HOME ENERGY EFFICIENCY SCHEME (No. 1) (Hansard, 8 July 1996)

§ Mrs. Maddock
I beg to move, That the clause be read a Second time.

§ Mr. Deputy Speaker
With this, it will be convenient to discuss the following: New clause 9—Home Energy Efficiency Scheme (No. 2)— '. In section 15 of the Social Security Act 1990 (grants for the improvement of energy efficiency in certain dwellings, &c.) for subsection (2)(c) substitute— (c) the descriptions of person from whom an application for a grant under subsection (1)(a) or (b) above may be entertained additional to those specified in subsection (1A);".'. New clause 15—Availability of funds for grants— `( ).—In section 15 of the Social Security Act 1990 (grants for the improvement of energy efficiency in certain dwellings, &c.) add new subsection (1B)— (1B) Each year the Secretary of State shall publish his estimate of the expected number of qualifying grant applications under this section over the next 12 months and of the likely cost of the work, based on demand in previous years and on reports produced by local authorities under the Home Energy Conservation Act 1995, and he shall ensure that 115 sufficient resources are available that this amount of work can be carried out within 12 months of the application or as soon after as is reasonably practicable.".'. New clause 17—Persons entitled to full grant— '. In section 15 of the Social Security Act 1990 (grants for the improvement of energy efficiency in certain dwellings, &c.) after subsection (1) insert the following subsection— (1A) Persons who shall be automatically entitled to a grant in value worth 100% of any maximum amount specified under subsection (3)(a) below for the purpose of this section shall include—

(a) all persons aged 60 years or over; and

(b)all persons in receipt of—

(i)family credit,

(ii)council tax benefit,

(iii)housing benefit,

(iv)disability living allowance,

(v)disability working allowance,

(vi)income support,

(vii)industrial injuries disablement benefit,

(viii)jobseeker's allowance, or

(ix)war disablement pension.".'.
Amendment No. 113, in clause 140, page 81, line 22, after 'domestic', insert 'heating'.

§ Mrs. Maddock
Hon. Members know that energy conservation is a subject close to my heart. Many hon. Members accept that it makes environmental sense and sense for the health of individuals and families. That is why I proposed the Home Energy Conservation Act 1995 and the new clause.
The background to the matter is the changes that were made last year to home energy efficiency grants. I and many other hon. Members have been photographed helping engineers installing insulation measures. I was photographed with two of my constituents, an elderly couple who benefit substantially from such work. Hon. Members who escaped that cannot have escaped the anger of constituents and other groups, such as Age Concern and Neighbourhood Energy Action, at the Chancellor's cuts in the home energy efficiency scheme in last year's Budget.
Earlier in the year, many people had been pleased when the Paymaster General said in January 1995 that the scheme would receive £100 million a year over the next three years. The Minister reiterated that commitment soon afterwards. However, in December last year, the Chancellor slashed the budget by almost a third—£31 million. Many Conservative Members—though few are here tonight—have joined with other parties to criticise that unjustifiable cut which was a blatant breech of a promise.
Fifteen Conservative Members signed early-day motions 470 and 702, both of which could reasonably be interpreted as calling on the Government to reverse the cuts. That is not surprising because not only would 200,000 fewer homes be insulated but Neighbourhood Energy Action, which deals with the scheme, estimated that 1,000 jobs would be lost in the small insulation industry. Many of us received letters on the matter. In addition, it reckoned that 500 jobs would be lost in manufacturing and retailing. On the usual assumption that each lost job costs the Exchequer £9,000 in lost tax revenue and benefit paid out, this will lose the Government £13.5 million of the saving, apart from the health and environmental consequences.
116 It would be nice to reverse the cuts, but unfortunately the amendments that I tabled on that were not selected. However, the amendments that I have tabled to deal with the problems of pensioners to ensure that they will get 100 per cent. grants and that we have a reasonably sustainable way of ensuring that the grants go on from year to year were selected.
Many hon. Members were lobbied by people who work in the industry. My hon. Friend the Member for North Devon (Mr. Harvey) had a letter soon after the cuts from a company based in Poole which operates HEES in Devon. It was in no doubt about the cuts' effects. The points made by its managing director are pertinent. He was especially scathing about the decision to remove the entitlement to full HEES grants for people over the age of 60 who were not in receipt of means-tested benefit. In the area where he was operating, it meant that more than 90 per cent. of his company's HEES work was for people in that category. He maintains that such people were not wealthy but were being penalised for having small amounts of life-earned savings. He wrote: Many people we see day in, day out are living on the breadline and without comforts such as insulation and draughtproofing and can suffer from hypothermia, illness and misery. The HEES grant enables us to provide them with valuable energy advice and refer them to caring organisations if further help is needed. This service is now to be taken away from thousands of needy householders who already are struggling with paying fuel bills with the addition of VAT. Of course, the Government removed entitlement to pensioners who now get only 25 per cent. of the cost of insulation work on their homes. Ministers have made several claims about the cuts that deserve to be challenged. Firstly, they claim that their initial decision to extend eligibility for HEES to all pensioner households and to increase the scheme's budget to £100 million were linked to the imposition of VAT on domestic fuel. As the second stage of VAT was defeated, there was no case for continuing with the concessions. Let us consider those claims in turn.
The extended eligibility for HEES was introduced with the first phase of VAT on home fuel and was at no point linked to increasing that to 17.5 per cent. Now the Government argue that that was the case, but that argument does not hold water. Pensioners throughout the country are suffering from the current 8 per cent. VAT levy yet, for the reasons that I have outlined, they have special heating needs and deserve special treatment.
The argument that the cut in funding is the result of the rejection of VAT stage 2 is even more spurious. The Chancellor of the Exchequer confirmed that after stage 2 of VAT on fuel had been defeated, he would not claw back the Treasury's £30 million. Indeed, he made a virtue of that. The cut cannot be blamed on the failure of the House to accept the Government's proposal for the full rate of VAT to be levied on domestic fuel.
Ministers have tried to claim that cutting pensioner eligibility to 25 per cent. of the level of grants will not significantly affect take-up. The availability of evidence goes against that assertion. Neighbourhood Energy Action states that in its experience grants would need to be about 70 per cent. to stimulate take-up by elderly people. But the Minister of State has said that lower-income households will be protected from the cuts. He is on record as claiming that the total number of home energy efficiency scheme jobs this year may exceed that of last year.
117 The two assertions appear to be rather contradictory. If we were to exceed the 600,000 jobs which were undertaken last year, given the financial resources available to the companies concerned, that would require about half of the work to be done for people receiving only 25 per cent. of grant. Apart from the fact that that is unrealistic, only slightly more than 300,000 jobs would be carried out for low-income households. That would represent a cut of about 1,000 a quarter when compared with the jobs carried out last year. That can hardly be described as protection.
New clauses 17 and 19 would have the effect of re-entitling all people over the age of 60 years to 100 per cent. grants for improving the energy efficiency of their homes up to the standard of Government maximums for all eligible people. The list of entitling benefits would ensure that everyone currently included in the scheme would continue to be included.
Given the background that I have set out, we have long waiting lists for the HEES. The new clauses and amendment are designed to deal with that. The cut has exposed huge demand for the scheme. Ministers guaranteed—they could not have done otherwise—that all claimants over the age of 60 years registering for the scheme before April would retain entitlement to 100 per cent. grant aid, even if they were not on means-tested benefit. That led to huge demand in the early months of the year.
There is now a waiting list of 372,000 households. It is expected that well over half the HEES work done this year will be for applicants who do not meet the new criteria. That has been a good thing in some respects. Many of us encouraged our elderly constituents to take up grants before 31 March. At the same time, however, there will be considerable delays, which will continue.
Neighbourhood Energy Action is extremely concerned about delays. In its view, there is urgent need for transitional funding to restore the scheme's budget, to reduce delays and to avoid an undermining of public confidence, which is extremely important.
New clause 15 would tackle the waiting list by placing a duty on the Secretary of State to estimate annually the number of qualifying applications for HEES grants expected over the next 12 months. The obvious basis on which to make such an estimate would be the number of successful applications in previous years. The new clause would oblige the Secretary of State to estimate the likely cost of the work over the year. That could be largely undertaken on the basis of the previous year's figures along with the information that is being gathered from local authorities under the Home Energy Conservation Act 1995.
The Secretary of State would be obliged to ensure that sufficient resources were available so that the expected level of demand could be met and that no one would have to wait for more than 12 months. I accept that much depends on the success of new clause 17.
Amendment No. 13 relates to domestic appliances. It would have the effect of clarifying the prevention of waste of energy in the use of domestic appliances in terms of the legitimate use of HEES grants. I am aware of the amendment that was tabled in Committee. The purpose behind amendment No. 113 is to ensure that only domestic heating appliances would be considered. There 118 will always be a limited budget and there will always be problems in targeting HEES moneys in the most effective ways to conserve energy.
I have been told by representatives of the energy conservation industry that they are concerned that domestic appliances will be taken to include non-heating appliances such as refrigerators. There is some capacity for energy savings in that area but such appliances would not represent an effective use of the limited funds that are currently available.
If the Minister is not willing to accept the amendment—given the limited resources, it is sensible—I hope that he will at least put on record the official Government interpretation of the phrase "domestic appliance" for future reference.
I am conscious of the late hour. I am not quite as fast as the Minister in getting through notes. I hope, however, that the House will bear with me. I intend to push for a Division on new clause 9, which is designed to deal with pensioners. I think that there is a great deal of support for it.

§ Mr. Robert B. Jones
This group of new clauses and an amendment might be described as a modest little number. It is designed to scrap cash limits, to wreck other energy-efficiency programmes and to ban the technology that might serve poor people best. It is not surprising, therefore, that I have come to the conclusion that the new clauses and amendment, taken together, are not a good idea.
The proposed new clauses and amendment would require an open-ended funding commitment to home energy efficiency schemes so that, regardless of demand, all applications for grant would be dealt with in a year, or as soon as reasonably practicable afterwards. That unlimited allocation would be based on a published annual assessment of estimated demand and cost, based on previous years' experience and local authorities' assessments drawn from their Home Energy Conservation Act 1995 reports.
We already have a published allocation of expenditure in the form of the Department's annual review. Of course, I hope, and expect, that local housing authorities, as energy conservation authorities, will take full account of the availability of grants such as those available under HEES in drawing up their reports under the 1995 Act. They will be an additional and useful tool in assessing the likely demand for grants and setting budgets. However, the allocations to particular programmes cannot be driven by such reports, as the new clauses require.
The hon. Member for Christchurch (Mrs. Maddock) referred to the backlog that has arisen from our commitment, as simple equity required, to honour at the old rates all grant applications made before the recent change in the rules, which introduced contributions from better-off claimants. Given that 372,000 people pre-registered their interest in having a grant by 1 April, the reduction of the waiting list is a matter of simple mathematics. By the end of June over 140,000 grants had been paid, which is a commendable performance. About 27 per cent. of these grants were paid to people on the pre-registration list.
After three months of working through the transitional effects of the recent changes, experience clearly shows that low-income households are not being disadvantaged. Those involved in administering and delivering the scheme are doing an excellent job in dealing fairly with 119 all claimants for grants. As the number of pre-registrations held centrally diminishes, the proportion of grants paid to claimants referred to the scheme through the conventional local channels will increase, helping installers to plan their work even more efficiently and thus reducing waiting times to a minimum.
I understand the hon. Lady's desire to look for a quick-fix solution to the present queues for grants, but her new clause would not be helpful. The lack of a cash limit to the scheme would make it almost impossible to plan the allocations to regions and to individual installation companies, which would in turn suffer uncertainty about the investment, training and employment needed for grant schemes. Without the discipline of a fixed budget, the incentives to achieve efficiency gains disappear and costs would inevitably rise. Outside the scheme, the realities of Government finance mean that other equally worthy programmes, many with a strong social dimension, would suffer as their budgets were raided to support unchecked demand in the home energy efficiency scheme. That would not be a good solution to the problem.
The hon. Lady asked about amendment No. 113. It might be helpful if I explain why the clause contains the provision on appliances. We looked carefully at measures that have the potential to give greater benefits to households that are in most need of help, and best overall value for money. We concluded that better domestic heating systems are important, but the existing power does not contain provision for tackling waste of energy in the heating of dwellings. There is some doubt about whether the power is sufficient to permit expenditure on replacing or supplementing elements within a system already installed, by, for example, substituting a more efficient boiler or adding an electronic hot water and heating control system. The phrase "domestic appliances" does not cover plug-in devices such as television sets and vacuum cleaners. Although there is scope for significant gains in energy efficiency in such devices, there are other ways of doing that, such as better labelling.
The hon. Lady has not made a good case for her amendments, and I ask the House to reject them.

§ Mrs. Maddock
I thank the Minister for his comments on amendment No. 113, but I am disappointed, as I understand that the Government are about to make a statement on the connection between good health and various environmental matters. Yet today we have seen just how shallow that commitment is. These amendments would definitely help to ensure that people do not suffer from diseases that are brought about by homes that are inadequately heated and damp. The Government had an opportunity to prevent that today. Indeed, they had an opportunity to restore rights to pensioners.
The Minister expressed his view, but it does not accord with that of many of the organisations involved in these matters outside, which will be as disappointed as the pensioners and I that the mean-minded move that was made last year will continue. When you consider the huge budget of £31 million, it is nothing but mean spirited. I beg to ask leave to withdraw the motion.