Cost of Living

Baroness Scott of Needham Market Excerpts

Thursday 3rd February 2022 Grand Committee

[Baroness Scott of Needham Market (LD)]

I, too, thank the noble Lord, Lord Whitty, for securing today’s debate. It is easy to say that it is timely: it has almost been too timely, as announcements have been coming thick and fast and we have all been hastily rewriting. The announcements about the energy price cap and the Chancellor’s response have meant that we are focusing largely on energy, but we are all aware that the general cost of living crisis is the context in which this debate sits. I particularly note the Bank of England’s prediction today that inflation will reach 7%; it has been some time since we have seen that.

As the noble Lord, Lord Whitty, said, both medium and long-term issues come into play here. I want to use most of my time to speak about a longer-term issue—energy efficiency. Research by Carbon Brief has shown that a series of cuts to energy efficiency measures has meant that today’s bills are around £2.5 billion higher than they might otherwise have been. The number of homes getting their lofts insulated fell by 92%, and cavity wall insulation fitting dropped by 74% when the grants were cut. A year before it was due to be introduced, the zero-carbon homes standard was scrapped. As a result, around 1 million new homes have been built since then with lower energy efficiency standards, meaning higher energy bills for occupants and owners facing expensive retrofitting.

The decisions to scrap those schemes were made because gas prices were high and energy bills growing. However, the decisions were short-sighted and there is a lesson for us to learn now because the answer to high gas prices is not more gas, as the evidence clearly shows; it is to double down on renewable energy sources and home efficiency improvements. If we do not act now, the peaks and troughs of fossil fuel prices will continue and we will be in this position over and over again.

State intervention is needed to deal with the problem of an inherently energy-inefficient housing stock in this country. I shall explain why. By their nature, many energy efficiency measures require up-front cash and often take some years to pay back. For those in the private rented sector, neither landlords nor tenants have any incentive to invest in those measures, even assuming that they can afford it. In the social rented sector, a lot of good work is done by local authorities and housing associations to reduce energy costs for their tenants, who quite often lack their own financial resources. But those bodies are themselves increasingly strapped for cash and unable to finance the energy efficiency measures that they know are required.

However, the majority of us are owner-occupiers. In a country with high levels of home ownership and a flexible job market, houses are no longer seen as places where people live for a long time. Houses are not just homes nowadays; they are property and often the main or only financial asset. Putting scarce cash resources into measures that take years to pay back and do not really add to the value of the house does not look like an attractive option for many people. Take the example of a heat pump, which can cost between £6,000 and £8,000. If we are to improve the energy efficiency of our national housing stock, government intervention is required. I remind the Committee that around 22% of UK carbon emissions comes from domestic energy consumption, so there is a significant contribution to net zero to be made.

As other noble Lords have said, Shell announced today that it made £17 billion profit in the past year. I agree with all those who said that it is beyond time that we thought about—indeed, introduced—a windfall tax. Like the noble Baroness, Lady McIntosh, I pondered on the extra VAT that has accrued to the Treasury, which ought to be available to help people. The cost-of-living increases and today’s announcements on energy will hit everyone but the impact on the poorest is absolutely devastating. The Chancellor’s package is not sufficiently aimed at helping them. The council tax rebate is an untargeted, blunt instrument. A scheme that helps people this year but has to be paid back in future years is just a gamble on gas prices falling. If they do not, at best the pain is postponed but it could get considerably worse.

It seems to me that by far the easiest way to target help to the poorest would be to reintroduce the £20 a week universal credit uplift. There is a strong case for having a look at the grant situation. I am sure that other noble Lords received a briefing from Marie Curie, which set out the difficulty that terminally ill people are having in receiving grants. That is a desperate situation; you do not get more vulnerable than people who are dying at home and are cold because they cannot access things—so we need to look at that.

A coalition of 27 charities has written to the Government urging them to respond to the energy crisis with measures that create a green, fair and affordable energy system, and I am afraid that the Chancellor’s response does not do any of that today. It does not help the worst off and does not provide any means of longer-term security through energy efficiency.