We move on to item 2, which is on fuel poverty. The Executive has published its consultative draft of the Scottish fuel poverty statement. At its meeting of 20 March, the committee agreed to take limited oral evidence to help inform our response. Given the number of witnesses who are attending, and in order to maximise the time for questions, the witnesses have been told that we will not provide an opportunity for opening statements. However, we have received written submissions—for which we are grateful—and they have been circulated to members.
I will have the first go at that. That target is achievable, but the Executive should consider co-ordinating grant schemes and widening the range of measures available under current schemes. I do not know whether anyone wants to add anything to that.
I would back that up. The 15-year target is achievable, but only if much work is done early on. Good measures are in place, such as the central heating programme and the warm deal programme, but we must consider how we can extend those programmes and what new measures we can bring in now if we are to achieve that target. It is effectively a target of only 14 years and a bit that the Executive is setting itself. Some people will be hard to reach and some homes will be hard to improve. We must start considering new measures that can be implemented now.
There is also duplication in schemes at the moment. Companies working under the energy efficiency commitment and organisations working under the warm deal are providing insulation measures to and targeting the same groups of households. Given the fact that one third of the Scottish housing stock is non-traditional housing, we must consider how to widen the range of measures to include things such as external cladding and perhaps even solar solutions in order to take people out of fuel poverty.
You will be aware that the Housing (Scotland) Act 2001 focused on the social rented sector and that there were strong arguments as to why that was necessary. The Executive is now moving to address issues in the private sector. How should the Scottish Executive address fuel poverty, particularly in the private sector?
There are real problems in the private sector because there is no carrot and stick approach. The private rented sector is not really regulated and there are problems with getting measures carried out and with landlords giving permission under current schemes. It is difficult for local authorities to gather information on all the housing stock, particularly in the private rented sector.
The committee considered in detail the current scheme for licensing houses in multiple occupation and concluded that it was not working very well. However, I think that the committee also made the point that we should not throw the baby out with the bath water. It is important that the limitations of that scheme do not compromise the long-term argument for a greater degree of regulation or oversight of the private rented sector. That is crucial to achieving our aims to reduce fuel poverty and improve housing quality. Without oversight it is very difficult to get things moving in the private rented sector.
We have found that the private sector owner-occupied properties of people at the point of retirement are of fairly good quality. However, as owner-occupiers get older, their properties tend to decrease in quality. The house conditions survey showed that those in the oldest age group, 81 and over, live in houses that have the lowest ratings for condensation, heating and double glazing and the lowest national home energy rating—NHER. We would like special measures for the oldest age group.
I have some comments on information gathering, particularly on the private rented sector. Local authorities have just submitted their second progress reports on the Home Energy Conservation Act 1995. The information that local authorities have on the private rented sector is very poor because they do not have the authority to gather information from that sector. Gavin Corbett is right—we license those houses in multiple occupation, but we know nothing more about them, their energy rating or state of repair. If we are disaggregating the figures from the house condition survey, we might want to know about the robustness of the information on that sector. The regulations under the Home Energy Conservation Act 1995 must be strengthened so that private sector landlords report to the local authority on their stock and its condition. At the moment, local authorities are making a best guess about how efficient or otherwise that stock is. If the local authority does not know how efficient that stock is, it is difficult to say what schemes suit the private rented sector best.
The Energy Action Scotland submission says that, on occasion, private landlords have refused permission for tenants to benefit from grants, such as the warm deal. However, a submission from the Scottish Association of Landlords says that
You raise a good point on awareness among private landlords—and more widely. There are currently 30 different schemes in Scotland. Even though we are an informed group, this panel would find it difficult to name them all. Access to information is extremely important.
The Executive states:
The housing improvement task force must consider how the private rented sector works and how the Executive interacts with it. You mentioned the Scottish Association of Landlords. I would like that group to be included in a number of the discussions that are happening. By and large, landlords are hidden from the view of scheme managers, insulation companies or groups like ours. We find it hard to make realistic contact with them.
I have questions for Age Concern Scotland and the other organisations that I will ask later. Please do not think that I am ignoring you.
From the outset our concern was that, in its measurement of fuel poverty, the Scottish Executive would treat income from housing benefit and mortgage relief as if it were disposable income. The notion of such income being more money in somebody's pocket is completely inaccurate. Our experience is that, if someone is in rent arrears, housing benefit generally goes on sorting out that debt. They do not suddenly have another £25 in their pocket to spend on fuel.
Including such income not only changes the number of fuel poor, it also changes their profile. As Shelter Scotland's submission mentions, because housing benefit is not spread evenly across the different sectors, including it would take out a disproportionate number of private rented sector households, which is a worry, as that is where the most intractable problems lie.
Paragraph 4.21 of the consultation states that
I want to add a comment to your question.
By all means.
To put that in perspective, nine out of 10 houses in Scotland—90 per cent of the housing stock—fall below current energy efficiency standards. That is the scale of the problem.
That is enormous.
It is enormous. We have to do a number of things. It is not realistic to amend retrospectively the building regulations so that we bring everybody up. Things can be done to some houses. An energy rating of 0 to 2 is poor when compared to houses being built at the moment that have a rating of 8 to 9, depending on who is building them.
Some local authorities that we work in partnership with—the witnesses from the Convention of Scottish Local Authorities might want to say something about this later—have already looked up their stock profile. It is difficult for the Executive to set an NHER rating of 6 when it knows that it will be difficult to bring some house types up to that rating within a realistic spend. Some local authorities are aspiring to a rating of 5. It would therefore be prudent for the Executive to set a rating of 5 to be achieved in the next five or six years.
Within the budget, would attaining a rating of 8, as in new builds, be a mission impossible?
No. It is not a mission impossible for new houses.
I meant for the older properties.
We need to consider more innovative solutions for the older houses. I was talking about widening the measures. Neither the warm deal nor the energy efficiency commitment money introduces solar power or anything to do with photovoltaics. If you bring in technologies that increase the ambient air temperature in the house, you reduce the amount of work that the heating system has to do. Those technologies could be used for £500 or £600. We are not talking about breaking the bank on those properties.
Kirstie Shirra has already mentioned the hard-to-reach groups that will get help from the Executive's commitment. Although they will get assistance, it might well be later on in the programme. Some of the written submissions also mention those hard-to-reach groups. Will you be more specific in detailing who those groups are?
Those in the oldest age group tend to have the lowest income, the highest care needs and live in the poorest properties, certainly in the owner-occupier sector. There are projects that deal specifically with that age group. We would look to some kind of initiative to reach the oldest age group.
Are there particular reasons why it is harder to get to those groups? What needs to be done to ensure that those groups benefit from the programmes to eradicate fuel poverty as soon as is practicable?
The reason is that it is more difficult for the older age group to get out. That group is socially excluded and finds it more difficult to interact with the amenities that are available. They may not have access to all of the information that other people have. District health officers and community care and social work departments have initiatives in place to try to reach the older age group. Our argument is that the older age group includes people who are most affected by and at greatest risk of fuel poverty. Action should be taken to try to reach them.
We have probably had the easy wins in that we have identified fuel poor households. We have not yet touched on whether people identify themselves as being fuel poor. The term "fuel poverty" is not easy to understand. When I explain my job to people, until I talk about living in a cold home, they find it hard to understand what I do. We must give people access to information and we must raise awareness. Once that has happened, people will identify themselves as being fuel poor. I have often said that we would be inundated with calls to help access insulation and central heating grants if we ran an advert in the middle of "Coronation Street" that asked, "Are you cold or do you know somebody who is cold?" People do not identify themselves as being fuel poor.
The problem is not unique to the elderly. Many people do not understand the concept. Although the elderly are important, the problem applies equally to young families who do not identify themselves as fuel poor.
That is a good point and one that could easily be addressed. When new mothers leave hospital with their babies, they are given a Bounty pack. Perhaps they should also be given information about grants to insulate and centrally heat their homes. That sort of simple link requires cross-departmental working between the departments of health, the environment and housing. We need to make those sorts of links and I hope that the advisory group will start to work on that.
The committee will be aware that a number of Executive documents describe the community energy partnerships that Transco has proposed. The Dundee community energy partnership is working to identify needs in a street-to-street, door-to-door survey of each household in Dundee. A number of hard-to-reach people, about whom we are talking, do not intermingle with the community. They keep themselves apart and do not attend lunch clubs, use day nurseries and so on. However, if someone arrives on the doorstep with a package of information and asks to make an assessment of how energy efficient the house is, the help comes to the person and they do not have to identify themselves.
There are references to broken and partial central heating systems throughout the various reports. Perhaps difficulties in definition are involved. Page 12 of the Citizens Advice Scotland report includes a reference to two electric storage heaters that were in different rooms, but linked together, counting as a central heating system. That meant that that property was ineligible for a grant. We need to get a handle on the extent of the problem that the interpretation of definitions and exemptions is causing. There is an urgent need for a follow-through programme.
We commonly receive inquiries from older people who have low incomes and little savings for help with the maintenance of central heating systems. It is expensive to maintain a central heating system properly, and for people on low incomes—of any age group, but especially older people whose income will never rise—that will always be a problem. It must be addressed as part of a strategy to maintain warmth in the home for old people.
The Executive had to start somewhere, and the easy way to start was by giving heating to people who did not have any. However, people who have two storage heaters that are expensive to run are also in fuel poverty. We need to think about changing that, and I hope that the Executive will do that.
There is a role for an increase in the uptake of the priority services register, which is currently run by energy companies. We are running a campaign in conjunction with energywatch to try to increase that uptake. However, if the issue was acknowledged centrally and the awareness campaign was carried out by the Executive, that would be of use as well. One of the benefits of the priority services register is a free gas safety check each year.
Are there potential linkages with care-and-repair schemes or programmes of that sort, through housing associations, which would be useful in that context?
Such schemes have an important role to play in our supporting older people and gaining their confidence by working with them through what can be a very long process of improvement and repair. Age Concern Scotland and Shelter Scotland were involved in the initiation of the care-and-repair movement in Scotland, many years ago. Although it is much better known now and receives greater recognition from the community and the Executive, it has not evolved much from its original form. It tends to involve one-person projects that can resource only a limited client group. There is definitely a need to strengthen that programme.
Mention was made earlier of the problems of non-standard properties, to which the normal insulation arrangements cannot be applied. There is an issue of what works and how much it costs. The Easthall project was innovative 10 or 15 years ago, but it does not seem to have been advanced by making use of solar energy, and so on. Can you give us an idea of the best methods for improving non-standard houses? They are obviously a major problem. In whole-house terms, are they worth it at all? Being realistic about the economics, do such houses have a long-term future?
That is a good point. We turn over about 1 per cent of our stock every year through demolition and new build. Much of our stock will be around for a long time, particularly the solid-wall properties. The best thing that we can do is put in extremely efficient central heating systems, which is what the Executive stated should be done when it drew up its specifications for the standards up to which stock had to come. We have done a lot in that regard and have introduced the seasonal efficiency of domestic boilers in the UK—SEDBUK—ratings. Once a high-efficiency central heating system is in place, solar slate technology can be used. For about £500, such technology provides about 2,000 kWh a year of warm air drawn from the atmosphere. Berwickshire Housing Association and Perthshire Housing Association are experimenting with that technology at the moment. That project has been around for the past three or four years and is probably the biggest project of its kind.
On whether it is cost effective to invest in houses that have a short life span, the priority must go to investment in the houses. Although it is right to say that we expect to demolish more houses in the next 20 years than we did in the previous 20 years, much demolition happens for management and popularity reasons, rather than because of physical obsolescence. There is limited overlap between being popular and having a short lifespan—we would be in a bit of a cul-de-sac if we were to demolish large numbers of non-traditional and awkward house styles despite their being popular.
Ann Loughrey talked about the amount of schemes that exist—one-stop shops and so on—and the fact that there is a lack of co-ordination among them. Is the Scottish Executive doing enough on how fuel poverty relates to health, to the environment, to education and so on? Would the existence of a more co-ordinated approach at the top—perhaps fuel poverty's inclusion as a social justice indicator—filter down and improve the situation across the board?
I agree absolutely. Greater co-operation, with the lead coming from the Scottish Executive, is exactly what we are looking for. There must be less duplication and more effective use of resources.
I have another quick question on a subject that is puzzling me. Practically every response that we have heard talks about the necessity of front-loading if we are to achieve the 15-year target, but we then hear reports that there are not enough gas fitters. How can that problem be addressed if we are serious about meeting the target?
We must co-ordinate provision that already exists. We still have a lot of stock that needs cavity-wall insulation, and there is enough capacity in that industry. We still have a lot of stock that needs loft insulation; there is enough capacity in that industry, too. Gas central heating is not the only type of heating system that can be installed. I share the view that we have a long-term problem with gas engineers. We are not talking about the next three or four years. However, as the schemes that we are instigating now hit their targets there will be a problem not with installing systems, but with on-going repair and maintenance. We must take action now. Transco and GWINTO—the Gas and Water Industries National Training Organisation—are working closely to bring gas fitters on stream now so that, in three or four years' time when we start to have serious problems, we will already have created a work force that can tackle other hard-to-heat houses. I hope that we will then go back to the houses that have partial or obsolete central heating to replace those systems. It is a problem, but steps are being taken now to address it. We must ensure that those steps are effective and that they have the support of the industry and of the Executive.
Do you reckon that front-loading is a viable option?
Yes.
Front-loading is crucial. It will be hard to achieve a front-loaded target, but we are talking about eradicating fuel poverty; that is a goal that we must achieve. We have said that there will be hard-to-reach groups and that there will be properties that are difficult to deal with. Unless we front-load the initiative early on, our target will not be achievable. It will be difficult, but we need to do it.
We have spoken about the Executive's position on the central heating programme and about the target for elderly people who have no central heating at all. However, we all recognise that there is a problem with partial systems or systems that are on their last legs. If you had the power to make the Executive change its view, would you widen the initiative to include people who have partial systems now, or do you think that the Executive has got it right by targeting people who have no central heating?
I do not have enough statistical information to say how successful the initiative is. I know that the Eaga Partnership will give evidence today, so perhaps it can answer that question. However, we think that widening the central heating programme must happen sooner rather than later. I would not want a situation in which a person who does not have heating is beaten to the grant by somebody who has a little bit of heating. That is a difficult question, which has a lot to do with information and access to information.
I would like to follow up on Cathie Craigie's point. She asked whether we would widen the measure if we had the power. The difficulty is that along with power there must be resources. If we widen the client group now, we must also increase the amount of money that is available. Already, without a lot of publicity, there is a huge queue of people lining up, although Eaga is managing the queue effectively and getting people through the system. We must manage expectation as well as install heating systems. In a five-year programme, somebody has to be last, but everybody wants their heating system installed in the first year. Ann Loughrey made a good point. Do we choose whoever is first to chap on the door? If that person gets their central heating first, will they be getting it at the expense of someone who has no central heating at all? It is very difficult to answer the question.
I would love an increase in resources for the programme. Today we have talked about the skills that people will need to meet the challenge. If we increase resources, are there enough people to do the fitting and maintenance that are required?
We are building the labour resource that is required, so that in three or four years' time there will be a substantial number of people who are able to do the work. If the money were put on the table today, the industry would struggle to find enough people who are qualified to do the work. The industry does not have the required capacity.
So we need to plan for the next three or four years.
We need to bring about a step change.
If we had more information about the housing stock, we would be able to target the worst housing first. That would address many of the concerns that Cathie Craigie expressed. However, at the moment we do not have the information that we require. That is why we would like local as well as national housing stock condition surveys.
I hope that a new housing stock condition survey will take place soon. Our witnesses have made a plethora of excellent suggestions. If you were to suggest one improvement to the strategy for eliminating fuel poverty, what would it be?
Energy auditing could help in numerous ways. It would enable us to build up a detailed picture of the condition of Scotland's housing. It would also provide local authorities with information on private sector stock and their own stock, which would allow councils to focus grants on the people who need them.
It is hard to tackle problems with a one-dimensional approach—members would expect me to say that.
In our view, it is most important to have a Government led, formal and co-ordinated policy that draws everything together. If I could do one thing by waving a magic wand, I would stop people self-disconnecting and ensure that they have fuel all the time. That would take people out of fuel poverty, but it is not realistic.
Today we have talked a good deal about the most vulnerable groups. Ann Loughrey touched on income, as opposed to energy efficiency. Although many powers related to income are reserved, income maximisation policies are not reserved. We would like income maximisation policies to be embedded in every strategy that the fuel poverty advisory group and the Executive propose. Failure to take up income support and attendance allowance is a particularly big problem with older people. When the pensions credit comes on stream next year, the number of people who are eligible for extra income, but do not receive it, will increase hugely. We would support any initiative that was aimed at getting older people to check their benefits.
I want to ask Energy Action Scotland about the skills shortage that Norrie Kerr spoke about earlier. In its report, Transco says that not addressing that shortage
GWINTO, which works closely with Transco, has done some very good work in that area. If members have not already received a copy of its profiles, I will ensure that one is sent to them. GWINTO has perceived that the industry will cope, except during cold weather. That situation will not necessarily affect the amount of installations, but it might affect you or me if we phone up to get our boilers repaired. There is a deficit of engineers in the winter, but during the summer, the engineers are well up to capacity. Again, the issue is about the timing of jobs. If many central heating systems are installed in summer when engineers are not doing maintenance work and repairing breakdowns, we can keep the programme going.
It is not long since Shelter and other housing organisations were arguing for housing investment that would create jobs. Let us hope that we do not reverse that argument by saying that we should break housing investment because we cannot provide skilled jobs. I am sure that everyone would agree that it is important to give that message.
I thank the witnesses for their attendance and evidence. If you feel that we have missed points that you want to highlight, we would be happy to hear from you again.
Meeting suspended.
On resuming—
I welcome our second panel on implementation issues. The witnesses are Councillor Alistair Gray, Ron Ashton, Stephen Cunningham and Alan McKeown—all from the Convention of Scottish Local Authorities—and John Clough and Stephen Morrison, who are from the Eaga Partnership. I am grateful for your attendance and your written submissions. As has been indicated, we will move straight to questions. However, at the end of the session, if you feel that there are points that you have not been able to make or that you want to expand on, we will be happy to hear from you later.
The target is eminently reachable, but I have some caveats that echo sentiments that were expressed earlier. Those caveats concern availability of resources, development of infrastructure and the drive to achieve. However, we believe that those aspects could be ramped up and the target achieved within 15 years.
COSLA's perspective is similar. I believe that the target is achievable and that the task is doable. It will be important to review the milestones and evaluate progress to ensure that we get there. Resources, as my Eaga colleague said, might also be implicated.
I want to clarify that when we talk about resources, we are not talking only about money. The issue, as was said, is getting the tradesmen. It is also about the ability of contractors to carry out the work in existing heating programmes. The biggest constraint is getting enough contractors to be able to programme the work and do the installations that are required. That situation needs to be thought through.
As you are aware, much of the focus of the Housing (Scotland) Act 2001 is on the social rented sector. It is clear that there is now a move by the Executive to address issues in the private sector. What are the key issues for the Executive in seeking to address fuel poverty in the private sector?
Eaga is charged with delivering the central heating programme to the private sector. First, it is worth establishing what the benchmark is. We were set a target in September last year of delivering, in the first six months, 3,500 central heating systems. That target has been achieved and surpassed. The benchmark target is challenging but achievable. In looking forward, the issue is the rate at which we can extend and roll out that programme. At what point will it be appropriate to extend eligibility for, and availability of, measures, and support and invest in the infrastructure that is required to deliver the programme?
I add that we are talking about dealing with vulnerable—sometimes extremely vulnerable—members of society. We must be careful how we deal with them. We still must also better quantify the volume. It is not just a case of dealing with heating; we must also consider the fabric and long-term maintenance of buildings. We must consider achieving fuel efficiency, which will help people's costs, through work on the buildings.
A key task for getting into the private sector has been flagged up strongly at meetings of the fuel poverty working group. The task is to identify the fuel poor by methodologies such as aggregated surveys—for example, the Scottish house condition survey—and local house condition surveys.
The Executive has said that it will ask the fuel poverty advisory group to provide the housing improvement task force with advice on which fuel poverty issues it might want to examine. Which issues do you suggest should be examined?
There is a clear link between the housing improvement task force and the fuel poverty agenda. The question is how we provide an overall package for the individual. For example, there is little point in putting in a state-of-the-art heating system if the windows are falling out. We need to have a joined-up message and a co-ordinated approach. As Councillor Gray said, we need to provide a comprehensive solution to the individual housing and other circumstances of the vulnerable and needy, especially those who are in the private sector. We need to co-ordinate and think.
We advocate what we might call a three-legged-stool approach. As has been mentioned, we need to take into account not only what home improvements are required but what effect the price of fuel has on the number of people who are in fuel poverty and on the income conditions of the particular clients. It is important to consider all three aspects. We need to be honest about the impact that we can have on each of those things.
A number of vulnerable groups who are in fuel poverty, such as people with long-term illness, impaired mobility or disability, need warmer homes than others might need. What specific measures should the Scottish Executive take to remove such groups from fuel poverty?
An immediate measure that could be considered would be to deal with the fact that gas is not available in all areas and that domestic electricity prices are 9 per cent higher in Scotland than they are in England and Wales. Legislation might be required, but tackling those factors would provide an immediate impact, ahead of the capital cost funding that the Executive is introducing.
The fuel poverty working group identified a number of areas in which liaison with the housing improvement task force would be beneficial in the fight to eradicate fuel poverty. It was suggested that the energy auditing of homes—by whatever measure; for example, by tying the audit to house sales or surveys—should be investigated. The working group felt that the energy auditing of houses would be worth while for its own sake and should be flagged up to the HITF. The working group also discussed the simple income indexes and the energy ratings of houses that are linked to the energy audit and agreed that the housing improvement task force should consider the issue.
Mr Gibson asked about vulnerable groups. The provision of housing must be considered as part of the overall package. We co-operate with the health service, joint future projects and a wide variety of agencies. In the private sector, care and repair organisations have a fundamental role. They examine the individual needs of the vulnerable and the elderly and match the solution to those needs. Undoubtedly, part of that solution is the heating agenda as a condition of the housing agenda. We must consider the matter in the round and match the approach to the individual. A package for the care and repair of individuals' properties must be designed.
I support that point. The way to reach the most vulnerable households is to work actively with organisations that are already on the ground—such as care and repair organisations—and which have active networks. Such organisations hold a baton of trust with the clients. Given the level of intervention in properties that we are talking about, it is extremely important to gain people's trust. Generally, we find that the number of referrals that are received from the network organisations is not huge, but the quality is high and they involve the most vulnerable clients. Quite often, working with those networks is the only way to access the most vulnerable people because they do not nominate themselves and they do not respond readily to public information. It is imperative that we work closely with those networks. Such close work seems to work well. A huge amount of networking activity takes place, which is positive. The more that we can build on that, the better.
Do you want the central heating initiative to be extended to those groups?
In time, I would like the initiative to be extended so that the health bodies could make referrals. I would like nothing better than to have GPs prescribing central heating systems.
John Clough mentioned vulnerable groups in connection with care and repair organisations. I declare that I am chairman of Angus Care and Repair. Older people who are disabled sometimes have difficulty appreciating how to access funding. There is a clear role for groups such as care and repair organisations.
We have heard about the shortage of gas fitters—Ron Ashton mentioned that in response to an earlier question. Is the problem affecting or impeding your ability to deliver the central heating initiative, or is it a problem for the future? If it is a problem for the future, at what point will it become a problem—next year or in two or three years' time?
I think that the problem is approaching very fast. I was fascinated by the earlier evidence, which reflects my experience. People are okay in the summer, so they start doing their installations, but they cannot get gas engineers in the winter when there is a high number of breakdowns.
My take on the situation is that the problem is not as acute in Scotland as it is south of the border, but that we should face up to it, as it is about 18 months away. It has not affected the delivery of the private sector central heating programme in its first six months—those targets have been achieved. The target for the next 12 months is 4,500 installations and in the following year it is 10,400 installations. As members can see, that is quite a step change. Acceleration of the programme in the coming year in the private sector would be positive and would allow the infrastructure to develop.
Do you get a sense that the Scottish Executive regards the lack of gas fitters as a problem? Should more work be done with Scottish Enterprise to support the initiatives that Transco and others are taking to address the problem, rather than addressing the problem in-house?
A powerful response would be for the committee to note the issue in its response to the consultation document and ask for joined-up thinking to take place.
There is a general lack of tradesmen. Today we are talking about gas fitting, but the situation is the same in other areas. Fewer apprentices are coming through than did so in the past. Other difficulties are starting to arise. That caught the system out, but national bodies, such as the Executive, are responding well. I support John Clough's comments that if the committee made that sort of statement, it would send out a powerful message.
Are there difficulties in particular parts of Scotland? Is there more of a shortfall in the central belt than there is in Lothian or is there more of a problem in the Highlands? Has any work been done to examine the pilot that Transco is operating in England, which encourages skilled people who have been made redundant, for example by Corus, to train as gas fitters so that they remain employable? The jobs are there and the scheme gives people a long-term future after they have been made redundant.
Yes. That is part of the scheme in which we are involved. It is centred round the Claverhouse Group in Dundee. Extremely valuable work is being done. The pattern tends to follow the work, in that, although theoretically Angus is a small rural area, a lot of the gas contracting industry is influenced by the Dundee market and the Aberdeen market. The contractors tend to follow the work, so the pattern can be sporadic and depends on where the work is, where the contracts are and what is happening. An overall shortage exists, but it tends to be worse in the central belt.
The shortage of engineers does not relate only to the gas industry. While delivering the programme throughout Scotland, we have discovered that there is, for example, a shortage of electricians in Orkney. Historically, companies have perhaps not had contracts of sufficient length to enable them to invest in training. Fortunately, with the mandate from the Scottish Executive to deliver the programme, we have been able to offer contracts of substantial length to heating companies. Now that the companies have between two and four years of work, they can say that, as they want to be a certain size of company in a couple of years, they will invest in training now. Historically, companies might have been given contracts for a couple of hundred houses, which it might have taken them three, four or six months to do. Once that contract was over, any investment would not be recouped. The shortage of engineers is not limited to the gas industry, but there is movement.
You give out contracts that cover a longer period. As part of the current housing stock transfers, one of the housing associations that operate in my constituency is doing a whole community regeneration in Airdrie. As part of that, the contractor—the builder—has had to take on a certain number of local young people and give them apprenticeships. Could you write a similar provision into your contracts to encourage companies, as well as training people, to take on local people, whether they are in their 40s or 50s or are school leavers?
John Clough mentioned the example of NEC in Livingston. We brought all our central belt contractors to meet the people who were being made redundant from NEC. The meeting was about establishing the travel-to-work area for those guys and saying that there were real opportunities. We said that, rather than becoming unemployed and living off their redundancy payment, they could invest a year of their life with no income to retrain as a gas engineer. The companies that we use are all backing that. They are sponsoring the places, so anybody who comes out of the 45 training places will work on the Scottish Executive central heating programme. The programmes in Dundee and the new community energy partnership that is being developed in Lanarkshire will feed into that. We will take advantage of any of those schemes for the central heating programme.
The key learning point in delivering training of that nature is that there must be the guarantee of a job at the end of it. Otherwise, you tend to find—we have run many training courses with Transco and the Gas and Water Industries National Training Organisation—that the drop-out rate is very high. Generally, these are skilled people, who have the promise of a highly skilled, highly paid job. If there is no absolute promise of employment at the end of the training, they can become less-skilled plumbers or fitters and drift away from the programme.
We are concentrating on training qualifications for fitters, but members should bear in mind the fact that we must ensure that we cover the maintenance side of the rapid installation work that is being done by the private sector. That may be an issue for the housing improvement task force. We cannot ignore the risk of carbon monoxide problems for our older citizens.
I want to develop an earlier point about the issue being much wider than just central heating, and to pick up Stephen Morrison's point about longer-term contracts that enable contractors to take on apprentices and carry out retraining. That issue could be flagged up under the Egan report, "Rethinking Construction". Rather than going through a competitive tendering exercise, we could use a best-value scenario to enter into long-term partnerships for certain types of work. Perhaps we should push quite strongly for the definition of best value to take account of the much wider principles of retraining apprentices. When local authorities are negotiating contracts, which can be quite large, with the Eaga Partnership, dialling in the need for apprentices is almost a requirement. Apprentices should be an integral part of work that is to carry on for three years or more, and they should be included in the best-value calculations.
The fact that there is a much more co-ordinated approach to the delivery of national objectives through local government, the community planning process and, through that, local housing strategies is helpful. The strategic context is very much up front.
I would like to pursue that point a little further. As I understand the situation, part of the trouble is the double whammy of the increase in demand as the programme develops and the age profile of the industry, given that people in their 50s are retiring. Three points arise, the first of which is the adequacy of the plans that are being put in place. If we accept that certain things are being done, is it your impression that, despite the difficulties, the plans are adequate and will meet the demands of the programme? Secondly, are sufficient training facilities available across the country? I understand that the main training establishment is Lauder College and that facilities are coming on stream in Queenslie. Thirdly, if we accept that people who are made redundant from other skilled industries can be retrained, which will deal with short-term problems, is there sufficient provision for training younger people who come into the industry over the longer term? How long does it take to train younger people?
I will kick off, but I will ask Stephen Morrison to come in.
The two levels of courses that have been developed by the gas and water industry will make people able to install central heating in either six or 12 months. That will help us out of a hole a year down the line. However, if we can provide the industry base with the confidence to invest in normal apprenticeships, there is no reason why the two types of training programme cannot run in parallel. Younger people would go through normal apprenticeships of three or four years. Even if the central heating programme were completed within three or four years, the systems would still need to be maintained and serviced over the longer term. There is no doubt that anyone who comes new to the industry will have a lifelong career. As a result, there is no need to choose between the two courses. One addresses short-term need and the other addresses long-term need.
We must welcome the fact that we are considering a problem that might arise 18 months from now instead of reacting to one that we are sitting on top of, which has been the case too often in the past. I want to give recognition to the industry, Transco, the Executive and the Eaga Partnership for dealing with the situation in this way. As I said, I want to highlight how contracts and works can change under a best-value regime. Using the Egan report on improving construction could, over time, drive a complete change in the way that small companies approach investment in staff and apprenticeships. Giving ourselves 18 months to ameliorate the problem is a welcome step. I agree that we have identified ways of dealing with the problem in the longer term and that things are falling into place, slowly in some areas and quickly in others.
You are absolutely right to say that the problem is not just the short-term impact over the next 18 months but the longer-term impact, and how the whole package of training and development is presented. I remind everyone that we are talking about a programme lasting 15 years, which is about the average life of a gas system. In fact, that is probably pushing such a system right to its end. We are talking not about making a one-off hit and saying "That's it, it's over and done with," but about a constant cycle from now on that will last as long as gas lasts.
I have just realised that my central heating system might have become obsolete.
The witnesses have mentioned the problems with gas fitters and so on, but the previous panel of witnesses said that front-loading should not be a problem, because we can do many other things to address certain elements of fuel poverty while we are waiting for all these new people to be trained as gas fitters. Do you accept that front-loading is a viable option?
I agree with front-loading in the sense that additional measures should be introduced and the programme should be rolled out. I tend to agree with the fuel poverty advisory group that we need to front-load in order to meet the consultation document's 15-year target. We need a 30 to 40 per cent achievement rate by 2007. It will get harder to address cases in the latter years and the rate of progress will probably not be as great. In Scotland, we also have to face particular issues such as hard-to-heat homes and rurality.
Two of the key comments in COSLA's submission concern grants. COSLA asks for expansion of the eligibility for and the extent of grants to be considered. Local authorities also ask for a bit more discretion. Are the current grant systems to combat fuel poverty inadequate to do a good job for COSLA's members?
Our submission says that we want local discretion to deal with local issues, which would include the issue that Linda Fabiani raises. That is important. All the additional work that we are considering with the housing improvement task force may have a resource implication across the board, which will be addressed when a report with recommendations is produced. There appear to be implications for grants, whether they are dealt with locally or nationally.
Measures under part 6 of the Housing (Scotland) Act 2001 are out for consultation at present and we will return to the committee with evidence on that. I am sure that the committee will be interested to hear where that goes. That carries a huge implication for the housing improvement task force. We must make the links with the HITF. COSLA's view is that the HITF's stage one report sums up the issues appropriately. Now we have to look for solutions to tackle those issues.
Do you have any last burning points to make?
Although the report is important, the process of developing the fuel poverty statement is also important, and today's meeting forms part of that process. The Executive has struck a good balance. We look forward to working with it through not only the consultation process but the implementation process. We look forward to monitoring the situation and ensuring that we keep on top of the issue.
I thank the witnesses for attending. The committee found the evidence useful. If you wish to expand on points, we will be more than happy to hear from you. I will suspend the meeting for two minutes to allow for the change of witnesses, but I ask committee members to stay in their seats, so that we can restart promptly.
Meeting suspended.
On resuming—
For our panel on provision issues, I welcome Hammy Smillie and Gordon McGregor from Scottish Power, Steve Gorry and Hamish McPherson from Scottish Gas, and Audrey Gallacher and Robert Hammond from energywatch.
That target will be achievable as long as sufficient resources are in place to achieve it. I echo what has already been said this morning about co-ordination of effort and the potential extension of schemes to ensure that more measures are available—as opposed to the current arrangements, about which there is said to have been a degree of duplication.
I go along with my colleague from energywatch. There is no doubt that we—the utilities, the Government, the private sector and the fuel poverty action groups who have been represented in the inquiry, including Energy Action Scotland—have a major opportunity to make a difference and to get the scourge of fuel poverty out of our society. I think that a target of 15 years is achievable if we all work together.
Scottish Gas endorses that view. We are delighted to play a part in today's discussions and to be putting some momentum behind the efforts that will be required to deliver on that target. I reiterate the importance of the comments that have already been made about ensuring that our action is joined up and integrated. Some of the schemes that are in place may compete with, rather than complement, each other. I agree that we have a massive opportunity, which might include an opportunity to work smarter as well as harder.
You will be aware of a focus on the social rented sector in the new housing legislation and that the Scottish Executive is now devoting much more attention to the private sector. Are there any particular issues that you think we should be aware of in relation to fuel poverty in the private sector?
From the point of view of the supply companies, the rules have tightened up where we are using energy efficiency commitment money to enter schemes aimed at people on fuel benefit. The problem with that is that there might be a considerable number of people in private sector housing as well as in social housing who are either eligible for benefits but not taking them up or on the margins of eligibility. Those people are effectively being excluded, which is an issue and a concern for us all and something that we would want to be addressed.
I agree that there is an issue here for many people, particularly elderly customers who stay in pretty big family homes. Not enough money might have been spent on their homes over many years, which might have been allowed to deteriorate. We have difficulty identifying it, but there is a market out there. In particular, we have to identify the elderly people in the circumstances I have described and do something about their situation. We have not found the solutions yet, but I think that we have the opportunity to sort the situation out if we work together.
One of the main issues is that of people's awareness of what is available to them. Work could be done on that. It was suggested in earlier evidence that a possible solution in the private rented sector could lie in energy audits of households. That idea could be taken forward by the Scottish Executive.
What effect do you think the removal of domestic price controls on energy providers will have on the fuel poor? Can you give a commitment that people on low incomes will not be put at a financial disadvantage following further deregulation of the energy market?
I will kick off. Scottish Power is the incumbent electricity supplier in the south of Scotland. The removal of price controls will have no adverse effect on our customer base. Prices in the south of Scotland have dropped by something in the region of 23 per cent since privatisation, but I must be honest and say—and I think that other people have said this—that lower electricity pricing will not necessarily get people out of fuel poverty. The fact is that people are having to spend 10 per cent or more of their income to heat homes that are difficult to heat. A drop in prices will not solve that problem.
We agree. Figures from the past speak for themselves. There have been significant price reductions, year after year, in our case since privatisation in 1986. The issue has become more sophisticated with time. For example, it has been contended that not all sectors of our customer base have benefited from competitive market entry and that the removal of price controls would increase risk. I point to the opposite being the case. If current pricing structures are examined, it can be seen that standing charges have been removed in many cases—we were the first company to do that.
It is a comfort to me that Scottish Power has assured us that the removal of price controls will have no detrimental effects on consumers. With regard to Scottish Gas, we are concerned about the removal of price controls because we do not have effective competition in the Scottish market. A considerable number of consumers do not have access to the market.
Age Concern Scotland stated:
I mentioned that energy efficiency is crucial. The issue is not just pricing. I want to state clearly that competition is effective in the south of Scotland.
What about the whole of Scotland?
I cannot answer for the north of Scotland. However, the vast majority of the population—75 per cent—is based in central and southern Scotland. Competition is firmly established—30 per cent of our customer base has changed supplier. That is comparable to England and Wales.
Several written submissions raise concerns about the high costs associated with prepayment meters. As Audrey Gallacher said, they have a significant effect on some of the poorer people in society. How can you justify the higher charges to those who use prepayment meters?
Prepayment meters and the infrastructure to support them are more expensive than credit meters. That fact has been verified by Ofgem. The figures indicate that the costs of a prepayment meter are about £18 a year higher than those of a standard credit meter. Those costs include infrastructure costs and make allowance for people paying early. In Scottish Power's licensed area, the net additional charge for an electricity prepayment meter is £13 a year. Somewhere in the region of 80 per cent of the customer base has chosen a prepayment meter because that is their preferred method of budgeting. We have always promoted prepayment as a secure method of budgeting to avoid getting into debt. The research that we have conducted shows that 80 per cent of our customer base is happy with a prepayment meter and the majority understand that they are paying an extra £13 a year for that meter. Something like 300,000 of our customers in central and southern Scotland use prepayment meters.
In Scottish Gas's experience, the cost of gas under prepayment is the same as it is using a standard credit meter. We equalised those tariffs two years ago. There are higher costs in supplying prepayment meter customers because the meter is a sophisticated piece of equipment that serves a multiplicity of purposes. Like Scottish Power, we ask those customers regularly about how they feel about prepayment as a supply method. We have found that the satisfaction levels are universally high. In addition, a significant percentage of that customer group is changing supply. There is already sophistication in the prepayment customer population—they know that choice is available and can be extended. More and more customers in the prepayment group—not just in gas, but in electricity—are choosing to exercise choice.
We believe that there is also an issue of transparency and of how much consumers understand about what they are paying for their gas and electricity through a prepayment meter. You have heard reports of satisfaction that have reached suppliers from their customers, but I have to say that that does not accord with the views that customers make known to us. Research that we have conducted, which will shortly be made public, turns that information on its head. Perhaps as few as a third of gas prepayment meter customers understand how expensive their meter is and fewer than a quarter of electricity customers understand that they are paying more for their electricity through a prepayment meter. The other thing to note is that 70 per cent of gas customers and 33 per cent of electricity customers in Scotland who are on prepayment meters are paying in that way because a debt is being recovered. It is still the case that if you owe a debt to your supplier you cannot switch supplier, so you cannot access a better pricing tariff.
It was my understanding that suppliers also use prepayment meters as a tool for recovering debt. I would be interested to see the information that suppliers and providers have on that. The information that I have certainly balances what energywatch is saying. The committee has been concerned by previous evidence that showed that people on the lowest incomes find themselves paying higher tariffs.
This is a cross-industry issue that is currently under the sponsorship of Ofgem. For four months towards the end of last year and the beginning of this year, much of the debt blocking for prepayment meters was removed, to allow systems to develop and to allow the experience to be measured from the point of view of suppliers and customers. That trial is now at an end and Ofgem is reviewing what the next steps need to be. From our perspective, the removal of debt blocking, particularly with regard to prepayment meters, is an active reality and I have no doubt that further procedures and policies will be developed this year to extend choice to that customer group.
Prepayment meters have been installed to allow people to pay off debt, but they have not been used as a method of preventing prepayment customers changing supplier. The rate of change for prepayment customers of Scottish Power is in line with the expected rate of change for other consumers. In fact, in some areas it is higher than the standard change-of-supplier rate. Along with British Gas and a number of other electricity companies, Scottish Power has been involved in the four-month pilot that Steve Gorry mentioned, the outcome of which is being reviewed. We will examine the results of the pilot and consider what lessons can be learned from it. I think that debt blocking as a method of preventing customers changing supplier will be removed in the not-too-distant future. Indeed, it is already happening.
I do not wish to pour cold water on the comments that have been made, but they might be a little optimistic. A lot of lessons have been learned from the trial. We have received a preliminary briefing on the outcome, but a lot more data need to be analysed before the picture will be totally clear.
I am interested in the fact that both Scottish Power and Scottish Gas supported the Executive's definition of those who are in fuel poverty. The lame reason that Scottish Power gives for doing so is that
The definition to which the member refers was agreed by the fuel poverty advisory group, on which Energy Action Scotland was represented. Most of those who are currently giving evidence to the committee, as well as a large number of other people—from some of whom members heard earlier—were members of the group.
Scottish Power is strongly of the view that we need local solutions to problems of fuel poverty and poor energy efficiency. To a large extent, Scottish Power's programmes involve partnerships with local authorities, housing associations and housing providers.
I would like to know about debt blocking. How does the fact that we now have competition affect debt blocking? How do companies deal with it at a competitive level?
Let me clarify that a fuel poverty action group has been set up under the chairmanship of Peter Lehmann. The outcome of that has been the establishment of a debt prevention working group.
Hammy Smillie is referring to a project that energywatch and Ofgem are conducting jointly. The convener helped to launch that project in Scotland and to gather some evidence that we are using to give the industry guidelines on debt and disconnection.
How do you think that can be done? Whose responsibility is it?
There is a licence obligation on suppliers to provide energy efficiency advice to their consumers. We need to ensure that companies are doing that well. We have information about companies with a smaller customer base that are providing substantially more energy efficiency advice and measures. We need to spread best practice throughout the industry and put pressure on companies to deliver on their social obligations.
We all want to do everything we can to prevent debt.
One of our most popular schemes is the fortnightly payment card. Purchases for prepayment meters tend to be weekly or twice weekly. People can therefore get the same features—the ability to monitor closely, to have personal control and to make regular payments—with credit meters as they can get with prepayment meters. However, prepayment meters offer additional functionality and control. We are obliged to account effectively, every six months, for consumption in relation to the payment plans.
I agree with Karen Whitefield to a certain extent. Many people do not have alternatives. Perhaps we should encourage innovation to offer them those alternatives. In the absence of such innovation, we should consider equality in costs.
We have always had prepayment meters. Years and years ago, when I joined the old South of Scotland Electricity Board—
It was only a penny for the meter.
Thank you. It was actually sixpence.
Prepayment meters are not the solution to budgeting. As we have heard, there are other options. Through the workshop that we held in Glasgow earlier in the year, we found that people were not necessarily being made aware of the alternative payment methods. A lot more could be done to raise awareness about such methods. Consumers want to feel in control and they want to have real choice. They can only have real choice if they have informed choice. Suppliers could do far more to make known to the public the alternative payment methods. That would ensure that PPMs are not the only answer.
I am a bit concerned about the simplistic view that debt prevention in relation to fuel is all about energy efficiency. That puts an onus on the householder, but some people live in houses in which the heating systems are clearly incapable of being energy efficient. When I worked in East Kilbride, the area had been used as a testing ground for every stupid, faddy heating system—whether electrical or gas—under the sun. A lot of systems are extremely expensive to run. Many people with such systems have prepayment meters and suffer from debt blocking. What can we do about debt prevention without hooking the responsibility on to householders and insisting that they are more energy efficient?
Debt prevention is working. It is alive and well in Scottish Gas, which operates the debt prevention centre for the whole of the UK British Gas operation.
After Robert Brown, members will be able to respond to the points that Linda Fabiani made.
I want to return to price, because the definition of fuel poverty is heavily dependent on the price. The Ofgem report made the point that the reason for half the people who were in fuel poverty being taken out of fuel poverty during the four-year period was the fall in energy prices. That distorts the monitoring a wee bit. Am I right to say that fuel prices in Scotland are still somewhat higher than they are in England? If so, why is that? Is there a clear view about the likely trend in fuel prices in the next year or two? I appreciate that that is subject to all sorts of variables. In recent years, there has been a fall in fuel prices, which has helped the situation that we are discussing.
We must separate electricity and gas prices. Gas prices have fallen, overall. Our prices have fallen by 33 per cent since privatisation, so we believe that competition is working in that respect. Electricity is another matter because there is not a common electricity wholesale market in the way that there is for gas.
I would like to clarify a slight mistake in that statement. The wholesale price of electricity in Scotland is tied to that in England and Wales. Because of that, it is broadly the same. The problem has been caused by the fact that, in Scotland, the distribution network represents 25 per cent of the asset base of the UK but serves only 10 per cent of the population. If you take out the distribution use of system charges, which all suppliers pay, whether they be the incumbent supplier or a competitor, the wholesale price and the supply price of a unit of electricity is the same in Scotland as it is in England and Wales. The problem is created by the distribution use of system charges.
Robert Brown made a pertinent point. Ofgem is making public statements about taking a million people out of fuel poverty but has given us no indication of what the adverse effect of that would be in terms of price increases. The price of gas in Scotland has gone up by about 10 per cent this year. One of the electricity companies has just increased its prices by just more than 2 per cent. Following long-term real-terms reductions, we are now starting to see increases. It is important that we recognise that as that is why we cannot simply rely on low fuel prices as a solution to fuel poverty.
I am conscious that, towards the end of that exchange, we began to move into more controversial areas. The point of bringing this group together was not to prove that there was competition in the energy market in Scotland, but I think that that has been established. Members might want to pursue certain points that have not been fully brought out, but we are against time constraints, as ever. Even if we had three days to cover this subject, we would still be short of time because of the nature of the subject.
Meeting suspended.
On resuming—
As a finishing-off point to that item, does the committee agree to consider on 15 May a paper that will summarise the evidence that we have taken at this meeting?
I thank members for that and for their forbearance. We got much out of that session.
Previous
Items in Private