Fuel Poverty

Debate between James Heappey and Rebecca Long Bailey

Tuesday 11th December 2018 Commons Chamber

[Rebecca Long Bailey (Salford and Eccles) (Lab)]

As we enter another winter, I welcome the opportunity to stand opposite the Minister in what will hopefully be a collegiate debate. I regret, though, the urgent necessity once again to debate fuel poverty in this Chamber.

Fuel poverty epitomises what a UN statement recently described as the “great misery” that has been “inflicted unnecessarily” on the UK’s poor, and in particular on the millions of children locked into a cycle of poverty. The UK is one of the world’s largest and wealthiest economies, with all the means at its disposal to eliminate fuel poverty, and yet it is not being eliminated. The latest data shows there were more households living in fuel poverty in England in 2016 than in 2015. The figures were higher in 2015 than in 2014, when in turn they were higher than in 2013. It is not just the extent of fuel poverty that is on the rise, but the depth of fuel poverty—that is, the difference between households’ energy bills and what they can afford to pay. Fuel poverty is not only persisting, but getting worse. Members should be in no doubt that this is not an unavoidable fact of life. It is a political choice.

According to the Office for National Statistics, the number of excess winter deaths throughout England and Wales last winter exceeded 50,000. As we have already heard, that is the highest recorded number for more than 40 years. The figures were described by the charity National Energy Action as “preventable and shameful”. According to that same group, at least 10,000 of those premature deaths were due to vulnerable people being unable to heat their homes adequately. I would like Members to reflect on the people behind those numbers. It means somebody’s neighbour, somebody’s parent, and somebody’s child—10,000 people dying before their time just because they could not keep warm.

The terrible impact extends beyond preventable deaths. I have previously mentioned the impact on health. We know that children living in fuel poverty are twice as likely to suffer from respiratory problems, such as asthma and bronchitis, and that fuel poverty is associated with low weight gains in infants and higher levels of hospital admissions in the first three years of life. Adolescents living in cold homes are at five times the risk of having multiple mental health problems. On top of that, there are the negative effects on educational performance, emotional resilience and wellbeing. When combined with the fact that fuel poverty is not evenly distributed throughout the country, but concentrated in pockets of urban and rural poverty, we have the makings of what can only be described as a social crisis. In some parts of my constituency, fuel poverty affects one quarter of all households, and over one quarter of single-parent households. We know that it is a problem locally because, between April 2017 and March 2018, of those people who came to a citizens advice bureau in Salford and Eccles about energy issues, the most common was dealing with fuel debt repayments.

In last year’s debate, I stated that 22% of households in Salford have prepayment meters compared with the national average of 15%, so I was particularly troubled by a report this year by Citizens Advice on the phenomenon of self-disconnection by those using prepayment meters. The report found that around 140,000 households in Great Britain could not afford to top up their meter in the past 12 months and that 88% of those households contained a child or someone with a long-term health issue. Half of those surveyed said that keeping their meter topped up was a daily concern, which is particularly shocking when we consider that more than 4 million households currently use prepayment meters.

Fuel poverty is not just an issue for those on prepayment meters. Following an unprecedented number of energy price hikes by suppliers rushing to increase prices in advance of the price cap, about which I will say more later, household energy debt has surged over the past year by 24%. It is often said that fuel poverty is due to the confluence of three factors that we have heard about very briefly already: low income, high fuel prices, and poor energy efficiency. I wish to say a few words about each.

After a decade of austerity and lost growth, annual wages are still £760 lower than they were in 2008. Is it any surprise therefore that 47% of all fuel-poor households in England are in full or part-time work? For those out of work, the benefits freeze has deepened fuel poverty as families, already struggling on very little, have experienced a real-terms income cut. The industry body, the Energy and Utilities Alliance, has noted that the introduction of universal credit, which leaves households without an income during the five-week changeover, is pushing more people towards making the decision not to heat their home and to face the dilemma of heating or eating. Raising the national minimum wage to £10 an hour, ending the welfare freeze, and reversing cuts to people with disabilities would go a long way to tackling absolute poverty, which is at the root of so much fuel poverty.

On the cost of energy, last month Ofgem finally confirmed that an energy price cap will come into force in January 2019. That is almost two years after the Prime Minister first announced a price cap as Conservative policy, and it is set at a level that is hundreds of pounds higher than the cheapest tariffs available. In the intervening period, the big six energy suppliers have hiked their tariffs, some on multiple occasions. Ofgem has announced that the cap is likely to be revised upwards within months of being introduced.

In addition, wholesale prices are rising, I feel obliged to mention research published just yesterday by the UK Energy Research Centre, which finds that a no-deal or hard Brexit could increase electricity generation costs by £270 million a year. That is another reason, if we needed one, to redouble our efforts in this House to avoid no deal or a bad Brexit deal.

Labour’s 2017 manifesto pledged an immediate emergency price cap to ensure that the average dual fuel household energy bill remained below £1,000 per year. Had that cap been introduced in July 2017, it would have saved households £2.85 billion between July 2017 and November 2018.

[James Heappey]

I know the hon. Lady does a lot of reading into energy policy, so she will know that a price cap can only be a temporary correction to the market. What is her longer-term plan for delivering a fairer energy price?

[Rebecca Long Bailey]

The hon. Gentleman is very learned on the topic of fuel poverty, and I agree with what he said. The Labour party has persistently stated that an energy price cap is a sticking plaster while the wider energy market is reformed, because it is not currently working in the interest of consumers. It forms part of the wider plan of Labour’s energy policy portfolio completely to reform the energy system as we know it.

Network costs represent over one quarter of the cost of a gas and electricity bill, but customers have been getting a bad deal. Citizens Advice estimates that network companies will make £7.5 billion in unjustified profits over an eight-year period. A recent report by the Energy and Climate Intelligence Unit found even more excessive returns captured by distribution network operators than Citizens Advice had predicted, with the six distribution network operator parent companies posting an average profit margin of 30.4%. By bringing energy networks back into public ownership, Labour would reinvest and pass on to customers the money currently paid out in dividends.

Industrial Strategy

Debate between James Heappey and Rebecca Long Bailey

Wednesday 18th April 2018 Commons Chamber

[Rebecca Long Bailey]

I completely agree again.

Another issue that has been brought to my attention relates to sector deals. I understand that sectors are ready with proposals for such deals, but there is no clear structure or process in place for them to follow. For example, the rail industry has had a proposal for a sector deal ready since October, and the plan would deliver transformation across rail over the next 20 years, including new approaches that will cut the cost of digital signalling, addressing capacity issues and reliability. Perhaps the Minister will explain to the House what the delay is. How many proposals for sector deals has he received and how many have been agreed? Perhaps he will also commit to setting out in clear guidance, accessible to all businesses, how to go about pitching for a sector deal? Finally, will he update us on the implementation of the “Made Smarter” review? It was effectively ready to go, but I am sad to say that it received only a few cursory lines in the Government’s industrial strategy White Paper.

In short, Mr Deputy Speaker, as I am sure you have gleaned from my comments, the Government's industrial strategy, as drafted, is inadequate. While they now recognise the importance of an industrial strategy—well done—they are not prepared to use the full policy levers at their disposal to achieve it.

[James Heappey]

Following the shadow Secretary of State’s consultations with businesses around the country, will she name just one that agrees with Labour’s plans for nationalisation?

[Rebecca Long Bailey]

I would not want to put on the record in public the names of any specific companies without their consent, but there has been resounding support for Labour’s approach to the industrial strategy, because we are prepared to invest in our country’s future and to provide the support that businesses deserve. I am afraid that I hear time and again from businesses that the Conservative party simply does not listen anymore.

Domestic Gas and Electricity (Tariff Cap) Bill

Debate between James Heappey and Rebecca Long Bailey

2nd reading: House of Commons
Tuesday 6th March 2018 Commons Chamber

[Rebecca Long Bailey (Salford and Eccles) (Lab)]

I am pleased that the Bill is before the House today, but I must express my exasperation that it has taken so long to get to this point. The 2017 Conservative manifesto committed to implementing an energy price cap that would protect 17 million households. The Government then repeatedly rowed back on that promise, passing responsibility to Ofgem, which made it clear that legislation was required. After months of to-ing and fro-ing, the Prime Minister reintroduced her commitment in her conference speech, and finally, on 11 October, a draft Bill was published. That Bill was then passed to the Business, Energy and Industrial Strategy Committee for pre-legislative scrutiny, which, due to the thorough work rightly done by colleagues, was not completed until mid-February. At the same time, a leaked conversation between the civil service and an energy investor seemed to suggest that the Government had no intention of seeing through the legislation. So yes, I was relieved last week to finally see the Bill introduced to Parliament, and I welcome the Government’s foray into a policy that they previously denounced as Marxist, but it remains the case that, as a result of this Government’s inaction, millions of households have been left to scrape through the winter facing a choice between cold homes or astronomical bills.

As all hon. Members will be aware, the UK experienced one of its coldest periods for decades over the past week, with the Met Office reporting that the UK had officially broken its record for the lowest March temperatures in a 24-hour period on Friday. As a result of this Government’s dithering and delay, the 4 million households currently living in fuel poverty, 1 million of which include a disabled person, will be receiving whopping bills at the end of the month. Startlingly, the latest figures from National Energy Action for the winter of 2016-17 show that excess winter deaths were 39.5% higher than in the year before, with an estimated 34,300 excess winter deaths in England and Wales.

[James Heappey]

The hon. Lady underlines the fact that the harshness of the recent weather will have increased energy bills for millions of people. Was she therefore as impressed as I was by the speed at which emergency payments were made to the most vulnerable to help them with their additional heating costs?

[Rebecca Long Bailey]

The emergency payments were certainly welcome—I thank the hon. Gentleman for his comment—but the fact remains that this price cap should have been in place this winter and it was not.

National Energy Action also found that each year an average of 9,700 people die due to living in a cold home. That equates to 80 people per day, the same number of people who die from breast or prostate cancer each year. It has been Labour party policy since 2013 to introduce a price cap on consumer energy bills, and although the principle of this Bill is positive, I remain concerned that, as drafted, it does not go far enough.

--- Later in debate ---

[Rebecca Long Bailey]

The hon. Gentleman makes an important point, and I will refer to this later in my submission. The Bill does not provide an answer to the broken energy market; it is simply a sticking plaster while the energy market is reformed. We would not expect the provision to be in place for a prolonged period. We are not openly against sunset provisions, although we might dispute how they are drafted, which we will explore in Committee.

In considering the cap removal, I must raise an issue that was highlighted recently by the Business, Energy and Industrial Strategy Committee. It found that vulnerable and low-income people were especially affected by poor-value tariffs, with 83% of those living in social rented housing, 75% of those on low incomes, 73% of those with no qualifications and 74% of disabled customers on a standard variable contract. It was clear from the Committee’s findings that, even with the advent of smart meters, those groups will still require protection from overcharging. I therefore urge the Government to consider representations by charities such as Scope, which has called for clause 7 to be amended to ensure that Ofgem, when it considers “effective competition”, has regard to the impact of removing or extending the cap in relation to vulnerable and disabled customers.

Finally on the drafting of the Bill, I am concerned that there is no guarantee that the price cap will be in place this winter, despite the Secretary of State’s earlier assertions. The Bill states that Ofgem must introduce a cap “as soon as practicable” after it is passed, but Ofgem has already said that it would take around five months after a Bill receives Royal Assent to enact a price cap because it has a statutory duty to consult power companies. This morning Ofgem has said that it

“will look to set the level of the cap over the autumn and bring the cap into effect at the end of this year”.

It therefore seems that the cap will not even be in place when the weather turns in autumn this year. I think that the Bill would be greatly improved by the inclusion of a hard deadline by which the cap must be in place, and Labour will be seeking to include such a deadline in Committee.

Given that the Government have already set the date for Committee consideration as 15 March, it would be encouraging if they provided a clear date for cap implementation because, even accounting for the relevant consultation periods set out in the Bill, it would be possible to introduce the cap earlier than next winter. Indeed, my advice is that including such a date might even lay to rest suggestions in some press reports that the big six, and indeed some members of the Cabinet, have been lobbying the Secretary of State to procrastinate or even drop the Bill entirely.

[James Heappey]

The shadow Secretary of State is kind to give way to me a second time. Does she agree that another option she might consider to help to introduce the cap as quickly as possible would be for her party to pledge its full support in helping to get the Bill through the House and the other place as quickly as possible?

[Rebecca Long Bailey]

I thank the hon. Gentleman for that very helpful comment. I have not opposed the Bill in any of my comments so far; I am providing helpful advice. We support the principle of a price cap and want it to be introduced in the most efficient and detailed way possible.

I think that there is consensus across the House that the energy price cap is no more than a sticking plaster, and that much deeper problems within the UK’s energy market need to be addressed. The market is fundamentally broken. Electricity bills soared by 20% between 2007 and 2013, while in the past year alone, every household in the UK paid £120 for dividends to energy company shareholders. Over the past few months, report after report and news story after news story have detailed the unfairness of the current system, but it must be noted that the final bills that consumers face are not simply a consequence of manipulation by some supply companies. As the Business, Energy and Industrial Strategy Committee has highlighted, network costs make up the second highest element of a duel fuel energy bill.

The Energy and Climate Intelligence Unit found last year that the six distribution network operators made an average profit margin after tax of 32% a year between 2010 and 2015, equating to £10 billion over six years. At the same time, shareholders received £5.1 billion in dividends. In a subsequent report, the ECIU calculated that electricity network companies’ exceptionally high profits are set to add £20 to household energy bills this year. Moreover, analysis by Citizens Advice last year calculated that network operators, including National Grid, had made £7.5 billion in unjustified profits, which it thinks should be returned to consumers. Quite frankly, that is the exploitation of a natural monopoly. It is not a market and there is no effective competition, and I want to hear how the Minister will deal with competition within this element of the energy market.