Fuel Poverty (England) Regulations 2014

Lord Whitty Excerpts

Thursday 27th November 2014 Grand Committee

In conclusion, we now know more about the problem of fuel poverty than ever before. However, this means that we know fuel poverty is a serious national problem. We know that households living on low incomes all too often are left to live in the coldest and least efficient homes. Our ambition and the strategy underpinning it make it clear that the Government do not accept this situation and are committed to providing support to the households that need it most. I commend the order to the Committee.

[Lord Whitty (Lab)]

My Lords, I thank the Minister for that explanation and congratulate her on getting through it. I hope that indicates that her health is improving even as we have this discussion. We touched on some of the same subjects in our earlier discussion, but on this one I probably should formally declare an interest as the chair of a charity dealing with fuel poverty.

There is a bit of a problem in dealing with what is, in effect, putting into motion the totality of the strategy on fuel poverty by discussion of secondary legislation. The Minister referred to previous bits of legislation, which were primary legislation. It seems a bit odd that we are defining the interim targets, the means of delivery, the overall strategy and, of course, the definition in secondary legislation. In future, Parliament really will require a rather more substantial discussion than one in a sparsely attended Grand Committee—although it is very welcome to see my noble friend Lord Hunt of Kings Heath, and indeed the noble Earl, Lord Howe, here. It is a rather limited form of scrutiny and this is a rather important subject.

The Minister will have heard me giving my doubts previously about the new definition. The old definition had problems—I accept that—but I think the new definition has almost the converse problems. None the less, one part of it is a very positive advance: in addition to measuring overall fuel poverty, there are measures of the depth of fuel poverty in Sir John Hills’s redefinition. That seems to me an advance, but it is one that does not seem to have flowed through to policy in terms of the way in which fuel poverty interventions are being prioritised. The Minister spoke about prioritisation, but maybe I missed how we are using those new definitions. Would she care to write to me on that matter?

Overall, this is another reduction in ambition. There was a 30% reduction in expenditure on consumer-funded interventions on fuel poverty from 2010-11 to this financial year. If you add the taxpayer-funded interventions, which were being run down by 2010, it would be a 40% reduction. We are running down the actual resources being devoted to tackling fuel poverty, despite the fact that the problem remains considerable. All Governments have recognised that, but we are working in a context where the total resources are constrained.

Notionally, it is a very good idea, instead of defining the target in terms of outcomes, number of households or number of individuals, to focus on and define it in terms of the energy-efficiency performance of buildings. Regrettably, it is a little difficult to measure buildings’ energy efficiency as we do not have a comprehensive index of energy efficiency. A building’s real energy efficiency may well differ significantly from the notional energy efficiency, as that depends to some extent on household behaviour, landlord-tenant relationships and all sorts of other things.

The phrase “as many as reasonably practicable” is a useful get-out for Governments of all sorts. I am sure that my noble friend Lord Hunt and I can remember using similar phrases. However, we cannot by any means be certain that the progress of interim targets, which are very clearly defined right up to 2030, can easily be measured by something as subjective as “reasonably practicable”. Indeed, 2030 seems a very long way off for those targets. We are attempting to ensure that the private rented sector reaches band E by 2018, whereas the general target appears to be behind that. We should surely do better than that. Most people think we could go faster than that in the private rented sector. The end date of 2030 should be brought forward at least to 2025.

On prioritisation again, if there is a more sophisticated way to use the new fuel poverty gap information, we need to see how we focus on those who are in the worst fuel poverty as distinct from—as has often been the case under all Governments—focusing on the easiest cases and the cheapest individual interventions. We are, of course, not only dealing with those in deepest fuel poverty but attempting to reduce the average level of fuel poverty at the same time. It will be quite difficult to ascertain how well we are doing on that under the new definition, for the reasons I have tried to explain.

Frankly, the central problem is the same one that we had on the previous group of regulations, which is that ECO, as the main deliverer of this policy, is flawed. ECO, particularly as defined now, is not sufficiently geared to prioritise attention to the fuel poor. In some ways, broadening the measures takes attention away from the fuel poor even though it may help in otherwise neglected areas such as off-gas dwellings. The ECO does not deliver the required targeting because delivery is down to the supply companies, which have to fulfil their quotas and are not necessarily going to follow any identification of priorities set out by the Government or the regulator. It is not clear how targeting and prioritisation can exist under the ECO.

Because we are dealing with this house by house via the suppliers rather than area by area, because we are focusing on the fabric of the notional energy efficiency of the house rather than the people within it and because we are focusing on defining the measures rather than the need, there is a serious problem. This is epitomised, again, primarily by the neglect of how we are going to intervene within the rented sector. We still have not fully resolved how to deal with the issue of the landlord-tenant relationships there. As I said earlier, this sets up changing and difficult-to-interpret signals to the industry. I am informed that there is a real danger that we will have fewer players in the insulation and installation industries and probably, therefore, higher unit costs and possibly lower standards.

If the deficiencies in the ECO were made up by other interventions, this would not matter; or it would matter significantly less. However, the other government interventions in this area are not going to deliver for the fuel poor. The Green Deal is primarily and explicitly for those who are able to pay and has its own problems, which we need not go into now.

The Warm Home Discount undoubtedly helps the fuel poor in the immediate term by giving them money off a bill, but it does not resolve the problem of keeping those bills down through greater energy efficiency in the medium term. The rationalisation of the number of tariffs that Ofgem now requires of companies, in order to fulfil a rash commitment by the Prime Minister a couple of years ago that the number of tariffs should be reduced to four, has led to some companies reducing the number of tariffs that they are able to offer to various elements of the fuel poor, particularly pensioners. The Green Deal, the Warm Homes Discount and Ofgem’s approach to tariffs do not help the numbers of fuel poor being treated or the speed with which we can deal with them.

The ECO as it is currently designed and due to be delivered will not achieve the full results which both the Government and I would like to see. We need some new thinking. My party has produced a Green Paper on energy efficiency and is prepared to discuss it with everyone involved. Although campaigners in this area support aspects of what the Government are attempting to do, and are certainly prepared to work within the new framework and the new definition, they need to see more resources and interventions at a faster rate than has been the case. The ECO is geared only for the two years to 2017, and the long-term view as to how people can have confidence in the aims and the targets that the Government are setting down here today is subverted by not extending the measures beyond 2017.

We need new long-term thinking and better means of delivery if we are to reinstil confidence among the fuel poor, among the consumers and taxpayers who have to pay for it, and among the industry which has to deliver it. We are not yet in that position. Many things are included within this document which I can support, but the overall level of delivery will be woefully short of what is required.