Electricity and Gas (Carbon Emissions Reduction) Order 2008

I must express my gratitude to the Minister for not answering my questions before I asked them. I thought that that was the usual way around, but he quickly recognised that that might be the best thing to do. I start my speech with a quotation from Hansard. As the Minister noted, I have given him notice of this. On 26 April, there was an exchange on the Floor of the House about fuel poverty. The questions were answered by the noble Lord, Lord Truscott, who was then a government Whip. I asked him what the point was, "““of setting targets for the gas and electricity suppliers to help families in fuel poverty if they are denied the information to know who they are””." The noble Lord answered by saying, "““the noble Lord makes a valid point. We are working on sharing data, but we must bear in mind issues such as the Data Protection Act and the protection of individuals’ information. We are, however, working on sharing data between government departments to ensure that we target better those who need support. We are working actively to achieve that””.—[Official Report, 26/4/07; col. 758.]" I ask the Committee to concentrate on the words ““between government departments””, because it is not government departments that need to share information. Indeed, a huge amount of information is already shared between them. The order puts obligations on the supplier industries, which are the ones that must target households. Exactly the same question was asked last week when the order was debated in another place. Mr Phil Woolas, the Minister who replied to my honourable friend Greg Barker, did not even attempt to answer the question about how the industry was to get the names and addresses. I remind noble Lords, and emphasise the point that the Minister outlined very clearly, that at least 40 per cent of the carbon emissions reduction obligation must be achieved by action carried out in the priority group. Article 2 defines ““priority group”” as those who get benefits or tax credits as listed in Schedule 2, have the relevant income of £15,592 or less or are at least 70 years old. I was interested that the Minister said that that last group is the most vulnerable. I fear that I have to declare an interest, as I come into that group. I am over 70, as is my wife, but I had not hitherto regarded myself as vulnerable, although I recognise that there are many pensioners who are. The Minister explained that the order doubles the level of energy emissions to be saved from the household sector as compared with the previous EEC target. That has nothing to do with the European Community; it is the energy efficiency commitment. The Minister’s honourable friend in another place called it ““eek””. I shall not call it ““eek”” because I think EEC is best. Given this major increase in the overall target and, within that, the 40 per cent target to come from the priority group, it seems clear that considerable difficulties will be created for energy suppliers. Indeed, my inquiries have revealed that they are already facing considerable difficulties, even before this order. My first port of call to find out what the Government are going to do about this was the Explanatory Memorandum that accompanies this order. To my astonishment, it runs to no fewer than 79 pages; it is a substantial document. Note A of that document, which runs from page 51 to page 57, spells out in considerable detail how many households are in the priority group. The figure for households on benefit is 8.5 million. If the over-70s are added—regardless of income, as the order makes clear—the total comes to 11.2 million target households in the priority group. However, there is nothing in all 79 pages of the Explanatory Memorandum about the problem faced by the industries in identifying which these 11.2 million households are. Even if one looks at Annexe A, ““Brief Summary of Consultation Responses””, there is no reference to the problems faced by the industry. It is said that those responsible for the practical delivery of measures, "““considered that the proposed 40% priority group obligation was not achievable””," but their view that one of the main reasons why it is non-achievable is the difficulty in identifying the target households is completely ignored. When I started consulting the industry, a different picture emerged. I started with the Energy Retail Association. It provided a valuable brief on the Energy Bill, which has been introduced in another place, entitled Fuel Poverty, Social Tariffs & Vulnerable Customers. Section 8 is headed, ““Government needs to share data with industry on vulnerable customers””, and starts: "““Identifying vulnerable and fuel poor customers has always been a challenge for the industry, and it is keen to share more data with Government Departments to help improve targeting””." In a recent press release, the chairman of the Energy Retail Association said: "““It is crucial that the support available is reaching the right people. Energy suppliers offer a wide range of help for vulnerable and older people to help them reduce their bills, but they have no information to identify those households””." I find it astonishing that that did not figure among the representations in response to the consultation and does not figure in what the department chose to put in its summary of those consultations. So we are already facing a considerable difficulty. However, it is not all hopeless. I am told that last year there was a small pilot scheme run jointly by the industry, the Department for Work and Pensions and DBERR. It apparently did not involve Defra; when I asked, I was told that Defra does not seem to have been involved. This pilot scheme in England and Scotland was seen as a special project. Certain limited information about some of the most seriously vulnerable customers, 250,000 of them, was involved. That represents about 0.02 per cent of the 11.2 million that I referred to earlier. The industry pays for the mailshot, which the Department for Work and Pensions sends out to the target households, including a coupon and a freephone helpline; the industry responds when customers return the coupon or phone in. The pilot scheme was regarded as a success and I think that it was a promising initiative. I therefore ask the Minister whether it will be, in the Government’s favourite phrase, rolled out to more than 0.02 per cent of the priority group. If so, when? When will there be a report on that pilot scheme? Having discovered all that from the trade association, I went to two of the suppliers. I buy my gas from British Gas, which I can tell the noble Lord, Lord Redesdale, passed my boiler the other day as extremely efficient. At the end of its press release after it had to put up its prices by 15 per cent, it made a good deal of what it does for poor customers. It quoted a report from Energywatch that said: "““British Gas has and will have made the most significant voluntary commitment to measures to reduce the impact of fuel bills on its vulnerable customers””." I got straight on to British Gas and asked how it did it. Its spokesperson, an extremely capable young lady, immediately responded and I met her yesterday. The main message is that the whole situation has been very difficult since the EEC started. She went on to describe what British Gas in fact does, a good deal of which is just advertising and blanket leafleting. However, it also goes to the local authorities, which can and do give it postcodes where people on housing benefit may be living. British Gas told me that it tries to work in partnership with local authorities—housing departments, social services and so on—to find areas of local deprivation. Of course, it is not given names and addresses. It sounds rather like a municipal game of hide-and-seek: ““We cannot tell you where they are, but we can tell you where to look””. I suppose that that is better than nothing, but it does not sound to me like a very cost-effective method. Indeed, British Gas estimates the cost of this hide-and-seek and its other measures as £2.5 billion over the three-year period of this order. It has put the cost of its past efforts to find customers at £6 per customer per fuel—many customers take both gas and electricity. Its latest estimate is that this is now going to cost £20 per customer per fuel. That is all customers, including the target customers, so a customer who buys both gas and electricity will be paying £40 for the cost of searching for the priority group. British Gas also told me that it is in no doubt whatever that the process that it has to use involves huge inefficiencies and that much of the £2.5 billion that it has estimated is simply wasted. One reason for that is that it finds that an increasing number of these target households have already benefited from the Government’s Warm Front scheme. That means that this is a complete waste, because the household has already got insulation, or whatever it might be. Will the savings from Warm Front households count towards a supplier’s 40 per cent target? If, as I suspect may be the case, the answer is no, is not that likely to make achieving the 40 per cent target even more difficult? I have also had a brief from Scottish and Southern Energy, whose representatives I met last week. That company is also finding identifying priority group households extremely difficult. That phrase is used over and over again. I found it used by the Energy Retail Association; it is always ““extremely difficult””. It expressed concern that, even with the help that it can offer vulnerable customers once it has found them, the amounts that customers will have to pay towards the cost of the improvements available under the CERT will be beyond the means of many of them. My noble friend mentioned Ofgem. I looked at the latest Ofgem five-year strategy consultation document, which is for 2008 to 2013. It is dated very recently—14 January. Chapter 6 is headed, ““Helping to tackle fuel poverty””. Paragraph 6.6 states: "““The challenge remains getting the message across to those who most need the help and ensuring that once identified they can benefit from the full range of help available—the ‘find and fix’ approach. This requires a joined up approach from Government, industry and other agencies. It is also dependent on the Government using its sources of information to improve the targeting of the help available””." The CERT is mentioned in paragraph 6.8, but not much is said about the monitoring role. It seems to me that Ofgem has identified this problem perfectly properly and that it needs more joined-up thinking, if I may put it that way, as others are asking for. My attention was drawn to eaga, the Energy Action Grants Agency, which originally was an agency but is now a very successful private sector company owned by its employees. It has been successfully delivering Warm Front across England for Defra and equivalent schemes in Wales and Northern Ireland. Eaga told me that it cannot identify the costs that it has incurred in identifying constituents who are eligible for Warm Front grants, but it gives some interesting information. I quote: "““eaga reaches Warm Front eligible constituents through numerous channels (ranging from partnerships with Primary Care Trusts to liaising with minority ethnic community groups), so it is not possible to put a firm single figure on the cost of identifying those eligible for Warm Front ... Our work differs from that of the energy suppliers; for example, they are able to utilise their billing of customers to make them aware of CERT energy efficiency programmes. eaga relies on raising awareness of the programme to generate applications from the public ... However, our extensive experience in dealing with vulnerable customers””—" I accept that that is true— "““local knowledge and work with other stakeholders means we believe the costs associated with identifying eligible vulnerable constituents are far outweighed by the benefits of the energy efficiency improvements we deliver””." To which one might say, ““Well, they would say that, wouldn’t they?””. I am, however, very impressed by eaga. I did not know about it before, but I have looked at its excellent website and had long discussions with its people, and it is a good organisation. Much more of this scheme might well be routed through it, as it seems to have the experience of doing this. Many of the companies are obviously finding it difficult. Eaga goes on to say: "““However, whilst we recognise that the absolute number of Priority Group households benefiting from CERT will technically increase, we believe it is very much worth noting that Priority Group customers are likely to pay 100% more under CERT and to receive only 44% of the additional benefits. This is worrying as these customers are the least able to meet these costs””." Would the Minister care to comment on that? I say straightaway that Warm Front has been an undoubted success and that eaga is entitled to much of the credit for the delivery of the scheme, so I regard its anxieties as pretty worrying. Given the real concern in the industry and in Ofgem, is it not genuinely surprising that in the entire 79 pages of the Explanatory Memorandum put out by Defra the problem of identifying priority group customers is not even mentioned, let alone addressed? Would I be unreal in thinking that this begins to look like a conspiracy of silence in Defra? I hope that that is not true, and today’s debate offers the Minister the chance to disprove it. Again, will the Minister say what Defra is doing to help the energy industry to identify PG customers and so help the industry to achieve the challenging 40 per cent target? In conclusion, and in a lighter vein, I make three suggestions. The first is that the names of all the tax credit claimants are put on to a couple of computer disks and sent in an anonymous envelope to the Energy Retail Association. The second thing might be to arrange for the local authority to put all its information into an unnetted skip and let it fly out over the roundabouts on the bypasses. The third thing is that the Department for Work and Pensions could put all its information on to a laptop computer and arrange for it to be stolen. I say this in a lighter vein, but all these things have happened.