Electricity

Alan Brown Excerpts

Tuesday 27th April 2021 Commons Chamber

[The Minister for Business, Energy and Clean Growth (Anne-Marie Trevelyan)]

I beg to move,

That the draft Warm Home Discount (Miscellaneous Amendments) Regulations 2021, which were laid before this House on 3 March, be approved.

The House may be aware that in October 2020 the Government consulted on the proposed one-year extension of the warm home discount scheme. The changes proposed were broadly welcomed, and these regulations will implement them.

The Government are committed to alleviating fuel poverty. In the sustainable warmth strategy, published in February, the Government restated our commitment to our statutory target to upgrade as many fuel-poor homes as is reasonably practical to at least an energy efficiency rating of band C by the end of 2030. The best long-term solution is to improve the energy efficiency of a home, thereby bringing down the cost of heating it, but that takes time and some homes, especially those that are harder to treat, may be left behind.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

I thank the Minister for giving way so early. Are there any interim targets for upgrading homes to energy performance certificate band C? What is meant by practical, cost-effective and reasonable costs? Can those terms be defined, or are they left for others to judge?

[Anne-Marie Trevelyan]

If the hon. Gentlemen waits, we may be able to provide him with some more information.

As well as reaching millions of people each year, energy bill rebates are simple to deliver and consumer friendly. The warm home discount is therefore a key policy in our policy mix to help alleviate fuel poverty. Since 2011, the warm home discount has helped more than 2 million low-income and vulnerable households each year by reducing their energy bills at the time of year when that is most needed. Under the current scheme, around 1 million low-income pensioners in receipt of pension credit guarantee credit receive the £140 warm home discount as an automatic rebate on their energy bills, and more than 1.2 million low-income and vulnerable households receive the rebate following an application to their participating energy supplier.

Building on the success of the scheme, the energy White Paper committed to extending the scheme to at least 2025-26, expanding the overall spending envelope to £475 million a year from 2022 and consulting on reforms to improve the fuel poverty targeting weight. We intend to consult on the future scheme later this year.

Reforming the scheme has long lead times, however, and this winter I want to prioritise the safe and timely delivery of rebates to ensure that those in need continue to receive this vital support, particularly given the continuing impacts of covid-19. It is therefore important that minimal changes are made to the scheme for next winter. This will mean that the scheme will be worth £354 million and that eligible pensioners on pension credit guarantee credit, as well as eligible vulnerable households supported through the broader group, can continue to receive £140 off their energy bills.

We will also not be amending the current energy supplier participation thresholds, as any change now, with such limited time for implementation, could cause significant and potentially damaging administrative and financial challenges for smaller energy suppliers. We intend to review that for the future reform.

We are, however, making some improvements to the industry initiatives part of the scheme. That includes lifting the restriction on providing financial assistance under industry initiatives to those eligible for a rebate, which will create greater flexibility and help more people during the covid-19 pandemic. We will keep the current overall cap of £6 million for the energy debt write-off mechanism, but we will also introduce a new individual cap of £2,000, enabling support to reach a greater number of households in need.

We will additionally be making changes so that proposed industry initiatives and specified activities will ensure, so far as reasonably practicable, that advice on the benefits of smart meters is provided to households benefiting from the industry initiative or specified activity. During the covid-19 pandemic, smart meters have been invaluable for energy consumers, allowing prepayment customers to top up remotely from home, while also enabling suppliers to offer timely support to vulnerable customers. We are also introducing greater consumer protections for boiler and central heating system installations and repairs carried out under the scheme.

Finally, we are proposing to make some further operational changes this year. That includes introducing a requirement for the Gas and Electricity Markets Authority to inform the Secretary of State if an electricity supplier that becomes a supplier of last resort notifies the authority of its intention to meet all or part of a failed supplier’s non-core spending obligation. This additionally includes making changes to clarify the full extent of the small suppliers scheme obligations when it passes the relevant threshold and becomes newly subject to the non-core spending obligation.

To conclude, the regulations extend the warm home discount until March 2022, which will help more than 2.2 million households this coming winter. The regulations will provide vital support for low-income and vulnerable customers to keep warm this winter in advance of consulting on wider scheme reform from 2022. I commend the regulations to the House.

--- Later in debate ---

[Rob Roberts (Delyn) (Con)]

Thank you, Mr Deputy Speaker, for calling me to speak on this important motion today. I do so not only as the Member for Delyn but as the chair of the all-party group on fuel poverty and energy efficiency. The motion that we are debating is one of the biggest steps that we can take towards tackling fuel poverty in our country and, as seems to be the case throughout the House, I wholeheartedly support it.

Fuel poverty is one of the most pressing issues of the 21st century, so I am proud to see that this Government are committed to doing all they can to make sure that every household is able to afford to properly heat their home. While it is positive that fuel poverty rates have fallen in recent years—around 12% of households in Wales are now classed as fuel-poor—there is still much more to be done. But with definitions and methodologies being different in all four constituent parts of the UK, it is impossible to compare which measures have been most successful in driving down those rates. One of the things that my APPG will look into is whether we can get a UK-wide agreement on a single definition of fuel poverty, so that we can get a real understanding of the depth of the issue and the disparities between different parts of the country.

Although I am pleased to see the UK Government’s ambitious plans to tackle fuel poverty, whether that is through financial support or improving the energy efficiency of homes, as a Welsh MP, I find myself once again a little disappointed by the lack of action from the Labour Government in Wales. The Welsh Government have proved once again to be all talk and no action, with Welsh Labour setting targets to eradicate fuel poverty in Wales by 2010, then again by 2012, and then again by 2018. Sadly, they have failed to meet this target time and again, not even coming close. It is the most vulnerable households in Delyn and across Wales who will ultimately pay the price for those failings. However, with covid causing further strain on household finances, I am glad to see the UK Government go beyond setting arbitrary targets and look instead to provide real support and solutions for those who need them most. Schemes such as the warm home discount, which are available to households in Wales and throughout Britain, are more important than ever and are a lifeline for many over the winter months.

[Alan Brown]

I am sure the hon. Gentleman will accept that, if someone is fuel-poor, the reality is that they probably live in a household where they are poor anyway. They are living in poverty and one of the causes of poverty is the reduction in welfare and benefits, which is clearly reserved to Westminster. Does he acknowledge that that is a problem? Also, has his APPG looked at investment in energy efficiency in Scotland, where it is four times per capita that of Westminster?

[Rob Roberts]

I thank the hon. Gentleman for his intervention, which kind of highlights one of the issues that I mentioned, which is the disparity in the definitions of what fuel poverty actually means in each of the four constituent parts. I mentioned that 12% of households in Wales are classed as fuel-poor. Although I did not note it down, I believe that the percentage in Scotland was 24%, so I am not entirely sure that trumpeting the successes of the Scottish Government would be a good thing in that case.

Quite simply, with over 2.2 million low-income and vulnerable households in Britain benefiting from the scheme each year, it is the correct and best decision to extend it for a further 12 months, but increasing the overall spending target of the scheme to £354 million will see even more households able to access the support that they need. Following proper consultation, I also welcome the changes that the Government are bringing in, which will broaden the reach of the scheme and give energy companies more flexibility, making it easier for households to participate in the scheme.

From increasing consumer protection during boiler and central heating installation and repairs to removing the restriction on energy suppliers that prevents them from providing emergency support on top of the scheme, all these small changes will make a huge difference to those who benefit from it. Although there is room to improve the scheme, I am enthused to hear that the Government have considered the importance of the industry initiatives element when looking at the future of the scheme. But it is vital that we pass these regulations now; otherwise, millions of households who are struggling due to the pandemic would be put in an even more challenging situation. I agree with the hon. Member for Southampton, Test (Dr Whitehead), the Opposition Front Bencher, on seeking more long-term clarity, rather than continued short-term measures.

I thank everyone who has put in to speak today on this important matter and welcome them all to attend our next APPG meeting towards the end of May. We will continue to work with the Government and discuss ways to improve domestic energy efficiency, to achieve affordable warmth for all homes and to eventually and finally eradicate fuel poverty. Heating a home should never be a luxury; it is always a necessity. Today’s motion and ones like it recognise the need among the most vulnerable households in our communities and ensure that they can live comfortably, secure in the knowledge that they are able to get assistance in properly heating their homes. I hope that the measures are supported on both sides of the House.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

Obviously, I welcome any moves to alleviate fuel poverty. The Scottish Government have provided a legislative consent motion for the draft regulations, so clearly I will not vote against them. However, the reality is that, although we welcome the measures and, as the shadow Minister said, the warm homes discount scheme has been a success, in many ways, it is a typical Tory trick, because it uses energy companies themselves and other bill payers to provide assistance to the most vulnerable. The reality is that we need much more direct UK Government investment, particularly in energy efficiency.

Recent schemes that were supposed to help with energy efficiency include the failed green deal scheme. The UK Government still have not provided compensation for those who were mis-sold green deal installations. We have just seen the failure of the green homes grant scheme. It is ridiculous that the UK Government pulled the money because the scheme was deemed to be too slow at helping people. Long-term funding is required to allow businesses to invest and to prepare for a pipeline of work, rather than the boom-and-bust cycles that we have at the moment.

Fuel poverty is a scourge of society, with something like 3.5 million homes considered to be in fuel poverty in 2018. It is known that the problem has increased in the past year due to the pandemic and people losing employment; yet the figures in paragraph 7.5 of the explanatory memorandum show only an inflationary increase to the funding available through the scheme. I therefore ask the Minister how many additional households she thinks require further support to alleviate fuel poverty, and how many will miss out because of that standing-still approach to the funding pot.

The Minister touched on the fact that imposing a cap of £2,000 for debt assistance will allow more people to be helped, so how many more people will be helped and how many people were previously helped at debt levels over £2,000 who will still have debt, even if they get assistance through the scheme? What is her response to the Committee on Fuel Poverty, which says that only 15% of the UK Government spend on fuel poverty actually reaches the fuel-poor? Will she listen to recommendations from industry, the third sector and the Business, Energy and Industrial Strategy Committee about investing directly in energy-efficiency measures and following the lead of the Scottish Government in terms of per capita investment, which, as I have said, is four times that of Westminster.

Will the Government consider that the Scottish Government are treating energy efficiency as a national infrastructure project, and when will we see proper joined-up policies looking at the long term? Will the Minister consider the call from the Environmental Audit Committee to reduce VAT on the refurbishment of energy efficiency installations in existing homes?

Paragraph 7.2 of the explanatory memorandum states that the Energy White Paper commits

“to all homes to reach EPC C standard by 2035”,

so as per my earlier intervention I am hoping that the Minister can clarify what “practical, cost-effective and affordable” means, and whether the Government will set that out. Paragraph 7.7 details that the funding envelope will rise to £475 million in 2022, from £354 million this year. Obviously, additional support for the fuel-poor is welcome, but on what basis has the additional £121 million been identified? How can a figure be derived when the same paragraph—7.7—states that there needs to be a consultation on scheme reform to better target fuel poverty? Surely good governance is about identifying a need and then identifying strategies and solutions to meet that need, rather than coming up with a figure and trying to work backwards to find a solution that meets the figure.

What will that £475 million look like for the average bill payer? Between the warm homes discount, contracts for difference, smart meters and other initiatives, what does it all mean for bill payers such as the previously fabled “just about managing”? Many people are struggling and the reality is that the more that gets lumped on energy bills, the more difficult it becomes for them to afford their heating.

Is the increased funding and consultation an admission that the current scheme is not hitting the right number of people, or the correct fuel-poor households? Paragraph 7.6 outlines that

“installations or repairs of boilers and central heating systems”

are required to be done through companies under the TrustMark scheme. I give a cautious welcome to that as well, but I would like to double check how reliable the scheme is, and what BEIS’s governance protocols are on it. I have already highlighted the green deal fiasco, where accreditation was far too easy for unscrupulous companies. I also have constituents who have been ripped off by installers of biomass boilers. Again, those installers were Government-approved contractors. I would just like to double check that the TrustMark scheme is fit for purpose and that the Minister makes sure that it has suitable overarching governance.

To return to fuel poverty and its effects, which is a reminder of why we need more action, roughly 3.5 million homes are fuel-poor. National Energy Action estimates that cold homes contribute to more than 30,000 winter deaths. Fuel poverty has been estimated to cost the NHS across the UK £2.5 billion, with ailments and conditions worsened by cold or damp houses. This is against the backdrop of the need to move away from fossil fuel heating.

I am on the BEIS Committee and we are undertaking a heat decarbonisation inquiry at the moment. We have heard that the overall install cost of a heat pump system is roughly £15,000. What are the Government’s plans to go from 20,000 installs per year to 600,000 per annum in 2028? How will that be paid for? It cannot just be put on the bills of the average bill payer yet again. Some direct Government investment is going to be required.

I implore the Minister to again look at some examples in Scotland. The provision of an independent advice body, Home Energy Scotland, has been welcomed by third sector organisations across the UK. They would like to see Westminster replicate such an independent body to provide free and impartial advice on modifications to the property, how to switch and to help people to make the correct decisions on how to manage their heating systems.

The Scottish Government also run an award-winning national fuel poverty scheme, Warmer Homes Scotland. Households assisted through that are expected to save an average of £325 in their bills. That is quite significant compared with the £140 warm homes discount rebate that the SI provides.

The SNP has pledged to replace the unreliable £25 cold winter payment with an annual £50 winter heating payment, which will cover 400,000 low-income households. Will the Minister look at that in the round, from a Westminster perspective? The SNP has also pledged that, if re-elected, it will introduce a £20 per week child payment, which is clearly going to help families, which then helps to alleviate fuel poverty.

I conclude with a cautious welcome, but really, more direct Government intervention is required if we are going to eliminate fuel poverty.

--- Later in debate ---

[Anne-Marie Trevelyan]

I thank hon. Members for their valuable and insightful contributions to this debate. I will do my best to answer their questions but, as ever, if I fail to do so, my team will make sure that we get back to everyone in due course.

The hon. Member for Southampton, Test (Dr Whitehead) highlighted some of the issues. To reassure him, the reforms will indeed target those most likely to be in fuel poverty as well as protecting the most vulnerable current recipients. He is right that consultation is required, but we felt that the pandemic pressures last year made that inappropriate and incredibly difficult, which is why we are rolling it forward for this year and will bring these consultations into action as quickly as possible. We absolutely recognise the value of industry initiatives, which is why we have expanded their potential use. The reform consultations later this year will include industry initiatives. I hope that reassures him on that front.

My hon. Friend the Member for Delyn (Rob Roberts) raised the really important and genuine challenge that we should try to find a UK-wide definition of fuel poverty. I take on board those things. I have regular meetings with the devolved Administrations on a number of issues, and I will put that on the agenda, because—he is not wrong—trying to think holistically is a really important challenge for this Government. I do not guarantee that I will find an answer immediately, but I absolutely take up the challenge of extending those discussions.

In response to the hon. Member for Kilmarnock and Loudoun (Alan Brown), we do have, as he asked, interim milestones in the fuel poverty strategy of fuel-poor households reaching an energy efficiency rating of band E by 2020 and band D by 2025. Achieving that is indeed a great challenge. However, investment in the local authority schemes element of the green homes grant scheme has increased by £300 million. We have already allocated £500 million across English regions, reaching 50,000 homes, and that will continue to roll out. This is absolutely targeted at reaching the most vulnerable households. Local authorities are making really good use of the fund and getting on with making these really important efficiency adaptations for those of our constituents who are most in need of it.

Turning to the contribution by my hon. Friend the Member for Southend West (Sir David Amess)—his early leadership on this should absolutely be celebrated. I have learned in my short time in this place that if you do not celebrate your achievements, no one else might do it, so I absolutely support his willingness to share. I did not know about that, so it is lovely to discover it. I very much hope that we will continue to reassure his constituents of our commitment, through both this SI and the forthcoming reforms, to really hone this and try to improve its reach even further. He will no doubt be waiting with bated breath for the heat and buildings strategy, which we will be publishing very soon—I would like to say imminently, but it is always hard to know just how clear one can be. Let us go with that. I hope that that will give him a clearer picture of the work we want to do to make sure we crack the efficiency challenge, which accounts for nearly 20% of our carbon emissions, so we have to find ways. It is complicated, with 50 million homes that are built in different ways. It is a huge challenge that we all have to undertake.

In the short term, we have heard from colleagues across the House about the importance of extending the warm home discount scheme that we are here to put through today for a further year. The financial situation that covid-19 has posed for households across the country in the past year has been challenging to say the least, but particularly so for low-income and vulnerable households.

[Alan Brown]

Will the Minister be able to clarify how the £475 million figure was derived? That is an increase of £121 million, which is an increase of almost a third. I am just curious about the workings that said £354 million this year is okay, but we need a massive increase the year after.

[Anne-Marie Trevelyan]

I thank the hon. Gentleman for that intervention, and I will make sure we give him the detail of the figures in due course.

I am really pleased that there is agreement across the House that low-income and vulnerable households should continue to receive the valuable support provided by the warm home discount at a time when they most need it. Over the 10 years of the discount scheme so far, more than £3 billion in direct assistance has been provided to low-income and vulnerable households.