Examination of Witnesses (Questions 20-40)
MS ANN ROBINSON AND MR SPENCER CLUBB
TUESDAY 30 APRIL 2002
20. I am personally very pleased you said that. On the question of people in fuel poverty but not in receipt of benefits, that is not regarded as a problem. For example, in defining severely disabled people for the purposes of a winter fuel payment, should we ever get one, you can define the severe disability in relation to access to certain components of DLA and so on. There is a clear entitlement there. People have often said that people not in receipt of benefits are very difficult to reach in terms of addressing their fuel poverty. In your submission, in 5.1, you say that Energywatch believe there are a number of indicators which can be used to identify groups of low income consumers who are not on benefit. Some examples include prepayment meter customers, consumers who are in debt etc. Suppose you do identify other groups of people in fuel poverty. What happens next? You are saying yes, you should be able to identify people not in receipt of benefit but who are also fuel poor and these are ways in which you might do it. I am not clear in my mind how you envisage any action taken as a result of that.
(Ms Robinson) If we do something about prepayment meters and narrow that gap or outlaw the lot, you are going to help the group of people who are poor, low income families who are not on benefit. You can also target energy efficiency measures as well and that group ought to be included in any targeting. I said at the outset that there is not one solution that does everything for everybody. We have a range of packages of solutions that we need and we need to look at the best mix for individual circumstances. This is a very good case where some of the measures we are talking about just will not do it and we then have to talk about how we target it in another way, how we try and help and support in another way.
21. You referred in your written submission to the fact that Energywatch will be conducting a number of outreach sessions. Could you say a bit more about that?
(Ms Robinson) The problem with even Energywatch, the CABs or any of these organisations is that there are still a lot of people who will not come anywhere near an official sounding organisation at all. Anyway, we do have a recognition problem because we are too young, too new. We have to work very hard at getting our profile up. It is very important that we deal with all the complaints that come to us. In dealing with the complaints, we can deal with advice and information but we have absolute choice ourselves about how we improve the access for the people most in need. We will have a programme and learn from this and improve our performance all the time. What we intend doing is using our outreach to go to the sink estates, to people for whom English is not their first language, to the elderly group or the disabled group or whatever it might be, to ease the access and make it possible for them to get help, support, advice, whatever is needed. In the process of doing that, if we had been already running the outreach programme for, say, 12 months, I would have been able to give you such a rich set of evidence because a lot of what I have been saying today is on statistics and some knowledge, but the detailed richness about what is happening to so many people is not quite there. It is like the question that was asked earlier about prepayment meters. One of the problems is that we do not know about disconnection or disconnection by stealth. We would love to be in a position to get that information. If we had the money to do it, I would like to do a significant piece of research and survey work in the autumn that bottoms out some of the key issues about what is happening in people's lives when they are on prepayment meters.
22. Could the outreach work not be done in Citizens' Advice Bureaux and so forth? There is a great deal of information and you could have access to that rather than having to go into the community. Given all the groups you have mentioned, laudable though that is, you have that information already in existing institutions.
(Ms Robinson) You are quite right and we will do it that way. We are going to do it two ways: through working with other agencies like the CABs and the Energy Advisory Centres, but recognising that some people do not approach CABs and others we are going to have to go beyond that and get right out there in the community working with people.
23. To what extent would you be constrained by data protection and freedom of information? There must be within the statistics or the information held by your old organisation, the Benefits Agency, a wealth of information that could be transferred. Roger has already made the point about disability living allowance that, if you are getting that kind of assistance, the chances are that you might benefit from assistance with regard to the cost of fuel.
(Ms Robinson) I totally agree with you.
24. Are you constrained there?
(Ms Robinson) We are. The companies themselves have found this extraordinarily difficult because obviously they have to target people for energy efficiency measures of one sort or another and yet the Benefits Agency will not give them their advice and it is a serious constraint.
25. Would you not be in that position, as a non-commercial body? One could argue that it would be wrong to give it to one company against another because they could take commercial advantage of it. On the other hand, you are a non-profit making organisation of a different kind.
(Ms Robinson) You are absolutely right. One of the things that we are looking at is how we target our activities. Who has the information? You can go to local authorities and they have a pretty good knowledge of where the areas of deprivation might be. We can use that. There are lots of organisations out there who can help us to target our activities. You are right about the Benefits Agency. We have a very good connection with the Benefits Agency still because Peter Lehmann is not only chairman of the Fuel Poverty Advisory Group; he is also chairman of the Benefits Agency Standards Group. Behind the scenes, he has been doing some work on the return of Fuel Direct.
26. Some of us have regretted the demise of Fuel Direct in the sense that it is nothing like as commonplace as it used to be and it seems to have been discouraged either by companies or by governments over the years. To try to reverse that would be a major change.
(Ms Robinson) It is. That should be one of the many things that we need to work on because that will do quite a lot in ensuring people do not get into debt and manage debt. From my days long ago when I was a territorial executive officer working in Wigan, I can tell you just how important Fuel Direct was because I used to spend an awful lot of my time trying to sort out people who had got into debt. When the tally man came round on a Friday, I used to say, "Be careful about what you are doing." Most people like direct payments like that because it is a way in which they can manage their benefits better. I think it is an absolute disgrace that it has been allowed to wither.
Chairman: It might be a problem if it becomes Crime Direct!
27. Particularly on the energy efficiency side of things, you talked about if you have fuel prices going up through the laudable need to improve energy efficiency, those increases have to be mitigated for the fuel poor. Did you have anything specific in mind on how that would be done or would that be the same kind of package we have already been talking about?
(Ms Robinson) There are two things running together here. There is the energy policy review and what is going to come out of all that, which is clearly going to lead to higher prices with sustainable energy. We do not believe in low prices at any cost. We believe in affordable energy. Again, we need clear objectives that set down, that are properly monitored and evaluated. As part of that process, we need to continue to monitor and evaluate what it is doing for fuel poverty. If we can get a set of measurements in terms of what is happening through energy and energy prices, and if we can get a set of measurements that are to do with the outcomes of measures on fuel poverty that we can track through, then we are in a position to know where we need to be ratcheting down or up. If I am right, I think a large number of people can be helped through extending the gas pipeline. It may be that instead of having an eight or nine year programme for that, what we ought to be thinking about is doing that in five years, for instance.
28. Coming to housing measures specifically, one of the first things you said today was that energy efficiency measures are very well represented in the fuel poverty strategy and to be welcomed and so on but they will not on their own eradicate fuel poverty. Are you able to make some comments on what you think the different degrees of fuel poverty are experienced very broadly by local authority or housing association tenants, private tenants and owner/occupiers, also targeting those three categories?
(Ms Robinson) I can shed a little light on this but not much. First of all, we have just recently run a survey and we have discovered that, of the general populationthese are figures for people on electricity prepayment meters17 per cent are on electricity prepayment meters. In local authority and social housing, we have a figure of 37 per cent, although Ofgem has produced a figure of 45 per cent. If a measure of the extent to which people are on prepayment meters is a measure of fuel poverty, you are talking about quite a significant increase in people in social housing who are in fuel poverty. There is an even bigger figure for gas because on gas nine per cent of the population is on prepayment meters but in local authority and social housing it is 33 per cent. I have no more information than that and that is new stuff that we have just got.
29. Have you formed any impressions of things like the effectiveness of the HEES scheme particularly in terms of categories of the fuel poor? In other words, whether particular kinds of tenants, for instance, have difficulty in practice accessing installation of central heating, not because the scheme is not there but because they are not getting cooperation from the landlords. Do you have any comment?
(Ms Robinson) I have no direct information.
(Mr Clubb) We have recently changed a lot of our systems as we have merged to become Energywatch. From now onwards, we can gather a lot more information about the problems people face and we are able to analyse these issues in a lot more detail. Up to now, we have not had the capacity to drill down and isolate specific problems like that.
(Ms Robinson) One of the things that is worth looking at is the experience we gained from the pilots and the Warm Zones because we need to learn from those. They may tell us something that at least partially answers this question.
30. On housing generally, there are those who would say that, if you are really going to tackle fuel poverty, the key to that is getting housing right. That is the only long term, sustainable way of tackling the issue. Do you agree with that?
(Ms Robinson) It is true that tackling housing is very important. When I was working on the energy policy review, we got some information that suggested that even by 2050 only half the current housing stock had been replaced. You only have to look around you at many old buildings, some built in the last century, some built at the beginning of this century. They are far away from any reasonable standards. They would probably cost a lot of money to bring up to standard. Even on the housing front, there has to be a degree of realism about what can or cannot be achieved. Even with insulation and central heating systems, there will still be some people in fuel poverty without other measures also being introduced.
31. I take your point that targeting housing is quite a long term objective and brings in all kinds of different issues. If we looked at, for instance, the European example, fuel prices there have in comparative terms been fairly high, but it appears that they do not have the same problem that we have as far as fuel poverty is concerned. Does that not tend to indicate that, whilst there may be other supporting measures, unless we tackle the issue of housing standards we will not tackle fuel poverty?
(Ms Robinson) I agree absolutely that tackling housing standards and doing something about housing and insulation is vital. It is a very important ingredient in the way forward, just as extending the gas pipeline is a really important ingredient in terms of the infrastructure. With the right investment going into housing and getting housing standards right and extending the gas pipeline and putting efficient heating systems in those homes, what we could be left with in terms of the harder end of fuel poverty might be comparatively small. My only proposition is the concern more than anything that a lot of emphasis has been put on the physical aspects and not enough attention has been paid to these other things like prepayment meters, like allowing people to switch because they are in debt. All these things can also make a difference very quickly, because if we are going to do something like housing or extending the gas pipeline you cannot do that overnight; it has to be longer term. We have to do something here and now to make a difference if we are going to take people out of fuel poverty by 2010. Improving the housing stock will not necessarily be in place by then.
32. Could we turn to the role of suppliers and the social obligation of suppliers? Ofgem's social action plan talks a lot about encouraging suppliers to develop products, particularly for low income households. In your submission to us you make the comment that current supplier initiatives do not even scratch the surface of fuel poverty. Are there any good supplier initiatives that you would recommend that could be emulated or is it all a waste of time?
(Ms Robinson) It is not all a waste of time. There is a number of them that are very good but they are touching very few people's lives at the moment. One of the best schemesand it happens that I think there are now 200,000 people on it and they are ambitious to have moreis the TXU Stay Warm Scheme. It has all the features that you need. People know exactly what they are going to pay. They can switch on the central heating system without worrying about what it is going to cost. That is a very good scheme and it deserves to be popular. Some of the other schemes we have just a few thousand people on and that is not enough. I do not think all companies perform equally well on this and there have to be some incentives to encourage good behaviour. I cannot claim the idea of social obligation was Energywatch's. I would love to say it was our idea but it was not, unfortunately, because I think it is a cracking idea. It has come from TXU.
33. You put a good deal of emphasis5.5 in your submissionon the need for solutions to fuel poverty to be developed locally rather than parachuted into communities. You also talk about the trouble with the number of schemes developed being that they are quite small scale and they do not lend themselves to a more general roll out. On the basis that there is a contradiction there, I can see that at a deeper level there is not. You can be looking at developing localised schemes but still want to generalise localised schemes for more general application, where that is appropriate, but how do we do that? If you are not going to parachute schemes into communities, you are going to develop them locally. What are the mechanisms you use for developing best practice and what is the role of the pilot? Is it to develop a local scheme or to try to develop something of more general application?
(Ms Robinson) The role of the pilot is to develop something of more general application, including best practices, which would include not only the delivery but also the management of schemes and of those resources. One of the things that we were looking for more than anything is some sort of real partnership at local level, perhaps with a local authority taking ownership of what goes on in their particular patch to make sure that people are working constructively together. We are seeing partnerships working quite effectively in other areas. I remember from my British Retail Consortium days some really good, effective partnerships in terms of community policing. I do not see any reason why we should not learn from effective arrangements of that sort that have gone on in other areas. We have had health action zones. We have some experience of action zones and when they work well they really deliver the goods. Let us take the lessons from the Warm Zones and see what they tell us and how to develop a good, local arrangement. There will not be one local arrangement that will apply everywhere. You need a set of principles that you expect to see in a successful local arrangement.
34. It is early days but do you see the development of the neighbourhood renewal strategy, neighbourhood renewal funds and so on, having a useful spin-off in encouraging partnerships that will tackle the fuel poverty issue?
(Ms Robinson) Yes. I am a very keen supporter of the neighbourhood renewal schemes. They can be quite pivotal in terms of bringing a number of disparate initiatives together to make a lot of sense with real local ownership.
35. You are very pessimistic on the suppliers front. I say this because you made the comment that the suppliers will not invest sufficiently in tackling fuel poverty without firm direction from government and the regulator. What leads you to believe that? If you had a choice, what would you like government to do?
(Ms Robinson) If the notion of the social obligation is accepted, that will go a long way to encourage the behaviour. I am pessimistic because, whilst I have been in this role, I have seen too many examples of companies' bad behaviour. When the companies are well behaved, they are great, but they do behave badly on occasion.
36. In what way?
(Ms Robinson) This is information that we are working on and I am a bit reluctant to put it in the public domain but I am very concerned, for example, about what has happened to wholesale electricity prices not being passed on to the domestic consumer. By our reckoning, about nine or ten per cent should be passed on. What has happened? About two per cent has been passed on. By sheer coincidence, I have been looking at some independent work that an analyst has produced about retail margins and, for the old PESs in the area, it does look as though, in the last 12 months, there has been five per cent more on margins. Ask where the difference has gone. I am not pointing a finger at anybody. I want to find out if there is anything in this and why. Companies are there to look after their shareholders. We hope that they have sufficient social obligation to do the right thing for consumers but at the moment I am not satisfied that there is enough incentive for them to do that. They are not falling over themselves to try and attract prepayment meter customers or low income consumers. There is not that much real competition at that end of the market. Somebody has to do something to open that up and make those competitive offerings available for low income consumers and to have something in place that encourages the companies to make that happen.
37. Have you told the regulator this?
(Ms Robinson) I have written to the regulator today to ask the question about wholesale prices and why they have not been passed on. There may be very valid reasons for it. I have also written to the regulator today to ask about retail margins over the last three years. I want to know what the facts are before I start jumping up and down. Perhaps I should never have said anything this afternoon but I could not resist explaining that there is enough there for me to be concerned. I want to establish what is going on.
38. It is not a revelation to us that energy companies are not philanthropic in their natural ambitions. That only happens when they are forced kicking and screaming to do so but notwithstanding that one of the problems that you have identified is scale. We are talking of 26 million homes, somewhere between four and six million that are in the predicament of being fuel poor, but you identify the lack of coordination between departments that you consider to be a significant threat to achieving the eradication of fuel poverty. Could you give us some examples associated with poor coordination and competition for customers between different fuel poverty schemes?
(Ms Robinson) I think the evidence is fairly clear. When the fuel poverty strategy came out, any intelligent reader could see that different chapters were written by different departments. That was an attempt to make it look seamless, but it was not seamless at all. We have all heard the rumours and the anecdotes about the difficulties that the DTI were having with DEFRA or whatever it was. We all know the problems about reaching some sort of compromise about the text. I have yet to see any strong evidence that the Department of Health, for example, fully understands and appreciates the impact of a lack of warmth on your health, to play a part in what ought to be done on that, for instance. Similarly, with the energy policy review, there were seven government ministers on that advisory group. You have DEFRA doing rural issues and environment issues. You have Stephen Byers's department doing housing. You have the Treasury concerned about public expenditure and benefit costs. You have the Department of Work and Pensions. There are so many of them all concerned. Some of those departments were not represented on the energy policy review obviously because it is more energy focused but there are so many different players here. You cannot help wondering, if we are going to have a properly focused, concerted attempt, first of all, to develop a proper energy policy and implement that and track that; and also to develop and implement a fuel poverty strategy alongside that to mitigate the worst circumstances, if we do not need to make some different arrangements in the machinery of government. I am not sure that, without those changes, it will happen.
39. You invest some optimism in Warm Zones. Why?
(Ms Robinson) Because I am always an optimist. We have five pilots there. I know they have all operated slightly differently but they have all taken a very heavily focused approach on what is needed on particular catchment areas. As a result of that, we might learn quite a lot. I hope I am not disappointed. That is what we have pilots for, to find out how to do things better. With five different ones, there is a very good chance we might do that.
40. Did I hear that you are unhappy about the outcome of the energy review?
(Ms Robinson) No. The energy policy review was a reasonable piece of work. I might think it is a touch complacent here and there. I might think some of the assumptions that have been made about how effective certain measures can be may be a little heroic, but I think it was the right piece of work at the right time. I am looking forward to the government's consultation document on this. We now need a proper debate about how to take that forward, how to do some of the work that had not been done and how properly to track the trade-offs between, for example, environmental gain and what I call economic pain. We obviously do need to do something on the environmental front and I am very supportive of this, but not if it makes UK Limited less competitive because our energy costs are too high compared with the rest of the world.
Chairman: On that note, we will finish there. Thank you very much. That is very helpful and a very good start for our investigation into this.