Fuel Poverty

Alistair Carmichael Excerpts

Wednesday 6th November 2024 Westminster Hall

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

I beg to move,

That this House has considered Government policies on tackling fuel poverty.

It is a pleasure to see you in the Chair, Sir Roger. A household in fuel poverty is defined as one that commits more than 10% of its income on energy to maintain a satisfactory heating regime. Fuel poverty includes three elements. The first is the household’s income, from which we compute that 10%; the second is the household’s energy requirements, on which the quality of the housing stock and the availability of cheaper tariffs have an influence; and the third is the fuel prices themselves. It is sobering to think that across the United Kingdom as a whole, no fewer than 6 million households are living in fuel poverty. In Scotland in 2022, some 791,000 households were fuel-poor.

[Sarah Dyke (Glastonbury and Somerton) (LD)]

I have recently received more than 200 emails from pensioners in Glastonbury and Somerton who do not know whether they can afford to turn on the heating this winter. Does my right hon. Friend agree that the Government should provide targeted energy discounts for vulnerable households, to reduce the number of people living in fuel poverty?

[Mr Carmichael]

It will be the first surprise of the day for everyone that the answer is yes. I very much agree that we need that—or if not that, something of the sort. Meaningful action that is fit to meet the needs of the different parts of the United Kingdom is long overdue.

While households in fuel poverty are committing more than 10% of their income, households in extreme fuel poverty are committing more than 20% to meet their energy needs and keep their home warm. In Scotland, there were 311,000 such households in 2019. By 2022, the figure had risen to 472,000.

This issue is particularly acute for us in the northern isles. In Orkney and Shetland, 31% of households live in fuel poverty; the Scottish average, which is higher than that of the rest of the United Kingdom, is 24%. It is not difficult to see why fuel poverty is particularly acute in the northern isles. Winters are longer, darker and colder than in other parts of the country. We are off the gas grid. Most of our homes are heated using electricity, oil and sometimes liquefied petroleum gas or solid fuel. Yes, an increasing number of people are able to use photovoltaics and ground or air-source heat pumps, but the bulk of our heating still comes from conventional sources.

[Helen Grant (Maidstone and Malling) (Con)]

I congratulate the right hon. Gentleman on securing this important debate. I recently visited the home of an elderly pensioner in my constituency. I sat in her freezing cold living room with her for more than an hour while I took instructions on a matter. She was wearing two jumpers, a scarf, thick trousers and boots. She was dressed in that way because she was too afraid to put the heating on, as she did not think she would have the money to pay the bill. Does the right hon. Gentleman agree that the Government’s cruel cut to the winter fuel allowance will have a serious impact on the health and wellbeing of some of our most vulnerable people?

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[Mr Carmichael]

I am sad to say that I do agree. I have seen the same thing time after time in houses across my constituency. I have seen people sitting with two, three or four layers on and a blanket over their knees. If there is any heating, it might come from a single bar on an electric fire or something of the sort. With the winter fuel payment, we have to understand that there is a generational difference: the people who were getting that payment were in large part brought up in an age when people did not borrow; they lived within their means. Taking away that money puts them more acutely at risk than people of other ages. When we devise policy, we sometimes have to look at the social and psychological impact as much as at the political and the economic. The hon. Member makes a good point.

In communities such as mine we have older, much less energy-efficient housing stock. Some elements of last week’s Budget may mitigate the worst effects. It did not have the comprehensive strategy that I wanted, but in the interests of fairness we should acknowledge that if the increase in the minimum wage leads to increased household incomes, it will have an impact on some people living in fuel poverty. The retention of the state pension triple lock will also provide some mitigation. To that extent, those things are welcome, but in the context of the wider influences on fuel poverty, they will hardly hit the sides. The energy price cap has now been put up to £1,717, which is an increase of £150, and it seems likely that there will be a further increase come January. The situation among the fuel-poor is only likely to get worse, which is where the hon. Member’s point about the winter fuel payment comes in.

It is true that the mechanism of pension credit is there to mitigate the worst effects, as I anticipate the Minister will say, but we have known for 20 years that there are problems with all the tax credit schemes and with the variation in uptake across the board. Again, it is a generational thing. Knowing the community that he comes from, the Minister will know that among older people in parts of the country there is still a real stigma attached to a means test. They will always be less likely to apply for something that they could otherwise have been given by right. For those who live in fuel poverty, it now feels as though anything given with one hand is being taken away with the other.

What can we do? What tools have we at our disposal? We have the warm home discount and the energy company obligation scheme, to which I will turn in a minute, but I first wish to raise a couple of more specific issues that relate to tackling fuel poverty in communities such as mine.

The Minister has already heard me raise the question of an isles tariff; in fact, we met earlier this week to discuss it. Orkney and Shetland has been at the heart of supplying the nation’s energy needs for the past 40 or 50 years, as we have played host to the oil and gas industry. Shetland now has one of the biggest onshore wind farm developments anywhere in the country, but in the shadow of the turbines are some of the greatest and most acute problems with fuel poverty. That is now generating genuine frustration. As we play host to major energy developments—latterly renewables—there is very little or no community benefit for those who host them.

Serious attention now needs to be given to the question of an isles tariff. It does not need to be an isles tariff; it could be something that applies across the highlands and islands and in other areas that are particularly badly affected. I am pretty sure that Ofgem will not be keen—as far as I can see, Ofgem is never keen on anything that will actually make a difference—but if it can accept the principle of differential treatment through a social tariff, which is now the subject of a consultation, a geographical tariff should also be given serious consideration.

Many of my constituents rely on electric storage heating. Access to “total heating with total control” tariffs, which were designed by the former hydro board specifically with communities like mine in the highlands and islands in mind, still provides them with the best and cheapest available source of heating. However, it does not allow them to take advantage of different tariffs when switching or other ways of saving money are available. It requires two meters, one of which has two readings. As smart meters are rolled out, it appears that although they may be smart, they are not smart enough to do something that the old technology did quite easily.

There is then the question of the radio teleswitch, which is the delivery mechanism for many tariffs. It is due to be switched off in 2025, as the last of the BBC analogue signal is decommissioned. We all need to cross our fingers and hope it lasts until 2025, because it could quite easily fall over at any point. When it does, the string and chewing gum that are keeping it going at the moment will simply no longer be enough.

Will the Minister give me an update? Before the election, his predecessor agreed to hold a roundtable. The election intervened, but I am pleased to hear that the roundtable went ahead and that the different players were brought together in the room. It appears to have made some progress, but my constituents would be keen to hear the details.

The Government’s manifesto promised a strategy with a warm homes plan, whereby £13.2 billion would be committed to address fuel poverty. The Budget last week allocated £3.4 billion over three years. That is a sizeable chunk of money, but it is not the £13.2 billion that we were promised. Presumably the remaining £9.8 billion will have to come in years four and five of this Parliament if the Government’s commitment is to be met.

I have two problems with that approach. First, it will leave a lot of people in fuel poverty for another three years while they wait for the money to come. Secondly, if the money comes at all, we will be shovelling it into wheelbarrows to get it out over the two years, a situation that always brings the law of unintended consequences into play, as we have seen time and again with energy efficiency measures, renewable energy development and so on. There is money that must be spent within a target time, but there is neither the existing labour force nor the skills base to deliver the work, so a whole load of fly-by-night companies are set up that come into our communities from outside, do substandard work, go away and eventually go bankrupt while constituents are left to pick up the pieces.

It is obviously for the Treasury to decide how the money will be spent, but looking towards years three, four and five of this Government, can the Minister give me some assurance that there is a view towards a strategy that will use the money that is currently committed, that we will have a clear idea, and that we can start planning now how to use any money that comes in future?

The two existing vehicles for alleviating fuel poverty—the warm home discount, which reduces bills by £150 a year for those who qualify, and the energy company obligation, which assists people with energy efficiency adaptations, renewable energy adaptations and so on—are both means-tested, which takes us back to the question of cliff edges. Most concerningly of all, those measures are due to end in 2026 unless they are renewed by the Government. The Minister will have an easier conversation with the Treasury if he bears it in mind that the funding for the schemes comes not from the Treasury but from the energy companies.

We need to know that there is a plan for the continuation of those schemes or for something that will seek to achieve the same end. It would be good if that plan could come as part of a Green or White Paper outlining a strategy. That is what is lacking at the moment: we have a scheme here, a scheme there, an idea of this and an idea of that, but there is no overarching strategy to ensure the best possible delivery. At the beginning of this debate, I gave the stat that 6 million homes across the whole United Kingdom are living in fuel poverty. That is not something that we should be prepared to live with.

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[Mr Angus MacDonald (Inverness, Skye and West Ross-shire) (LD)]

Thank you very much, Sir Roger, for allowing me to contribute to the debate. I thank my right hon. Friend the Member for Orkney and Shetland (Mr Carmichael) for securing it.

The two big issues facing rural Scotland, and the highlands in particular, are the care sector and fuel poverty. I am sure hon. Members have not spent too much time worrying about this, but although the mean daily temperature in London is 16°C, it is 9°C on the island of Skye, where God comes from. On Skye we have longer nights, colder weather, windier conditions and older, draughtier houses. In June this year, the daily standing charge for electricity was 61.1p in the north of Scotland and 40.8p in London, so in the north of Scotland we pay 50% more to be connected to our electricity. That is shocking.

[Mr Carmichael]

Standing charges, which vary massively and randomly across the country—from memory, I think the worst area is actually north Wales—are one thing, but just a couple of weeks ago OVO Energy announced that it would start charging its customers £1.50 every time it sends them a paper bill. Is that not just—I say this, Sir Roger, for the purposes of staying on the right side of you—taking the mick?

[Mr MacDonald]

What is absolutely clear is that the electricity companies are not losing money. Their total profits add up to tens of billions of pounds, but the costs are being borne by the poorest people in our society.

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[Andrew Bowie (West Aberdeenshire and Kincardine) (Con)]

It is an absolute pleasure to serve under your chairmanship this afternoon, Sir Roger, and to join so many colleagues here in Westminster Hall for an incredibly important debate. I congratulate the right hon. Member for Orkney and Shetland (Mr Carmichael) on securing it.

It has been great to hear from colleagues. The hon. Member for Shipley (Anna Dixon) spoke about the removal of the winter fuel allowance and how the push to get more pensioners on to pension credit is incredibly important. However, when the figures suggest that the push for pension credit will actually offset the money being saved by the apparent removal of winter fuel allowance, I wonder whether the Treasury and the Department for Work and Pensions have thought their plans through. The comments by the hon. Member for Winchester (Dr Chambers) about the knock-on impact of fuel poverty on the NHS and charities were well made and should have been listened to carefully by all in this room and beyond.

As ever, the hon. Member for Strangford (Jim Shannon), who is a friend, made powerful points about the unique situation facing residents in Northern Ireland, where so many more houses than in Great Britain are off grid and rely on LPG and oil for their heating. Households over there face unique challenges when combating fuel poverty. As he said, the removal of the winter fuel allowance is a crushing blow for pensioners facing a cold winter this year.

The hon. Member for Wokingham (Clive Jones) raised insulation. I completely get his point. We need to go further and move faster to insulate more homes. I am proud of the Conservative Government’s record on that. We inherited a situation in which only 12% of households had an insulation EPC rating of C or above. When we left office earlier this year, it was up to 41%—a near 30% increase. Could we have gone further? Absolutely. Could we have done more? We absolutely should have. But that was a near 30% increase on the situation in which we found ourselves when we came to office, and that is something about which I am very proud.

[Mr Carmichael]

Is EPC not something else that we could reform? The way in which EPC bandings are rated seems to be utterly random and occasionally quite counter-productive.

[Andrew Bowie]

I agree. I would love to see the Government commit to a review of EPC ratings and how homes are judged. Maybe the Minister will speak to that if there are any plans coming through the Department for Energy Security and Net Zero, or indeed any other Departments that would be responsible for that as well.

The hon. Member for Inverness, Skye and West Ross-shire (Mr MacDonald)—it is taking time to get used to that constituency name—raised some very interesting points and concerns that I share, as I represent a vast rural constituency myself. However, he is entirely wrong: God, of course, comes from Aberdeenshire, not the Isle of Skye, although Skye probably comes a close second.

I wonder what the constituents of the hon. Member for Inverness, Skye and West Ross-shire and the right hon. Member for Orkney and Shetland, as well as companies reliant on the oil and gas sector, think of the Liberal Democrats’ support for the extension of the energy profits levy—something also raised by the Liberal Democrat spokesperson, the hon. Member for Mid Dorset and North Poole (Vikki Slade). As we will be voting on the Budget resolutions in a few hours’ time, they may go away and reconsider their support for those Government measures. The Conservatives will certainly be voting against any extension.

Keeping homes warm this winter will be at the forefront of people’s mind in many households across the United Kingdom. We can feel the temperature falling outside as we speak. As a consequence of various pressures such as Putin’s illegal invasion of Ukraine and the ongoing instability in the middle east, the cost of heating homes has risen and has hit many families hard.

Myriad factors contribute to fuel poverty, including energy efficiency, income, housing costs and energy prices. That is why the Conservative Government took steps to support families to keep their homes warm. Through the energy bills support scheme and the energy price guarantee, we supported households the length and breadth of the UK at the height of the energy crisis. The steps we took amounted to approximately £1,500 for a typical household, covering about half the energy bill of every home in Britain. The warm home discount scheme meant support for 3 million households at risk of fuel poverty: that was 3 million families who could afford to keep warm and keep more of their money in their pocket. We stepped up support for our pensioners, delivering up to £600 in winter fuel payments and pensioner cost of living payments to 11.8 million pensioners. Some 1.1 million cold weather payments, worth £29.6 million, were paid out last winter alone. Those were all steps to support some of the most vulnerable people in our society in the cold weather.

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[Mr Carmichael]

This has been an exceptionally good debate, and I have been encouraged by the degree of consensus. We have to approach a subject such as this with humility and recognise that nobody has ever found the answer to these fairly intractable problems.

I did not anticipate that the main point of contention would be where God came from. Of course, as the theologians tell us, God is omnipotent, omniscient and omnipresent, so all those who have claimed that He is from their constituency are able to do so quite accurately. A point that I think is beyond any debate is that He is happiest, if not necessarily warmest, when he is in Orkney and Shetland.

Question put and agreed to.

Resolved,

That this House has considered Government policies on tackling fuel poverty.