My Lords, I am grateful to the noble Lord, Lord Whitty, for his amendments dealing with the future of the energy company obligations and the approach to replacement boilers adopted within the scheme. By way of background, ECO is worth £1.3 billion per year and is split into three obligations: affordable warmth; carbon savings communities; and carbon saving. ECO has been specifically designed to help us fight the battle against fuel poverty and to reduce carbon emissions by requiring obligated energy suppliers to invest in heating and energy-efficiency measures. Importantly, ECO is expected to be more cost effective than the Warm Front Scheme, with the
delivery cost of 120,000 major measures estimated at around £350 million each year under the affordable warmth obligation. Under Warm Front, this amount of funding might have supported only 80,000 major measures, on which basis ECO is likely to be 50% more cost effective than the previous government-funded scheme. I recognise how important it is for vulnerable consumers to know how to access the support. That is why, in recognition of some of the reported difficulties, as the noble Lord, Lord Whitty, stated in his opening remarks, in identifying vulnerable customers who are eligible for help, we have provided a data-matching and referral service for ECO affordable warmth, operated by the government-funded energy saving advice service. Working in partnership with the Department for Work and Pensions, this service confirms whether a consumer meets the qualifying benefit criteria. Already, nearly 12,000 customers have been referred to an obligated energy supplier through this route. As we work on a new fuel poverty strategy to support the proposed new fuel poverty target, we will also be considering the scope for making more extensive use of data matching in future.
I turn to the amendments in more detail. Amendments 51ZB and 51ZC propose that ECO be extended to 2019, subject to a review. At the time that ECO was introduced, we indicated the intention that ECO would run until at least 2022 and the Government will, in due course, bring forward proposals for consultation on what the next phase of ECO, from 2015, should look like. In designing these proposals, it is important that we have flexibility to take account of experience under the current phase of ECO and new issues that may arise. It would therefore be wrong to restrict the future design of ECO to its current provisions. As part of our consultations on its future, we would, in any event, also consult all the organisations specified in the noble Lord’s amendment. Given the Government’s plans for the future of ECO, we believe that setting this requirement in law would be damagingly restrictive.
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Amendment 51ZD would change the arrangements for the replacement of boilers under ECO. I would argue that this amendment is also not unnecessary. As was shown in the first Green Deal and ECO statistical release on 27 June, ECO is already delivering, with over 80,000 measures installed at the end of April and £155 million-worth of measures traded on the ECO brokerage platform to date for delivery over the coming months. We expect tens of thousands of boilers to be replaced each year under current arrangements. We will continue to report on progress, with both monthly and more comprehensive quarterly statistical releases.
There are other difficulties with the noble Lord’s amendments. For example, the text proposed would effectively mean that there would be no limit to the number of free boilers that might be offered to eligible customers. This would have a serious impact on the costs of the policy. Such costs fall on all bill payers, including those least able to pay, which risks undermining confidence in the overall policy. It would also dramatically skew the balance of the measures installed. At present, obligated suppliers have the freedom to meet their targets in the most cost-effective way, including by
installing basic insulation measures, which are very cost effective and help to minimise costs. Among the affordable warmth eligible group, we estimated in the final Green Deal and ECO impact assessment that around 1 million households could benefit from further insulation. It is therefore important that affordable warmth delivery is not simply focused on boiler measures.
I am grateful to the noble Lord for the opportunity to discuss ECO, which is a key instrument to help us tackle fuel poverty, the subject of an earlier debate. Both the noble Lord and I share a concern for ensuring that the needs of vulnerable households continue to be addressed in the long term through ECO. However, I do not believe it is helpful for detailed eligibility criteria to be specified in primary legislation. As we have seen in relation to the legislative framework for fuel poverty, we need the flexibility to be able to respond when our understanding of a problem changes. That is why we have proposed, while maintaining a duty on the Secretary of State to address fuel poverty in primary legislation, that the same holds true here and why we consider that detailed eligibility criteria should be set out in secondary legislation, allowing us to keep those criteria under review while maintaining parliamentary oversight of any changes. In addition, this enables us to amend criteria over time to reflect developments in the Government’s benefits system.
The noble Lord asked what ECO had delivered so far. I think I have already alluded to that. More than 80,000 measures have been installed under ECO, benefiting more than 70,000 properties. More than 55,000 of these measures were installed under the affordable warmth or carbon saving community elements of the obligation, thereby benefiting the most vulnerable customers. The noble Lord also suggested that ECO was not going to deliver or have a large impact. ECO is a new obligation and has required some changes across the energy efficiency sector. However, the obligated suppliers have been set challenging targets, to be met by March 2015, and 80,000 measures have already been installed. This is a new measure and one planned to work over many decades. I think that the noble Lord must recognise we are taking a long-term view here and not instituting short-term fixes. On that note, I hope that the noble Lord will withdraw his amendment.