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14 Mar 2001 : Column 286WH

Home Energy Efficiency Scheme

12.55 pm

Mr. Christopher Chope (Christchurch): I welcome the Minister. I hope that he can respond to my concerns more fully than he did when I raised a constituency matter in the House at 2 o'clock this morning--although, as he said, I had not given him much notice. I gave him more notice on this occasion.

Although the debate was prompted by constituency cases, it will be of much wider national interest. The administration of the home energy efficiency scheme now amounts to no less than a national scandal. Answers to questions that I put to the Minister's Department, which are recorded in columns 530-34W of yesterday's Hansard, reveal that more than 58,000 households are waiting for about £44 million of work to be done under the scheme. Since it was extended last June, about £27 million of work has been carried out. At that rate, a £44 million backlog is equivalent to about one year's output. Those delays are substantial and unacceptable, yet the Government are still heavily promoting the scheme with advertising, raising expectations by so doing. They have spent about £3 million this year on advertising and promoting it.

The delays that are being experienced are being blamed on a shortage of heating engineers. However, it is clear from parliamentary answers that too few heating contractors have been engaged to do the work. There are 22 nominated heating contractors in the eastern area of England, and only 37 in the remaining three quarters of the country. Two contractors appear on both lists, one of which is NW Heating Maintenance, a firm to which I shall refer.

The previous Conservative Government established the home energy efficiency scheme under the Social Security Act 1990. While we were in government, well over 2 million people benefited from grants under the scheme and were consequently able to have energy efficiency measures carried out in their homes. Those who benefited were people on benefits, the disabled and the over-60s. Throughout that period, the scheme was overseen by the Department of the Environment and its administration was contracted out to an organisation called EAGA Ltd., a spin-off from National Energy Action. The company, which is now called the EAGA Partnership, is still responsible for the administration of the scheme across three quarters of England, including Dorset--specifically, my constituency of Christchurch. In its 45th report, published in the year 1997-98, the Public Accounts Committee stated:

The PAC concluded:

Against that background, I draw hon. Members' attention to what has been happening in practice. The scheme may have the word "efficiency" in its title, but experience on the ground shows that its delivery and

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administration is far from efficient. EAGA has been much better at spin than delivery, taking a leaf out of the Government's book.

The present scheme was launched by the Government with their customary blaze of publicity. More than £100 million was allocated to be spent in England. It was no surprise that many people were attracted to the idea of having up to £2,000 of free central heating provided at the expense of the taxpayer. I have no quarrel with the concept of the scheme: I welcome it. My concern is that, so far, none of my constituents has benefited from it. Nine and a half months after it started, on 1 June 2000, not one central heating installation has been completed under the scheme in my constituency.

On 9 March, EAGA answered my question about how many heating jobs had been completed in Christchurch by saying:

None had been completed. EAGA based those figures on claims from people living in postcode areas BH6, BH7, BH8, BH9, BH21, BH23, BH24 and SP6. That is an area wider than my constituency. On behalf of the wider Christchurch area, I ask the Government, why do my constituents appear to be discriminated against in this respect, as they are in so many others?

Among those attracted to the scheme in Christchurch were Mr. and Mrs. Griffiths of Burton and Mrs. Donovan of Ferndown. In March 2000, Mrs. Donovan's oil-fired heating broke down five times. She applied to the local council for a grant towards the cost of repair, but was told that the Government were introducing a different scheme to ensure that pensioners and older people would have adequate heating for the winter. In June, she registered for the new scheme. She was visited in August by an EAGA representative who told her that she qualified and would have a new system fitted, and that an engineer would call soon.

Nothing happened. On 2 December, Mrs. Donovan wrote to the EAGA Partnership to complain and she did not even receive a reply. After making other representations in February, in desperation, and having tried every other avenue, she turned to her Member of Parliament. She had been incredibly patient, perhaps too patient: she had waited for the engineer since last August. Her letter to me described her various health problems and said that she

She explained that she spent most of her time in her bedroom to keep warm. She said that she had made several telephone calls to EAGA, only to be told that she was at the "top of the list".

I took up Mrs. Donovan's case by writing to the chief executive of EAGA and received a holding reply. Shortly afterwards, Mrs. Donovan was visited by an engineer who confirmed that she needed a new boiler and said that he would be back soon--she imagined, in a matter of days. More than two weeks later, she telephoned me to say that nothing had happened. I telephoned EAGA and last Friday received a faxed letter to say that Mrs. Donovan would be sent a postal order for £40, which

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I was assured that her work was scheduled as a priority.

Interestingly, EAGA wrote to hon. Members on 7 November saying that there were clients who might have to wait up to four months before the backlog was cleared. The letter said that EAGA was operating a strict first-come-first-served policy. That has turned out to be palpably untrue. If such a policy had existed, Mrs. Donovan's heating would have been installed months ago.

Mr. and Mrs. Griffiths came to my surgery 10 days ago to discuss their experiences with EAGA. Mr. Griffiths is registered disabled and lives with his wife and four children. He applied to the scheme in July 2000. In August, he was visited and his application accepted. In October, he was told that the correct boiler for his needs was a Glow-worm Micron and that he would be provided with one. In November, he received a letter to say that because of especially high demand, delays were being experienced, but he should continue to be patient. It continued:

The letter also assured Mr. Griffiths that all the work was being done on a first-come-first-served basis, that no one was jumping the queue and that additional contractors were being appointed to speed up the work.

On 8 December, Mr. Griffiths received another letter from EAGA's customer services, requesting him to be patient. Eventually, he was visited by a representative of NW Heating Maintenance and on 13 February he received a quotation for supplying and installing a new boiler in the sum of £1,288.56 including value added tax. He was surprised, because he had earlier been told that he would qualify for a grant of £1,000, but was now told that he would have to contribute £677.93 towards the cost of the new boiler.

After meeting Mr. and Mrs. Griffiths, I telephoned EAGA and NW Heating Maintenance. The latter, which is based in Liverpool, proved to be unable to respond to any of my calls, but I found out from EAGA that the £1,000 grant had been reduced because Mr. and Mrs. Griffiths had received cavity wall insulation and window draught proofing at a cost of £326, which had been set off against the £1,000. That came as a surprise to Mr. and Mrs. Griffiths because no cavity wall insulation had been installed. An engineer who called to do the work discovered that the house already had cavity wall insulation. He drilled a hole and found that out, and then fitted one window with some rather inadequate draught proofing. It now turns out that he charged EAGA £245 for the cavity wall insulation and £81 for draught proofing.

It would seem that Mr. and Mrs. Griffiths are the victims of a serious rip-off. The firm concened, Cosytherm Ltd., has been paid by EAGA--by the taxpayers, effectively--for work that it did not do. However, that is not the only rip-off to which Mr. and Mrs. Griffiths have been subjected. Mr. Griffiths has discovered that he could purchase a Glow-worm Micron boiler off the shelf for £413 including VAT. He has obtained a written quotation from a firm in

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Bournemouth that could supply and fit a Glow-worm Micron, remove the old boiler and connect up the system for £879.90 plus VAT. NW Heating Maintenance has quoted £254 more to do the same work, despite supposedly enjoying all the advantages of massive bulk purchasing. Obviously, if Mr. and Mrs. Griffiths accepted the quote from the local firm, which they are not allowed to do under the Government scheme, the additional cost to them would be only £34 instead of £677. That is the difference between whether the work is affordable for them or not.

The Minister can be under no illusions. The unacceptable delays, uncompetitive pricing and general inefficiency of the new heating scheme arrangements are a scandal. However, insult has been added to injury by television advertisements encouraging more people to apply for free central heating, which both Mrs. Donovan and Mr. and Mrs. Griffiths mentioned to me. The advertisements for the scheme, which has been renamed "Warm Front", involve 85 advertising spots in the Meridian television area, at a cost of around £80,000, with the advertisements costing a further £95,000 to produce. I presume that they have been timed to give the impression of a caring Government in the run-up to the general election. It is a pity that they do not make it clear that, at the present rate of progress, people who apply now will not have their heating installed for a year, and that those who applied last summer, like my constituents, have still not had their work done.

Why are the Government carrying out expensive television advertising for a service that is already in crisis, and which cannot be provided? Why is there no effective competition among central heating installers under the scheme, so that the monopoly suppliers can not only delay serving their customers, but overcharge significantly, as my example shows?

Why is the EAGA Partnership the recipient of a soft contract that covers three quarters of England when it is obvious that it cannot deliver? What redress will the Minister seek from EAGA for the way in which it misled Members of Parliament and its customers with circular letters that assured people that it operated a strict first-come-first-served policy? I take that issue seriously. Those constituents waited patiently, believing those words at face value. I am sure that I was not alone among Members of Parliament in believing that the problem was under control, and that we should not worry about the delays because the people who applied first would be served first. We took that circular letter at face value, but it was not true.

Will the Minister now ensure that the National Audit Office and the Public Accounts Committee investigate urgently the contractual arrangements that surround the Government's home energy efficiency scheme? That investigation should include the costs of the latest advertising campaign and the abortive costs of having to pay £40 for every customer whose heating has not been delivered or who has been otherwise adversely affected by the delay. I should also like an inquiry into the rotten deal that customers and taxpayers receive as a result of lack of competition between installers.

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Finally, as the scheme is designed to provide the most environmentally friendly and cost-effective heating systems, I hope that the Minister can explain why the quotes are for non-condensing boilers. Under a scheme with more than £100 million of taxpayers' money, surely it would be much more sensible for the boilers provided to be condensing boilers. That would reduce costs for the need group to which the scheme is directed, and it would have environmental benefits, but it does not seem to happen in practice.

I hope that the Minister can allay some of my serious concerns.

1.12 pm

The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Robert Ainsworth ): I thank the hon. Member for Christchurch (Mr. Chope) for initiating the debate. It is good to see him again; it is such a short time since we parted company at 2 o'clock this morning.

The Government are determined to tackle fuel poverty, which affects millions of householders. Many of them are the most vulnerable in our society--pensioners, families and disabled householders--and struggle each winter to keep warm. That is why, last month, we published our United Kingdom fuel poverty strategy, which sets out our commitment to end the blight of fuel poverty for vulnerable households by 2010. It will help more than 3 million households.

In England, vulnerable households in the social sector will be helped by our drive to bring all social housing up to a decent standard by 2010. That will ensure that they no longer suffer from fuel poverty. Those living in the private rented sector or who own their own home will be helped through the warm front team and the revised home energy efficiency scheme. The scheme, or HEES, is therefore a key element in our strategy to tackle fuel poverty.

As the hon. Gentleman said, HEES was started in 1991 and provided households with a single insulation measure, often simple draught proofing for windows and doors. A review of the scheme showed that it reduced heating costs of households by, at most, £100 a year. That level of reduction was not sufficient to move households out of fuel poverty, and it did not tackle the difficulties faced by those who lacked a central heating system or whose central heating system had broken down.

We have radically revised the scheme. The new scheme, introduced in June 2000, provides grants of up to £2,000, which is up from the £315 available under the scheme introduced by the Government whom the hon. Gentleman supported. The increased grant allows us to provide complete packages of insulation and heating measures, which can reduce the cost of keeping warm by up to £1,000 a year. For the first time, we are providing efficient central heating systems for low-income householders aged 60 or over. We also believe that although HEES could never offer an emergency-type service, it should offer to repair central heating systems that have broken down.

The HEES package of measures should be sufficient to move the large majority of householders out of fuel poverty. We are providing funding of more than £600 million for the first four years--more than double the

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level of the previous scheme--and our aim is to assist about 800,000 householders by 2004. To date, more than 76,000 pensioners and families have benefited from the scheme and enjoy substantially warmer houses as a result. A further 58,000 will have work carried out in the next few months.

HEES is managed in eastern England by Eastern HEES, a not-for-profit subsidiary of the energy supplier TXU. In the rest of the country, it is managed by the EAGA Partnership--an employee-owned company that has managed the scheme since its inception in 1991. The contracts were placed following a full, open competition in accordance with the UK public procurement regulations. The tenders were assessed by a panel that included external commentators. It was a unanimous decision of the panel to award the contracts to EAGA and Eastern HEES, as they offered the lowest prices of technically compliant bids.

The two scheme managers are now responsible for much more than simple administration. They are required to market the scheme, survey homes and recruit subcontractors to carry out the work. As their fees are not linked to the measures installed in each home, elderly and other vulnerable householders can be sure of receiving clear, independent advice on the most appropriate measures for their home. However, the scheme managers are paid according to the volume of work carried out, and so have a powerful incentive to ensure quick delivery. The UK public procurement regulations were also used by the scheme managers to recruit the individual heating and insulation subcontractors. I understand that the scheme manager placed advertisements in the trade press and wrote to all members of the Confederation of Registered Gas Installers--some 40,000 companies--inviting them to tender for work. Contracts were awarded, on the basis of lowest cost, to those companies that met our robust technical, quality and safety requirements.

When we announced the scheme in May 1999, many doubted that gas heating systems and insulation could be fitted within the grant maximums suggested. There is evidence to suggest that the prices paid by HEES are lower than those achieved by either energy suppliers, in respect of insulation, or local authorities, with regard to heating.

Changes to the scheme introduced last June were considerable, so it is not entirely unexpected that there have been problems with its implementation. The hon. Gentleman quotes examples from his constituency. I have also received constituency complaints--as, I am sure, have other hon. Members. The hon. Gentleman should remember that the scheme was substantially new and introduced nationwide last June. For example, during the first three months, there were delays in surveying homes that caused follow-on delays in installation. That problem was resolved.

At present, there are serious difficulties in providing heating improvements due to a national shortage of qualified heating engineers. The scheme managers continue to encourage heating companies to tender for work under the scheme. Existing installers are being encouraged to transfer resources from areas of low to those of high demand. We are also considering how to encourage more smaller installer companies to come forward.

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The long-term solution is to increase the number of gas engineers. From last month, in conjunction with Transco, we introduced training programmes to provide an additional 800 engineers to work under the scheme over the next 12 months.

In much of the country, including the south-west, a fast-track system for heating repairs is being introduced. If an engineer has to shut down a boiler and the household has no other source of heating, the fast-track system should normally ensure that the replacement is fitted within five days. If the boiler can be made to work but still requires replacement, the change will be handled more routinely.

Those measures have led to substantial improvements. In much of the country, new gas heating systems and replacement boilers are being installed within three months of survey. The hon. Gentleman extrapolated figures from the start of the scheme and used them to suggest a waiting list of one year. However, that ignores the fact that, because the other scheme was so different, we started from zero. It is totally unrealistic to suggest that people are facing a year's delay when we were going through such a good rate of climb. They are not.

Mr. Chope : Would not the Minister accept that if we are told that it is a first-come-first-served scheme, my comments are fair? Mrs. Donovan applied in June, but she is still waiting.

Mr. Ainsworth : I shall try to deal with individual cases later.

In some areas, including that represented by the hon. Gentleman, serious delays remain in the installation of new heating systems, but we continue to seek improvements. Both scheme managers are keeping those with an interest in the scheme up to date. We realise that many people do not have other heating in addition to the central heating. The scheme managers will shortly be writing to all households that are awaiting heating repairs to offer those without supplementary heating the use of thermostatically controlled electric heaters while they wait for their systems to be repaired. The hon. Gentleman referred to that communication. I must point out, however, that although heating is an important component of HEES, the most popular measure remains the installation of effective home insulation, and insulation continues to be installed as normal and within agreed time scales.

The hon. Gentleman raised a number of questions. First, he complained that the advertising was being done for political purposes and asked why we should be advertising when people were suffering delays. I ask him to accept that huge efficiencies can be gained if people come forward in greater numbers, particularly in areas where they have not been doing so. The area covered by Meridian has one of the lowest number of people coming forward, and that has led to inefficiencies.

The hon. Gentleman says that the Government are advertising something for their own ends. In fact, Age Concern criticised the Government for failing to advertise the scheme properly. On 12 January, Andrew Alsop of Age Concern told the BBC that the Government should publicise the scheme properly. It is a good scheme. Help is available and so is the cash.

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However, the Department for Social Security needs to publicise better the help that is available. We were under pressure from organisations such as Age Concern to get the scheme up and running, and we needed to ensure that contractors were coming forward in greater numbers than they were. That will help solve the inefficiencies that are the result of low take-up; if the work is obtained in clusters, prices will fall and efficiency will rise.

The hon. Gentleman mentioned two cases. He tried to suggest that what happened to his constituent, Mrs. Donovan, is proof that the scheme is not being handled on a first-come-first-served basis. There was a delay in dealing with Mrs. Donovan, but EAGA issued the job to an installer that was unable to complete due to a high work load. We should investigate the juxtaposition of the hon. Gentleman's claim that no schemes are being installed in his area with the installer's assertion that its heavy work load was causing the delay to Mrs. Donovan's work. The installer may well have been unable to fulfil the commitment that it had given to EAGA--we should investigate that, and any information that the hon. Gentleman has will be useful. This was not just a case of "first come, first served" not applying; the work was issued to an installer, and the installer caused the delay. The work has now been reissued so that Mrs. Donovan can be treated with the priority that she deserves.

The hon. Gentleman made serious allegations in the case of Mr. Griffiths, in which payments were claimed for the installation of cavity wall insulation. I hope that the hon. Gentleman knows that that case is under investigation by EAGA, so I cannot comment except to say that it will be investigated. We hope to advise him of the outcome, and to learn any lessons that arise from it,

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so that we can ensure that we properly protect the public purse in such matters. There is no question of discrimination--the hon. Gentleman has rightly raised two matters on behalf of his constituents and will receive a response.

At the moment, scheme managers are carrying out little or no advertising of the warm front team or of HEES in much of the country. They are able to rely on word of mouth to generate sufficient interest to meet the scheme's capacity in these areas. The exceptions are the south-east and parts of the south-west, where local referral networks are not fully effective. To ensure that eligible households do not miss out on help, the scheme manager, EAGA, is using advertisements in the local media.

A pilot series of television advertisements is running on weekday afternoons to reach older people in the area. The cost of the four weeks of television slots is some £80,000, and the advertisements cost about £95,000 to produce. Early indications are that they have generated a good response. More than 1,200 inquiries have been received from eligible households in the first three days alone. It is up to EAGA to determine whether the campaign offers better value for money than other routes. At the same time, EAGA is developing the local referral networks to make them more effective, and so remove the need for further advertising.

I assure the hon. Gentleman that we are doing all that we can to tackle the delays faced by some householders. Their difficulties should not detract from the achievements of the scheme. More than 76,000 vulnerable households have already benefited and a further 58,000 will have work carried out in the next few months, with the result that they will enjoy substantially warmer homes. We have allocated more than £600 million for the first four years of the scheme, with the aim of helping 800,000 households by 2004.

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