State Pension Credit (Disclosure of Information) (Electricity Suppliers) Regulations 2010

The noble Lord is absolutely right. Under these arrangements for sharing with the energy suppliers the data of people who are in receipt of certain components, or a component, of pension credit and are aged 70 or more, that matching has to be done. If somebody is entitled to pension credit, has not made a claim, has not been assessed and is in receipt of pension credit, they could not possibly feature in this match. That is right. In a sense, that is just a consequence of the broader challenge of trying to make sure that there is improved take-up of pension credit. This data-matching route will not be a perfect solution. The purpose of the pilot is to see how effective it can be for the cohort that we have identified and are seeking to apply it to. The noble Lord, Lord Freud, referred to data security and contractual arrangements. The department takes security of data very seriously and must deliver policies, procedures and controls to ensure that data are securely held, transferred and protected. Security is woven into everything that we do, driven in part by experience. We are deploying our existing IT service provider, HPES, to undertake the data-matching exercise, and it fully adheres to all departmental security protocols: creating contractual arrangements with the energy suppliers which specifically detail security arrangements and specify secure measures for handling, destroying and transferring data; encrypting all data in accordance with the DWP’s encryption methodology prior to transfer to protect personal data; identifying named security officers from both the department and each energy supplier; and introducing a stringent monitoring and reporting system to ensure that security is at the forefront of the data-matching exercise. Creating these regulations—specifically Regulations 7 and 8—will strengthen the legal safeguards even further by creating an offence of unlawful disclosure, which is supported by the noble Lord. The noble Lord asked what the scheme will cost. If, ultimately, it involves 250,000 people at £80 each, he is absolutely right that that will amount to £20 million, which will be met by the energy suppliers. The costs of setting up and running the data-matching exercise and the customer service follow-up action will also be met by the energy suppliers, and the total cost of that is not expected to exceed £1 million. The noble Lord, Lord Freud, talked about poverty targets and the need to do more. Our fuel poverty targets are challenging but the Government’s policies in the UK fuel poverty strategy have centred on the three main drivers of fuel poverty: reducing the demand for energy through improving home energy efficiency; raising real incomes; and ensuring competitive energy prices through regulating the market and voluntary social pricing support schemes. Since 2000, we have spent £20 billion on benefits and programmes to tackle fuel poverty. This is a priority for the Government. For example, this year we expect to spend around £2.7 billion on the winter fuel allowance, and we are currently committed to paying more than £250 million in cold weather payments. Warm Front has assisted more than 2 million households. The total funding for 2008-11 is £1.1 billion. Earlier this month, we launched the boiler scrappage scheme, which will provide a £400 incentive to help up to 125,000 households to upgrade their boilers. This scheme will cost something like £50 million. I suggest that these measures have a real impact. We estimate that without them the number of fuel-poor households in England would be around 400,000 to 800,000 higher. The noble Lord, Lord Oakeshott, asked about processing delays in pension credit and what that would mean. Unfortunately, someone whose claim is settled late will not qualify under this pilot. We recognise that some customers will obviously be disappointed, but, for reasons of simplicity and cost, we are not planning a further DWP scan to identify cases where a pension credit is subsequently awarded for the qualifying claim. Doing so would add enormously to the cost and the timeframe for delivery. The noble Lord, Lord Freud, asked how long the electricity suppliers will retain the shared data. We are expecting suppliers to be in a position to delete files sent to them shortly after they have received them. However, the exact timing will depend on how the data will be loaded on to supplier systems and when the payment will be made, and this is still under discussion. The noble Lord, Lord Freud, asked about success measures. We will be evaluating the scheme against a number of criteria, including how many pensioners are matched automatically, how many we reach through manual sweep-up through letters to those who do not match automatically and whether those who match get their credit with their next energy bill. Of course, we will learn lessons for the future as to the effectiveness of data-matching. The noble Lord, Lord Jenkin, asked how suppliers had found vulnerable households to date. It is a theme that he has spoken about previously. We believe that suppliers have been very successful in delivering against their CER targets, which is why we had the confidence to increase the level of the target by 20 per cent in 2009. For instance, by the end of the first 18 months of the three-year scheme, suppliers had achieved 63 per cent of their increased CER target. In the absence of any means of sharing government data with suppliers, they found it difficult to meet their priority group targets in the energy-efficient commitment that preceded CERT, which comprises households claiming particular benefits. In response, the Government took the opportunity to add all the over-70s to the group. So it is not all pensioners—it is those over 70, which increases the level of opportunities. Certainly, that helps suppliers make further progress on their priority group targets at the CERT halfway point, with less than one-third of savings left to be achieved. The figures from April 2002 to September 2009 show that 3.4 million cavity wall insulations have been done, as well as 3.6 million professional loft insulations. Close to 2 million households have benefited from subsidised DIY loft insulation. In total, that means that around 7 million households have benefited from some form of insulation measures during this period. I should say to the noble Lord, Lord Jenkin, that we are sorry to hear of his direct experience of the scheme. I shall share with DECC colleagues the lessons from that experience, to ensure that they are aware of it. As for monitoring the scheme, at the moment lead-times are monitored closely, although practically they tend to vary through the year. However, we recognise that in some cases the work is not done as quickly as the Government would like, let along the consumer. The Energy Saving Trust recently commissioned a review of how its advice network refers into carbon emission reduction target schemes. The aim of the review is to improve the customer experience offered by the EST and the advice centres for customers wishing to install a CERT-funded measure. Most suppliers operate their own independent auditing procedures for insulation work and impose fines, suspensions and contract cancellations on installers who fail to meet standards of service and customer care. Suppliers work hard to ensure that customers do not have to wait longer than is reasonable and take action in cases in which that fails. The noble Lord referred to the hassle factor and its impact on customer service and the success or potential success of the scheme. The primary aim is to deliver carbon reductions in households; the scheme has been very effective, and I have just outlined some of the achievements to date. This is about awarding the rebate, so people do not have to take action themselves. The noble Lord asked about the consultation on the mandated social price support scheme; we hope that that will take place in the summer of this year. The noble Lord, Lord Jenkin, talked, too, about the difficulty to date of suppliers finding vulnerable households. We believe that they have been successful in that; it has been helped in part by adding the over-70s to the group. One can understand the challenge—and I think that the noble Lord himself said that sometimes there was a process of focusing on particular areas. "Blitzing" is the term that might be applied to that. Part of the challenge is to reach these customers and to do it on a basis that has regard to costs. One can understand the challenges of that, which is why the data-matching—if we can make it work—provides a significant opportunity. The noble Lord, Lord Jenkin, asked what proportion of the priority group is represented by the 330,000 eligible people. It would be about 2 to 3 per cent. What we learn from the process is important. If we can make it work, the possibility of expanding it could be significant. The noble Lord asked when payments would start. The Government will consider the success of the scheme and assess whether it provides a secure and effective means of targeting assistance to poorer pensioners. We expect payments to start from late spring, and evaluation will begin as soon as the first payments are made. The noble Lord asked about progress on the pilot schemes. I do not have much detail on that. Perhaps I might write to him. The noble Lord, Lord Freud, tempted me to comment on Conservative Party proposals. I am sure that he will forgive me if I do not stray into that. He referred to the discounted tariff and asked whether the overlap is large. The purpose of a trial run to evaluate the overlap is to see whether the exercise is going to be meaningful. If we found that there was a 90 per cent overlap and that only 10 per cent of the potential customer base was going to be within a matching exercise, it would be doubtful whether such a small exercise could be justified on cost/benefit terms—hence the proposal that, if there is a large overlap, rowing back from the principle of excluding people if they get a discounted tariff would broaden the scope of people who would be within the exercise and make it potentially more meaningful. It is proposed, although I am not sure that it has been finally agreed yet, that for those who are in receipt of a discounted tariff the payment would not be £80 but £40, which would not be the full amount. I fear that I have not covered all the points that noble Lords made. If anybody wishes to press me on a particular matter, I shall try again. If not, I shall look at the record and write to noble Lords further. Fuel costs can have a big impact on household budgets. We want to be able to identify and target support effectively to those households which need most help. The regulations facilitate data-sharing between government and energy suppliers, and enable the Government to pilot their energy rebate scheme. The Government are proud of their record on reducing fuel poverty and our aim through this scheme is to provide pensioners over the age of 70 with a fuel rebate worth £80. Most people should receive the rebate this spring, without needing to do anything, in time to impact on the last quarter’s energy bills. We are working with energy suppliers to set up a communications strategy to ensure that people who might be affected are aware of the scheme and its benefits. The energy rebate scheme will last for one year only. However, the lessons that we learn should be invaluable when it comes to designing the mandated scheme from 2011. I commend the regulations to noble Lords. Motion agreed.