments dealing with the ECO and I do not want to go into those in detail now, but even assuming that the ECO works, in aggregate more than £200 million less is being diverted via taxpayers’ money or cross-subsidy from the consumer into fuel poverty and energy efficiency schemes. I will discuss later whether, even within that, the ECO is working most efficiently.
It is important to move forward on this issue and the government amendments are a significant step in that direction. Some of the documentation is still not adequate and we are unlikely to see any more before the Bill completes its passage. It could be another six to eight months before the secondary legislation appears, which takes us well into the second half of next year. By that time, according to most prognostications, energy prices will have risen, low-income households will not have seen an increase in their income and the tariffs that are likely to be offered under Ofgem’s new arrangements will not have been geared to attacking the problem of fuel poverty. That is the other area that is not covered in the Government’s policy statement, which I spoke of at probably excessive length in our previous Committee session—namely, that you can use the tariff structure as well as energy-efficiency interventions in order to improve.
Energy Bill [HL]
Debate between Lord Whitty and Baroness Maddock(13 years, 10 months ago)
Grand CommitteeRead Full debate Read Hansard Text
Baroness Maddock
Sorry, that was a mistake—I should not have mentioned it. I remember the Bill coming in, and I remember that when a new Government come in they are keen to get their legislation through. What have we had in this Committee? The noble Lord, Lord Judd, and everybody else have agreed that there is a great urgency about what we are doing. So there is always a conflict about making this process in the Houses of Parliament, which goes very slowly, keep up with what you want to do and your ambitions for the nation. This is always a challenge to us, and it is partly what we are facing here. At the same time, there is an issue here.
One thing has changed since I came in 13 years ago. We have the Merits of Statutory Instruments Committee, which gives a whole lot more scrutiny to secondary legislation than it ever did before. I served on that committee for the four years noble Lords can serve before they have to move on, and it was quite fascinating. In the normal course of events, if you are on the Front Bench, you do the primary legislation and you are lucky if you manage to keep abreast of what is going on in secondary legislation. I had done the last Housing Bill and then went on to the committee, where all the secondary legislation was coming through—so I knew what had gone on. We have something that is a little better, and we have used some of the facilities of this House to challenge secondary legislation as we could not before. It is not perfect and, if we were reforming Parliament, I think we would do it better. Nevertheless, it is slightly better than it was before, and we should remember that.
Quite often the previous Government got into this mess, but during the Bill people often tried to bring forward a little more detail. We are not very far into this Parliament, we are all keen for this to happen quickly and the Minister is trying to get to grips with this matter with his department. I appreciate the problems that he has, but most of us would like to see a little more clarification on Report, although his officials may not want that. Given the situation in which we find ourselves, and being realistic about when we will get to Report, that gives the Minister’s department a little time to help us with this issue. It is difficult, and I have heard a certain amount of hypocrisy today from the Opposition. I have been in opposition and I know what this is like. It behoves us all if we think this is important, and if we are all saying to the Minister, “Let’s rush ahead with this”, to give him a little time to come forward with a little more detail as we go through the Bill. I hope he can satisfy us on that today.
Lord Whitty
My Lords, I am not against relying on statutory instruments to clarify the policy as we go down the line. All Ministers find that it takes time to work out the details, but at this stage we need to put down some markers and to have an idea of the general direction in which the Government are going.
I agree with a lot of what my noble friend Lord O’Neill said on the ECO and fuel poverty. If the Government are effectively putting all their eggs in the fuel poverty basket through the ECO replacing all other forms of intervention, as my noble friend Lady Smith said, however good the scheme which emerges under the ECO is, it will be undermined if the payment for it is on a quasi-poll tax basis. You will take away with one hand what you have given with the other. I urge the Government to think clearly about what they are doing on both sides of that equation.
However, my main point is on Ofgem. I understand that a review of its role is still ongoing. As the Minister will know, there are widely different views, not necessarily on a party basis, on what Ofgem should and should not be doing. Ofgem itself tends to change its mind on what it should be doing. Clause 67 implies that we are taking something away from Ofgem. I should like to know from the Minister whether this is part of the review of Ofgem, which I understand will end in March, when there will be a report. Ofgem is also covered by the Public Bodies Bill, as my noble friend said, and there are uncertainties relating to what will emerge as a regulator in that regard. It is important that the totality of what Ofgem is responsible for is defined before we provide measures which could, piecemeal, carve off bits of Ofgem’s role or add bits to it. Before we finish the Bill, we need to hear the result of that review and what the Government propose in total.