Cynulliad Cenedlaethol Cymru

Bore da. Good morning. Can I welcome Members to the meeting? Are there any interests to declare? No.

If the witnesses are prepared, can we move straight on to questions? Thank you very much. And if I can start. Sorry, just the other bit—can I welcome Daniel Alchin, deputy director of retail policy of Energy UK, and Jenny Boyce, external affairs manager, E.ON? Thank you very much for coming along. We're very grateful.

Thank you for having us. 

What work are you doing to tackle fuel poverty in Wales? We know from the Wales Audit Office that energy prices are being seen as a key contributor to fuel poverty. Any views on that? 

I'll take the first question around what we're doing for fuel poverty. If I look across E.ON, we have invested in a care and assessment tool that enables our customer advisers to have an open conversation with our customers to capture vulnerabilities. So, it's not a tick list, it's almost like a key word search, and that enables us to signpost our customers to various bits of help, so Citizens Advice, StepChange, income maximisation, tariffs and the warm home discount. Although we don't tend to break it down to regions, we know from the priority services register that about 5 per cent of our PSR are Welsh customers, so that broadly aligns with our customer base and our population. The same can be said for warm home discounts: about 5 per cent of warm home discount recipients at E.ON are in Wales. And we have an energy debt fund as well, so we support with white goods, debt write-off and boilers.

And then, if I turn to energy company obligation 3, about 11 per cent of our ECO3 measures have been delivered in Wales, so that's over index in terms of population and our market share in Wales. That's largely around internal wall insulation, underfloor heating, loft cavity et cetera. And we do work with partners through our warm home discount obligation, so we work with Age UK, and last year we delivered 1,300 benefit entitlement sessions in Wales. The average amount of extra money that we found for those customers was £2,500, and that's usually through attendance allowance or guaranteed pension credit that these elderly customers weren't claiming.

Thank you. 

So, Energy UK—we're a trade association for electricity and gas suppliers, so a lot of our work is working with our members and helping and supporting them in terms of their delivery of their support programmes like ECO and warm home discounts. I would highlight that last year we provided, on behalf of Energy UK, secretariat for an independent commission looking at the experiences of customers in vulnerable circumstances in the energy industry. It was chaired by Lord Larry Whitty. That report was published in the middle of last year and currently we're working through the long list of recommendations that are in that report and trying to take those forward. We're due to report back the commissioners in about 12 months' time.

The question of energy prices: energy prices I think are obviously a key factor involved in fuel poverty, but they're only one. I think it's also important to recognise that the fabric of our buildings and the homes we live in are also vitally important. Lots of people use way more energy than they need to because their homes leak and they're inefficient. And I think we also need to recognise the role of income and how much money people actually have.

I think one of the big things that came out of our vulnerable customers commission, where we toured the country and we held evidence sessions, including one in Wales—what came across from basically all respondents was the challenges that so many people are having with the basic costs of living. It was a universal theme that came across really strongly throughout our work on that report.

Thank you. And finally from me, what's your view on the current definition of fuel poverty? Do you think it's right? Do you think it needs changing? If you think it needs changing, how? 

There's never going to be a perfect definition of fuel poverty, and it very much depends on the data you've got as well. There are concerns around the 10 per cent definition because it excludes energy efficiency. So, you will have some households that are defined as being in fuel poverty, but actually have quite a large residual income and choose to have a house that needs a lot of heating. Probably more worrying is the people that aren't captured by that 10 per cent. We know that customers underheat sometimes, so they wouldn't be defined. There are examples I remember from schemes where the customer would live in one house and have a wood-fuelled burner; they wouldn't be classed as fuel poor under the 10 per cent, but, absolutely, they are. So, we would favour something like the Scottish or English method that does bring in energy costs because of energy efficiency.

Just to add to that, I'd agree with that. I think all definitions, by the nature of what they are, are somewhat imperfect in this area. Everything's going to have an advantage or a drawback. I think the key is just understanding what your definition captures, what it doesn't capture, and having a degree of consistency to ensure that you can track things over time. 

Thank you. Llyr Gruffydd.

You mentioned consistency there. Is the difference in the definition an issue for you, across the UK—an issue for you on a practical level in any way, or does that not matter as much?

It can feed into policy. So, it can be a part of changes to ECO, for example, or warm home discount. I wouldn't say in recent times it's been a huge issue, but one thing—it's a really good point about consistency across the board—one thing we found is that the shift in emphasis on ECO does have a knock-on effect. So, it used to be a pure carbon-saving emissions target. The supply chain gets ready for that—it builds up expertise in solid wall, for example; it's now shifted to a fuel poor scheme, which is largely delivered with measures that aren't solid wall. So, yes, on that particular case, I wouldn't say it's had a massive impact, but, yes, anything that feeds into policy, if there's not consistency, will have an impact, yes.

Just to add on the ground, I think, when you look at the various definitions we have—the English definition, the Welsh one, the Scottish one—when it actually comes to delivering policy on the ground, we tend to move from the definition to identify properties often associated with benefits, and things that can be means tested, but tend to congregate around similar sort of properties. So, they tend to come down to more practical levels. I think there is a challenge that when you look at a policy like ECO or warm home discount, because you do have different definitions in different parts of the United Kingdom, you do see potentially different degrees about how successfully different policies target against different definitions, because they're obviously designed with a particular definition in mind. 

Okay. Thank you. 

Neil Hamilton. 

Good morning. The Government's had a strategy to eradicate fuel poverty for nearly 20 years. Originally, the strategy was set out in 2003, then that was changed, or reconfirmed in 2010. Now, we're about to have a consultation on a new strategy because none of the targets that have been set previously have been met. Are you able to give us a view on how far the Welsh Government's upcoming strategy is likely to differ from the 2010 strategy, which reconfirmed the 2003 strategy? Have you heard anything that is in any way significantly different from what we know already?

I'm not sure I can personally offer any insight into what the plans are. I think the important thing with any strategy—and I think this is the lesson from Wales, from Scotland, from England, anywhere that's had a strategy—is it's important that when we look to set targets, we make sure those targets are appropriately ambitious, but they're also realistic and achievable. And it's important that when we put strategies in place we take them a step further and make sure we're backed up by policies that we know and can evidence are actually going to meet those strategies. I think, too often, we put in place long-term ambitious strategies and then haven't backed them up with the appropriate policies around them to actually meet them in the end. And, therefore, we've always been destined to potentially not meet the goals that we've set ourselves.

Yes, because there's clearly perhaps a massive difference between the noble aspiration, which everybody will agree with, and, given the nature of the housing stock in Wales, the timescale that is necessary to eradicate fuel poverty, given the inevitable costs that that is going to entail. So, your point about realistic aspirations is a key one, because otherwise people are always going to be left disappointed in the outcome of these strategies. But, anyway, you haven't had anything as yet from Welsh Government, which indicates what the new strategy will have that is different from what we have already. 

As Energy UK, no. 

No, we haven't either. 

I wonder if you can tell me, then, about existing mechanisms and opportunities to support partnership working in Wales to tackle fuel poverty—stakeholder groups, for example, that you might be part of, or projects between local authorities and energy suppliers—to help to achieve the objective of getting rid of fuel poverty.

If I take that and talk about our partnerships across ECO and warm home discount, in terms of the income side of it, we work a lot with StepChange, the Money Advice Service, Christians Against Poverty, which most of the energy companies do. And then, on the warm home discount scheme, we work with Age UK, as I mentioned before, Citizens Advice, and we've been doing a lot with health at the moment, and trying to link health and fuel poverty. So, a scheme we've just got off the ground in Staffordshire, with 13 boroughs, is a health through warmth scheme. So, we have funding from the warm homes fund, with Cadent—I think Wales local authorities have received some of that—and that's to do new gas connections. We're putting in ECO funding to then do first-time central heating. And we're then using warm home discount funding to go in and give benefit advice, energy efficiency advice et cetera. In terms of local authority partnerships, we partner with local authorities across the country. We've used Nest and Arbed, and we've part-funded some of our measures through that.

Do you want to follow that up, Jenny?

I wonder if you could be a bit more specific. Which local authorities are you working with in Wales?

I couldn't tell you off the top of my head—

You're here to give evidence about what you're doing in Wales. It's interesting to hear what you're doing in Staffordshire, but we really need to know which local authorities you've got realistic partners with.

Could you send us a note on which ones you're working with?

Yes, I'll send you a note.

Thank you.

With regards to Staffordshire, it was an example of where we're starting to move into the health—

I'm very happy to hear about that, but we really do need to know how far we are away from where we need to be, in terms of relationships with you.

Yes, absolutely. So, what I would say is delivering 11 per cent of our ECO target in Wales means we have got extensive partnerships. My apologies for not having a list of those partnerships.

But you will send us a note on it—

I absolutely will, yes.

—which we will add to our evidence. Neil Hamilton.

Mr Alchin, have you got anything to add to that?

I can't give any examples, unfortunately. We are a trade association that represents energy supply members. So, I'm sure my members will be able to offer similar sort of evidence to that that Jenny has.

Okay, thank you very much. If you could provide us, again, with a note of anything that might be helpful.

Yes, I'm happy to do that.

Can I ask you, then, Mr Alchin, does Energy UK still have a seat on the UK Committee on Fuel Poverty?

No. Technically, we never did. But I suppose my old chief executive, Lawrence Slade, used to be a representative on it, I believe. And, obviously, with him moving on from the association, I don't believe we do.

Do you have a view on the usefulness of this body, and whether we ought to have something similar here in Wales?

I think it's a really interesting body. I think the reforms that were taken to it, to make it a more tighter knit of independent individuals, individually appointed by the Government, was a positive move, and scaling it back from the large body it was before. And I think it's done a really good job, actually, over the past few years of being able to, effectively, hold Government to account, and hold its feet to the fire about its statutory targets that it's put in place. I think it's produced some excellent reports, and I think, and I hope, that it's going to actually lead to and drive to the UK Government having to make some changes, in terms of the suite of policies they have in place. So, it's something we've welcomed, and I think it's been positive.

In your written evidence, you've said that Energy UK is supportive of greater efforts to effectively identify households in fuel poverty for support through greater use of Government data matching. Can you expand on what you mean by Government data matching, and how this approach could be utilised in Wales?

I think it's recognising that, between various different Government agencies, in local authorities, there is a whole host of data that we hold about individuals. And when we design policies and programmes like ECO or the warm home discount, we often use proxies like benefit entitlement as a way of identifying and targeting and evidencing that someone is the right person to receive support. And I think we could make better use of this data to actually make the process of finding and identifying and proving that people are requiring support much more efficient. I think the warm home discount core group is a great example of that, where, every year, we work with the Department for Work and Pensions, the energy suppliers will take part in the scheme, go through a process of data matching it against the DWP's data of people who are core group eligible—so those in receipt of the guarantee element of pension credit. And you have a really effective process, which is able to quickly identify people and ensure that energy suppliers can provide them with support automatically, without customers needing to take further action. I think there are a lot of opportunities, potentially, with the digital economy Act that passed—in 2013, I want to say, 2014—

It feels like later than that. But, yes, it has passed, anyway—[Laughter.]

That's the date in my head.

—opening up the powers and giving Government greater powers, both at a UK level and at a devolved level. I think there's potential to do a lot more in that when we look at designing future policies. 

Yes, because one of the problems we've got is identifying who is really in fuel poverty on the one hand, and then, because of the geography of Wales, the area-based schemes miss a lot of people who are in fuel poverty. And also, there is a leakage to people who are not really in fuel poverty but, by virtue of the definition, end up getting the benefit. So, we really need to have more refined data, in order to target the policy. 

As I said, we're targeting—. Targeting is always a slightly imperfect science, because you have to use—[Inaudible.]—and you have to make compromises. But when we do identify for policies who we want to target and support, I think the next follow-up question needs to be 'Well, what data do we currently have at our disposal, and can we use that to make it as easy as possible to make sure that these households are getting the support they need?' 

Very good, thank you very much. 

Llyr Gruffydd. 

Thank you. I'm just interested in what work you do or how you support consumers who might be fuel poor to identify the best energy tariffs? 

Yes. So our cast tool—[Inaudible.]—has got a 'best deal for you', which takes customers through the best tariffs for E.ON. Through our work with vulnerable customers through warm home discount, we fund tariff checks and that will be across the board, whether it's an E.ON tariff or anybody else's; we'll put people on the right tariff. 

How does that work, sorry—the tariff check? Is it randomised? Or do you identify people?

No. So, in the cast tool it will be if you are talking to a customer who's on a standard tariff, for example, and they're talking about income, it will flag up to the adviser to take them through that best deal. In terms of the warm home discount and looking at vulnerability, that's usually a face-to-face session where we go through energy efficiency advice, what benefits you're on and what tariff you're on; it's a standard check that somebody is trained to do. And then, on all our written bills and, of course, on statements, it's very clear that if you're not on the best tariff it will say 'You could get a different tariff' and there would be links to third parties to check tariffs. 

Yes, I'd echo that. I think a lot of those are common requirements that you would see across all of Energy UK's reach-out members. 

Okay. One issue that's come up in evidence as well, of course, is that some of the best deals tend to be available online and not all people access the internet for various reasons, either because they don't have the skills to do so or they live in an area where the internet is so poor and broadband is so poor that it doesn't really work. So, tell us a bit about how you mitigate some of those challenges.

Yes. Do you want me to go first? 

I'd just reiterate that on all our written contact to customers, there is a contact number and we can take customers through it on the phone. Like I say, from the warm home discount point of view, where we go into people's homes, we will do it face to face through there. 

I think, as an industry, as Jenny's said, every bill and statement will have a message in there about whether that supplier offers a cheaper tariff and contact numbers to get hold of that supplier and have that discussion. There's also signposting to Citizens Advice, and as an industry, we collectively fund a consumer advice service at Citizens Advice where people can phone and get in contact for advice and support, and then, there are also programmes like Energy Best Deal, which a number of suppliers fund, where Citizens Advice puts on dedicated sessions in communities for groups of individuals to talk them through and help them engage in the process and help them switch. 

So, there's clearly an awareness in terms of direct engagement with people—telephone lines, et cetera—so that people don't have to go through the internet to access. But is it true that some of the best deals are available online only? Or is that a misnomer? 

I think you do find that some of the cheapest deals will require online account management and will require customers to go online to manage their account. The idea there is that those customers do cost less to serve and the idea is that you're then passing on those savings you make to those customers as a benefit for them choosing to manage their account that way. 

Yes, okay. I can understand why they would be cheaper, but then some people might feel that they're excluded from accessing those without having access to the internet. So, I think there's still an issue there really, isn't there? 

They weren't in the days of Community First, of course. 

Sorry? Say that again.

They weren't in the days of Communities First when they had—[Inaudible.] 

Well, no they weren't with digital inclusion. Yes, indeed, I remember it well. Yes, so, pre-payment meters is the other bad egg that people refer to and it has certainly come through in evidence where the poorest people tend to be more likely to use pre-payment meters. So, what initiatives, or what are you doing to mitigate some of the challenges that that brings? Because they tend to be on a higher rate, very often.

I think, for us, the answer to pre-payment is smart pay-as-you-go. So, we are leading the market in terms of our SMETS2—smart metering equipment technical specifications 2—meter installs, and our anecdotal feedback from our customers is that smart pay-as-you-go for our vulnerable customers is a welcome tool, they've got a lot more flexibility transferring money from electric to gas, et cetera. So, we would see that as the answer to pre-payment.

So, does that mean that the tariff is lower?

Yes. So, with smart pay-as-you-go, you will have access to our standard tariffs. The problem with pre-payment meters—

I see, yes. Sorry.

The problem with pre-payment meters is that they're a basic meter, so it's very difficult to actually put tariffs on there. So, we are trying, as much as we can, to transfer people over to smart pay-as-you-go. The only time we won't do it is if the technology's not right from the smart communication hub, so there's a risk of putting the customer off-supply, for example. So, we've been lobbying central Government to try and get the technology fixed so that we can get SMETS2 in across the country. There are still areas where we can't fit SMETS2 because of technology. In those cases, sometimes, it is actually better to put a SMETS1 pay-as-you-go meter in for vulnerable customers than leave them on pre-payment. So, that's what we would do. 

And is there a cost to customers for making that switch? 

No. No cost.

I think the other thing I'd just add to that is that since 2017, we've had a price cap on pre-payment meters that the Competition and Markets Authority implemented and Ofgem manage—sorry, I had something caught in my throat—which, I think, should hopefully give some customers reassurance that Ofgem have calculated a cap from the bottom up and said, 'This is a fair price for the energy you're using. This is reflective of the cost of an efficient supplier.' Yes, that tariff cap is currently higher than the direct debit cap, but that reflects, I think, as Jenny has eluded to, there is a very expensive infrastructure that sits behind the pre-payment system that needs to be paid for. When we move to smart metering, and as we move more people to smart metering, that infrastructure is no longer needed, and therefore, we expect an equalisation of those costs.

Okay, yes. Fine. Finally from me for now, then, I'm wondering whether you have any view as to whether Brexit might impact on energy prices in the UK at all, because, as we've already heard, energy prices are one of the overriding factors in determining whether people are in fuel poverty or not.

I don't think either of us have a huge amount that we're able to share, as in it really depends on the exit arrangements and the trade deal that's maybe made. The best we can say from our analysis is that, at the moment, we don't think it's going to have a major impact apart from some administration cost. That could change, though. It's really difficult for me to be able to give you a clear answer, I'm afraid.

From our perspective, I think it was pleasing to see that energy and climate change were referenced in the political declaration, and I think from our perspective, it's going to be key in the negotiations with the European Union over the next year that those remain central topics and that central Government really pushes on those.

Okay.

Thank you very much. Jenny Rathbone.

Can I just pursue the fact that smart meters would enable you to provide a fairer deal to people on pre-payment meters? Does that mean that your members are targeting people on pre-payment meters to be at the top of the queue for installation of smart meters?

I can't speak to what my members' roll-out strategies are for their smart meter obligations—that's their own commercial plans. So, I don't know. I think, with smart, what you will have is a more intelligent and more modern system that doesn't require the big back-office, expensive systems that we currently need to support pre-payment meters.  

Okay. So, is E.ON targeting pre-payment people?

We're targeting everybody.

That's not targeting—doing it for everybody is not targeting.

But I think we've covered pre-payment customers in the first round. If we can fit a smart meter, they would have had a communication from us saying, 'We're in your area, can we fit a smart meter?' 

Okay, but you're not prioritising people on pre-payment meters and going for them first.

We've probably done the first round of anybody we think we can put a smart meter in, they have gone through some form of communication from us to ask if they would like a smart meter.

So, that's a telephone or a letter?

There are various options, depending on what the customer has chosen as their preferred contact method. So, we can text customers, we'll write them a letter. It's pretty much in most department's objectives to talk to customers about smart meters. So, part of my role is to run the warm home discount, and we talk to our customers about smart meters when we speak to them.

Thank you. Turning to the warm homes discount—this £140 that some people get—just looking at the Government website, it says that people get a letter saying, 'We think you're eligible and you've got to fill in this form'. Elsewhere, it says, 'You don't need to apply', I think, possibly on E.ON's website, so it's very confusing. Could you just describe how people get hold of this £140?

Yes, certainly. There are three elements to the warm home discount, and there are two rebate elements to the scheme, and they're the main elements, really. So, the core group—that is data shared by the Department for Work and Pensions, which Dan spoke about earlier—this is data sharing between suppliers. Those customers who are identified by the DWP will receive a letter from the DWP saying, 'You will receive this discount'. We will get the data and we will pay them, and those customers do not need to apply.

Then, there's the broader group. Historically, the core group was the biggest part of the warm home discount, and these were customers on guaranteed pension credits, so these are your most vulnerable core group. With the pension age rising, that group's getting smaller with attrition. Therefore, the broader group is actually coming on a par with the core group, so it's quite a big pot of money. Ofgem sets some minimum criteria for the broader group that all suppliers have in their criteria, and then suppliers, depending on their specific customer base, could add more criteria. You will have to be on a low income and have some sort of vulnerability, so it's usually means-tested benefits. That's the scheme where you have to apply to your supplier, and that's the one where you'll see first come, first served. All suppliers will have a scheme, they will put it out, they will verify the customers and they will pay the customers until the cap is reached—until we reach our target—and then that scheme will close.

From Dan's point earlier, we would like the whole thing to be run like the core group. We believe that data matching is the best way; we think that the Government have the data to be able to tell us who are the most vulnerable and, therefore, the best recipients of WHD. That would take away the administration cost, which is, obviously, part of the price cap, and it would take away any need to apply for the discount.

Okay, so, at the moment, if you're disabled but you're not a pensioner, you'd have to work out that you were in the broader group and then you'd have to apply.

Yes.

So, it undoubtedly means that those who are most in need get to the back of the queue, because if it's on a first-come-first-served basis, we all know that the people with the most ability will, obviously, be quickest to apply.

Yes. We do prioritise, on warm home discount, our marketing, so we will use our PSR—our priority services register—to identify where we think customers will be eligible for warm home discount. There is an online form for us, but we do have paper and we do take telephone applications. But, yes, you are right: the better way to do this, and the fairer way to do this, is to do it all through data sharing. Therefore, we are more than happy to take a Government steer on who the most vulnerable are and we will provide that payment. 

Who actually pays this? I appreciate that no money goes through the customer, but who actually pays for this discount? Is it the Government or is it the companies?

No. It forms part of our energy price. So, about £150 on an average bill a year is policy cost—so, that is warm home discount cost and ECO costs. This is a point we've tried to argue. We believe that that's quite regressive, because regardless of what income you're on, you will pay the same. So, another lobbying point of ours is that that should be in general taxation to make it more progressive. But, at the moment, it forms part of all of our energy bills.

The warm home discount, specifically, is about £12 a year per customer.

Okay. Energy UK—there's quite a long list of companies that are part of the warm home discount scheme. How many of your members are not prescribing—?

Are not—. I can tell you that 12, currently, are obligated, are required by law to take part in the scheme. I think there are one or two more that voluntarily deliver the core group, which probably means that there are 10 or 12 Energy UK members that are not yet of a size that the law applies to them.

So it's about size, is it?

It is.

So, once you reach a certain size, you are obligated.

Yes. So, for the last scheme year, I believe it was anyone with over 150,000 customer accounts that was obligated to take part in the scheme and deliver the rebate.

Yes, I think for core group. I think, for broader, it stayed at 250,000. And I think the argument there from the Government is that, actually, the administration cost would put smaller suppliers at a disadvantage. More data sharing means there are hardly any administration costs. So, again, data sharing comes in, we would argue that all suppliers should be obligated.

Okay. So, are all of the larger energy companies members of Energy UK?

Yes, with the exception of E.ON. But, yes, all the others are.

Okay, fine. Well, E.ON's here with us. So, I think I've covered this area. Thank you for your evidence.

Thank you very much. Moving on to Joyce Watson.

Good morning, both. I know you've described the UK ECO scheme fairly well, but just in case there's something you haven't been asked and you're dying to tell us about it, now's your chance.

So, I think one of the questions was around our written submission on least cost of ECO and where we talked about how that is at odds, in some ways, to eradicating fuel poverty. So, we talked about the least cost. So, the way ECO is set up is we have an ECO target given to us by the Department for Business, Energy and Industrial Strategy and that's measured in lifetime bill saving, so how much we can save a householder by putting a measure in. We have a spend target across the industry that is calculated by BEIS. So, that's the £640 million per annum, and that, again, is built into the price cap. So, we have to deliver x amount of savings for x amount of money. That means we have to do some low-cost measures, we have to do loft, we have to do cavity. If we try to do the whole scheme on solid wall, which would be the most effective, I think, measure for fuel poverty, we would run out of cash very quickly and fail our obligation. So, I think there was a question there about getting everyone to the EPC A. With ECO in its current form, you would need other funding to supplement it.

A couple of things on ECO: I think, as Jenny said, it's a £640 million a year scheme. The problem of addressing fuel poverty is one that's going to cost substantially more than that financially, and, I think, often, the challenge with ECO is because it is one of a very few number of schemes that are actually, sort of, out there, it gets pulled to do too much, and I think we need to recognise what it can do and what it can't do and recognise that there is a big pot of missing money here if we're going to actually address the quality of homes across Wales.

I think the other thing—and Jenny touched on it earlier—is there is a regressive nature to how ECO is funded as well, in that we know a lot of fuel-poor homes tend to consume a lot of energy, and because of the way that the money is recovered from consumer bills, often, those homes in the worst fuel poverty end up actually contributing the most towards the scheme because they use the most energy. To me, that doesn't feel right. Personally, I think—. At Energy UK, we've said for a long time there is a really important role for Government-backed schemes to sit alongside ECO to help fill that gap and ensure we can progressively fund the supporting work.

Okay. We have touched already, significantly so, on the fact that it's designed to operate on the least-cost basis and you mentioned some of the issues that that will then throw up. Is there anything further that you want to add? I mean, you just talked now about how you'd prefer, with a solid wall house, to do much more, so that was an example of a result of that least-cost basis, but are there other bits of information that you think we need to know about?

I think, to make real inroads into fuel poverty, you need to tackle solid wall houses. I think that's key. One of the new bits of ECO is the innovation part. So, that allows suppliers to bring new products to market that may solve this crisis. So, we've got one, a Tŷ-Mawr product, an EWI, an external wall insulation product. So, one of the reasons solid wall is so expensive is you can't do it in low temperatures, it's scaffolding, it's boarding, it's a four-to-six-week process. The Tŷ-Mawr system we've got: essentially, you laser-measure the house, you take that away, and you build the external wall in a factory and it's almost like a jigsaw. You can put it up, it takes three or four days in all weathers, and one of the key things is that it's a brick finish, so if we think about using ECO to try and then drive the able-to-pay market in solid wall, it's actually a nicer finish to your house. So, there are things going on; we aren't just standing still and saying, 'We need to change ECO.' But, again, it's about scale, so at the moment it costs more than a normal solid wall. The idea is that we bring it forward as an innovation product. The more we can get it on the walls, the cheaper the cost will be.

So, that's interesting, because the area that I cover, Mid and West Wales, probably has more solid wall housing in it than most places, and, of course, the other thing: if you're putting a form of cladding, I suppose it is, then the next question has to be, for me—and I think it's fairly obvious what it's going to be—is how it's being tested in terms of flammability. And if you haven't got that information, it would be useful.

I mean, it goes through our work. We have a standard assessment procedure expert and an innovation manager who assesses all our products, so he will look at the BBA and how they interact with each other. We tend to use suppliers who are contracted to do that work. Certainly, it's a pertinent question, absolutely. We did a review after Grenfell on all our cladding and we were able to come out very swiftly and say that we didn't use any of those products. Our products are tested. But absolutely, it's a fair comment. I think there are very stringent rules in ECO on technical monitoring and on quality, and there's actually more coming in. Some came in in January, there are more coming in later in the year, so, actually, as ECO, we are very heavily regulated in terms of the products we use.

Yes, I'd say the safety of home owners is of paramount importance across the scheme, and I think just to build on Jenny's comment there, one thing to be aware of about ECO is that it is a very technical scheme. It is a very complex scheme in terms of the requirements around suppliers that they need to meet when they're funding and delivering projects and on the supply chain throughout, including detailed on-site monitoring and post-install by supplies agents that's required by Ofgem. We've also seen that level of scrutiny take a step up with the changes that came in on 1 January, with TrustMark taking on greater responsibility for approving quality throughout the supply chain, following the Each Home Counts reviews that was kicked off back in 2016. So, there is a high amount of evidence and detail and technicality that goes into ECO to ensure installations are done properly and done safely.

Before we move on, I think Andrew Davies has got a question on this very point.

Jenny, just on the alternative model that you have got about cladding the solid wall properties. You've said it is more expensive. Can you give us a feel for how much more expense there is than the—shall I call them the traditional model that you use at the moment that takes six to eight weeks, I think you said?

Yes. So, if we were talking a three-bed semi, you'd be looking about £8,000 for solid wall with rendering. You're probably looking at another £2,000, £3,000 on top of that for Tŷ-Mawr at this point. There is absolute potential for that to come down massively if we can get it at scale.

Thank you. Back to Joyce Watson.

We've had comments from the Residential Landlords Association, and they mention a hesitancy within legal teams of local authorities to engage with ECO schemes. Is that something that you're coming across?

I think local authorities approach it in two different ways, so some local authorities will go to a managing agent or they'll go directly to a funder, and I think—. I watched the local authority evidence session, and there was mention of a bid process, so if there's a bid process and the local authority leads it, that would be a direct supplier going for the bid, so an energy company like ourselves wouldn't go for that, and I think that's where some of the issues with control happen. I would say for us, we talk to local authorities. The issue comes as ECO can't fully fund some of the measures, and therefore local authorities have to go and find other funding through Nest, Arbed, through home energy efficiency programmes for Scotland area-based schemes, but occasionally, there aren't ways to make a scheme work. But in terms of legal and procurement, we don't come across those issues for local authorities very often, I would say.

So, you haven't seen any evidence?

No.

And yourself?

No, not either. I think the biggest changer has always been the level of resource that local authorities have to engage and to run tenders and to engage in those types of works. So, they don't necessarily have the resources they need to be able to make those commitments.

And finally, I suppose, from me: we talked about commissioning work and we are being told that the ECO schemes are not sufficiently utilising local contractors for that work. So, if that is the case, and that's what we're being told, how can that be addressed?

Did you say local contractors?

Local contractors, yes, rather than bringing in companies into an area, fitting it all and shooting out, which doesn't actually keep any money in the local area.

So, I raised this question when I saw it with our obligations manager, who said the majority of our work is done by local contractors in local areas. The only reason it wouldn't do is if there's a risk of non-delivery. So, an example would be solid wall. There's a finite amount of scaffolding and scaffolding companies, so we may need to bring in that to a local area.

I think one of the problems I talked about at the start of the session is about the changing nature of ECO. So, it's very difficult to get firms to invest in training when they haven't got a long-term policy landscape to say, 'This is the measure that Government will support and fund.' So, solid wall is an example. In ECO1, so a few years ago now, and its predecessor, the community energy saving programme, it was solid wall, and so there was an industry built up around solid wall. The changes to ECO now, it's 9 per cent of ECO that's delivered through solid wall. So, I think that is another issue. If some companies do bring in work from outside, it could be because there is a lack of local training and investment.

To the point of how you drive increased local activity in the scheme, I think it's recognising that to deliver ECO works, there is a high standard, certainly a higher standard than, say, in the new-build home market, that work needs to be done to, and people need to be accredited to—the new publicly available specification standards, for example, which have just come into effect. So, I think, what can we do to drive up awareness and skills in local areas to ensure that you have qualified people who are there to undertake that work? I think that would be crucial.

Because we're trying to report back to Government. So, on this particular question, is there something you'd like to put forward, or for us to put forward on your behalf, in terms of training? Maybe—because we know, don't we, that these schemes are going to keep going? They might take different forms, but I can't imagine that the skill set are hugely different.

I think when you look at skill, you look longer term at meeting fuel poverty but also carbon emission targets. I think you're completely right, these are skills we're going to need for years to come, and I think anything we can therefore do to upskill local trades and workforces to ensure that they have the resources that they need to take on contracts and deliver work I think would be hugely welcomed by my members.

Okay. And finally, you did, unless I missed it—I don't think you've said anything about—. You did say 'embrace the "worst first" approach' in prioritising energy efficiency interventions.

So, yes, this comes from, I guess, the law of diminishing returns here. So, if you take a SAP rating of a G house to an F, you're going to get more emissions saved than if you take and E to a D, for example. At the risk of talking about solid wall and nothing else, this is where we talk about getting to E. So, if you've got everybody in Wales to an EPC property C, you would save 80 per cent of your emissions because, actually, you get less returns when you take a C to a B and an A. And there are new homes that you would struggle to get to A at the moment, and you would end up having solar panels on all roofs. So, the idea was in CESP, which is the predecessor to ECO—it was worst first, it was solid wall, it was multiple measures. In ECO, its least-cost measures, and that's how the policies have been designed.

Thank you.

Thank you. Andrew Davies.

Thank you. You touched on some of the points, in response to Joyce's last couple of questions, in particular about skills, and we've had the climate change emergency declared, and, obviously, that will inform Government policy, whether it be in housing or a whole raft of other areas. So, that's welcome evidence that you've given us about the need to upskill. But one thing we've received evidence on is, in the rural communities, that it's very tough to get into those communities and actually get these measures put in place. Have you any suggestions or ideas that could break down some of the problems that the schemes and the operators are facing in rural communities? Because if you live in a rural community, if you haven't got access to gas or oil, basically, you've got very limited options as to how you're going to heat your house, as such.

It's a tricky one with rural estates. In terms of any suggestions, where we've found it helpful is to try and give a holistic service. So, where we've used Age UK or we've used the fire service or police when they're doing their home energy checks, then that's the case if they can refer into schemes. The ECO rural uplift that we have now has been really useful in attracting measures to rural households. But, again, I'd look at other funding options. So, Nest and Arbed, obviously, in Wales. In Scotland, you're got HEEPS ABS. That, again, can drive policy. So, if you wanted to go into rural, you could set schemes up, or you could set the direction of Nest and Arbed to bring the ECO funding to rural communities. But it's a tough challenge, I would say—rural communities—absolutely.

And when it comes to building regs—obviously, this institution and the Government have responsibility on building regs—are we doing enough around building regs and the direction we're giving around building regs to make the improvements that we need? Or do we need to be firmer and tougher and maybe have a complete revamp of some of the policies that go into informing local government as to how to enforce those building regs?

If I come back to the previous question first, I think a lot of it comes down to how you design and how you target policies, and then how you ensure that policies have the appropriate funding to deliver the work that you're asking them to deliver. So, if the target is improving the efficiency of rural households, that needs to be the objective of the policy, and the policy needs to be scoped out and funded with that in mind.

In terms of your question on building regs and do they go far enough, in Energy UK, we've long said there is a need for a greater regulatory steer about the future direction of travel we're going in, in terms of what we expect from our homes. By setting a long-term ambition for where we want to go, if we want to see houses reaching a certain EPC standard, you then give a clear indication to businesses that there is a market for these things and you give customers a driver to take a step forward.

It can be quite a blunt tool, regulation. Therefore, if you're going to make it work, you probably need to put incentives alongside it, carrots and sticks to work together to encourage people to invest. But I think, if we're looking at our longer term net-zero ambitions, inevitably, we're going to need tighter building regulations for both new properties and existing properties.

Thank you, Chair.

If there are no further questions, can I thank you both very much for coming along and answering our questions so succinctly? Can I remind Jenny Boyce that you did promise us a note?

Yes, absolutely.

Which we'll be able to add to our evidence. Can I thank you both again very, very much for coming along and for how helpful you have been to our investigation? So, thank you, both. To colleagues, we'll break until 10:40.

Good morning, again, to my colleagues. Can I welcome David Weatherall of the Energy Saving Trust, Rajni Nair of Citizens Advice, and Crispin Jones of Arbed am Byth? So, croeso, welcome. If you're happy, can we move straight to questions, and can I start? Can you outline the work you're undertaking to help tackle fuel poverty in Wales, in particular your involvement in delivering the Nest and Arbed schemes?

Shall I start? The Energy Saving Trust is involved in three principal programmes in Wales that impact on fuel poverty: we are a partner in the delivery of the Arbed am Byth programme; we work as a subcontractor to British Gas in the delivery of the Nest programme, which is less directly focused on fuel poverty but obviously still with relevance to improving homes and tackling energy waste in Wales; and we work on the Welsh Government Local Energy Service, promoting community energy and sustainable energy in local authorities.

I'm happy to go next. As you know, Citizens Advice provides independent and impartial advice to people in Wales. One of the programmes that we provide advice through is Warmer Wales, which is funded by British Gas, and this service runs across 14 local offices. We provide holistic advice about energy and energy efficiency, but we also provide advice about debt and benefits too. We do that through face-to-face advice, through local offices, and also other local locations or in people's homes, and through telephone as well. We obviously are the statutory consumer advocate for energy, so we represent energy consumers all through Great Britain, so we obviously comment on Nest and Arbed through that.

I'm managing director of Arbed am Byth. Arbed am Byth was set up to deliver the Arbed 3 scheme, or a number of schemes for Welsh Government under the badge of Arbed. Effectively, we set up and deliver area-based schemes to improve the energy efficiency of the most vulnerable and hardest-to-treat homes in Wales. We do that across all 22 local authorities and via schemes that engage with consumers at doorstep level, effectively.

What do you see is the impact and the scale of fuel poverty in Wales? Do you think we have a serious problem with fuel poverty? Is it having a serious impact on people's lives or not? Are different demographic groups affected?

You'll be aware the latest data show that 12 per cent of Welsh households are affected by fuel poverty. That's clearly a significant improvement on the 26 per cent that were affected the last time a full survey was carried out in 2008. Nonetheless, there are significant sectors of the Welsh population that are much more likely to be in fuel poverty and are much more likely to feel the disbenefits of fuel poverty. So, we know that households living in older properties are more likely to be fuel poor, 20 per cent of households living in pre-1919 homes are fuel poor. Clearly, there's a much higher propensity for people living in homes that have solid walls to be in fuel poverty. We know that the effects of fuel poverty are particularly felt by people who are vulnerable, people who have pre-existing health conditions and, indeed, that living in a home that you can't afford to heat can significantly exacerbate those health conditions. 

I might just build on that, based on the data that we have at Citizens Advice. Based on people who come to us for fuel debt issues, 82 per cent of those people have a monthly income of less than £1,500. What we find is that almost half of the people who come to us with fuel debt issues have a long-term health issue or are disabled, and half of those long-term health issues and disabilities are mental health issues. What we find is a clustering effect. So, of those coming to us about fuel debt issues, 35 per cent of people are also coming to us about water debt issues, and 34 per cent are also coming to us about council tax arrears. So, what you find is a bigger picture of poverty, which you'd expect. And then this is exacerbated. So, if you come to us about fuel debt issues and you have a mental health problem, then you're 50 per cent more likely to come to us with a problem about your water supply and 40 per cent more likely to come to us about council arrears. So, it's a bigger picture, where people have issues with their fuel, but also have issues with the wider picture. FootnoteLink

I think I'd just add, because we tend to deal more practically with householders and people who are in fuel poverty, we see what is sometimes classed as the apocryphal evidence. So, the people whose children genuinely are unable to do homework in any other room but in the living room with the television on, because the home just isn't warm enough. What we have discovered a lot of is people who have mental health stress and anxiety conditions who probably wouldn't ordinarily ask for help, who don't recognise the term 'fuel poverty' or that they're in fuel poverty, but very much are according to any definition. So, I think that's our experience: that it's probably not just the data,  there's an awful lot on the human side that we're recognising as the symptoms and consequences of fuel poverty. 

Okay. Thank you very much. Neil Hamilton. Sorry, Llyr Gruffydd. No, Neil Hamilton. Sorry. 

I'd just like to ask a couple of questions about measuring fuel poverty and data. Can I ask you, Ms Nair, first of all: can you expand on your findings that contacts with your local offices in Wales are still increasing—related to fuel poverty, that is—despite the Welsh Government's measures apparently showing a decline? Although, of course, there are methodological issues relating to the data that have been published recently. Therefore, it's difficult to know whether the previous measure was accurate, whether the current measure is accurate and, actually, where we are. So, the practical experience on the ground is, perhaps, as good a guide as any.

The Welsh Govenrment has tried to predict fuel poverty over the last 10 years and, in doing so, they've used old housing data to try to predict that level of fuel poverty. Because of that, it's really hard to measure what the effect of the Warm Homes programme has been on fuel poverty over this time span. Because of that, you're less certain when you're talking about how fuel poverty has changed over time. What we see on the ground is that fuel debt issues are still increasing. So, that doesn't necessarily mean that everyone who comes to us with a fuel debt issue is in fuel poverty, but we can recognise that the lived experience doesn't appear to have changed, based on the clients who come to Citizens Advice.

So, it's not measurably getting worse, not measurably getting better: is what you'd say, is it?

Not from the data that we have, but that data doesn't capture all of the picture. 

Gentlemen, have you got a perspective on this?

I think, clearly, as I said, significant progress has been made in tackling fuel poverty in Wales, from the 26 per cent in 2008 down to the 12 per cent that we see now. Clearly, fuel poverty is caused by three factors: income, the cost of energy, and the energy efficiency of the property. And, to some extent, the behaviour of people inside that property as well. So, trying to address all those factors and for policy to tackle all those drivers and to really deliver impacts is a complex problem. We are seeing progress, but initiatives that really can get to all those causes of the problem will be important in ensuring that it really delivers in terms of people actually being able to afford to heat their home. 

What I'm trying to get at is to what extent we can rely on the statistics and the means of measurement in the first instance. Are they producing meaningful results? Clearly, every year, we spend money on insulating houses and so on; presumably, things are getting better, but we don't know the speed in comparison with the problem if we don't know how big the problem really is. This is the key issue. 

There's a lot of debate about metrics around how you measure fuel poverty, and you'll perhaps be aware that we now have different definitions of fuel poverty in Wales, Scotland and England. 

Just to help. 

My view is that we can get a bit lost in definitions and debating definitions. We need to improve the energy efficiency of poor homes, we need to be making sure that the energy tariffs are not excessive, and we need to be, obviously, tackling incomes through benefit support and other measures. Clearly, fuel poverty policy tends to focus on the energy efficiency side of the equation, because that's the bit that can be more readily tackled, certainly within the ambit of the Welsh Government. I think what we need to do is perhaps talk—. It is important to focus on definitions, but not focus too much on definitions that we lose sight of the fact that what we need to do is make sure that the homes of low-income people are well insulated.

I agree. Mr Jones, have you got—

I'd only add, my experience goes back to the first National Assembly for Wales, sitting on the fuel poverty advisory group for the then social justice Minister, Edwina Hart, seeing the measures that we could deliver under any Government or grant-funded scheme then to the measures we can deliver now on how we can improve the energy efficiency and control, with the exception of tariffs, people's fuel bills, I've seen significant progress. But again, in terms of the metrics, I agree with my colleagues; they're the set metrics, really.  

Can I then ask you again, Mr Weatherall, on your view, taken from your written evidence, that

'a more joined up approach between health data and housing data'

would be positive? Can you say how this would be done and how the data could be used to shape fuel poverty interventions and policies? 

I think what we're saying is that we're already seeing Welsh programmes targeted increasingly at people who do have health problems, and you'll be aware that the traditional approach to targeting fuel poverty has been around using welfare benefit support. What we've seen over recent years, increasingly, alongside that traditional targeting approach, is extending the reach of schemes, as has happened with Nest, to target people who are identified by their GP or otherwise as suffering from health problems. 

I think there is ongoing work. There's been very good evaluation work done of Welsh programmes to date around looking at the health impacts of energy efficiency schemes. I think that is something that needs to continue to be a priority, because it is identifying the impacts of fuel poverty on people with long-term health problems; it's necessarily a long-term job. So, I think what we were trying to indicate with that is the importance of looking at the delivery of programmes to different people with different health problems, and the fact that we need to track those impacts in an ongoing way. 

Okay. Thank you. 

Thank you. On to Jenny Rathbone. 

Could you give us your views on how you think the upcoming fuel poverty strategy for Wales should differ from the 2010 strategy? Who wants to go first? 

So, I think one of the points that I made earlier was about the old strategy not having up-to-date housing data, which then, every time you tried to think about what the fuel poverty measure was, you weren't taking into account the energy efficiency improvements of the Warm Homes programme. And, therefore, that made it harder to direct the policy action that you were doing. So, one of the things that you probably need to improve on is to get more regular housing data.

I think one of the things that we suggested in the written evidence that we submitted was having some sort of monitoring, a stakeholder group, so to speak, which would regularly provide recommendations to the Welsh Government about how the fuel poverty strategy should change. So, I think, what we know might happen is there might be policy action that thinks about decarbonising homes more generally. So, how do you help people decarbonise homes in terms of the energy efficiency and different heating technologies within their home? And the independent decarbonisation advisory group put forth some recommendations recently about improving the homes of fuel-poor people. And, so, that would then need to be taken into account with the new fuel poverty strategy, what the interaction is between those two different policy areas. So, ideally, you'd have something like that. 

I think one thing that would help as well is better transparency. So, Welsh Government are very good at doing evaluations and doing decision policy papers, but it is very difficult to find these papers; they're scattered everywhere, and it would just be really useful to have that in a more consistent format. Those are some of the ideas that we had. 

Okay. Thank you. David, do you want to—

Yes. So, some of the ideas we have, so, having said definitions are not essential, I think it is important to look at the definition of fuel poverty used, and to look at the definitions that have been adopted in Scotland and England and do an assessment of whether Wales does need a shift. The classic criticism of the 10 per cent definition used is that wealthy people who choose to live in very large draughty homes might end up spending over 10 per cent of their income on fuel, and should those people be the target of fuel poverty policy? Discuss. 

And your view would be?

My view would be I do think there is a benefit to including some sort of income threshold within the definition, so that—. I think, also, it should be—. I think Rajni touched on the need to be tackling and taking a whole-house approach, which is sort of embedded in the schemes to date, but I think you could go further with that. And, I think, particularly making sure that people living in the worst homes—which, in our experience delivering programmes in Scotland, are often the most vulnerable people, particularly in the owner-occupied sector—actually have all the support they need to improve their homes, because there are often vulnerable people living in very poor condition owner-occupier homes that are expensive to improve, and making sure that programmes have the flexibility in terms of outreach, so actually going out and helping people, and flexible funding to enable those properties to be improved, I think, should be a key focus of policy going forward.

ECO funding: ECO is a great, Britain-wide scheme, and, to some extent, countries and regions are in competition to get that money out of energy suppliers. Wales has done fairly well at that, not as well as Scotland, but better than England. But, I think, there might be more competition because we are likely to see more—. Indications from the Conservative manifesto are that we're going to see new funding going into fuel poverty in England, and that could well mean that England is in a position to lever more ECO money. So, in short, I think Wales needs to be focusing on how it can maximise the money it gets out of the ECO programme. One of the ways you could do that is for Welsh Government to provide greater support to local authorities to be able to take full benefit of that. So, again, to learn from Scotland, one of the things we do on behalf of Scottish Government is we have a dedicated, highly experienced person who works with each of the local authorities in an independent way, helping them maximise the money they can get through the UK programme.

The private rented sector hasn't come up yet. Fuel poverty is highest in the private rented sector: 20 per cent compared to 12 per cent in all households, and 10 per cent or 11 per cent in owner-occupied and social rented. The introduction of the minimum energy performance certificate standard of E last year, so that you can't rent out a home unless it meets that E standard, is obviously an important step for that, but I think there needs to be thought about how, probably, regulatory drivers can be used to push private landlords further than that, so that, like social landlords, the vast majority of homes meet the Welsh housing quality standard of standard assessment procedure 65. I think that's—

SAP 65—what's that equivalent to, A, B or C?

It's a bit below a C.

Okay. Thank you. Crispin.

I think I'd only add really in terms of the strategic co-ordination of measures and programmes. So the points that David referred to, one of the things we find from practical delivery of Arbed, for example, or any area-based scheme, is that ECO will pick up one measure in a property, which is great—it's additional funding—but if that happens, it may change the eligibility of that property for another scheme. So the co-ordination along the lines that David referred to, I think, would be very sensible to incorporate in the strategy.

Okay. Because listening to earlier witnesses, it doesn't feel like people have been working together very effectively. If you ask local authorities, 'Do you work with energy companies?', well, 'no' is the answer—from the witnesses we've heard from. And, equally, the energy companies weren't able to give us any specific examples today. But, equally, local authorities control all the data around education, social services. Are we joining up the dots? No, it doesn't appear to be the case. None of you have mentioned that. Do you use public services boards to this effect?

From an Arbed perspective, one of the strengths we've found recently is by working very closely with local authorities. I accept that, within the 22 local authorities, we tend to work with the authorities where schemes are being developed. There's always a risk of over-promoting a scheme if it's not going to be an area. But we use the Welsh index of multiple deprivation, we look very much at health and housing, and work with local authorities. And I think the success, and the growing success, of Arbed has been by really engaging with local authorities. So I would very much emphasise the importance.

So, which local authorities would you pinpoint and say, 'Well this is the model for—'?

We work very closely with Flintshire. Flintshire have been very effective in working very closely with us, in terms of putting effective schemes together. Rhondda Cynon Taf we've worked with as well. We're currently in Merthyr Tydfil—that's worked very effectively. Ynys Môn, we have programmes about to be developed. So we're at separate points of engagement, but I don't think we could run an effective Arbed scheme without close liaison with local authorities.

I can understand that; we'll come back to that later. But, the general principle, public services boards have passed you all by, have they?

I would just quickly pick up that local authorities, from anecdotal evidence that we get from local offices, are quite under-resourced. And so, picking up on David's point earlier, when he was mentioning the minimum energy efficiency standards, actually enforcing things like the minimum energy efficiency standards can be problematic in some local authorities, because they don't have the expertise or the time or the knowledge or the resource, I suppose, to enforce those standards. And I imagine that's also probably an issue in thinking about fuel poverty more holistically.

Fair enough, but the public services boards and the Well-being of Future Generations (Wales) Act 2015 are challenging people to do things differently. So, coming at it and saying, 'Oh, we haven't got the resources', isn't a sufficient answer, to me.

Part of what I was trying to indicate when I was referring to the need for support for local authorities around maximising data and maximising ECO was precisely around addressing this point. I do think there is an issue of lack of capacity in local authorities and I think they do need support to be able to bring together the information on fuel poverty, the information on their housing stock, and, therefore, to work effectively with energy suppliers and to join up in the way that you're calling for.

I think also one area where I would like to highlight success in Wales, and certainly I think this is happening better here than anywhere else in Great Britain, is the linking up of the Nest service with wider support. If you call Nest for help with energy efficiency or a cold home, they have a very extensive network of other agencies and types of help that you can be referred in to if the caller is identified as needing that support, whether that's help with fire protection measures through, obviously, to benefits and income support. 

Okay. Lastly from me, what are your views on the proposed revision of Part L and Part F of the building regulations, in terms of the new strategy? Is it ambitious enough? Or too ambitious?

I haven't completed a detailed review of it. I think one of the points I made in our written response was that the standards in building regs will already deliver a warm home, certainly a warm home that would protect the vast majority of people from fuel poverty, and, clearly, for carbon reasons we need to go further than that. But what I think is really important is not just to focus on the standards in the Part L changes, but also on making sure that builders are actually building to those standards, because we know that in the past that hasn't happened. And I think there is interesting potential from new in-home energy monitoring technology to actually not just be saying, 'Yes, we've built this home to this standard, that's fine', but actually to track its performance in the first year of operation to make sure that it's actually delivering. 

Thank you for that. 

Thank you very much. On to Joyce Watson. 

I want to talk about working in partnership and you've outlined some, but the Wales Audit Office did highlight that former stakeholder groups established by the Welsh Government, working on fuel poverty, have been dissolved. So, I would like any comments on the current mechanisms and opportunities for stakeholders to become involved in fuel poverty policy discussions with the Welsh Government.

So, in terms of interaction with Welsh Government, so far, throughout this fuel poverty strategy, they've interacted with stakeholders fairly well. I think one of the things that I would like to see is, after the fuel poverty strategy has been published, more regular interaction where we can see a response to some of the recommendations that stakeholders might be making. I think, as I mentioned before, you might expect to see different policy changes coming down the line, as Ministers look at the recommendations from the independent decarbonisation advisory group, and I'd like to see a reflection of that within the fuel poverty strategy and stakeholders to be included in that conversation, when you might need to then pivot a strategy or think about how the strategy reflects on those different policies. So, I think that's a really key part of what happens next, not just that we finish at the strategy, but how do we deliver a strategy reflecting the needs of all stakeholders.

Something that I definitely think needs to happen is co-designing different programmes. So, what I know from the advisors on the ground are things like sometimes people struggle with what happens after Nest. So, they might have ongoing costs like boiler maintenance or they might have a new intervention put in, but they really don't know how to work that new intervention and so it doesn't actually remove them out of fuel poverty. So, I think one of the key things is co-designing those interventions, so you're constantly getting the information from the people on the ground and able to adapt that programme.

I don't think I have anything to add to that.

I think, just generally, organisations that play partnership roles—members of the End Fuel Poverty Coalition et cetera—or other organisations we always reach out to, because we just find their advice invaluable in helping develop the schemes that we run. It's a repetitious answer in terms of just working with people again is what helps us be successful.

Okay. So, Citizen's Advice helped to make a recommendation and you've talked about it, but it is about monitoring, which you've already said, and the upcoming strategy. So, in order to do that effectively, and with some certainty that it's being done, do you think that we need to look at the UK Committee on Fuel Poverty as a model, maybe, to take us forward?

I think, potentially, something like that would be useful. What we wouldn't want to do is replicate anything that's happening there that also thinks about things nationally. But think about the Welsh-specific elements of the fuel poverty strategy that do have Welsh-specific stakeholders that have some input to give. So, I think, potentially.

One thing I'd probably talk about is the targets within the fuel poverty strategy. So, any targets need to be reflective of what the goal is, and that goal needs to be very clear. So, in the English fuel poverty strategy, they have certain goals around the EPC level of homes, whereas the last fuel poverty strategy was more about eradicating fuel poverty. And because of that, you need targets that reflect that goal, and you need interim milestones, and that's why something like having a UK fuel poverty replication to feed into those milestones would be really useful, to make sure that we're on track and we're not actually doing activity that then backloads a lot of the activity to the last minute, which can be quite expensive as well.

Can I just add—just a reflection? I think we haven't really touched on climate change much, but Wales has a target to decarbonise by 95 per cent by 2045, and that has a lot of implications for communities and jobs in Wales, and I think there is a focus already on climate justice here. But I think it's important to link up that discussion about fuel poverty and programme policies to tackle fuel poverty and the impacts of those on different communities with the wider discussion about how Wales is going to tackle climate change and what that means for different stakeholders. And we're seeing interesting work in other parts of the UK around citizen assemblies and the like, and I think it's worth—. To me, I think a lot of our discussion about fuel poverty will increasingly be integrated under that climate justice umbrella.

Okay, thank you. Andrew Davies.

Thank you, Chair. To the Energy Saving Trust, in your evidence to us, you said that stricter regulations were clearly needed on the private rented sector to bolster EPC targets. What did you have in mind when you said that?

As I explained before, the private rented sector has the highest rate of fuel poverty of the different tenures. There is a problem that you'll be aware of that's well documented in energy efficiency, that if you're a landlord and you make an energy efficiency improvement, you don't benefit directly from the energy savings resulting from that in the way that an owner-occupier does. So, clearly, there is less of a financial driver for landlords to make energy efficiency upgrades. So, I think it's been accepted that regulatory drivers are probably more of a priority in the private rented sector than they are in the owner-occupier sector or the social rented sector where Government has wider levers they can pull to promote energy efficiency. Now, clearly, at the moment, we have a minimum energy efficiency standard of E where that's cost-effective. We suggest that that could go further, and as I said in my earlier response, we think we need to have in view that Welsh housing quality standard of standard assessment procedure 65.

Sorry, can I quickly interject as well?

By all means.

I think one of the other things that possibly needs to change with the minimum energy efficiency standards is that it has a cost cap of £3,500, and, ideally, you'd want that cost cap slightly higher, in line with what the Committee on Fuel Poverty has said about £5,000 as well.

Okay, thank you for that. Obviously, houses are constantly being built and there are measures we can take via the building regs mechanism to make sure those houses are as energy-efficient as possible. Have you got any suggestions that we can be making so that we're not building new houses that turn into the real issues in 20, 25, 30 years' time? What improvements should we be making? We've talked about energy efficiency certification, raising the standards there, but what other measures do you think we could be making in the houses that we're building today so they don't turn into the problems of tomorrow? 

I think I'd refer you to my previous answer there, on the Part L. I think it's about we need to go—. Building standards—. New homes, if they're built to standard, are an awful lot warmer than the average existing home, and so they will—. Even a home built to the current regulations will substantially protect householders from fuel poverty if they are built to that standard. Now, we need to go further than that, particularly for—. We need to go further than that, towards a zero-carbon standard for new builds, principally for carbon reasons. I think the important thing for protecting people from fuel poverty is about making sure that homes are built to the standards to comply with Part L of the building regulations.

I think—

Joyce Watson—

Sorry, I was going to quickly just say that Welsh Government has a consultation out at the moment about changing elements of Part L, and that's a really good step forward for what we need to be doing.

Okay, thank you. Joyce Watson.

I just wanted to—. I agree with everything that's being said, but we've all seen reports of new energy efficient schemes—and you did touch on it very lightly—that have an affordability cost for the tenant, for the user, whoever they might be. So, in terms of the balance—because it's about balance, really—about meeting your energy targets, reducing emissions, but at the same time putting in systems that people who are already poor can actually afford to run—I don't think anybody's really elaborated on that, but I remember just last week watching such a scheme that had been put in and people were sitting looking at it because they couldn't afford to run it. You know—I mean, that's not really very good, is it? Do you have any thoughts around that?

Yes, I mean, I would absolutely agree. The affordability of the measure after it's been installed is very important. I think, if I speak from Arbed's perspective, we tend to use an EPC as the first base, so we'll look at the existing EPC of the property and then we'll do a considerable amount of modelling in order to see which are the most effective measures for that property—fabric first, et cetera, and heating system—and then the model does say what we would anticipate—it's a deemed score but to anticipate what the saving on fuel will be. Perhaps one of the difficulties is that some customers will—quite rightly, householders will take the benefit in thermal comfort. So, they may overheat their home, but if you've been living in a cold home, that's what you desire. So, I think there's some behavioural understanding we need as well. But, no, you're absolutely right: the affordability of it is something that has to be considered upfront. 

I think, to be absolutely clear, fuel poverty initiatives and energy efficiency interventions should either result in a home that is warmer or a home that has a lower bill, or some combination of those two. That's their aim. That's the point of doing those. I think there is, as Crispin's explained, sometimes an issue about people knowing how to use the new systems that have been installed in their homes, and that's one of the reasons why insulation is particularly important, because new heating systems can be complicated and difficult for people sometimes, but insulation is just there. One of the things we've found and evaluated through work in Scotland is that actually going in after people have had measures installed and really doing systematic support—and I know this is something Arbed does already—and actually really making sure people do know how to use the kit and how to manage and run their home can really make sure that both savings and comfort are delivered.

I was just going to quickly say that, yes, you're absolutely right that not all technologies will be suitable for every home, and that's exactly why Crispin talks about doing some sort of evaluation of what's right. I think Nest is, what, 90 per cent plus central heating installations, which sounds like such a contrast compared to the ECO installations, where you get much more insulation as a proportion of the breakdown of what types of interventions you might do. And I think it's extremely important not just to put a boiler in in a very leaky home where all the heat just goes out anyway, and to also think about what other interventions you need to make to that home to make sure that it's actually made a difference to that person.

Before I call Jenny Rathbone in—some things that happen, like we had an electricity cut, which has changed all our timings on the central heating, so it comes on at weird times and goes off at weird times. That has had a huge effect, and the weekend involved me trying to do battle with the central heating system. But you have these sorts of problems that occur outside, which really do affect people, over which they have no control, and if the system is relatively complicated—or more complicated than the capacity of the person who is dealing with it, in my case—then you can have problems, can't you?

I'm sure in submissions from organisations like Smart Energy GB, they will have commented on the potential for smart technology to address a lot of those issues, and made all our heating systems easier to use. I think it is important that the Governments keep up the pressure on those technology companies to deliver solutions that aren't just for, you know, wealthier tech-friendly people, but actually are helping vulnerable and lower income households.

Jenny Rathbone.

We all know people who overheat their homes so that they have to go around in their underpants and T-shirt, even in the middle of winter, but I think that's a distraction from the real issue, which is how we're delivering homes that will both enable people to afford to heat their homes, as well as tackling the carbon emissions problem. So, I'm interested to hear from Arbed. Are these Part L regulations stringent enough, or should we be going for zero carbon?

So, in many cases, it depends whether there are the people to retrofit installations, which is obviously what—

No, we're talking about new homes on the building regs.

Yes, so Arbed won't touch new homes at all, so it's purely the retrofit. And I think the figure that continues to astound me, which I think is important, is that 80 per cent of the homes that we will live in in 2050 are here now. So, new build is critically important, but retrofit is a problem we have to deal with now.

If I can just add a comment—please stop me, Chair, if it's not relevant—but one of the problems that we encounter is that the most effective measure in terms of fabric-first we can apply to some older properties—pre-1919, pre-war—is external wall insulation, but if you live in a home of architectural interest or detail or a terrace in an area—not a conservation area, but just where you're used to the look—we can't really do that. Customers don't want us to do that, and I understand it, so one of the advantages, I think, of Arbed, is that we have a project board with the Welsh Government where we can bring in innovation, so we can discuss it in order to bring it into the scheme, and there's some internal wall insulation products that we're now looking at, because, historically, if you live in a terraced property, if I come in and say I'm going to make all your rooms 100 mm smaller, that's not an effective solution. But if we can reduce that and still achieve significant savings, that's the sort of measure we need to look at.

How well are all these stakeholders working with the universities? Cardiff University is in my constituency, and I know Swansea University is also involved in really pushing ahead on different ways of retrofitting different types of homes. Are the energy companies really aware of what has already been delivered through the innovative homes project?

There are programmes: so, Innovate UK have various programmes et cetera, and central Government, that energy companies can become involved with in order to access and fund new materials, new products et cetera. ECO itself has an innovation route, so that new materials and new products can be brought into ECO, but with Ofgem's approval, and I think most organisations would follow the work of Professor Phil Jones et cetera at Cardiff University. We're hoping to join a programme with Cardiff Metropolitan University in terms of looking at some of the after-effects of installation with people. So, I think that that is there, but in terms of whether it could be forced more proactively, I absolutely think it could, yes.

Thank you. Finally, Llyr Gruffydd on this.

Thank you very much. Just quickly picking up on the comments about the smart meters, in previous evidence, we've heard that smart meters can really help move us away from pre-payment meters—Energy UK and E.ON were telling us that earlier. I just wanted to check that you concur with that view and that we're not realising the potential that smart meters could actually bring in this context?

Yes. You will have spoken to people who are more expert on this than I am, and Rajni may well have more expertise, but my understanding is that smart meters, perhaps rather than moving away from free-payment meters, will allow a wide variety of flexible, different types of payment and therefore will remove some of the stigma of smart meters and also help deliver lower costs for those customers.

Yes, I would agree with that. I think smart-proofing really could make a difference to the people who are currently using pre-payment meters who have difficulty going to the shops—maybe they have mobility problems, maybe it's cold and difficult—smart pre-pay improves that customer experience. Also, there are opportunities for suppliers to use the data from smart meters to identify vulnerability and things like that. Whether they take that up is another question, but hopefully, that's something that will happen in the future as well.

Can I just follow this up and and say that from the evidence we heard earlier, I don't sense that the energy companies are actually going after the pre-payment customers in order to prioritise them for smart meters? If that's the case, why not?

There have been technical problems historically with the SMETS2—that's the second version of smart meters—pre-pay solution, and that might be a reason why they've decided to hold off on that. In addition, they might not be trying to target vulnerable consumers for reasons like testing out the technology before they give it to a consumer in a vulnerable circumstance. So, it's likely that they're some of the reasons why the SMETS2 pre-pay solution isn't something that they've pushed as much.

Okay, but is there any evidence that they are actually targeting people on pre-payment meters? Because, obviously, it is the most scandalous situation that the most vulnerable pay the most.

I want to say that I'm not as up to date with this as I was before, but I would assume that they're trying to target as many people as possible, because they're really trying to push smart meters on consumers for natural reasons, like the targets that they have with Ofgem and under license conditions. So, I would assume that they're trying to get as many people on to smart meters as possible.

That's a good place to stop the first part of this session. Can I thank you for the information you've provided us with? Can you provide us a note, if possible, on any information that the citizens advice bureaux have got on the last question that Jenny Rathbone asked?

About smart meters?

Yes.

Absolutely.

At this stage, I say thank you very much and goodbye to Rajni Nair, and we move on to talk about Nest and Arbed. So, if you're ready to move on, I'll ask the first question.

Thank you very much.

Thank you. The Energy Saving Trust said that if the Welsh Government is to vastly reduce fuel poverty over the next 10 years, it would need to ensure a minimum of 15,000 homes per year were lifted out of fuel poverty. Currently, just over half of that figure are being lifted out of fuel poverty. Do you accept the numbers, and if so, how are we going to bridge the gap?

Well, certainly, we accept the numbers, and in terms of solutions to bridge the gap, we come back to some of the ideas that we were exploring in the first half of the session to increase the scale and impact of Welsh activity to tackle fuel poverty.

Thank you. On to Neil Hamilton.

The Wales Audit Office has highlighted an underspend of the Arbed scheme in recent years. Can you tell us why this has occurred and what action is being taken to address the problem?

Yes. With respect, Chair, I should declare that I've only been in post since August last year—no excuse, just in terms of clarification—and Arbed am Byth are running Arbed 3; we didn't have an involvement in Arbed 1 and 2. So, again, not to make excuses, but just to talk in context. What I can talk about is the year one of Arbed 3, there clearly was an underspend, as the Wales Audit Office reported, and 145 properties were treated. Clearly, Chair, that's not in line with what you suggested.

The Wales Audit Office reported also that there were some legal challenges around the award of the contract, which we understand. I think that it really was in terms of the speed at which the mobilisation of the scheme could deliver, given the delays at the beginning. So, that's really the only explanation in terms of the underspend. It probably doesn't answer your question, so please stop me, Chair, but I think in terms of what's happened now is that, without those challenges and now that Arbed am Byth are able to deliver—I think probably by year 2, we would anticipate, we're in quarter 4 now, 2,200 or 2,300 properties—we would expect a much larger order of magnitude increase. But that, I think, is the only explanation for Arbed 3's underspend in year 1.

Right, I think I see. Good. Well, can I ask you also to expand on your suggestion in written evidence that there is a need for a top-up fund for the Nest and Arbed schemes and the rationale for this fund targeting those in severe poverty?

Yes, as I was saying earlier, obviously, there's a limited amount of money to go around per property. That's the case in any programme, any type of scheme, but I think what we're saying is where homes are perhaps very dilapidated, perhaps lived in by very vulnerable people, there may need to be targeted extra support, whether that's financial or in terms of advice to really help to make sure that the worst homes aren't left behind. There's obviously a balance in that between the best use of available resources in spreading across many homes and in targeting the worst homes, but that was what I was suggesting—

The rationale being that the extra expense of tackling the worst homes might mean, if we didn't have the opportunity to put the extra targeting in, that they would be left out of the scheme altogether, so there would be an inherent unfairness then in the system.

And I think it's also sometimes about making sure that the most vulnerable people get the help they need.

Just very briefly, from a practical point of view, we quite often come across properties where the roof is in a state of disrepair and we can't, therefore, put in loft insulation, or we can't put in solar photovoltaics. Some form of additional funding or enabling works funding would be very useful in that situation, especially where a great deal of those people simply can't afford it. They just can't do it.

So, a holistic system would take into account all these measures. Again, it's needs and means, the usual tension between the two, isn't it? Can I ask you both also to set out how much the ECO scheme funding is being accessed for use in the Nest and Arbed schemes? Is this opportunity to bring in more funding being maximised?

So, if I answer from Arbed's perspective, ECO funding hasn't yet been brought into Arbed. There have been challenges with ECO 3 and the understanding of how we report the data, so ECO, you probably will have learned from previous attendees, has a certain set of criteria that needs to be fulfilled. One of the advantages of Arbed is that we don't tend to ask a great deal of personal questions to householders. It's an area-based scheme, and, therefore, its eligibility is based on the property. We are now, however, asking those questions in the right way so that we can bring in ECO, and we've just appointed an ECO compliance administrator to make sure that that happens. So, whereas we haven't, to date, brought in ECO, we certainly will exploit that as fully as possible to add to the Arbed scheme from this point forward.

Right, thank you very much.

Just with regard to Nest, I should explain to the committee that the Energy Saving Trust is involved in delivering Nest as a contractor to British Gas. So, British Gas works for the Welsh Government delivering that programme, and we will provide answers on—or at least, British Gas unfortunately weren't able to be here today. I think they are available to come to future sessions or perhaps to provide a note to you on some of these questions. So, I'm afraid not able to feed back in detail on Nest issues.

Just on the ECO point more broadly, I think, clearly, as I said earlier, ECO is going to be a big part of the financing, going forward, that pays for upgrades to Wales's homes. I understand that Nest has, in the past, levered several million of ECO funding to support their work, but I think there are steps that could be taken to make sure that more ECO funding comes into Wales.

Thank you very much. Joyce Watson.

It's about advice and awareness, and I'm going to ask Energy Saving Trust particularly. The summary of responses to the consultation on Nest in 2016 did say that the Welsh Government had decided to introduce in-home advice as part of that scheme. So, the question is, does Nest currently offer any in-home advice, and do you feel that that should be happening?

I am, I'm afraid, reluctant to answer that question. As you'll appreciate, we operate as a contractor to British Gas for the programme, and I don't feel I can comment on what the programme does or should do. I'm sorry about that.

So you'll send us that information.

Yes.

Okay, that's fine. So, the same as before.

Does the Energy Saving Trust do in-house advice?

My understanding is that the service we provide is primarily telephone-based.

Okay. So, I'm going to ask Arbed now particularly. There's been—as we've gone through the inquiry, there seems to be less awareness of the Arbed scheme amongst many of the witnesses, compared with that of the Nest scheme. Do you have any explanation as to why that might be?

I should say that that's why I'm particularly grateful to be invited here, because I am aware that Arbed is not as heavily promoted. I think the obvious explanation is that, as I mentioned earlier, because Arbed is very much area based, if we were to roll out information about Arbed to all the 22 local authorities, the expectation is that we will be doing schemes in that area. There's a very fine balance, as you mentioned earlier, so what we tend to do is, when we deliver a scheme, we work very closely with the local authority, and we promote it via community engagement and direct addressing to the householders. But we have found that, for us to promote Arbed as a scheme, it can be quite contentious, because if we were to go, for example, to Ceredigion, and say, 'This is the Arbed scheme', someone would perhaps inevitably say, 'When will you come to us?' It's probably a bad example, because we may be going to Ceredigion soon, but one of the other local authorities where we don't have an immediate plan to go to. So that's really, I think, the obvious answer. There's certainly no lack of willingness to promote it, either, from Welsh Government, or from ourselves.

The other thing we've been hearing is the confusion about getting fuel poverty advice, and where to go. There has been a suggestion that maybe a single point of contact for that advice would be useful. What are your views on that?

I think we've always been strongly in support of a single point of contact. That's the model we deliver in Scotland—if you call up the Home Energy Scotland service, that's the single point of contact into different schemes. So, yes, a single point of contact is certainly a useful approach. I think one thing to note about a single point of contact is that it can be simple at the front but might be complex and involve lots of different parties behind that.

Just from our perspective, we would support that, because there are inevitably people on the periphery of an Arbed scheme who will be aware that Arbed are in the area, but aren't able to treat those particular houses, so, for them to have a single point of contact where they can at least be given that single advice I think would be very useful.

But they would equally, then, be able to access the information telling them what they might be able to access. If it's not that scheme, there might be another.

Yes, I agree. We more recently shared data with Nest in order to make sure that we're working together in similar areas, but you're absolutely right, there are a lot of people outside of those areas, who we're not able to effectively signpost towards one single point of advice. 

Okay, thank you. Thank you, Chair.

Jenny. 

I just want to take that point—

I was going to call you in anyway, Jenny.

Great. I just want to take that point a bit further, though, because the whole system seems so fragmented. Having a single telephone point of contact is all well and good, but earlier, we talked about how more innovative schemes have got to get permission from Ofgem; we know that Nest schemes will do boilers, but they don't do insulation; Arbed's got an area-based approach; ECO and the warm homes discount, some people get it automatically and other people have to apply, which obviously means the better-off, most competent people get it. Do we need a fuel poverty tsar to just pull the whole thing together, knock heads together and just have a single approach across Wales?

I think one of the challenges for that is obviously the split of governance in this area between Westminster and Cardiff and I think, to some extent, what will be needed is very strong engagement by the Welsh Government in the discussions that the Department for Business, Energy and Industrial Strategy are having about what ECO looks like going forward, because, as you might be aware, the current phase of ECO comes to an end in 2022, and they're looking at—or I hope they're looking at—what happens after that and how it might need to change. So, I think one of the challenges in joining things up is that, just focusing narrowly on ECO, it's a market-based mechanism, so suppliers are supposed to do things differently in different areas, but that does make it challenging to create a joined-up picture at the level of Wales or, indeed, any other region or part of the UK. 

I've nothing further to add, really. 

Sorry?

I've nothing further to add, sorry. I would agree with that.

Fine. Okay. Just to go on to, really, the effectiveness of the current strategies in reducing fuel poverty, I wondered, Mr Jones, if you could just describe to us how the Arbed scheme works in the areas that are identified, including the role of data in pinpointing which street gets done and which doesn't, and what role local authority discussions have in deciding whether it's x or y.

Yes, certainly. Our starting point is the Wales index of multiple deprivation and an understanding of the lower super-output areas that appear most highly on that. We then look at these. So, we can effectively look at any area in Wales that qualifies according to that data. We look specifically at health, housing, et cetera, to see exactly the most appropriate benefit we can bring, given the level of deprivation. We then overlay that with the home analytics database, which effectively tells us which are the E, F and G rated properties, the least efficient properties.

So, we start to build up a picture that says there's an area that is fairly high on the index of multiple deprivation, it also has some of the hardest-to-heat homes and the least efficient homes. We then look at a few other areas, conservation areas, et cetera, and we try and overlay to say which is the largest scheme we could practically develop that will help the most number of householders in that area. When we've done that, we work very closely with the local authority, because they will have that local knowledge. One of the things we find is that, if a local authority enveloping scheme happened, the energy performance certificate won't have been lodged. We don't have, then, access to it. So, it could be that the maps says that this is a great area to target, but an awful lot of homes have had external wall insulation under a local authority enveloping scheme. So, that's why we have to work very closely with the local authority. 

So, if it then transpires that we can take it to the next stage, we then get in touch with all of the E, F and G rated properties, invite them to a community engagement event so that we can then say to people, 'There are no promises at this stage, but what we think is that this is an area we could apply Arbed funding to to improve the energy efficiency'. Inevitably, other people who we haven't written to hear about this and come in. So, that's absolutely fine; we'll carry out an energy performance certificate to make sure that their home is eligible and, if it is, then that's fine. Once we've got to that stage of assessing the properties, working with the local authorities and local stakeholders, we then take that proposition to the Welsh Government and say, 'This is an area that we would like to develop a scheme.' That process is fairly quick; it doesn't cause much delay. 

So, you just have one community engagement event.

No, no. We have a number of community engagement events over the period, because what we find is—. We also find, just on a practical level, that, if I have one community engagement in one part of the village, some people just don't want to go to that part of the village. Well, that's fine; easier for me to call two. So, we'll have two or three. We also hold them at different times of the day, so that people who work can come in the evenings, et cetera. So, we do have a number of community engagement events. 

But you don't actually knock doors. Because the most vulnerable need several contacts before they'll let you in. 

Yes, absolutely. We have to be careful, in terms of, when we approach people, we have to have a reason for doing it. So, the E, F and G rated property becomes our reason to make contact. Only if they respond to us, obviously, can we engage with them. We don't knock doors, because our work with trading standards on scam-awareness schemes tells us that the risk of knocking doors uninvited is too great, with cold calling zones, et cetera, and the fact that these are vulnerable people. And, as much as I'm very proud of our pink lanyards, it still isn't sufficient for people to trust us, and there is a risk, obviously, that other people could impersonate us. 

Yes, but you're working in partnership with local authorities. 

Yes. 

You've got councillors who will be familiar to people in that area. 

Absolutely. 

Why aren't you using them to support you knocking doors and saying, 'This isn't a scam; we are actually offering you something for free'?

We absolutely are, and there are councillors—I won't name them now, but there are councillors who have been absolutely massive champions for us in many of the local authority areas who would do exactly that, who bring people by the hand to give them the trust to say, 'Come to this community engagement event. It's okay; it's trustworthy, and this is what you can get.' So, absolutely, my apologies, I should really be championing, because a lot of the local councillors have been very, very effective champions for Arbed.

Okay. But where you have dozy councillors, that means individuals who are illiterate are just missing out. 

Well, yes, there's always going to be some obstacles. But the community engagement events we do, once we've made contact, we do have a local scheme manager and a community engagement officer in those schemes. So, they will engage with people; we just don't want to knock doors until people have engaged with us, because that is too risky. We do promotion via newsletters, et cetera, so we do make contact with everybody, but we don't like to knock doors. 

But are you also working—? Local authorities are one stakeholder in this; you've got also got the local GP, the local citizens advice bureau. All these people will have done detailed work in this area before you've arrived. 

So, yes, we absolutely do. So, there's a number of charities that turn to us, and organisations such as the Power Up hubs. There's a lot of organisations who we do engage with, and what we tend to do is to invite those to our community engagement events, so that people can see friendly faces, recognise the names, and engage at that time. 

Okay. Thank you. 

Just turning to the Energy Saving Trust's role, obviously Nest's last report highlights the fact that those who have had home energy efficiency measures get a substantial reduction in the numbers of homes where they're living in fuel poverty. What more do you think the Welsh Government could do to ensure that all the households who are involved in Nest are getting out of fuel poverty?

Well, I come back to some of the remarks I made earlier about reaching some of the worst homes. I think what we need to do is think about all these programmes as part of a wider initiative to—. Coming back to that 95 per cent target by 2045, we are going to have to improve the vast majority of Welsh homes in terms of energy efficiency, and that's going to involve not just those people living in fuel poverty, and that's going to involve substantial programmes to build the market, to build the capacity of the supply chain in energy efficiency in Wales. As you were referencing, some of the work, I think, from Cardiff University, has been very innovative about developing new technologies. I think that's going to be key. We are, in some cases, up against the limits of what technologies we've got affordably available to us. 

So, I'm afraid it's a broad answer, but I think it will—. The additional—. To go further, certainly within the available resources, does involve doing that broader work around trying to develop the market, develop the energy efficiency industry in Wales. 

Okay. But, having had the Nest makeover, it only reduces fuel poverty from 43 per cent to 21 per cent. Twenty-one per cent of those households are still living in fuel poverty after Nest. That goes back to my earlier question about maybe having a fuel poverty tsar to try and cut through some of this, because it's just not as effective as it should be. 

As I say, I don't want to comment on the specific performance of the Nest programme. But I would refer you to the point I made at the start, that energy efficiency is not the sole cause of fuel poverty. There's also—obviously, income and energy costs are the two other parts of the triangle, and behaviour comes in there somewhere as well. So, I think trying to make sure that people who have energy efficiency improvements actually really are either having a warmer home or are paying lower bills also involves tackling those issues.

Sure. Thank you very much.

Mr Jones, you said earlier that Arbed does quite a lot of number crunching to work out what is the most effective strategy for a particular set of homes. Does that mean that you then have the data on the pre-existing levels of fuel poverty in these buildings, and do you then measure what the improvements have been after your interventions?

We do, but again it's deemed figures from energy performance certificates. So, I know that the committee's aware that there are flaws with energy performance certificates; it is the most accurate data we have. So, what we can say is that we take the property from an energy rating of, and, by installing the measure in the recommended order, we can get to an improved energy rating. And that is modelled on that should be the energy saving. So, we may say that, actually, the energy cost should reduce by £600 a year. In reality, given the factors that David's referred to, and the thermal comfort take-up from the householder, that may not actually happen. What we don't do at the moment is actually measure what the reduction is.

Okay. So, is this because the local authorities don't have the resources to really apply the building regs and ensure that people are doing what they claim they're doing? Or is it—? What is the reason why we don't even know accurately what level of fuel poverty people are actually in?

I guess the obvious answer is that the monitoring isn't there. So, you would have to monitor over a full heating season and beyond, and actually say, 'Well, before—'. I guess the other difficulty is you'd realistically then have to monitor before intervention and after. And part of the desire for us to get into a property as quickly as we can is to remove someone from fuel poverty. I think it would be difficult for us to say, 'Can you continue as you are for this year, so we can monitor it and then come in next year?' But there will be a technological solution, and I would suggest that's what we need, because that's the only way, I believe, you can accurately measure for that householder, with that occupancy level, et cetera, exactly what the reduction will be.

So, the annual energy statements that all energy companies have to provide to their customers, surely there's a way of actually using that data, along with the size of the property, to be able to see whether—. There should be a way, surely—if you know the size of the building, and you know how much energy is being consumed, you can see which are the ones that really are leaking energy all over the place.

Yes, I absolutely agree. There's no remit for Arbed to do that, but I—

But it's something that we could get Ofgem to do.

It is quite complicated, because of people, unfortunately. People live in homes, and families change—. As Crispin has indicated, you need to do it over at least a year to get—well, two years really, to get one heating season and then a comparator heating season. If we all think about how stable are our lifestyles in our homes over a full two-year period—children go off to university, people move out—let alone just that we change the patterns of how we use energy in our homes. So—.

But we already have the data, you see—we already have the data over two years, but we're not applying it, it would seem, to ask these strategic questions, even though we have the IT systems that will do that for us.

There is a database maintained by UK Government—the national energy efficiency data-framework database—which does aim to do some comparison of real energy bills against homes that are known to have energy measures installed.

Okay. Lastly, can I just ask you both—well, ask Arbed, anyway—about the thorny issue of areas like Ceredigion, where there are pockets of fuel poverty, which don't neatly fit into this estate that we need to tackle. Ceredigion County Council made this very clear to us when they came in. So, you mentioned earlier that you were working with Ceredigion council. Does that mean you are now beginning to address all these isolated stone-built properties that are off the gas grid?

Yes, so in terms of off the gas grid in Ceredigion, as an example—two solutions: we can assess whether or not it's close enough to have a gas extension, because an awful lot of Arbed schemes involve gas connections— 

Except with climate change reductions, why would we be installing gas?  

Well, I agree it's contentious, but as an interim measure, it still is the most effective way of delivering that fuel poverty opportunity. But in areas such as Tregaron, for example—I don't want to set hares running—Tregaron is an area that we would like to look to work in. Some of the things we're doing is to say we would need to develop a smaller scheme, and smaller scheme, in terms of number of properties, may actually be over a wider area. So, it picks up those pockets. We don't have a restriction on the number of schemes or the size of schemes. We have an optimum size, so that's the sort of work we can do.

Unfortunately, as I mentioned earlier, if it's a stone-built property or terrace of stone-built properties, it comes down to whether we can put external wall insulation, because the fabric is so important, or whether we look at a more innovative internal wall insulation measure. But, ultimately, we like to do the fabric—roof and walls and floors—and then the heating. So, if we can do those, we can absolutely make a difference. So, we will continue to work with Ceredigion council in order to try and find the right areas. 

Thank you. Andrew Davies.   

Thank you, Chair. Can I put this question to you, David, first of all? And I appreciate you might not be able to comment, because it's about the performance of Nest, but I'll put it on the record and then maybe you can provide us with a note. In the evidence that we've had it shows that most of the interventions in the Nest scheme have been boiler replacements, whereas in the ECO interventions, they have included 25 per cent cavity wall insulation and 17 per cent loft insulation. Why is there such a high propensity to put boilers in under the Nest scheme?

I think I would prefer to leave British Gas to respond to that question in a note to the committee, if that's all right?

If we could have that note that would be really helpful to explain that anomaly. Local councils were in giving us evidence last week, and the point that they made to us was that both Nest and Arbed, when it came to enabling works, were slightly reticent about facilitating those enabling works. They've highlighted leaks in lofts et cetera that would prevent roof insulation going in. Do you think that's a fair observation? 

I think it is in many cases. So, for Arbed, for example, we're judged by the energy efficiency improvement we make. So, Welsh Government don't have a measure for roofs improved. We do, however—in some cases, I'm actually aware of, at the moment, we will use some of our community benefit funding in order to help householders pay for that. But if we come to a property that needs a new roof or needs significant amount of works doing there is no pot, as we referred to earlier, that we can go to in order to help that customer. So, in that case, there is a risk that we would walk away from that customer and be unable to help them. So, I do accept that enabling works is certainly an area that needs further investigation.

But that's because there isn't a specific pot to allow you to be of assistance in that area? So, if there was a pot, you could come over it? It's not a psychological issue with the scheme or anything? It's all to do with the way the funding is allocated?

Yes, the way in which the outputs are recognised, and I should say, in fairness, there are certain local authorities we work with who are able to provide enabling works and we may work with Age Cymru handy-person schemes, where they exist. So, there are a number of options we can explore, but there is a risk that we walk away if that funding isn't available, yes.

And is that fair to say about Nest as well, then? 

I believe so, but, again, we'll feed back on that in the note. 

Provide a note. Final point: obviously there are some blockages in the system for people on low incomes, especially if they're not on benefits, to qualify for some of the help and support. Have you any comments that you'd like to put on the record that could assist people who just fall out of the catchment, because they're not on benefits but they are on low income? 

Well, I suppose that's an easy one for me, really, because the advantage of Arbed is we don't look at that low income or income at all. So, it's very much on the area. So, if it's an area high on the index of multiple deprivation and the property requires treatment, we don't need to investigate levels of income or means-tested benefit for the application to go through. 

David—Nest? 

Well, I won't answer specifically for Nest, but I think this is a really important point, because people aren't just—. There isn't a population of Wales that's in fuel poverty and a population of Wales that isn't in fuel poverty—there are people on the margins of fuel poverty and there are people who move in and out of fuel poverty. I think, therefore, it's really important that the strategic framework that's developed also links in to wider programmes of support that drives that people that aren't quite in fuel poverty have access to other types of help and support to help them tackle energy efficiency. So, I think it's about looking at energy efficiency in homes in that wider strategic framework. And in that sense it will be interesting to see what new propositions emerge from the new Government in Westminster as well that might help to drive the market.

Okay, thank you very much. We're on to, finally, Llyr Gruffydd.

Thank you. If I could just ask Crispin, in response to Jenny earlier you walked us through the process, effectively, didn't you—engaging with the community and bringing people together? Can you give us a sense of the timescale involved for those who are interested in bidding for funding and also those who actually deliver the works on the ground?

Yes, certainly. So, there's no bid for funding, as such—it's just if we find an area that would qualify, we'd just go to a local authority and say, 'This is what we'd like to do', and they generally support us, for fairly obviously reasons.

The build up to a scheme can maybe take six weeks. That's why we don’t tend to engage with all communities at that stage, because it may not go anywhere. So, we have to do our investigation. Once we engage with householders, an average scheme would probably take between six and nine months. The exception to that is where we have gas connections, we have to work with Wales and West Utilities, and they have a plan for their works. In which case, it could go for 12 to 18 months. But we do tend to have—. With each individual scheme we work out that time in advance because, quite rightly, some schemes have gone on for a very long time, and some, occasionally, haven't run long enough for everybody to engage. So, a lesson we've learned is that we need to extend the scheme but make it very clear to people.

Okay. And not to obsess with enabling works, but, clearly, it is a key message coming from this session and last week—local authorities were telling us that the lead-in time wasn't really sufficient for them to be able to come up come up with, potentially, from within their own budgets, or to source other funds to be able to pay for some of those enabling works. So, there is a bit of a mismatch there, would you agree? I know you want to get on and do the job, but, of course, if local authorities could have a bit more time to bring money to the table, then, clearly, that would have a benefit.

Yes, I guess—. It's a very fair point, because if we were to almost say to local authorities, 'Which of the 22 have some enabling funds? We'll go and develop a scheme there.' As handy as it would be, there is probably an argument that it's not the fairest way to do it. But in terms of engagement with the local authority, I absolutely take the point—there is perhaps a way we can improve our early conversations with local authorities to see if they do have that facility, I would agree.

Okay, that's fine. We've had evidence as well, again, from local authorities, that Nest and Arbed often prioritise energy efficiency improvements that could be done quickly and cheaply. And I'd be interested, really, in your response to that, and maybe you could tell us a bit more. I know we've touched on this, maybe, on how you actually then assess the effectiveness in terms of tackling fuel poverty of those interventions that you actually made.

So, from Arbed, there's an independence in the whole-house assessment. It's carried out by an independent domestic energy assessor. So, the DEA—the domestic energy assessor—recommends measures. We have to act on those measures. So, we can't go in and instruct them how to assess a property in order to get the quickest or cleanest measures. They're all governed by the lodging agency, the accreditation agency that they work with. So, we then receive that energy performance certificate, and then we have to follow the model. So, in some cases, it may say that the order of hierarchy for this is: external wall insulation, loft insulation, boiler. Now, if we're in the situation we described earlier, where external wall insulation isn't relevant for that property, then we will remodel that energy performance certificate to check if we didn't do that, because there was a reason for it, could we still achieve an output? If we can do that, then, and only then, can we move to a loft insulation and boiler. So, we're very, very strictly governed and audited on following the recommendations of an independent domestic energy assessor. Does that help?

Yes. And what about the post-home-improvement monitoring and tracking of efficiency, longer term? That’s something, clearly, we've touched on already, but I'm just interested to know how we could do that more effectively, more meaningfully and maybe over a longer time frame.

Yes, I guess I should probably pass this on to David, in terms of that, but from our side, we have a physical inspection on 100 per cent of the properties, so we do have an accredited inspector that goes in and checks that the customer understands how to use the system and can answer their questions, but I do accept that's an immediate point—it doesn't cover the longer term.

Yes. David. 

I think, on the evaluation and impact point—we've discussed this already—there's obviously a balance between cost and being able to do detailed monitoring of impacts. But, the Welsh Government has been quite proactive at this, at least in terms of some of the health impacts. There have been longitudinal studies of the health impacts of Nest interventions that are leading the UK. Of course, it would always be better to gather more data and to do more monitoring, but I'm aware that that adds a cost. 

Okay. And finally from me, then—again, the Arbed timescales. In evidence we've heard that the timescales make it difficult for local companies to engage and find themselves doing some of the work, particularly because of the in-and-out nature of the work. Local companies don't really feel it's worth them building up the expertise and the skills, really, to engage as fully as we would like. So, could you tell us a bit about whether you're actively engaging with some of those local businesses, or how you try and get over that? 

Yes. So, I guess I'm actually really proud of this point. Every single measure that's installed under Arbed today and for some time is installed by an organisation based in Wales whose operatives reside and spend their money in the local economy. That's, I think, a real badge of honour for Arbed. I'm certainly very proud of that. We've made significant efforts more recently to actually engage with smaller contractors because what we find is with the smaller contractors—tying in to what we said earlier—they know the local area. So, what we don't want to do is have—. Some larger contractors are very, very accommodating and they'll say, 'We'll cover wider areas.' If we don't have contractors, we sometimes have to do that. We would much rather work with local contractors because we can offer a certain continuity because of the size of the schemes. So, I would certainly encourage any smaller contractor, locally based in Wales, to get in touch with us. We'd very much like to hear from them. 

Okay, thank you.

Okay. Well, thank you very much. It's been a fairly long session for you, but I'm sure you've noticed that as well. [Laughter.] David Weatherall has promised us a number of notes from British Gas, so we look forward to receiving them. Thank you all very much for attending.