Select Committee on Trade and Industry Minutes of Evidence


APPENDIX 2

Supplementary memorandum by the Fuel Poverty Advisory Group

1.  DIFFERENCES BETWEEN APPROACH TO FUEL POVERTY IN ENGLAND AND SCOTLAND, WALES AND NORTHERN IRELAND

  FPAG's remit covers England only. We are obviously keen to learn from good practice elsewhere, although we are clearly not experts on the approaches in the devolved administrations. A number of the organisations represented on the Group are active throughout the UK (eg Eaga and NEA) and have provided relevant information to the Group.

  Three points are worth highlighting on the approach in Scotland.

    —  Warm Deal (the Scottish equivalent of Warm Front) does in appropriate cases include a benefits health check—ie an assessment of whether the customer is entitled to benefits which he/she is not receiving. On the basis of a recommendation from FPAG (and others) this is now included on a pilot basis in Warm Front in England.

    —  In Warm Front there is a maximum grant per household. In Scotland the average grant per household has to be at/or below £2,500 but there is no restriction on the grant to any individual household. This provides flexibility for the homes where expensive work is needed to remove the household from fuel poverty. FPAG has recommended a similar approach for England.

    —  In Scotland free central heating is offered to pensioners who have no central heating system. FPAG has not recommended this for England. It would provide help to some of the fuel poor currently not covered by the English fuel poverty programmes, but would draw in many who are not fuel poor—thus exacerbating the problem of targeting of the programmes.

  In Wales a significant number of properties do not have, and are unlikely to have, access to mains gas. Pilot projects on alternatives, such as oil, are therefore in hand.

  In Wales and Northern Ireland, the Warm Front equivalent programmes provide grants for the conversion of solid fuel to gas central heating (where gas is available)—which is not the case in England, where it is perhaps somewhat less relevant.

  In Northern Ireland, the extent of fuel poverty is very high. Natural gas has only recently been introduced in Northern Ireland and one of the main anti-fuel poverty measures is to encourage the development of the gas industry. The format of the energy suppliers' energy efficiency/fuel poverty programmes is somewhat different in Northern Ireland. A £5 Energy Efficiency Levy is raised from each Northern Ireland Electricity customer and the funds are then spent by the energy suppliers, primarily Northern Ireland Electricity, under a framework laid down by the Regulator. In recognition of the intensity of the fuel poverty problem in Northern Ireland, 80% of the funds have to be spent on fuel poverty programmes.

2.  FINANCIAL CONSTRAINTS OF DEFRA

  We can only make informed judgements about this as we are clearly not party to Defra/Government financial arrangements. We would make the following observations.

    —  The financial constraints on Defra appear to have been very tight in recent years, much tighter than in many other Departments. This is probably in part a result of foot and mouth disease but there may be other factors as well.

    —  As far we understand it, there is little "optional" expenditure in Defra. Much of their expenditure is obligatory eg under the Common Agricultural Policy. The Fuel Poverty programmes, especially Warm Front, running at around £150 million pa are a surprisingly large part of their optional expenditure.

    —  There is a series of other demands on Defra stemming, for example, from EU Directives on waste and recycling, and relating to water.

    —  There appears also to be a feeling in some parts of Defra that fuel poverty does not fit well with the key environmental and rural objectives of the Department.

    —  As a result of all this, expenditure on the Fuel Poverty programmes, especially Warm Front, is often under threat and there was an 11% cut in the budget in 2003-04.

  For the future:

    —  For all the same reasons there again may be a threat to the Warm Front budget this year (2004-05).

    —  Because Warm Front is such an important part of Defra's optional expenditure it is harder to secure the necessary increase in resources for the current spending round (2005-08).

    —  The pressures on Defra staffing do, as we mentioned in our evidence, cause problems for the implementation of the Fuel Poverty programmes.

  In conclusion, it is our view that the institutional/Departmental arrangements are not helpful for the attainment of the fuel poverty targets.

3.  DEPARTMENT OF HEALTH

  When we gave evidence we were unsure about the funding of the energy champion scheme in five Primary Care Trusts—a scheme under which a health service employee champions awareness of fuel poverty and energy efficiency grants amongst health professionals. This scheme is funded by Defra via National Energy Action, not by the Department of Health. This underlines our comments about the lack of commitment from the Department of Health.

  We would therefore like to see the following from the Department of Health:

    —  Funding of energy champions more extensively in a number of PCTs.

    —  Encouragement from Department of Health to Primary Care Trusts to accept fuel poverty as an important issue, to refer customers to the fuel poverty and energy efficiency schemes and to respond positively if they are approached by an organisation offering energy efficiency measures. This request, in particular, is an extremely modest one.

4.  ENERGY COMPANIES

  The Committee asked about additional contributions from the energy companies. We were in general complimentary about their work, and some of the companies, as we mentioned, feel that they do—in part—own the fuel poverty problem. This is helpful. The most important contribution they can now make is to keep their electricity and gas prices as low as possible. There may be some upward cost pressures, but it is important, especially from a fuel poverty viewpoint, that prices should not be increased any more than necessary. In addition, when costs fall, this should be rapidly reflected in price reductions.


 
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