As the Minister will be aware from my participation in previous debates and from the letters that his Department and I have exchanged, I have been rabbiting on about this subject for some while.
It was indeed about six months ago that I first thought that it worth raising the issue in public, rather than merely dealing with my constituents’ complaints.
As the Minister will clearly remember, the origins of the debate lie in a series of complaints that I received from constituents about the service they received under the Warm Front scheme over which Eaga presides. He will also recall that some other hon. Members, including several Labour Members, raised similar points in a recent debate, and they continue to pursue the issue.
I welcome the right hon. Gentleman’s efforts. He is doing a good job on behalf of his constituents, and his criticisms have sharpened up both me and my Department.
That is very generous of the Minister. He and I have had long discussions in Committee on various matters, and I am conscious of his general disposition to be generous. I am grateful for his comments.
As a result of appearances on various obscure radio and TV programmes, I received considerable correspondence from people outside West Dorset. At one stage, I had thought of troubling hon. Members with a retelling of the various things that I had heard, but I decided on reflection that it would not be a productive line of action. Instead, I shall describe the conclusions that I have reached following conversations with various experts, people who have been involved with Warm Front over the years, constituents and others who have corresponded with me. Those conclusions relate to the possible character of the problem and how we might test that it is indeed the character of the problem in an effort to arrive at a constructive medium and long-term solution.
Let me start with the issues that have arisen, with which the Minister will be entirely familiar. First, there is the question of the prices that people pay—partly themselves and partly with the assistance of the taxpayer—for the equipment and for its installation in their homes. Are those prices in line with the best prices available in the market? The second issue is the speed of responsiveness and the degree to which the customer—typically an elderly person in need of better heating and insulation—receives what they need when they use the Warm Front process.
Finally, alongside the question of price and speed, there is the question of responsiveness. As many of us have being saying for some while, we live in a post-bureaucratic age. As a result of the net, open networks in general and the changing conception of people’s relationship with public services, people increasingly feel that they are, or at least should be, in control of their own lives to a much greater degree. Part of the frustration that I sense among many of those who have written to me from West Dorset and elsewhere arises from the fact that the scheme seems to put the customer in the position of a supplicant. The customer is offered something, but feels from then on that they are in the position of a dependant who has been lucky to receive something from on high, even though they have relatively little control over what they receive or how and when they receive it. Alongside the questions of pricing and the speed of responsiveness, therefore, there is the question of the degree to which the customer feels empowered or, rather, disempowered.
Let me deal first with the question of price. In West Dorset, I have tried to identify the truth behind the considerable allegations about the difference between the gross price for an installation under the Warm Front scheme, which includes the customer’s contribution and the grant, and the lowest price available locally for doing the same work. I received assistance from Eaga—I am grateful to it for its considerable co-operation—in the form of a confidential account of its labour rates for specified jobs. I then wrote to all the contractors whom I could identify in West Dorset to ask them precisely what they would quote for the same jobs. I did not reveal the Eaga amount to them and I promised that I would not reveal to Eaga or anybody else the amounts that they quoted. I sit in the middle as an opaque recipient of pieces of information and I do not reveal to either side what the other side’s answers are.
Unfortunately, I must admit that few of the local contractors have replied and I am trying to investigate why not. In general, my constituents are not shy about writing to me. I receive about 15,000 letters a year, so I doubt that there is a lack of postal inclination on the part of those of my constituents who are contractors. They might not have been sure that I would indeed observe their confidence—I hope that is not the case, but it might be. They might not have wanted to spend their time engaging in a theoretical exercise that had no effect on their business, when they were busy trying to get on with it—quite a likely explanation, given that many of those contractors are one-man or one-woman operations. Indeed, one or two contractors have rung me up to say that is the case and that they do not really know how to quote for a job until they have seen it. In any case, they said that they do not much like quoting, that they preferred getting on with the business and that they were very sorry, but they did not want to spend their time answering my questions. In other cases, people might have been reluctant, for one reason or another, to divulge precisely what their prices were, even to me. I do not know what the explanation is, but in any event I have had only a small selection of responses. As of yesterday, I had received four; by this morning, I had received five. That is not a large sample.
Nevertheless, as far as I can make out, the five quotes are below the Eaga price for the same work, which I had not disclosed—one is slightly lower, three are rather further below it and one is considerably below it. Of course, I have no means of telling whether the work would be of a better or worse quality. Eaga and those defending it have maintained that the Warm Front scheme delivers superb quality on the whole, and it is true that the scheme is inspected. On the other hand, critics have written to me in considerable abundance to assert that the materials used are often substandard and do not last long, and that some of the work is not good. I do not know the quality of the work of the contractors who have written to me, because none of them happens to have installed any central heating for me, and I do not know any of their customers and I have not managed to conduct a customer survey.
I cannot, therefore, offer a view of the comparative quality of the work involved. However, if the quality is similar, I can at least assert that such relatively slight evidence as I have been able to accumulate so far suggests that some of the prices available in the market for the same work are a little or considerably lower than the Eaga price. Interestingly, I have also observed—the Minister and his officials will be well aware of this feature of the market, but I had not understood it—that there is a wide discrepancy between the quotes that one receives from different local contractors for a precisely defined job. That points to an interesting feature of the market, to which I shall return.
In light of that information, I have a suggestion about how we might proceed if the Minister is willing to do so, although I accept that it is not something that he will be able to do overnight. Perhaps the Government could achieve the same or better results as with the current scheme, with the same or lower expenditure, while making the system more responsive to customers and giving them a sense of being empowered—at least more so than now. My proposal relates to West Dorset, but it would be possible to do what I suggest in another part of the country. I would be delighted, on the part of the people of West Dorset, to host it there, but if the Minister wanted to try different areas, that would be almost as good.
My proposal relates to what happens with a wide range of similar grants that are provided through the Department for Environment, Food and Rural Affairs and other Ministries. Examples include grants for the installation of low-carbon energy equipment and for heritage tiling on roofs. Such improvements to houses are subsidised by the Government in one way or another. In almost all such cases, instead of a large superstructure of national tendering and a company that both organises the tenders and has a subsidiary that wins a lot of the tenders, or is exempt from the tenders and carries out the action and then further subcontracts to others, the norm is for the customer to apply to a Department, or someone who acts on behalf of a Department, and to be given a voucher or cheque that enables them to do whatever they are trying to do.
Such systems empower customers, as they can choose what they want to do, and the speed of response within such systems relies on how long it takes to get through the paperwork and send the cheque. Of course, that is also a feature of the current scheme; the paperwork will be there one way or the other. With such systems, there is no need for the superstructure of national tendering and the many rules that I am told by Eaga and others have to be applied. In the superstructure system, a vast part of the marketplace is excluded because many contractors and subcontractors do not fit the specifications of the tendering regime that Eaga is compelled to observe. All that is swept away if the customers simply receive vouchers or cheques and choose the equipment from whom ever they can get it cheapest and most quickly. Under such an arrangement, suppliers would have to be certified in some way—perhaps the CORGI—the Council for Registered Gas Installers—scheme could provide certification. We could discuss the appropriate form of certification, but beyond that there would no need to worry.
Such a scheme would trade on the wide discrepancies in the marketplace between the prices quoted by different contractors for the same job. I have identified discrepancies through my amateur work, and all the experts assure me that it is a general feature of the marketplace. The scheme would reveal to customers what the quotes were, as they would ask local contractors for quotes—presumably, most customers would ask for two or three. Contractors would have to be certified, but, other than that, customers would simply be looking for the nearest and cheapest providers. I suspect that there would be a vigorous market, as there is in non-subsidised installations. I do not know whether the quality of work would be as good as it is now or better, or whether the price would be as low as it is now or lower. I do not know whether the speed would be as great or greater, or whether people would be happy to be empowered in that way, but those are empirical questions that are subject to empirical methods of verification.
The Minister could launch a small pilot scheme in West Dorset, or some other area or areas. The same scheme could be run, but the block of spending that is to be devoted to the scheme in that area for the following year, or the year after, could be used to run a voucher scheme. After about a year, it would be possible to come up with an extremely robust analysis, because we would know all the people who had been involved. It could be a condition of the scheme that the Department could send in inspectors to find out whether the quality was as good as, or better than, the quality of Eaga installations, which is already being measured. We could find out whether there were any complaints and what the pricing was. We would then know the answers, and could stop having debates on this issue.
My hunch is that under such a scheme, prices would be lower, speeds faster and customers as satisfied. Furthermore, inspections would show that the materials used were as long lasting or better than those used by Eaga. Presumably, if my hunch were right, the Minister—or his successor when he moves to greater things, as I confidently expect that he will, despite the current problems with the Government—would opt for the Letwin scheme. If, on the contrary, the prices were higher, the quality was lower and the system was slower, no great damage would have been done, because West Dorset, which is already suffering from some problems, as I can testify, would simply have been through a period in which the scheme had not been improved or had been made slightly worse, but not for long and not for many people. In such circumstances, the Minister or his successor would revert to the current arrangements.
In short, a small-scale pilot would provide us with real evidence as to whether those of us who think that there is real room for improvement are right, or whether we are dreaming and should stick with the current arrangements. I hope that I can induce the Minister to consider that possibility, although I do not naively anticipate that he will do so now, or firmly. I hope that he will run a pilot, so that we can find out the truth of the matter.
I offer the right hon. Member for West Dorset (Mr. Letwin) the traditional congratulations on securing the debate, and I wish to re-emphasise the point that I made earlier in my intervention. The debate shows two things. First, it shows the value of having constituency Members of Parliament as policy makers, because the right hon. Gentleman has drawn from his constituency experiences and not just from policy theories. Secondly, it shows that he is one of Parliament’s leading thinkers, although he is not in my party. The combination of those two factors has brought about a sharp scrutiny of the Eaga scheme and the Government’s policy on it. If nothing else, I can assure him that his work and that of other hon. Members has prompted much activity and thought within the Department and across the Government about whether the scheme should be changed.
I am grateful to the right hon. Gentleman for acknowledging the value of the scheme. None of us is debating whether we should have the scheme at all. The scheme is aimed primarily at addressing fuel poverty, which has increased in recent months because fuel prices have gone up. It is also a major fuel efficiency scheme. It is a paradox of the scheme that eligibility is assessed in relation to householders, but that retrofitting is by the house. At some point, we will have done our job and completed the task, notwithstanding the lifetime of boilers and heating systems.
The right hon. Gentleman’s remarks have prompted a review of not only the way in which the scheme works, as discussed in my meetings with Eaga, but of where it fits into energy efficiency schemes—most significantly, the carbon emission reduction target scheme. The way in which that obligation on energy suppliers, which has a vulnerable groups category, works provides lessons for this scheme.
Let me put on record a few statistics to back up our support of the scheme. It began in 2000, since when 1,700 households in the right hon. Gentleman’s constituency have received either a main heating system, an insulation measure or both. Across the country, 1.7 million people have benefited from Warm Front, and half a million have been assisted in the past two years alone. That is a huge achievement, and we must not lose sight of it. Mr. Cummings, I think that the figures for your constituency are even greater than those for the right hon. Gentleman’s and mine.
The challenge is huge. Have we got it right? I am pleased to be able to tell hon. Members that the National Audit Office—off its own bat; I have no influence or powers over it—has announced a study to review whether the scheme offers value for money. Areas of particular focus will include eligibility criteria, grant levels and the performance of Warm Front contractors. The report will be published by Christmas and will back up work that we have done with our own contractors. I welcome the study. By good coincidence, Warm Front’s annual report will be launched tomorrow in the Palace of Westminster at 10 am by my colleagues and me. The report will address some of the issues raised by the right hon. Gentleman on this occasion and others.
The issue of price is central to the debate. I refer the right hon. Gentleman to the Adjournment debate held on 3 March 2008 for an outline of Government policy. I reiterate that I understand his concerns. As he knows, there is a cap on how much cash can be contributed to each household, which raises another dilemma of policy choice. By capping the money and asking householders to make contributions, we can help more households across the country, but we also do two things. First, we change the relationship between the customer and the provider. As he says, the customer is then paying for part of the service, which might give rise to a different relationship. Secondly, we provide a different question to the contractor. Rather than being top-down, the scheme introduces an element of consumer choice.
We have considered the right hon. Gentleman’s point. There is a decision to be made about the cap: whether there should be one and what it should be. We are also considering the value for money aspects. The Department’s independent quality assurors oversaw the price-setting process to ensure that it was competitive and delivered best value to the public. Since then, two independent price reviews have taken place, both of which are on the DEFRA website and discuss Warm Front prices. The assessments are independent. I listened with great interest to the findings of his constituency research. I am minded to do something similar, perhaps. I suspect that the reasons for the non-response are as he outlined; such is the busy world in which people operate.
The assessments made for us show a favourable picture of Warm Front prices. Excess payments made for costs over the cap might change people’s attitudes, but the question that matters to me is whether dissatisfaction with Warm Front provision is greater than with provision in the non-Warm Front sector. That is an important question to ask. I do not want to cast any aspersions on the industry as a whole, but we all hear stories, and we try to establish whether they are true. That is the first question.
The second question is the right hon. Gentleman’s. Would a different, non-tendering system provide a better result for the customer and, implicitly, the taxpayer? I am grateful to him for not pushing me for a response, and I give him a commitment to consider his suggestion. Perhaps I should throw into the debate the fact that Warm Front already provides for non-eligible pensioner households a £300 voucher towards heating measures, so the idea is already there. I suspect that, because the value is a lot lower than the £2,700 or £4,000 figures, the idea is different, but it is there.
The right hon. Gentleman referred to other schemes as well. I do not want to pick holes in his argument, but any scheme must pass the pragmatic test of whether it works. Would it be advantageous not to have the contracting phase for the scheme? Would Eaga, as the appointed scheme manager, not have to go through an appointment procurement scheme? Would it just rely on CORGI or some other suitable registration scheme? I suspect that CORGI is the one that we would look to. If so, what would be the implications for quality and price, for customer empowerment and for the relationship between the scheme and other partners, such as local authorities?
By a happy coincidence, I was in Easington in the north-east recently, at the invitation of Mr Cummings. I witnessed what is, in my view, one of the strongest schemes in the country. The relationship between the contractor and the contracted other partners brings greater added value to the scheme. I do not know whether that would be possible under the right hon. Gentleman’s idea, but as I said, I have an open mind.
I should like to defend the reputation of Eaga and the Warm Front scheme. To answer a point that has featured in previous debates, although not today’s, Eaga has subsidiaries that deliver some parts of the scheme. Proper tendering and procurement processes are of course in place, as well as independent assessment. Eaga, as the scheme deliverer, is paid an administration fee based on the number of houses, so it is not in its financial interest to interfere in the market in any way. I hope that those two assurances will be publicised. I am keen to send a message to Eaga employees and contractors that we think that the scheme is doing a good job. That is not to say that it cannot improve. The right hon. Gentleman has shown us one way forward—a pilot in his area—to which I will of course give due consideration.
The other issue that the right hon. Gentleman has raised in various debates and on BBC programmes relates to timetables. It is okay for me to say that Warm Front is not an emergency service, because it is not, but clearly, as a Member of Parliament, I do not want constituents not to have heat or hot water. That is an appalling situation. If it happened under my local authority, I would be furious, so I need to be furious if it happens under Warm Front as well. We must ensure that timetables are kept to. I have met Eaga to discuss that point, and it has responded positively, but we must build into policy some guarantees and assurances to prevent the sort of thing that happened to the right hon. Gentleman’s constituent, whose name has fallen from my memory, I am afraid, although I should not publicise individual cases anyway. We considered the case that he raised with me, not just specifically but as an example of a generality.
We are debating how to improve the scheme. I am pleased to hear that Eaga has responded positively to the right hon. Gentleman’s investigations. Other Members echo that, and I have met Eaga representatives and been reassured by their commitments. They have also put to me the other side of the story, which involves the many thousands of grateful consumers who have written to thank them and, through them, the Government and the taxpayer. I am determined to ensure that the scheme is the best that it can possibly be, and I thank the right hon. Gentleman for his positive approach in putting forward his ideas without seeking to score cheap political points. That is not his way of doing things, and he should be commended for it. My obligation in response is to take his ideas seriously.