Warm Home Discount Scheme (Northern Ireland)

Baroness Ritchie of Downpatrick Excerpts

Monday 2nd March 2015 Commons Chamber

[Ms Margaret Ritchie (South Down) (SDLP)]

I was delighted to secure this very important debate on the extension of the warm home discount scheme to Northern Ireland. I am pleased that the Minister is in her place to respond. The rate of fuel poverty is higher in Northern Ireland than in any other part of the UK, representing 42% or 294,000 homes, with the figure rising to 62% for elderly people. I would like to outline the extreme toll that fuel poverty takes on people.

Only last week, I received an e-mail from the Contact a Family organisation. It told me that Ellen Johnston from Belfast, whose six-year-old son Cole has global developmental delay, low muscle tone, epilepsy and cannot speak, said:

“People don’t realise that it can cost so much more if you have a child with a disability or special needs. I used to work before Cole was born and tried to work from home but it was just too difficult to do this and deal with Cole’s needs and medical appointments at the same time.”

That serves to illustrate the cost and the burden on that poor lady of heating her home, particularly with a disabled child and particularly when she was relying on benefits and had no other source of income.

Many of us take a warm home for granted, but many people, particularly the elderly, do not have the comfort of a well-heated home. It is also worth noting that retired people are for obvious reasons at home much more of the time and therefore require the heating to be on for much longer periods than those still in work do. For them, heating their home becomes an enormous financial pressure, leading many to be left with the reality of living in extremely cold conditions. This is not just a matter of simply adjusting the thermostat or putting on a jumper, as a previous Energy Secretary suggested—it is often a matter of life and death.

Under the Government’s own criteria, an estimated 6 million households are living in fuel poverty, and this winter a reported 40,000 extra winter deaths occurred in the UK—a rise of 29% on the previous year. According to the Office for National Statistics, from the beginning of December until 16 January this year, there were 8,800 more deaths than the average of 25,000. The rate rocketed by 33% in the week up until 16 January, when there were almost 15,000 deaths as an extremely cold spell took hold. An additional 3,000 deaths are expected and by March 31, the end date for Department of Health winter death totals, numbers will have surpassed the flu-hit toll of 36,450 in 2008-09, making it the worst since the peak of 48,440 deaths in 1999-2000.

The figures for Northern Ireland are at least as grim, if not worse, with approximately 600 excess winter deaths recorded in 2013-14—up by about 20% from 2012. It is important to note that not all those deaths represent the “very elderly”, with approximately one in five under-75s and one in nine under-65s in the last year for which records were available in Northern Ireland.

Low interior temperatures also lead to a range of other medical conditions, from bronchitis and other respiratory diseases to heart problems, not to mention the extra psychological toll that they can take. The World Health Organisation recently reported on the extreme danger that cold and damp homes, which often have poor or shoddy insulation, can pose to people’s health by causing respiratory illnesses. One of my party’s councillors, Brian Heading, has taken a great lead on the issue, and is trying to raise awareness of it in councils in the UK and in Ireland. It puts enormous pressure on an already hard-pressed health service and on individual families.

[Lady Hermon (North Down) (Ind)]

Fuel poverty is a very serious issue in Northern Ireland. I should like to know why Northern Ireland is the only part of the United Kingdom to which the warm home discount scheme does not extend. Did the Westminster Government not pay for it, or was money allocated but not spent in the proper way by the Northern Ireland Executive?

[Ms Ritchie]

I may be able to explain that later in my speech, but suffice it to say that Northern Ireland is the only region to which the scheme does not extend and in which there are particular market conditions. Our climatic conditions are probably similar to those in Scotland, and we have similar levels of fuel poverty, but the war home discount scheme extends to Scotland and not to Northern Ireland.

I understand from Age Sector Platform that the scheme could be administered centrally by the United Kingdom, and that the costing could be executed by the utility companies. In fact, one of the utility companies that operate in Britain, SSE, also operates in Northern Ireland, through its agent Airtricity. I imagine that if the Minister approached the Northern Ireland Executive and, in particular, the Department of Enterprise, Trade and Investment, as well as the utility regulator and the other utility companies, a resolution might be found.

In Northern Ireland, the problem of cold and damp is exacerbated by the fact that people have no access to the warm home discount scheme. The scheme was introduced in April 2011 by regulations made under section 9 of the Energy Act 2010. It provides a £140 rebate on household energy bills for eligible groups, namely pensioners receiving guarantee credit, who are known as the core group, and other low-income households, who are known as the broader group. Some further payments were made on the basis of other criteria.

More than 2 million low-income and vulnerable households in England, Scotland and Wales have been helped each year, and total payments were expected to reach £1.1 billion by March 2015. The Department for Work and Pensions estimates that approximately four out of every five households claim this entitlement. While it is obviously desirable to maximise the figure and promote better awareness of the scheme here, it is worth repeating yet again that no one in Northern Ireland has access to it. The hon. Member for North Down (Lady Hermon) made that point a few moments ago.

The scheme is administered by Ofgem. The Department for Work and Pensions has a monitoring role, and the administration costs are carried by the UK Government. Could the arrangement not simply be transferred to Northern Ireland, with the administration being carried out centrally here in Britain? It is financed by levying around £11 per annum on consumers, and Age Sector Platform has estimated that Northern Ireland could be covered by the scheme with the addition of just £1 per customer per year. This scheme was designed specifically, in the words of the Department of Energy and Climate Change,

“to reduce fuel poverty in the UK”,

with no mention of excluding Northern Ireland, and indeed has been set up with a mechanism to ensure that no supplier is left footing a disproportionate burden owing to the uneven spread of fuel poverty across the UK. Surely the north of Ireland should not be excluded from this.

While the Minister in response to written questions has maintained that fuel poverty is a fully devolved matter, in DECC’S own fuel poverty statistics guide it is described only as a partially devolved matter and it is acknowledged that devolved Administrations do not have the capacity to

“affect certain aspects of fuel poverty policies”,

such as incomes and market conditions. Fellow Members representing Northern Ireland constituencies who are present tonight will recall that we met Age Sector Platform in this building on 4 November and it referred to that specific point. We were under the illusion—including me, a former Minister for Social Development—that it was a totally devolved matter, but that document from DECC clearly shows that it is only partially devolved and therefore the UK Government centrally do have a responsibility in this matter. It is on that point that I and other Members representing Northern Ireland constituencies are seeking answers.

[Mr Nigel Dodds (Belfast North) (DUP)]

I congratulate the hon. Lady on securing this important debate. I agree entirely with what she is saying and she is right to highlight these matters to the United Kingdom Government. I ask that she and the House be assured that there is consensus among all the parties in Northern Ireland and the Members here on this issue, and we will continue to work together both here and at home with our Executive colleagues to try to bring about an answer and a solution for the people affected by fuel poverty in Northern Ireland.

[Ms Ritchie]

I thank the right hon. Gentleman for that helpful intervention. He is absolutely right: there is cross-party consensus on this issue in Northern Ireland and we want to continue working during this debate, and particularly after it, to ensure that a solution can be found that mitigates the impact of fuel poverty on some of the most hard-to-reach households in both urban and rural communities.

There is consensus on this issue across the parties in Northern Ireland. That point was reiterated at the meeting with Age Sector Platform on 4 November in this House. It intends to hold a cross-party Parliament meeting for older people shortly, and before the election; I have just got word of that today.

Age Sector Platform has also submitted a strong response to November’s consultation, advocating our inclusion in the scheme. It has also suggested that as Power NI, one of the utility companies in Northern Ireland, meets the threshold for mandatory involvement in the scheme in the UK, with 250,000 domestic customers, it should be included, along with Airtricity, which is a subsidiary of SSE, which is already involved in Britain. I would be most grateful for an updated assessment of this situation from the Minister.

I am aware that the Minister of State’s response to written questions on this issue has been that fuel poverty is a devolved matter, and obviously I am aware that Ireland has a separate energy market with different providers. However, as I have said, there has been an acknowledgment and awareness from the Department that we face the same problems with fuel poverty, but do not have the same toolset to deal with them. Surely there is a role for the UK Government in providing, or at least enabling or facilitating, the scheme in Northern Ireland.

The Minister’s answers on this question have so far been fairly blunt, but will she commit this evening to taking a more positive and perhaps more nuanced view of the issue? Will she work with the Northern Ireland Executive whenever possible to explore the options to extend the scheme, or a comparable variant of it, to Northern Ireland? I am calling on her to do the right thing and to work with the Executive at Stormont to protect the elderly and disabled members of our population and some of the most vulnerable families in hard-to-reach communities.

We are also looking for an extension beyond April 2015 of the landlords’ energy-saving allowance, which would help to further mitigate fuel poverty in the private rented sector. I am calling on the Minister to do the right thing this evening. If the warm home discount scheme is extended, pensioners and other elderly people in Northern Ireland will be spared freezing in their homes next winter.

[The Parliamentary Under-Secretary of State for Energy and Climate Change (Amber Rudd)]

I congratulate the hon. Member for South Down (Ms Ritchie) on securing the debate on extending the warm home discount scheme to Northern Ireland. Fuel poverty remains a huge challenge, as she rightly says, and the coalition is committed to tackling the problem and to helping the people affected, especially those on low incomes and in vulnerable households.

To help us to meet the challenge of fuel poverty head on, the Government have introduced a new, more accurate “low income, high cost” measure of fuel poverty in England. This enables us to deliver effective policies that can cut bills and increase comfort for those on low incomes living in the coldest homes. We have a range of policies in place, including the warm home discount, that address the contributing factors of fuel poverty through either increasing income or reducing energy bills.

I want to provide some context for the warm home discount scheme and tell the House how it operates in Great Britain. The powers for the warm home discount scheme are set out in primary legislation—the Energy Act 2010—and it is delivered by suppliers within Great Britain. Introduced in 2011 through secondary legislation, the warm home discount scheme requires electricity suppliers with more than 250,000 domestic customer accounts to provide financial support in respect of energy costs to their vulnerable customers. This winter, the customers eligible for that financial support received a £140 rebate on their electricity bill.

Since we launched the scheme, around 2 million households in or at risk of living in fuel poverty across Great Britain have benefited from lower energy bills each year. As a result of the success of the warm home discount, this Government have extended support to 2015-16, with a spending target of £320 million. This is in addition to the £1.1 billion that has been spent over the first four years of the scheme and will continue to support the people most in need.

Fuel poverty in Northern Ireland is devolved to the Northern Ireland Executive, who decide their own fuel poverty objectives and policies. However, in looking at the feasibility of extending the warm home discount scheme to Northern Ireland, we can see that a number of factors would affect that arrangement. As I said, the powers for the warm home discount scheme were set out in primary legislation in the Energy Act 2010. However, the powers extend only to Great Britain, so any extension of the scheme to Northern Ireland would require a change in primary legislation.

The energy market in Northern Ireland is different from the one that operates in Great Britain. There is also a difference in the nature and number of customers in fuel poverty. Northern Ireland operates in an all-island energy market that is separate from that of Great Britain. It is at a different stage from the GB market in terms of energy market regulation and competition.

The warm home discount scheme applies only to the largest suppliers, based on their domestic market share across Great Britain. The same rules apply in all regions so as not to create market distortions. In Northern Ireland, only the largest supplier would meet the current participation threshold for the scheme. That would mean customers of smaller suppliers would be ineligible, which could lead to a distortion of the single energy market.

I also want to highlight the importance of maintaining a balance between helping those in fuel poverty and ensuring that energy costs are kept as low as possible for everybody. The warm home discount scheme is funded by energy suppliers, which we expect to pass the costs of the scheme on to customer bills. The question from the hon. Member for North Down (Lady Hermon) was about the source of funds, and the simple answer is that the funds are only collected from bills in Great Britain—they are not currently collected from the Bills in Northern Ireland, which is unique in the UK in that respect.

Replicating the GB scheme in Northern Ireland could be done but would pose particular problems. Given the high proportion of households in fuel poverty in Northern Ireland, making them all eligible would have a high overall cost. For example, if Northern Ireland were to replicate the impact of the warm home discount scheme in Great Britain, for one in 13 households benefiting we could expect an increase in energy tariffs of 2%. However, if coverage of the scheme extended to include all fuel poor customers in Northern Ireland, the costs of the scheme would add almost £59—a 9.8% increase—to each household electricity bill.

A different means of funding such a scheme may be needed for Northern Ireland. Northern Ireland already has a number of schemes in place that provide support to the fuel poor, including the sustainable energy programme, the warm homes and affordable warmth schemes, and the boiler replacement scheme. Those are in addition to the availability of cold weather payments and winter fuel payments. Also, the recent downward pressure on oil prices will come as welcome relief to the many customers in Northern Ireland using oil for heating purposes

I understand that Power NI, the main supplier in Northern Ireland, has announced a tariff reduction of 9.2% to take effect from 1 April 2015. This will be a two-year tariff and is estimated to reduce a typical domestic consumer bill by approximately £50 per year. Alongside the downward pressure on heating oil and gas prices, it should result in a reduction in the extent and severity of fuel poverty.

The hon. Member for South Down raised the issue of covering administrative costs. For her information, the Department for Work and Pensions administrative costs cover only a small proportion of the cost of administering the scheme. Most costs, including the administrative costs, are borne by the suppliers. My officials in the Department of Energy and Climate Change regularly meet Northern Ireland Executive officials to discuss fuel poverty issues. However, as fuel poverty is devolved to the Northern Ireland Executive, they decide their own fuel poverty objectives and policies.

Fuel Poverty remains a huge challenge in both Great Britain and Northern Ireland and needs to be tackled. However, the differences between our energy markets and the way we measure fuel poverty mean that we need to consider different policies to best meet the needs of those we are trying to reach.

[Ms Ritchie]

The Minister has clearly stated that her officials meet Northern Ireland Executive officials to discuss fuel poverty and fuel poverty objectives. What specific issues have been discussed in the recent past between her officials and officials in the Department for Social Development in Northern Ireland about the mitigation of fuel poverty?

[Amber Rudd]

I thank the hon. Lady for that question. Obviously, the key point that is relevant to what we are talking about is how we could advise or assist in some equivalent measure, which is exactly what she has raised with us today. In preparation for this debate, we had further discussions. The hon. Lady talked earlier about trying to keep the dialogue open, and I wish to reassure her that we are always keen to work with the Department of Enterprise, Trade and Investment in Northern Ireland and to share with it all that we have learned about trying to administer this scheme in the best way to reach the constituents who, as she has clearly set out, are so vulnerable to high energy costs: the vulnerable, the disabled and the pensioners, who often do not go out.

Although I do not have the answers here today about how the scheme could be extended to Northern Ireland, because, as I have said, it is a devolved matter and has separate payments, I would like to reassure the hon. Lady that we are always keen to work with our counterparts in Northern Ireland and we will be keen to continue to do that. I hope I have shown that we will work with them wherever we can to make sure that fuel poverty is eradicated in Great Britain and Northern Ireland by any means possible. I commend her for raising this issue today.

Question put and agreed to.