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Dr Thérèse Coffey (Suffolk Coastal) (Con)
First, I thank Mr Speaker for granting what I hope will be an important exploratory debate. I welcome the number of contributions that we shall hear, and I am delighted that after such a late sitting last night, so many people are still interested in fuel poverty in rural Britain.
Fuel poverty is defined as when someone spends more than 10% of their net income on fuel. As we know, the main contributory factors are a low income, the high price of energy, high energy consumption or houses with low energy efficiency. There have been plenty of debates and petitions on the subject, but I felt that it was important to raise it again at the start of this Parliament and in advance of the spending review, so that Ministers understand the concerns of their constituents in rural areas.
Yesterday, the Commission for Rural Communities published a report entitled, “The state of the countryside 2010”, which made specific reference to fuel poverty, and noted that things are getting worse rather than better. Across the House, we must recognise that fuel poverty has continued to increase rather than decrease, and we need to look for radical solutions to change that. Instead of an ambitious strategy of eliminating fuel poverty for vulnerable households by 2010, the number of households starting to enter fuel poverty has risen from about 2.5 million to about 5 million.
I recognise that this is a devolved matter, and that the Welsh Assembly Government and the Scottish Government have their own schemes. It is important to learn from some of the shared issues, and look at how different challenges are approached.
Roger Williams (Brecon and Radnorshire) (LD)
The hon. Lady is right to say that some of the issues that we will debate this morning are devolved. However, other issues such as competition policy are not devolved and are matters for Westminster.
Dr Coffey
I recognise that there are issues such as competition, and the impact made by Calor Gas was a successful change. The Office of Fair Trading is monitoring the situation to assess its effectiveness. At some point in the near future, we should like a review to see whether that change has worked, or whether people are still in what is effectively a false market. From speaking to some of my constituents, I understand that the change has allowed them an element of choice, whereas before they were handcuffed to one supplier.
My constituency of Suffolk Coastal has 17% fuel poverty, which is slightly lower than the national average where about one in four rural households face fuel poverty. I should perhaps declare—although I was told that it was not a declaration—that I am off the gas grid and reliant on oil for central heating in my rented cottage in Westleton. I want to focus on people who live with no access to the gas mains, even though 20% of them live within a mile and a half of national gas connections, and I welcome some of the efforts made by the National Grid Company to start connecting more households. All hon. Members share concerns about people who are reliant on oil, solid fuel and liquefied petroleum gas, as that is where the problems lie.
In 2009, in a parliamentary question, the Government were asked what they were doing to tackle fuel poverty, and the answer was Warm Front. However, I am afraid that Warm Front is not working in areas that are difficult to reach, and that is reflected in the evidence gathered by various organisations. Time and again, people in my constituency—or other hard-to-reach areas, such as the constituencies of some Members in the Chamber today—are losing out in such schemes. There has been limited success, and I recognise that some energy companies have been kicked and told that they must start doing something about the situation, but these are early days and we need to kick even harder.
Sir Robert Smith (West Aberdeenshire and Kincardine) (LD)
I congratulate the hon. Lady on bringing this subject before the House. She makes an important point about the difficulties and challenges in rural areas. Is not one of the added challenges the fact that so far, schemes have tended to come up with the simplest way of making a house more efficient? It is right to make efficiency a priority because relying on prices proved a mistake for the previous Government. However, in rural areas, much of the housing stock is not constructed in such a way that it is easy to make it more efficient. Any scheme must be far more robust and long-term to transform such houses into places where people can live without fuel poverty.
Dr Coffey
My hon. Friend is absolutely right. The extent of solid-wall housing is a particular issue that cavity insulation fails to address. It is mainly prevalent in rural areas, but also in London where the challenge is damp Victorian houses. Instead of national schemes, I would like the Government to consider more local schemes and ensure that any grants available address local needs. My constituents, and many others, would then be able to access help that is relevant for them, rather than being told either that they do not qualify for a scheme, or that a scheme is useless for them. Such local schemes would be welcomed by people who feel that they are on the fringes of society when it comes to Government help on this issue.
Andrew George (St Ives) (LD)
The hon. Lady is making good progress on this matter. She mentioned Warm Front, which was a national scheme, and the need for a better, more tailored local delivery. Does she agree that one of the biggest problems with Warm Front—although it was set up with the best of intentions—was the usual difficulty that Governments face due to the strange and highly centralised method of public procurement, which means that they have to narrow down and reduce the number of companies with which they can contract? Therefore, the prices for much of the work undertaken are astronomical and much higher than they would be if provided by a local small company.
Dr Coffey
My hon. Friend is right. The issue is particularly prevalent in rural areas, where prices have meant that less work can be done with the available grant. One of my constituents suggested that I promote a private Member’s Bill on making sustainable energy more local, and I hope that the Government will address that point by absorbing elements of that idea in their thinking on any future schemes.
Many hon. Members are present, so I will move on and speak a little about the market. I recognise that Calor Gas and similar LPG suppliers provide an opportunity for people to heat their houses without having everything provided electrically. A premium is paid for that because of the delivery method. However, I would like LPG suppliers to go further, to challenge their efficiencies and work with particular groups to ensure that the people they serve receive the best value possible. Micro combined heat and power boilers are being developed, and I would like more investment in technology so that we can address those kinds of problem.
There are no social tariffs for oil or LPG, and it is challenging to think about how they could be created for the relatively small group of people who access that type of fuel. I could argue that we should receive some money from the mains gas and electricity companies to redress the balance. I am pleased that people can now hold a post office bank account or, if they do not have access to that, can get a direct debit discount. Without straying too far from the subject, dare I say that the number of post offices in my part of the world has reduced dramatically over the past 10 years? That presents its own challenge.
I understand that at least one company, EDF Energy, offers dual fuel discounts to people who have access only to electricity rather than electricity and gas, although I do not know how much the company advertises the discount. I will do my best in forthcoming weeks to advertise it to my constituents—I might take up the offer myself. I was not aware of it until I spoke to somebody from EDF Energy yesterday.
There are things the market can do. I recognise, though, that as the price of social tariffs or similar measures add costs to industry, they end up being paid for through increasing fuel prices. However, it is an important part of social responsibility to ensure that people in rural areas are not freezing to death and being ignored.
In terms of the Government, I hope that we shall see a change in the balance of schemes. I have talked about more local solutions. I want any possible future investment to be rebalanced in favour of rural schemes and—dare I say it?—not just for people on benefits. A number of people just miss out here or there, but like everyone else, they still need to heat their homes. The cost of oil goes up; the cost of LPG is going up. That is hurting more and more people. We are trying to reach some of the communities that have never been on benefits and do not necessarily want to start now—it is an element of dignity for them. By the way, I want to correct a misconception. Although fuel poverty affects a number of pensioners, and two thirds of my constituents are, I believe, over 60, it affects people of all ages, including people with young families. We need to remember that.
What else am I looking for? We are expecting £6,500 grants, which will be repaid through efficiency savings in fuel bills. I would like rural people to be able to access higher up-front cash advances, because if people have an oil central heating system, they cannot switch suddenly to photovoltaics and everything is fine. They have to rip out the entire heating system and put in a brand-new one.
Such measures would help the people of Suffolk Coastal because our climate is similar to that of Jerusalem. It may not be sunny every day, but there is plenty of sun and little rain. We are missing out on marvellous resources all around us, because the amount of cash that we need to spend up front to change our systems is just prohibitive. Bold thinking, rebalancing in favour of rural communities and tailoring solutions to allow local people to make the decisions that best suit them, rather than having top-down schemes, are some of the issues that I want to raise today in addressing fuel poverty in rural Britain.
Albert Owen (Ynys Môn) (Lab)
I congratulate the hon. Member for Suffolk Coastal (Dr Coffey) on initiating this very important debate. It is also timely, given the election of a new Government. I have already been in correspondence with the Department of Energy and Climate Change and I shall come to that in a moment.
I want to start by pointing out that this issue is about rural Britain—the periphery areas of Great Britain and Northern Ireland. The periphery area that I represent in north-west Wales suffers from a double whammy: most of the household customers pay extra for their fuel, but they also pay extra fuel costs for their transport. We have had a number of debates on the issue in this Chamber, and I appreciate what the Chancellor of the Exchequer said in the Budget about looking at rural areas and pilot schemes whereby transport costs and the price of petrol at the pump can be considered. Pilot schemes should also consider rural areas on the periphery of the United Kingdom when it comes to energy prices and energy costs as well. That is what I believe the hon. Lady was developing in her argument.
Periphery areas are a special case. I do not accept that in the 21st century, areas on the periphery should have to pay much more in fuel costs. I know from having the port that is the gateway to Ireland and Wales in my constituency that Northern Ireland’s problem is compounded by fuel smuggling from the Irish Republic. Fuel is smuggled in and out of the United Kingdom via the south of Ireland. There are huge problems that we need to grapple with.
I have campaigned to reduce both the cost of petrol at the pumps and the cost of energy supplies to homes. People living in periphery areas and rural areas are being ripped off. The hon. Lady says that she wants to give the companies a kicking. I will join her and I think that all of us should, because mass profits have been made by many of the companies over a long time and the people who are paying for it predominantly live in the rural areas of Britain. The market is letting people down badly in those areas.
All that my constituents and those of the hon. Lady and every other hon. Member in the Chamber are asking for is a level playing field. Yes, they want reduced costs, but they want to pay the same as people in urban areas and other parts of the United Kingdom, and importantly they want choice. Quite often in isolated rural areas, people just have the choice of propane gas, coal or other things. Off-grid areas do not have access to mains gas and are losing out. The market says that it will provide choice to customers, but in rural areas they simply do not have that choice and they are penalised for it through the price that they pay. That limited choice and paying more for fuel is a huge problem.
I said that I had already raised the matter in correspondence with the Department, and I first did so at business questions, when I asked for a debate on the issue. A debate in Government time would be very much welcome in addition to this important Adjournment debate. I have had, over many years, helpful responses from Energy Ministers and progress has been made. Warm Front is a good national project that has helped an awful lot, and good energy efficiency measures are available. I am certainly familiar with what has been done by the Welsh Assembly and I know that other devolved Administrations are working on the issue, too. This Parliament, local government and the Welsh Assembly can work together with the distribution network to ensure that we get better services to people in these areas.
In the very helpful reply that I received from the Minister of State, Department of Energy and Climate Change, the hon. Member for Wealden (Charles Hendry), he said that he recognised that more needed to be done. One option that he came up with was a further roll-out of energy efficiency measures. I disagree with the hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith), who said that we have been concentrating just on price. Huge amounts of money have been invested in energy efficiency measures. In my constituency, most of the houses have been done, and to a very high standard, but the price is the issue.
Sir Robert Smith
The hon. Gentleman is right to say that the price is the issue. The problem was that in the early days of the previous Government, because of the way in which the market was working, prices for domestic gas were falling so dramatically that people were coming out of fuel poverty and it seemed as if the job was being done. Then the price started to go up relentlessly and it became clear that much greater work should have been done in the good times to make the housing stock more efficient, rather than responding after the fact.
Albert Owen
I agree partly with what the hon. Gentleman says. It is easy to be wise after the event. He will remember that at the time we were in the “dash for gas”, gas was relatively cheap across the whole United Kingdom and our eye was off the ball, because people were getting cheap fuel. Yes, more could and should have been done then, and it should have been done over the past 13 years. I hope that more will be done over the next few years to ensure that we alleviate fuel poverty in rural areas.
The Minister told me he was involved in the option of promoting renewable heating, which is another important way forward. Although I shall argue for the gas network to be extended throughout the United Kingdom, we need, particularly with the low-carbon economy that we are moving towards, to consider renewables. Geothermal energy is important in many areas. It would be helpful if new estates and new housing, including affordable housing, such measures installed at the construction stage.
In my constituency—I am sure that other hon. Members have experience of this—many of the problems are not just with stone houses that are a century old or more, but with estates that were built in the 1960s and ’70s, where the developers simply did not put gas mains in and did not provide for up-to-date fuel, leaving people on the periphery of the gas mains area. I am sure that at that time people would happily have paid for access to the gas mains from those properties, and it would have been a selling point for the builders, who were very short-sighted.
When I talk about areas off the grid, I am talking about not individual isolated properties but more often about small villages, towns and hamlets that are a short distance from the mains. There are issues about getting the pressure to the level needed but, again, I am sure that in the 21st century that can be done relatively simply.
Mr Mike Weir (Angus) (SNP)
Does the hon. Gentleman accept that there are two problems with that? First, there are many rural areas where the gas main will simply never go, because of practical difficulties. Secondly, in an era of rising gas prices and a possible shortage of gas, does he believe that gas is really the way forward for dealing with rural fuel poverty?
Albert Owen
I welcome that intervention, but that is not the point that I am making. I am saying that we should have renewables as well. Areas close to the gas mains should be offered a choice. I have seen the price differential between the bills of people who are off the gas mains grid and people who are on it, and it is simply wrong and unfair that some people are paying so much more.
Andrew George
I agree with the hon. Gentleman. He will be aware that the level at which ground source heat pumps are sold does not ensure cost efficiency for homes. In fact, the payback period required is 25 to 40 years, and we will achieve something only by rolling things out in larger numbers. However, given the hon. Gentleman’s excellent record in arguing this case, does he share my disappointment that the previous Government failed to support—indeed talked out—the Fuel Poverty Bill introduced by my hon. Friend the Member for Somerton and Frome (Mr Heath), whose private Member’s Bill included many of the measures for which the hon. Gentleman is arguing?
Albert Owen
The hon. Gentleman knows me well enough to know that I would not pander to the previous Labour Government when they were in office, and I will certainly not try to defend their record now when I think that it is wrong. The hon. Member for Somerton and Frome (Mr Heath) has an excellent record on this issue, and now that he is in the Government I hope that he will able to use greater leverage on Ministers to ensure that measures are introduced. As Deputy Leader of the House, he is in the privileged cross-governmental position of being able to bring everyone together to get things done as soon as possible, and he will get my 100% support in doing so.
In his helpful letter to me, the Energy Minister said that some schemes are working and that Ofgem has made progress on connecting vulnerable households to the gas networks by encouraging large gas distribution networks to work with agencies to produce results. He said that about 20,000 households would be connected to the grid by 2013, but we simply do not have the agencies or the local authority initiative in my area, so there is no lead partner. I urge the Government to look at that, because we need a thrust from central Government, and from regional and national Government in Wales and Scotland, to push the issue forward. I acknowledge that there are many excellent energy efficiency measures, and I repeat that the Welsh Assembly Government have an excellent record in this field and are taking fuel poverty and their part in dealing with it very seriously, but we all need to work together.
The boiler scrappage scheme was useful in helping many people to replace equipment. That is a big issue, and the hon. Member for Suffolk Coastal is right that there are a lot of associated costs with changing to another source of energy and not least to another supplier. People have to remove the gas storage equipment in their properties, which is costly, although some companies will take over that cost because they will get the business in the future. However, when people apply, they are hampered by additional costs, so the process is not easy. People feel trapped with their supplier, which is putting an extra cost on them.
Albert Owen
Things certainly have improved, but the change has not been advertised very openly. When people were approached in the past, it is clear that they felt trapped. The customer needs clarity to ensure that they can get a better deal from a different supplier.
The core of the problem remains the cost of domestic fuel, particularly in rural areas and areas on the periphery, and that is why the debate is so important. A constituent in her 80s who came to see me in late May was very grateful for the additional Government support that she received through the winter fuel allowance, which helped to alleviate some of the problems that she faced, but she was still paying huge amounts for her propane gas. From 2008 to April 2010, her company supplied her at a unit cost of between 45p and 51p per litre. That gave her an average quarterly bill of between £400 and £700, which is an enormous amount for an elderly person living on her own in an older property. The property and the dozen like it on the same small estate are not that old, but I was astonished to find that the properties that did not have access to mains gas were all paying different prices to the same supplier. The households had to go through something like an auction to get the basic unit cost down—they had to negotiate.
I raised the issue with the company. In addition to the unit cost, there was the cost of associated charges such as the standing charge and gas surcharges, which took the price up considerably. When the company replied to the correspondence I had sent on behalf of my constituent, it said that the variations were due to the geography, the seasons and the type of agreement, but I am talking about households in the same estate paying different prices.
Those issues need to be looked at, which is why I want to move on to the excellent campaign by Which?, the consumer group, which is looking for greater transparency in energy prices. The old chestnut from many of the suppliers and fuel companies is that the retail price is linked to the wholesale price. When wholesale prices go up, the companies say that they are forced to put their retail prices up, but when wholesale prices come down, companies say that the system is very complicated and sophisticated, and it does not necessarily follow that the retail price is linked to the wholesale price. We therefore need greater transparency.
I am asking for a breakdown from suppliers to show exactly the amount of bulk gas that they get at wholesale prices and what they pay for it. Some of the electricity companies, and the companies that supply gas and electricity, are now more open and transparent, and they are gaining from that—greater transparency is in the interests of the suppliers, as well as the consumer. The Committee of Selection is meeting today, and as a member of the new Select Committee on Energy and Climate Change, I will push for greater transparency so that we can see exactly the link between wholesale and retail prices. That is an important move forward, which would benefit consumers, particularly in rural areas, and I would welcome it. The Government should be encouraged to work with the consumer watchdog to bring about greater transparency.
I know that a number of Members want to speak in the debate, and I do not want to detain them, but I have concentrated on off-mains gas areas because they are being hit particularly hard, and we need to look again at extending the network; indeed, hon. Members in previous Parliaments raised the issue. The irony is that although my constituency is on the periphery, I am promoting the concept of an energy island because we have energy generation in the area. We have a nuclear power station and wind farms, and we welcome both because they generate employment and contribute to the United Kingdom’s energy security. We also have projects that are looking at tidal energy, so we are well positioned to provide the new renewable energy that the Energy Minister told me was a way forward. However, although the Wylfa power station in my constituency supplies more than 30% of energy in Wales, some people living in close proximity to it pay some of the highest prices in Wales for their energy because they do not have the opportunity to use the gas network and they do not have the same choice as many people in non-rural and urban areas of the United Kingdom.
I welcome the response that I received from the Energy Minister. He is a sincere man and he will work with the Deputy Leader of the House and others to ensure that we get a good deal for people in my constituency, in peripheral areas and in rural Britain. Once again, I congratulate the hon. Member for Suffolk Coastal, because this is a hot subject. It needs dealing with now, and I hope that we can move forward.
Mr Clive Betts (in the Chair)
Order. Five hon. Members are indicating that they want to speak, which means that they have about eight minutes each if we are to get the winding-up speeches in. I cannot insist on that, but it would be helpful if hon. Members bore it in mind.
Tim Farron (Westmorland and Lonsdale) (LD)
It is a pleasure to serve under your chairmanship, Mr. Betts. I pay tribute to the hon. Member for Suffolk Coastal (Dr Coffey) and congratulate her on securing the debate, which is incredibly important for a range of reasons, many of which were set out by the hon. Member for Ynys Môn (Albert Owen).
One important reason to discuss the issue is the incorrect assumption made, I dare say, throughout Whitehall and other places that rural areas are affluent. That is a staggeringly inaccurate assumption, but it is understandable, based on the headline figures. My constituency has the second lowest unemployment in England—I probably should not say that out loud; we will be off the list for every grant going—and average house prices are £250,000. So far, so good, but the largest number of jobs available in my patch, which I suspect also applies for many hon. Members present, is at the minimum wage.
The average wage is about £18,000 a year, which means that the gap between house prices and average incomes is the largest outside the south-east of England. We have only 3,500 council homes left, following the foolish and damaging sell-off of the 1980s, with a waiting list of 5,000. All that means that although benefit uptake is low in the south lakes, the incidence of poverty, housing need and, especially, fuel poverty is extremely high—above 20%. In addition, the average age is 10 years above the national average. Many people who live in the communities that I represent are retired and do not, therefore, appear in unemployment figures, but they live in real poverty.
It is vital that the Government should understand that fuel poverty is more likely in rural communities because of the age of the housing stock, which has been explained by both hon. Members who have already spoken. I shall not go into further detail, except to say that homes are harder to insulate the older they are, and if they have no cavity wall to fill.
In addition, as we have heard, many homes in rural, sparsely populated areas are off the mains for gas, and sometimes even for electricity, and are much harder and more expensive to heat. However, although villages such as Hawkshead, Coniston, Grasmere, the Langdales, Dent and other areas in my constituency are rural and have an elderly housing stock, it is important to remember that many of the larger towns—larger, that is, by our standards—such as Kendal, which is a huge metropolis of 14,000 to 15,000 houses, have benefited hugely from Warm Front. It is important not to knock it too much. It did the easy things quickly and tackled fuel poverty among some of the poorest families. The areas they were living in might have been built-up, but they were not necessarily in urban areas.
Those homes were built in a way that enabled Warm Front to get at them quickly to insulate cavity walls and so on. It is important to celebrate easy, quick wins. The Government need to get plenty of those, too, in their first few months in power. I want the Government to build on Warm Front, not sweep it away thinking it has done damage—it has not.
There are great opportunities in rural communities—to build on something that the hon. Member for Ynys Môn said—for the provision of renewable energy resources, which can be enormously beneficial to the wider country in tackling climate change and creating energy security, which has also been mentioned. However, there is also an economic benefit to the struggling communities that are served.
I want to get in a word for my county. Cumbria has the fastest-falling water in England but only six plugged-in hydro schemes. That is scandalous, and I would like the Government to redress the situation quickly. Last week, I met a team from Kentmere, the charitable trust running the Kentmere Hydro project. The 350 kW scheme has the full backing of planners in the national park, which is staggering. It also has the backing of the community, which is less staggering. The one thing that could hold the project up, of course, is finance.
The trust is not looking for handouts, particularly at this time, but I ask the Minister to make it clear that the green investment bank announced by the Chancellor will be able to provide loan finance for such charitable trusts, and that those trusts will be able to qualify in their bid for feed-in tariffs. That community project could be replicated across rural Britain, as long as there are clear signs of active, practical encouragement from the Government. The same applies to anaerobic digestion. I hope that the Government will back anaerobic digester start-ups in rural communities as a way to generate income and green energy from waste.
I spoke last week to an older couple living in the Lake district, whose income is just under £10,000. They spend £2,000 a year on council tax and just over £2,000 a year on fuel. They are very typical. Their plight is worsened by the price of petrol. I urge the Minister to consider the impact of fuel duty on rural communities where little or no public transport is available and there is no choice for many people, however poor they may be, but to use the car.
I am sure that other hon. Members know, as I do, many people who must make the appalling choice between petrol in the car or food on the table. I welcome the Government’s investigation of rural exemptions on fuel duty, and of course I call for Cumbria, the Lake district and the dales to be included in any such pilot.
They key factor behind all fuel poverty, as we all know, is the cost of fuel. That is why it is vital that there should be further social tariffs covering all fuel systems—not just mains fuel systems—and moves to ensure that the cheapest unit costs are the ones that people pay for first. As things stand, an elderly couple in fuel poverty heating their cottage in Grasmere could easily pay more per unit for the energy they use than a City banker heating his luxurious second home next door. If I had a fiver for every time a politician said we are living in difficult times, I could probably pay off the national debt, but however fair the Government try to be in reducing the deficit, these difficult times are bound to be most difficult for those in the most marginal financial situations. That is why the Government must demonstrate that they will go out of their way to eliminate fuel poverty, especially in rural Britain, and that they will take practical steps. Otherwise, a bad situation could get worse.
Mr Mike Weir (Angus) (SNP)
I am very pleased to take part in the debate and I congratulate the hon. Member for Suffolk Coastal (Dr Coffey) on obtaining it. This is an important issue. I was interested in the concept of building a new Jerusalem in Suffolk Coastal.
I have raised the issue of fuel poverty many times in Parliament and the stock answer that I normally get from Ministers about off-grid gas is that they are taking action to ensure the extension of the gas grid. However, in reality, many of my constituents will never have access to the gas grid. It will never go to the glens of Angus, or to many other parts of rural Scotland, especially the islands, however much it is extended. There is no option for those constituents but to rely on liquefied petroleum gas, home fuel gas or some other alternative fuel. It has been estimated that some 4.3 million consumers—mostly, but importantly, not exclusively in rural areas—are not on the gas network. In some areas, although the gas network is technically available, the cost of connection to it is prohibitive and people cannot do it.
Consumers who are off the gas network face particular problems. A typical gas bill is now rising to around £1,000 a year, but it has been estimated that those who are off-grid face bills of about £1,700 a year. That is a significant difference. I refer hon. Members to the table in the report on fuel poverty produced just before the general election by the Select Committee on Energy and Climate Change. It relates only to England, but it shows the extent of the problem of cost between different fuel sources.
Sir Robert Smith
Does the hon. Gentleman think that the differential could become a more serious problem? Given the changing nature of the world market for natural gas, with shale gas and liquefied natural gas potentially bringing the price down in Europe, and if we ensure that the market works and those on the gas main get the benefit of a lower gas price feeding through, it will be all the more important to tackle the situation for people who do not have mains gas, because fuels such as oil and coal are not necessarily following the market down.
Mr Weir
The hon. Gentleman makes an excellent point, but there are other pressures, not least climate change, against the extension of the use of gas. The Government are only now considering the decarbonisation of the gas supply and generation from gas. Many issues arise in connection with that.
There are many excellent schemes to help with insulation and energy efficiency, and many homes in rural areas are hard to treat, which exacerbates the situation. The Select Committee report noted that Ministers in the previous Government said that they were very enthusiastic about innovative technologies to tackle the problem, but we expressed disappointment at the slow pace of implementation. I do not think that the Government have yet responded to that report, and it will be interesting to hear what the new Minister has to say.
As has been mentioned, people who are off the grid do not have the same access to the social tariffs as mains gas customers. I accept to some extent that they have access to electricity tariffs, but many off-grid consumers use home fuel oil or LPG as the main fuel for heating their homes and water, and that is likely to be the major part of their energy spending. They do not get the full benefit that others do for those things.
The Department’s annual report on fuel poverty statistics for 2009 states:
“The highest proportion of fuel poverty is amongst households without gas, where nearly 23 per cent of households are fuel poor, compared to around 17 per cent of both standard credit and pre-payment meter customers.”
In Scotland, the situation may be slightly worse because of geography and the lack of a grid in the highlands and islands. The latest Scottish house conditions survey states:
“Households that use electricity, oil or other fuel types (such as coal or peat) are around twice as likely as those who use gas to experience fuel poverty. Also, those who use... ‘other fuel types’ (not gas or electricity) are more than twice as likely to experience extreme fuel poverty than gas users”.
I understand that the number of off-grid customers in fuel poverty in Scotland is around 116,000—about 47% of all who are off-grid.
There are other problems than price. For example, in many areas customers have to make an up-front payment to get a supply—and many suppliers demand a minimum supply quantity. That can be a substantial sum, and those on low incomes cannot afford to pay up front. That causes another problem—people may be forced to go without as a result.
Those who use gas or electricity will have pipes and so on coming to them, but those who use some of the alternative fuels find in bad weather that it is difficult to get a supply. It is interesting to note that in the recent harsh weather the Department for Transport had to allow a derogation from the driving hours regulations to enable deliveries to be made in many parts of Scotland and northern England. However, this is a long-running issue.
At the conclusion of consideration in Committee of the Energy Act 2008, the Energy Minister, the former Member for Stafford, arranged a meeting of representatives of the various bodies concerned with the matter. There seemed to be a willingness to consider things, but frankly the problem lies in difficulties caused by the nature of the market, which has already been touched on. That market is very different from that for domestic gas and electricity, and we need to find ways around the problem because those consumers have fallen through the cracks.
The domestic electricity and gas market is dominated by the six big energy companies, and it is easy to get social tariffs from them. The market for other fuels is much more diffuse and difficult to regulate. However, in many areas I would question whether there is real competition, as there is effectively only one supplier. With recent amalgamations in Scotland, the situation is getting worse. We need radical solutions to tackle the problem.
The Minister may remember that, during consideration in Committee of the Energy Act 2010, I suggested how the matter might be dealt with. Section 10 of the Act allows the Secretary of State to introduce a reconciliation mechanism, such that if one company had more fuel-poor customers than the others, it would not be particularly badly hit. The burden would be spread among all companies and, as far as possible, each would meet an equitable amount of the cost of meeting their obligations under the social tariff.
That principle is a good one, and it could be extended to cover all fuel suppliers, allowing a general sharing of the cost of meeting the obligation to help the fuel poor. Because of the difficulties in that particular market, it would not be easy to introduce individual social tariffs, but a general reconciliation mechanism would bring suppliers within the ambit of the scheme. Allowing the overall cost to be shared between all the energy suppliers would enable us to make progress and extend the social tariff concept to that disadvantaged group.
That is a radical way to deal with the problem. Otherwise, it will always be filed under the “too difficult” heading and nothing will be done. Such a mechanism would ensure that the cost were shared more widely—as the benefits would be. It would ensure that all energy suppliers could operate equivalent social tariffs for all their customers, whether they used electricity, gas or other forms of fuel. In what the hon. Member for Westmorland and Lonsdale (Tim Farron) said are troubled times, Ministers might be attracted by the fact that it would have a revenue-neutral approach for the Treasury. It would not impose a greater burden on the taxpayer, but I can already hear the howls of protest from the major energy companies. However, it would deal with what has become a most intractable problem.
As was suggested by the hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith), the problem will get worse. Whether we like it or not, the price of fuel will continue to rise as we try to move to a low-carbon economy. We will effectively be subsidising various renewables and possibly—and unfortunately—nuclear power, which will have an impact on all electricity bills. I ask the Minister to consider the suggestion.
In another aside—I realise that this is strictly not within the Minister’s brief—the Select Committee report suggested that we should consider how the winter fuel payment is made. It is paid in the winter, the most expensive quarter. For many off-grid customers, winter is not the best time to be given that money. If they were to receive it earlier in the year, they could buy oil or other fuels in bulk when they were cheaper. That would allow them to stockpile for the winter. Staggering the payment for off-grid customers would allow them to take advantage of cheaper prices. Again, importantly, it would be revenue-neutral for the Treasury.
I am trying to be helpful to the Minister by not simply calling for more spending; I am calling for us to consider things in a new way and to look at more radical solutions. If we do not, we shall continue to file the problem under the heading “too difficult” and nothing will happen to help those people. That would be a wasted opportunity, and fuel poverty would continue to increase in rural areas throughout the United Kingdom.
Mr Clive Betts (in the Chair)
Order. Before I call the next speaker, I should say that it would be really helpful if Members limited themselves to eight minutes.
Dr Sarah Wollaston (Totnes) (Con)
I congratulate my hon. Friend the Member for Suffolk Coastal (Dr Coffey) on securing the debate. Many hon. Members have suggested solutions to the problem, but I want to emphasise a particular reason why the Minister and the House should be concerned. It is the excess of winter deaths. The fact is that 36,700 more people died in the winter of 2008-09 than expected. Even more worrying is the fact that, of the most vulnerable—those aged 75 and over—29,400 more died.
We do not have figures for excess winter deaths last year, which is unfortunate as it was a very cold winter. The figures are calculated by taking the number of deaths over the winter and comparing them with figures for the previous autumn and the summer, to the end of July. We will have those figures at the end of the month, and I expect that we will be in for a further shock. However, the figures for 2008-09 were themselves shocking, being the highest for a decade.
It is an interesting phenomenon that the further south or west one is in Europe, the higher the excess—between 5% and 30%—but we have a particular problem in this country. A study in the British Medical Journal found that a prime reason was the inadequacy of housing; it considered whether improving housing and heating would protect vulnerable people. Of course there were many other reasons, but I hope that the Minister will consider why that problem is crucial.
Mr Gregory Campbell (East Londonderry) (DUP)
What the hon. Lady says about the inadequacy of housing stock is important. Does she agree that in many regions of the UK the problem is not with housing associations or housing authorities, but with the private sector? Landlords are not always assertive in establishing whatever Warm Front schemes are available to provide better heated homes for the private-sector tenants.
Dr Wollaston
I thank the hon. Gentleman for that comment. Unfortunately, the BMJ study did not comment on that aspect, but it is an interesting point.
In the south-west, 11.7% of households, or 259,000 people, live in fuel poverty. It is a serious problem, and many Members have spoken about why that is the case in rural areas. Hard-to-treat housing stock with solid walls is a particular problem. The hon. Member for Westmorland and Lonsdale (Tim Farron) spoke strongly about rural households being disadvantaged because fuel costs for transport are so high. There is an inadequate bus service, which means that people have to travel quite long distances by car, thus putting them at a double disadvantage. Moreover, they are hit again by the fact that their housing costs are high. In my constituency, we have some of the lowest wages in Britain, so we are disadvantaged on all fronts. I hope that the Minister will address those points.
Mr Mark Williams (Ceredigion) (LD)
It is pleasure to serve under your chairmanship, Mr Betts. In the short time available to me, I will emphasise some of the points that have been made. First, let me pay tribute to the hon. Member for Suffolk Coastal (Dr Coffey) for introducing the debate. The hon. Member for Totnes (Dr Wollaston) introduced a salutary note by speaking about why we are here. By stressing the need to avoid those winter deaths, she summed up the importance of this debate better than I can.
The 147 villages and hamlets across Ceredigion are subject to the monopolistic practices of the energy suppliers. In too many of our communities, there is simply no choice. Across Wales, 8% of all households are off the mains gas network. The Competition Commission has examined the issues surrounding liquefied petroleum gas, but we need a wholesale review of the energy market, as it is clear that there are some very real problems.
I am glad that we are debating rural areas so early in the Session. Rural constituencies face a package of issues, including an ageing population, the lack of transport, and an ageing housing stock, which are hard to remedy.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar (SNP)
The hon. Gentleman mentioned the package of issues that face us. Some 53% of people in my constituency of Na h-Eileanan an Iar are in fuel poverty, which is the highest proportion in Scotland and probably the UK. Heating and transport are very expensive, which is why during the debate on the Finance Bill yesterday, some hon. Members might have heard me arguing for a rural fuel derogation. The issue today is about the winter fuel payments. My hon. Friend the Member for Angus (Mr Weir) made a good point about that, and I noticed the Minister taking a note about the issue of earlier payments. When making such payments, wind-chill factors as well as fuel poverty should be taken into account. Including wind chill would make a difference to my constituents.
Mr Williams
I am happy to endorse that point. Although I represent a coastal constituency and live on a cliff top, my experience cannot be compared with that of the hon. Gentleman or of his constituents, so I commend his proposal to the Minister. I concur with what has been said about the differential between retail and wholesale unit prices, and the lack of social tariffs. We are all aware that the Government have fewer resources to offer, but in commending what the hon. Member for Ynys Môn (Albert Owen) said about some of the schemes that have been pursued in Wales, I suggest that the Minister consult widely with the devolved Administrations to ensure that where there is good practice in England-only schemes, the Assembly Government can follow suit in a swift manner. After the announcement of the boiler scrappage scheme in England, a somewhat limited substandard scheme was launched in Wales very late in the day. In fact, the scheme was announced in April, when replacing boilers is perhaps the last thing on people’s minds.
Albert Owen
In defence of the Welsh Assembly Government, they tried to amend the scheme so that the elderly and the vulnerable could apply for it. I thought that that was why we were here today—to protect the most vulnerable against fuel poverty. I thought that it was an excellent idea to limit the scheme to senior citizens and vulnerable people.
Mr Williams
I welcome that aspect, but I question its timing. That was the point I was trying to make.
Last December, a consultation on fuel poverty in rural areas was initiated by the Commission for Rural Communities—I do not know what my English colleagues would say, but some of us regret the loss of that commission because it has been an independent voice offering strong messages for those of us elsewhere. Its interim report offered some key points to consider. Some 50% of the UK’s carbon emissions from housing come from hard-to-treat homes—off-gas, solid and non-traditional wall construction, high-rise or properties without a fillable loft or cavity. That is a huge proportion of the households that many of use represent. As we have heard, many of those hard-to-treat homes are in rural areas, and there is a clear need to take action to reduce emissions, tackle climate change, and reduce bills. In 2005, the figures got worse. Some 14.6% of households in villages and hamlets were living in fuel poverty compared with a national average of 7%. That is the background to the huge challenge facing the Minister.
Interim recommendations from the CRC report include updating data to improve its scope and definitions so that we have a clearer view of where the problems lie; improving data sharing; and, critically, learning from best-practice examples. As my friend, the hon. Member for Ynys Môn, said, the coalition Government need to prioritise certain pilot areas.
Although it seems hard to believe now, we had a particularly cold winter last year and cold weather payments were of great use to my constituents. However, I worry that the need for seven consecutive days of temperatures below zero may have distorted the payments. Despite experiencing very similar weather, towns and villages in the northern part of Ceredigion received three triggers while in the south just one trigger has been reached. Will the Minister look into that—again, that relates to the point made by the hon. Member for Na h-Eileanan an Iar (Mr MacNeil)—and say whether he is confident that the level of cold weather payments received truly reflects the problems people are experiencing on the ground?
Moreover, there are many people who were eligible for cold weather payments but who missed out on them altogether because of a failure to claim pension credit—the most recent figures show that between 1.1 million and 1.7 million eligible pensioners are not claiming pension credit. I will stop now, but there is much more to be said. The Chamber is aware of the enormity of the problem. It is good to see not just the Celtic nations but all the rural parts of this country represented in the debate. The Minister has a huge job on his hands and we look forward to what he will say in a few moments’ time.
Mr Clive Betts (in the Chair)
Order. Let me say to hon. Members that I intend to start the winding-up speeches no later than 10.40 am.
Roger Williams (Brecon and Radnorshire) (LD)
It is a great privilege to take part in this important debate. I congratulate the hon. Member for Suffolk Coastal (Dr Coffey) on securing it and I warmly welcome her to the gang. I am sure that her contributions will always be valued. Without prejudging the Minister’s response, which will be very helpful, let me say that this is an issue to which we will return from time to time.
I shall concentrate on competition issues because they are clearly the responsibility of the Minister and his colleagues at the Department for Business, Innovation and Skills. When I was elected in 2001, I contacted the Office of Fair Trading and the Competition Commission because there were some uncompetitive practices in the LPG market. I built on the work of my predecessor, Lord Livsey, who was very active in the matter. We were surprised when, in the end, the Competition Commission decided to take up the issue, because there was huge resistance from LPG suppliers.
Some of those uncompetitive practices were quite clear. There were issues over the different types of connection and appliance and whether ownership of the bulk tank could be transferred from one company to another. Some regulations have been introduced to ensure that there is more competition in the marketplace. In fact, Calor Gas is to hold a reception in this place tonight.
Andrew Bridgen (North West Leicestershire) (Con)
Could we not do more to promote local group buying schemes to balance the uncompetitive market and get better pricing?
Roger Williams
The hon. Gentleman anticipates a point that I was about to make. Let me repeat though that a reception will be hosted tonight by Calor Gas, which is one of the major LPG suppliers. The Minister may like to go along—he may even be speaking at it—and make some of the points that he has heard during this debate.
One of the key issues about fuel poverty, which has already been referred to by my hon. Friend the Member for Ceredigion (Mr Williams), is the opportunity to buy in bulk. I visited some old-age pensioners’ bungalows owned by Powys county council in a little village called Garth, where pensioners switched off their LPG heating in the middle of winter and consequently had no heating in their houses at all, because they just could not afford it. Nobody was responsible for ordering the LPG and the local authority—the pensioners’ landlord at the time—was taking no interest at all in the pricing mechanism for the tenants, and the tenants themselves were not sufficiently empowered to take hold of the situation. I contrast that with what happened in another village, Llanspyddid, where members of the community got together and negotiated to buy in bulk for a little estate, so they got a good reduction in price.
However, the point that I want to make to the Minister is that many LPG users do not know their rights and powers under the new regulations. One of the things that the Government could do, which would not cost a lot of money, is to publicise the new powers and opportunities that exist under the new regulations.
I bring it to the attention of the House that although there is a freer regulatory system in the LPG market, some suppliers still want customers to enter two-year contracts, or even longer contracts in some places. That may be within the letter of the regulations, but I am not sure that it is within their spirit.
A number of people on the lowest incomes, particularly retired people, live in park homes. The best one could say about the position regarding competition for the supply of LPG to park homes is that it is unclear. I raised the issue in the all-party group on park homes the other evening. Representatives both of the owners of park homes and of the estates where park homes are located confirmed that the position on competition is unclear. However, it is a difficult issue so given the short time available to me in this debate, I would be better off writing to the Minister about it.
Another issue is that the new free market applies only to bulk LPG; it does not apply to small cylinders of LPG. Some of the poorest people in our communities use small cylinders of LPG. Buying those cylinders is even more expensive than buying LPG in bulk, which itself is much more expensive than mains gas. Many of the poorest people use mobile heaters, bringing them into their bedrooms late at night when they go to bed; they put them on in the morning in the bedroom and then take them into the kitchen when they are making their breakfast. They take the heaters round the house. However, those LPG cylinders are not covered at all by the regulations, which is an issue the Minister might want to familiarise himself with.
On a related point, we are all concerned about the future of public houses in rural areas, yet it is not clear to me whether the regulations apply to small businesses, such as public houses, as well as to residential properties. Perhaps that is another issue that the Minister might inquire about.
I turn quickly to what I think is a solution to some of the fuel poverty issues: taking mains gas not to individual isolated properties but to communities that do not yet have that facility. I am thinking in particular of communities such as the former mining community in Abercrave in my constituency. One can understand why there was no huge impetus to connect communities such as Abercrave to mains gas, because so many people were in coal mining families and received free coal as part of the miners’ terms and conditions; indeed, miners’ widows, if they survived, received free coal too. Of course, very few people receive free coal now, and they are living in fuel poverty because they have to use either heating oil, which we have talked about, or LPG.
That solution—connecting such communities to mains gas—is very expensive and I am not in any way belittling the cost. But it is a long-term solution and not a short-term fix. Are there any facilities that could be brought into play to ensure that such communities enjoyed the facility of mains gas?
In another village in my constituency, Llangynidr, the problem is that the mains gas pipeline runs on the other side of the River Usk from the village. Making the pipeline cross the river would be the main cost involved in ensuring that Llangynidr received a mains gas supply.
Those are some of the issues that I want to put to the Minister, particularly the points about competition and how we can ensure that the regulations, which are already in place and doing a good thing for LPG users, can be fine-tuned, so that everybody enjoys the benefits that only a few people are enjoying at the moment.
Mr Clive Betts (in the Chair)
I thank all hon. Members for their co-operation in getting the timing right, so we have time for the winding-up speeches. I think that the two Front Benchers have about 12 minutes each.
Emily Thornberry (Islington South and Finsbury) (Lab)
May I begin, Mr Betts, by saying that it is a pleasure to serve under your chairmanship for the first time?
I congratulate the hon. Member for Suffolk Coastal (Dr Coffey) on securing this debate. I listened to her maiden speech in the Chamber with great interest and I concluded that, although it was highly unlikely that we would agree politically, she would undoubtedly serve her constituents well. Indeed, we now know those constituents as the people of the new Jerusalem. I also concluded that she was likely to be a formidable advocate for them, and frankly this place can never have enough formidable women.
This debate is one of great importance. More than one in four households in rural areas are in fuel poverty. In sparsely inhabited English communities, every second home has an energy efficiency rating of less than 30, which amounts to a significant health risk. Fuel poverty is a knotty and difficult problem with which the Labour Government struggled. Although we made progress, much more needs to be done. Our concern is that the emerging political philosophy of the coalition Government may prove to be a significant handicap—that might be putting it mildly.
The coalition agreement brags about the way the two governing parties were brought together by a shared ideology that is antithetical to Government intervention. It says that they
“share a conviction that the days of big government are over”.
However, there are times when Government leadership is necessary and when the market will not solve a problem. Climate change, for example, is, in itself, the ultimate failure of the market economy. There are times when we need to intervene. Furthermore, the effectiveness of Government intervention must be measured and quantified, so that we can account to the public for the spending of their money.
We have heard from the Secretary of State for Energy and Climate Change that he did not have any Government targets for the creation of green jobs and that he did not want to borrow our targets, for fear of seeming to copy the Soviet Union’s Gosplan. However, that judgment is wrong. I urge the ministerial team to reconsider their attitude to targets. In relation to fuel poverty, my first question to the Minister is this: will the coalition keep our 2016 fuel poverty target? If it will not do so, how many people do the Government intend to lift out of fuel poverty by any of their schemes, in either rural or urban areas?
Throughout my contribution, I will put a number of questions to the Minister. I asked some of them in a debate last week and during the somewhat rushed winding-up speeches, the Minister of State, Department of Energy and Climate Change, the hon. Member for Wealden (Charles Hendry), overlooked many of them; I am sure that he did so unintentionally. Therefore, I thought that it might be helpful if I numbered my questions today, for ease of reference.
My second question relates to access to the grid and fuel poverty. The number of off-gas properties is much higher in rural area than in urban areas. Those properties are dependent on solid fuels, heating oil and liquefied natural gas, but the prices of those fuels are higher and they fluctuate more than gas prices. Households that are off the gas network face typical energy bills of £1,700 per annum as opposed to £1,000 per annum for households on mains gas. What steps will the Government take to increase the number of homes on the gas grid?
Another problem is that rural areas have lower average wage levels than urban areas, and the take-up of Government assistance has been more difficult in rural areas. It costs more for contractors to install energy efficiency measures in rural homes, and there is evidence that consumers in rural areas are less aware than consumers in urban areas of the availability of financial support, so my third question is, how does the Minister intend to tackle that problem, especially in the light of recent budget cuts to the Energy Saving Trust?
Another problem, as we heard from many contributors, is that there are fewer cavity walls in rural areas, and solid walls are harder to heat and more expensive to insulate. My fourth question is, what consideration have the Government given to the arguments in favour of making grants available to the rural poor who cannot be connected to the grid, so they can install microgeneration projects, such as ground source heat pumps? Will the Government consider the findings of the Warm Front pilots on air source heat pumps in areas off the gas network for occupants in fuel poverty?
I encourage the Government to be proactive and confident; if we take action, we can get results. Labour achievements on fuel poverty include Warm Front assisting more than 2 million households since 2000, which National Energy Action described as “an extremely successful programme”. Despite early problems with take-up of the scheme, improvements were made and the number of grants increased in 2005-08. I listened with interest to the criticisms of the hon. Member for Suffolk Coastal of Warm Front, but saying that rural communities such as hers lose out on schemes over and over again is overstating the case. In the past five years, Warm Front has helped 2,000 households in her constituency. My fifth question is, can the Minister give his assurance that Warm Front will be retained?
Under the carbon emissions reduction target, major energy suppliers had an obligation to direct at least 40% of carbon savings to priority group households, so, my sixth question is whether the super-priority group of 15%, which was announced on 30 June, in addition to the 40% priority group, can be contained within it. Seventhly, what will the Minister do to ensure that the carbon emissions reduction target takes account of the greater difficulty and cost of insulation in rural areas? In the Energy Act 2010, Labour put a statutory obligation on energy suppliers to offer social tariffs to those in fuel poverty. Under Labour, Ofgem provided incentives for gas networks to connect deprived communities. Households assisted under the scheme qualified as being within the 20% identified in the index of multiple deprivation.
Albert Owen
My hon. Friend talks about incentives for gas networks to be extended and for the grid distributors to take the lead, but is it not the case that we need an agency, a local authority or even a community group to do so? Does she agree that we should look at it in that way? We need to ensure that we have local champions in rural areas because, with the greatest of respect, Ofgem in central London does not understand small rural communities. Agencies must work with local government at a local level.
Emily Thornberry
That is right, and, in fact, many of the characteristics to which my hon. Friend refers are part of the community energy saving programme, to which I will return in a moment.
In the Suffolk Coastal constituency, 29,960 people receive winter fuel payments. Eighthly, given the fact that payments have benefited millions of people, will the Minister guarantee that they will continue in the age of austerity? The Government recently announced the dissolution of the Commission for Rural Communities, which I agree is unfortunate, as many hon. Members have said, particularly given that it did a great deal of the analysis on rural fuel poverty that led to significant changes in energy efficiency policy to allow for better targeting of fuel-poor rural households. Everyone knows that Labour did not eliminate fuel poverty and that great challenges remain. Nevertheless, without Government measures, there would have been 400,000 to 800,000 more fuel poor households in England in 2008.
Ninthly, how are the pay-as-you-save pilots established under the previous Government going? Will they run their course and inform the Government’s plans or not? Is the green deal just our pay-as-you-save scheme with a different name, as commentators have said? Tenthly, will the Minister clear up the confusion over whether there will be any form of Government subsidy for the green deal? Will it impose any cost on the public purse? We have had contradictory statements from the Minister of State, Department for Communities and Local Government, the right hon. Member for Tunbridge Wells (Greg Clark), and the Minister of State, Department of Energy and Climate Change, the hon. Member for Wealden, this year. Eleventhly, will the amount available per household be £6,500 or up to £6,500? Twelfthly, will it be more for harder-to-heat homes? In the debate last week, the Minister in the Chamber today told us, with characteristic enthusiasm, about the potential deal with companies such as Tesco, B&Q and Marks & Spencer on the green deal. What will companies get out of this? That was question 13. How confident is he that the private sector will see it as a good proposition?
Most important is my 14th question: how will the Minister ensure that all households that need to improve their energy efficiency take advantage of the scheme? How will the poorest take advantage of it, and how will it work for those on low incomes and those with poor credit ratings? If poorer households do not take up the scheme, does he agree that it will have failed? On 24 June, the Minister’s new boss, the Secretary of State, said at the UK energy summit organised by The Economist:
“Some people—such as the fuel-poor, and those in hard-to-heat homes…—will need extra help because energy savings alone will not be enough. We intend to provide that help by refocusing the obligations on energy companies. Local authorities could also join with energy companies to reach those who live in houses that need it most. Insulation measures are often cheaper if implemented a street at a time. And we are planning to strengthen the Government’s powers to target energy insulation measures on the highest priority cases.”
Does that mean that CESP is saved? Perhaps the Minister will give it another name; I always thought that it sounded more like something that needed a strong dose of antibiotics, but it is a good scheme and the Government should look at it carefully. Will it continue?
At the beginning of my speech, I referred to the profound health problems associated with fuel poverty, and those problems are urgent. If we hit another severe winter this year, there are likely to be tens of thousands of excess deaths. The Government are under an obligation to be proactive, and I hope that they will be.
The Minister of State, Department of Energy and Climate Change (Gregory Barker)
I, too, am glad to be serving under your chairmanship for the first time as a Minister in Westminster Hall, Mr Betts. I congratulate my hon. Friend the Member for Suffolk Coastal (Dr Coffey) on her maiden Westminster Hall speech. She made a fine start in the main Chamber.
It has been a really terrific debate, and I have learnt a lot. It is the first time that I have listened to a fuel poverty debate as a Minister, and it is striking how much cumulative knowledge there is, not just in one party, but on both sides of the House. In the coming months and years of coalition, I hope that we can be inclusive, not only with our coalition partners, but with other parties, because it is clear that concerns about fuel poverty go beyond party boundaries. Although we come from different sides of the political argument, and may have different priorities or apply different principles to problems that lead to different solutions, there is much more common ground on this issue than is often the case. I hope to have an open-door policy and will be open to new ideas from all parties.
We have a radical programme on energy efficiency and we approach it with new vigour and ideas. I appreciate that the hon. Member for Islington South and Finsbury (Emily Thornberry) is new to her job as well and mustard keen to defend the record of the Labour Government, but we all have to wake up and smell the coffee. She asked whether the Government would keep the 2016 target. Keeping targets is not difficult at all, but meeting them is tough. Her Government, whom she defends, were reversing at speed on fuel poverty despite their best efforts. Over 4 million more people—more like 5 million more—are in fuel poverty than in 2004.
Despite good schemes—the hon. Lady rattled off a number of them—the best efforts of Ministers and a great deal of public spending, we are nowhere close to meeting the fuel poverty targets. We have to do some big thinking, ask ourselves some serious questions and redeploy our resources more effectively to deliver for the fuel-poor, particularly for the rural fuel-poor.
My hon. Friend the Member for Suffolk Coastal addressed clearly what everyone in the Chamber feels: the rural fuel-poor get overlooked and are part of a forgotten population. Many of the schemes introduced under the previous Government have treated people’s homes in urban areas. However, the rural fuel-poor often get a worse deal, particularly those who are off the gas network, because there is a lack of social tariffs for those who are off the grid. That issue has been a reoccurring theme of the debate. My hon. Friend is right to be concerned that metropolitan-centric, top-down schemes that are not embedded in their local communities do not always deliver.
It is difficult to find many of the rural poor. The hon. Member for Westmorland and Lonsdale (Tim Farron) spoke well and reminded us that it is often more difficult to find and treat fuel-poor homes that are in, or surrounded by, areas of relative prosperity than those that are concentrated in a metropolitan area. That is a challenge and it is why such homes have been harder to treat in the past. However, it does not mean they are any less deserving of support and concern.
I cannot commit the Chancellor to anything, because doing so is way above my pay grade. However, I heard what the hon. Gentleman said about the potential for a green investment bank—the Green Investment Bank Commission published its report last week—and I have taken on board his suggestions. I encourage him to have a dialogue with Ministers to discuss such a function for the GIB. I would welcome that opportunity.
The hon. Member for Brecon and Radnorshire (Roger Williams) gave a very good speech. He focused on concerns about competition and ensuring that reforms of competition in the market drive right across and reach target groups that have, so far, not been helped sufficiently.
I was particularly interested in the ideas mentioned in an intervention about supporting and enhancing local group purchasing schemes. When I go back to the Department, I will ask my officials to consider what we can do in relation to that, because the measure does not necessarily involve a lot of spending. I will consider what we can do to try to support and encourage such schemes, because empowering communities is an aspiration that is shared right across the coalition. If one wants to refer to an ideology, it would not be any of those listed by the hon. Member for Islington South and Finsbury. We believe in localism, the need to empower our communities far more and the fact that the solutions to our nation’s problems are not locked in Departments in Whitehall.
I say to the hon. Member for Ceredigion (Mr Williams) that, of course, we are committed to consultation and best practice, not just with devolved Governments, but with local government and communities. Learning best practice is not a one-way street; there is a great deal more that we can learn from what is successful in communities. Although I am not familiar with the triggers for cold weather payments, I know how important they are. I will look into the problems he mentioned and write to him.
The hon. Member for Ynys Môn (Albert Owen) spoke at length and with great expertise about the extra costs suffered by particularly far-flung areas—not just in his constituency, but in the whole of the British Isles. He focused on partnership-working with devolved Governments, local authorities and communities. I assure him that we are committed to doing that. He also wanted to know what the coalition had to say about off-grid support and protection. The coalition agreement is not a manifesto; it is a relatively tight document. However, he will see that it specifically mentions the need to support and protect off-grid customers. We want to do a lot more.
Albert Owen
I hope the hon. Gentleman will not regret offering an open-door policy to Members such as me. He is talking about the coalition and localism, with which I agree. However, there must be more than warm words. Although I agree with the devolution of powers, which I have fought for in referendums for many years, we do not simply need it to happen; we need resources. That is the important thing. Dealing with the issue is not just about passing powers from Whitehall to Cardiff, and to rural areas in Wales; it is about making sure that the resources follow those powers.
Gregory Barker
I appreciate the hon. Gentleman’s comments, but he will also appreciate that we are in a resource-constrained environment for reasons that we do not need to rehearse here. As well as resources, another factor that empowers communities is knowledge. He made a good point about the need for greater transparency about wholesale and retail prices. I agree with him about that, but we also need greater transparency about billing, tariffs and the costs of switching to a different tariff or the best tariff, or paying by direct debit. Those are all important points.
My hon. Friend the Member for Totnes (Dr Wollaston) brought her medical expertise to bear when she talked about the excessive number of winter deaths. She reminded us of the shocking figures that were published last year and of the impact that poor housing has on not just health outcomes, but life expectancy. That helped to bring the debate into sharp focus.
The hon. Member for Angus (Mr Weir) was right to point out that a minority of the population will always be off-grid and that price is important. He made a crucial point about up-front payments and minimum deliveries. I will consider his ideas on section 10 of the Energy Act 2010. I cannot promise that we will act on them, but we will look at the matter with fresh eyes, because we are interested in radical steps forward and new thinking. As I said, we cannot go on as we are.
We have a big plan of our own: the green deal. It does not involve grants, loans or mortgages and it certainly does not involve the very modest proposals—pilot schemes—that the previous Government introduced. The green deal is a bold, unprecedented scheme that will not involve personal debt, as the pay-as-you-save model of the previous Government did.
Gregory Barker
I shall not take interventions, because I am very short on time. The green deal will bring in new capital, new finance providers, new installers and local providers. A constant complaint about Warm Front and its provisions is that it has not empowered local suppliers. The green deal will mean that as long as a local provider can deliver the standards, they can do the work. That will even apply to a village supplier if they get the accreditation, which should be simple and easy to do. I hope that we will see many community enterprises and community partnerships working on the green deal.
The green deal is fundamentally a pay-as-you-save model. We accept that many of those who live in rural homes and some of the most fuel-poor cannot make the savings to justify the significant investment in building infrastructure that is needed; for example, those who have solid wall houses often fall into that category. That is why we intend radically to reform the supplier obligation. We have started doing that with our carbon emissions reduction target extension, where we have increased the amount that we can direct is spent on insulation; if we take into account DIY, it is now 80%. We have stopped the lunacy of mailing or subsidising light bulbs. The green deal is focused on real insulation efforts. We have increased the super-priority group—made up of pensioners, people with children and those from low-income households—from 10% to 15%, so that it is larger than under the Labour consultation. That is really important, but we want to go further.
Gregory Barker
I am afraid that I do not have time.
We want to go further to ensure that support is available. The carbon emissions reduction target will raise more than £1 billion, which is much greater than under the Warm Front programme. Potentially there is a significant amount of revenue, but it needs to be much more focused.
I welcome the thoughts of all hon. Members in the Chamber today about how we should focus on the fuel-poor. We will be considering reforming the supplier obligation, so that there is no hiatus beyond the CERT extension in 2012. There is a new deal—a green deal—and there will be a new supplier obligation. Real, substantial resources will be made available for the long term, and we are absolutely certain that we need to continue to deliver for the fuel-poor.
However, fundamentally, we cannot keep chasing the fuel price and subsidising fossil fuels. We need to spend the money we have on investment in building infrastructure to make homes not only warmer, but cheaper to heat in the long term. We must reduce people’s dependency—whether they are on-grid or off—on gas, coal and oil.
I again congratulate my hon. Friend the Member for Suffolk Coastal on initiating the debate. I am sorry that I have not been able to answer everyone’s questions, but I am sure that this is the first of many Westminster Hall debates on this vital issue.