Fuel Poverty

Albert Owen Excerpts

Wednesday 26th October 2011 Westminster Hall

[Gregory Barker]

Absolutely. The rural fuel poor are the hardest hit of all. In the last years of the previous Labour Government, they saw, in real terms, the cost of heating their homes increase by 130%—absolutely iniquitous.

[Albert Owen (Ynys Môn) (Lab)]

The Minister will be aware that fuel poverty has been rising in the past 18 months as well. We had one of the coldest winters, and external factors contributed to that. With regard to off-grid, the Minister of State, Department of Energy and Climate Change, the hon. Member for Wealden (Charles Hendry) conceded that he would meet with myself and other hon. Members. Is the Minister saying that he will look at the possibility of Ofgem, the regulator, giving the same protection to people who are off-grid as it does to those who are on the gas mains? They need that protection against fuel suppliers, not competition and regulation.

[Gregory Barker]

The hon. Gentleman makes a valid point. Protection in this area is overseen by my hon. Friend the Minister of State, who has that portfolio responsibility. I am sure that he will be pleased to meet with the hon. Gentleman and his colleagues to discuss this matter, because we are concerned about fairness and practices that have been going on among the heating oil distributors. I know that my hon. Friend takes this issue very seriously.

The independent report being prepared by Professor Hills focuses on whether fuel poverty is distinct from poverty and why measurement is important. It provides an assessment of the current definition of fuel poverty, and identifies and analyses possible modifications and alternatives to the existing definition. I do not wish to be frivolous, but it has been pointed out that under the current definition of fuel poverty Her Majesty the Queen would be in danger of being tipped into those defined as fuel poor, because it takes more than 8.9% of the royal grant to heat the historic royal palaces. We have to ensure that the definition captures those who are in genuine poverty, rather than the more well-off who are making lifestyle choices in spending their income on such things. We have to ensure that we focus our precious resources on those who are genuinely the most vulnerable.

Tackling fuel poverty will be a huge challenge and a key part of the solution is undoubtedly to address the thermal efficiency of the UK housing stock. Britain has some of the oldest, leakiest and most expensive homes to heat in Europe. We urgently need to address this issue. We do not have the highest energy costs; we have among the highest energy bills, because we have to waste so much heating to actually keep warm. Both the carbon emissions reduction target and Warm Front, measures started under the previous Government are continuing, with work being done in the homes of some of those most at risk. However, we recognise that if we were to just continue with these measures, specifically with Warm Front, it would never get us close to meeting our statutory target of eliminating fuel poverty. In fact, Warm Front would take approximately 80 years to get close to dealing with fuel poverty.

We need a game changer and that game changer is the green deal. The coalition flagship Energy Bill, which contains the green deal, has now received Royal Assent. That is a significant milestone on the journey to launching the most ambitious home-improvement programme since the second world war. We expect to commence a public consultation shortly on secondary legislation to develop the precise design and scope of the scheme. We are working closely with the devolved Administrations to ensure that the green deal can be rolled out at scale, really ambitiously, right across Great Britain.

The green deal is necessary to deliver our objectives, but on a dramatically more ambitious scale than anything that has gone before. We aim to retrofit 14 million households by the early 2020s. Assistance for the fuel poor and targeting the most vulnerable will be at the forefront of this action. The domestic green deal is an opportunity for all householders, whether in the private sector, social rented sector or private rented sector, to improve the energy efficiency of their homes at no up-front cost. It will help protect people against price rises in the future through greater energy saving now.

However, there are drawbacks and we appreciate the particular needs and constraints of the most fuel poor. Green deal installations are paid for through future savings, and we realise that they may not be the full answer for all households. As the hon. Member for Islwyn pointed out, it is no good projecting savings on heating a whole house if the widow living there is only able to heat one room. We recognise fully the need for a substantial element of subsidy for the most vulnerable and fuel poor. That is why we will also introduce a new energy company obligation. Integrating the green deal and the ECO will provide further support for those homes that need it most.

We want to ensure that everyone who wants to can access high quality energy efficiency measures, so that they can cut their emissions and heat their homes more affordably, as well as creating a warmer, more comfortable and liveable home environment. The ECO will assist the poorest and most vulnerable households to an affordable warmth target, providing up-front support for thermal performance measures to help households to heat their homes more affordably. In developing the green deal and the ECO, we are removing the barriers to take-up, raising awareness and showcasing benefits to make energy efficiency a no-brainer for everyone.

We are aware that the long-term solution to the iniquity of fuel poverty is to renovate the UK’s building stock. However, we also need solutions to keep people warm this winter, and the coalition is requiring suppliers to provide a rebate of £120 to some of the poorest pensioners through the new warm home discount. We are also providing winter fuel payments and, if we get the anticipated cold snaps, cold weather payments. We recognise that energy prices are hitting many households hard at a difficult time, and understand consumers’ concerns about rising energy bills. That is why we have obtained a voluntary agreement with the suppliers, who will be writing to 8 million customers to advise on how to save money by changing to a cheaper tariff and will place a cheaper tariff signpost on the front page of most bills. Bills are far too complicated, and they need to be simplified and send much clearer messages to vulnerable and general consumers about how to save money.

[Albert Owen]

I support energy efficiency measures and Ofgem’s recommendations for simplifying bills, but does the Minister agree that it is perverse how many energy companies currently charge low users more money? Low users are often the vulnerable people mentioned by my hon. Friend the Member for Islwyn. Was that issue raised at the Downing street summit so that the companies got a clear message that they should not be punishing those low users?

[Gregory Barker]

The Secretary of State was at the summit, but unfortunately I was overseas. I will happily write to the hon. Gentleman to summarise the key issues discussed, but I can assure him that such issues are at the forefront of our minds when we are making policy.

This is the first year of the warm home discount, and we will assist around 2 million vulnerable households. Many will be low-income pensioner households—exactly the sort of constituent discussed by the hon. Member for Islwyn—who are in receipt only of pension credit guarantee credit. We expect to find more than 600,000 of them and to provide them with a £120 rebate off their bill. Most will receive a rebate without even having to claim, a major benefit to such vulnerable people who might struggle with forms or not realise that they can make a claim. The data-matching process to identify automatically the recipient low-income pensioners for this winter is currently under way, and the call centre is now open to take general enquiries regarding the scheme. Over the four years of the scheme, it will be worth up to £1.1 billion which, at a time of widespread budgetary pressures, is a significant increase in funding on the previous voluntary agreement that also assisted many households under the previous Government.

Fuel bills in the winter months can account for around 60% of the year’s total fuel bill. By working with other Departments, we can ensure that we are reaching the most vulnerable with the assistance that they need. The Department for Work and Pensions provides winter fuel payments of £300 to those over the age of 80 and £200 to those over 60. Those payments provide assurance to older people that they can keep warm during the colder winter months, knowing that they will receive significant help with their fuel bills. In addition, the Government have permanently increased the cold weather payment from £8.50 a week to £25 a week, providing real help to those most vulnerable to the cold. Last winter, we made 17 million cold weather payments, worth an estimated £430 million of direct help to low-income vulnerable households when they need it most—