Low-Income Families: Energy Cost Support

Lord Callanan Excerpts

Tuesday 6th September 2022 Lords Chamber

[Lord Wood of Anfield]

To ask Her Majesty’s Government what further support they plan to provide for low-income families who do not pay income tax, to help meet their rising energy costs.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, we are making necessary preparations to ensure that a new Government will have options to deliver additional support as quickly as possible. Further to the support measures announced in May, the Government will of course continue to support low-income and fuel-poor households with their energy bills through the warm home discount, winter fuel payments and the cold weather payments scheme to ensure that the most vulnerable are better able to heat their homes over the cold winter months.

[Lord Wood of Anfield (Lab)]

My Lords, the incoming Prime Minister spent the summer repeatedly pledging income tax cuts, yet 43% of adults, including those in the greatest need, pay no income tax and would not benefit from this. Meanwhile, her pledge to reverse the national insurance rise will give the poorest 10% of households £7.60 per year and the richest 10% £1,800 per year. When asked about this, the new Prime Minister said,

“to look at everything through the lens of redistribution … is wrong”.

Does the Minister think it fair at a time of such widespread fear among low-income households to prioritise income tax cuts that would give the most frightened families no help whatsoever?

[Lord Callanan (Con)]

The noble Lord is commenting on proposals that he has not yet seen. The House will not have long to wait, and a lot of options have been worked on over the summer. As well as putting preparations in place for the Energy Bills Support Scheme, which I remind the House will be rolled out from 1 October in a series of monthly payments, other options have been prepared. The energy price rise is unprecedented, and we all know the reasons for that. The noble Lord will have to be patient and wait and see what we announce.

[Lord Forsyth of Drumlean (Con)]

My Lords, does my noble friend not agree that the reason why 46% do not pay income tax is that this Government have raised their thresholds? If it was right to pay an extra £20 in universal credit during lockdown, when circumstances were bad—they are considerably worse now—should we not look to increase universal credit payments on a temporary basis?

[Lord Callanan (Con)]

My noble friend makes powerful points on both the issues that he raises. Of course, we should be proud of our record in taking the lowest paid out of income tax altogether, but I am sure that the new PM will want to bear my noble friend’s words in mind.

[Lord Addington (LD)]

My Lords, if we are going to give these assistance packages, would it not be a good idea to have a document that clearly states the Government’s thinking and what will be sacrificed? If we get it wrong, we will end up paying for this primarily in the health service.

[Lord Callanan (Con)]

I am not quite sure that I understand the noble Lord’s point. Of course, all of the appropriate documentation would be produced. With a lot of these schemes, it is easy to bandy around large numbers, as we have seen recently, but they take a lot of time to implement. Officials in my department have been working solidly over the summer to implement the last package of announcements—the Energy Bills Support Scheme—which is why it is now ready to go, from the first of next month. A considerable amount of very swift work would be required to implement a new package as well.

[Baroness Finlay of Llandaff (CB)]

Do the Government recognise that there are clinically vulnerable people whose lives depend on the equipment they have at home, such as oxygen concentrators, pressure-relieving mattresses and ventilators, as well as warmth in cold weather, of course? These people must be placed on a “clinically vulnerable” list that must be kept up to date to ensure that their electricity supply is not cut off if they are unable to pay their bills. They need additional financial help; otherwise, as has been suggested, they will end up being emergency hospital admissions to an NHS that already cannot cope with the pressures on it.

[Lord Callanan (Con)]

I agree with the noble Baroness. She listed one particularly vulnerable group but there are others, as well as many small businesses, who will suffer because of the high energy prices at the moment. We are all aware of that and we all know the problem. Of course, coming up with solutions is difficult and potentially expensive, but we are working on it.

[The Lord Bishop of Oxford]

My Lords, it is very good to hear that a plan is in place to address this catastrophe, which is concerning so many people, and to bring help to households. What steps will the Government take to address this fundamental failure of the market, such that huge, almost unimaginable profits are accruing to energy companies, while the poorest in the country face the dreadful choice between heating and eating?

[Lord Callanan (Con)]

The right reverend Prelate is not correct about that. It depends on which energy companies he is talking about: many of the energy suppliers have gone bankrupt over the last year or are making very marginal profits. Some producers, often in other parts of the world, are making very large profits. There are issues to do with some of the early renewable power obligation companies, which are also doing well. Under the latest contracts for difference schemes, that money is being recouped from the taxpayer. In all of these things, it is easy to make these observations but of course, it is an overly complicated situation.

[Lord Lennie (Lab)]

My Lords, following on from the right reverend Prelate’s question, figures from the University of York suggest that four in five households will face fuel poverty by January and millions of people are struggling to make ends meet. The i newspaper reported yesterday that the new PM is following the pattern of the former PM and doing a screeching U-turn, now saying that direct intervention in the fuel crisis is necessary and following Labour’s proposal to freeze energy bills. Can the Minister tell us if and when we can expect this to be delivered?

--- Later in debate ---

[Lord Callanan (Con)]

The noble Lord will, as I said to the noble Lord, Lord Wood, have to be patient and allow the PM to look at all the various options. I know that she has been doing work on this over the last few days, and I am sure that the House will not have long to wait.

[Baroness Browning (Con)]

Will my noble friend take a particular interest in those who are entirely dependent on benefits—disability benefits in particular—and for whom that is their only source of income? I declare an interest, having some responsibility for close relatives in this position. Whatever happens in the future, to date people on employment support allowance, for example, are divided into two groups: those deemed to be contributors through their past national insurance contributions and who are eligible for the grants that are available now, and those who have not had that experience and get nothing. This seems to be the worst form of discrimination.

[Lord Callanan (Con)]

I think my noble friend is talking about the warm homes discount, which we retargeted in the summer. Another three-quarters of a million people became eligible for it—some three million people are now eligible—and we were trying to target it at the most vulnerable. Clearly, there are lots of different groups that we will need to look at very closely.

[Lord Vaux of Harrowden (CB)]

My Lords, my postman asked me a question the other day that I was not able to answer, so I hope the Minister can help. He is on a tariff that guarantees him 100% renewable electricity. The cost of generating renewable electricity has fallen, yet his bill is more than doubling. He does not understand this, and neither do I. Either these renewable tariffs are nothing of the sort—they are just greenwashing—or companies must be profiteering outrageously. Which is it? If it is profiteering, is it right that the taxpayer should subsidise that?

[Lord Callanan (Con)]

That is another good question, and the answer is complicated. The marginal rate of electricity is set because of the highest contributor to that, which is gas-fired generation at the moment. This is why we have launched the review of market arrangements, which is looking urgently at that exact situation. The noble Lord makes a powerful point.

[Lord Sikka (Lab)]

My Lords, I have spent the last few weeks visiting pawnbrokers across parts of London to see how the people at the bottom of the pile are managing. They are pawning vacuum cleaners, microwave ovens, radios, televisions, bicycles and DIY tools. One lady even pawned a toaster so that she could get £5 to buy a birthday card and a present for her friend. That is the level of abject poverty we have at the bottom. Can the Minister invite the Prime Minister on my behalf to accompany me to visit the pawnbrokers and see for herself what has happened to the people under this Government?

[Lord Callanan (Con)]

I am not sure that pawnbrokers have necessarily arisen just under this Government. However, I totally accept the general point the noble Lord is making: there are many people—actually, on all income levels—who are suffering because of this crisis, which we all know was caused ultimately by Putin’s invasion of Ukraine. This is a difficult problem, and there are no simple and easy answers. All the potential solutions are very expensive and need to be looked at closely, and I am sure that the PM will do that.

[Baroness Garden of Frognal (LD)]

Can the Minister please confirm that the Government are still intending to give £400 to all households, regardless of their income, and two or three times that amount if they happen to own two or three properties? Why are they not redistributing that money to those who really need it?

[Lord Callanan (Con)]

Yes, that is the intention. Again, the reasons for it are long and complex, as I just explained to the noble Baroness. By far the largest package of the support measures that were announced is in fact going to those on the lowest income. Having said that, there is a recognition that those who do not necessarily rely on benefits and are not on the lowest income—perhaps what is referred to as the “just about managing”—are also suffering and deserve some help. It is very difficult with current policies to target support directly at those people. We wanted to get the support out as quickly as possible, and that is the reason why one element of the package was universal—to ensure that support goes to those “just about managing” as well. However, as I said, the majority of the package is targeted at those on the lowest incomes—which is correct.