HL Deb 04 April 2003 vol 646 cc1610-3

1.5 p.m.

Baroness Farrington of Ribbleton rose to move, That the draft order laid before the House on 13th March be approved [14th Report from the Joint Committee].

The noble Baroness said: My Lords, the order will amend the Electricity and Gas (Energy Efficiency Obligations) Order 2001, which placed an obligation on electricity and gas suppliers to achieve targets for the promotion of improvements in domestic energy efficiency.

The 2001 order requires each electricity and gas supplier to direct at least 50 per cent of energy savings to those in receipt of at least one of the benefits or tax credits described in Schedule 2 to the order—a priority group of low-income consumers. From 6th April 2003, we are introducing two new tax credits—child tax credit and working tax credit— which will replace working families' tax credit, disabled person's tax credit and children's tax credit. In October 2003, we are introducing pension credit, which will replace the minimum income guarantee. The draft order gives effect to these changes by adding child tax credit, working tax credit and pension credit to the list of benefits in the 2001 order.

In the case of child tax credit and working tax credit, there will be an income cut-off of £14,200. Families in receipt of those credits who earn less than £14,200 a year will be included in the priority group. We have chosen an income level of £14,200 because that is an uprating of the low-income cut-off used for tax credits now, of around £11,470. That level is generally recognised as being an indicator of low income.

In conclusion, this order reflects the forthcoming changes to the tax credits system and the introduction of pension credit. We have sought to do this in a way that will maintain the focus of the priority group on low-income consumers. With that in mind, I hope that the House will approve this necessary order. I beg to move.

Moved, That the draft order laid before the House on 13th March be approved [14th Report from the Joint Committee]. —(Baroness Farrington of Ribbleton.)

Baroness Byford

My Lords, I thank the noble Baroness, Lady Farrington, for presenting the order. We support it. I want to make a couple of comments.

First, the Explanatory Notes indicate that one requirement of the 2001 order is for each supplier to direct at least 50 per cent of energy savings to those in receipt of at least one of the benefits or tax credits described in Schedule 2 to the order—the priority group of low-income consumers. If the noble Baroness cannot answer my question, I am happy for her to write to me. Can she tell the House how many people that will affect and how the companies anticipate targeting them?

Secondly, I turn to the tax credits system. The Minister will not be surprised to know that there is widespread concern about the take-up of these new measures. The Conservative Party has highlighted that on many occasions, as have many other organisations such as Help the Aged, Age Concern and the Child Poverty Action Group. The success of the new measures depends on a decent take-up rate, but the omens so far have not been good. Take-up of existing tax credits is very low—just 17 per cent for the baby tax credit and 64 per cent for the working families' tax credit, including just 51 per cent of eligible couples. And the new tax credits are even more complicated than the existing ones, which is why the 12-page application form comes with 47 pages of instruction. That may be a good reason why there has not been much take-up of some of the good schemes that are being introduced.

When asked about using tax credits in the education formulae of the local government grant, the Minister, Nick Raynsford, recently admitted that: Ministers are aware of the difficulties caused by the different take-up rates and that, as a new scheme, working families tax credit might be particularly affected.—[Official Report, Commons, 31/1/03; col. 1082W.] New figures published last week show that up to 6,700 eligible pensioners are losing out on £820 million per year because they do not receive the minimum income guarantee, the precursor to the pensions credit. Since 1998–99 take-up of all the main means-tested benefits—income support, housing benefit, council tax benefit and income-based jobseeker's allowance—has fallen.

These are real concerns. While I am sure that they are not the direct responsibility of the noble Baroness, she is in the Chamber to answer on behalf of the Government. I am happy for her not to respond in detail today, but I wish to put on the record the point that, while some of these new schemes—the energy efficiency order is a good example—are good ideas and could benefit many people, because the system is so complex, many people are not taking advantage of the opportunities being offered to them. Having said that, I support the order.

Baroness Miller of Chilthorne Domer

My Lords, so far as it goes, we certainly welcome the order. The Minister will know from the hard work of my noble friend Lady Maddock both in this House and in another place that there are much wider ways in which energy efficiency could be addressed, were the Government to choose to pursue them. We welcome the order as perhaps an interim measure before the Government choose to address the issue in the comprehensive way often suggested with great eloquence by my noble friend Lady Maddock.

Baroness Farrington of Ribbleton

My Lords, I am well aware of the advocacy in this area of the noble Baroness, Lady Maddock, the noble friend and colleague of the noble Baroness, Lady Miller of Chilthorne Domer.

All noble Lords accept that, with every benefit, it is difficult to ensure a 100 per cent take-up. Equally, all recognise the particular difficulty in creating the detailed paperwork required to cover eligibility as simple as possible. From a sedentary position the noble Baroness, Lady Byford, said the word "smaller", but as I grow older I hope that the print will become larger while the number of questions to be answered will become fewer.

Suppliers are expected to target eligible groups through, for example, partnership schemes with local authorities. Advertising by suppliers of their schemes under the energy efficiency commitment will be encouraged. The size of the priority group will be increased by the amendments contained in the order. Currently the group numbers around 7.7 million people. The figure of 8.8 million mentioned in the consultation document was based on earlier figures which have since been revised. The addition of those on pension credit and new tax credit is likely to increase the priority group by a little over a further 1 million people.

I welcome the support that has been expressed for the order and note the comments that have been made. I commend the order.

On Question, Motion agreed to.