Fuel Poverty and Energy Price Caps

Allan Dorans Excerpts

Thursday 19th November 2020 Westminster Hall

[Allan Dorans (Ayr, Carrick and Cumnock) (SNP)]

The difficulty with following the hon. Member for Linlithgow and East Falkirk (Martyn Day) is that he makes such a comprehensive case. As we prepared our speeches individually, there is some repetition in our remarks. However, as he was speaking, I took the opportunity to take out some of the repetition, as it is such a short debate, rather than take up too much time.

Fuel poverty rates vary significantly across the United Kingdom and cannot be directly compared, owing to differences in methodology. However, the latest estimates show that around 11% of households in England are classed as fuel-poor. The figure is 12% in Wales, 18% in Northern Ireland and 25% in Scotland. That is a remarkable difference, and one that needs to be addressed.

In Scotland, fuel poverty is generally measured on the basis that, in order to maintain a satisfactory heat regime, a household would be required to spend more than 10% of their disposable household income on fuel. Some of the areas of the worst fuel poverty in Scotland are in my constituency of Ayr, Carrick and Cumnock. There is deep injustice in that, as many of those areas are in communities still living above the great Ayrshire coalfields that powered the economy and the industrial revolution for centuries and they are home to many wind farms, which power the economy today. Adding to that sense of injustice, those wind farms now play a major part in the transfer of electricity from Scotland to other parts of the United Kingdom. As of April 2020, that transfer stands at 25,000 gigawatt-hours annually—enough to heat 700,000 homes.

Parts of East Ayrshire in my constituency have some of the highest levels of fuel poverty in Scotland—a staggering 32% of households—while neighbouring South Ayrshire, also in my constituency, has one of the lower levels in Scotland, at 22%. Both figures are much higher than the English average of about 11%. Most shockingly, 13% of households in East Ayrshire suffer from extreme fuel poverty and need to spend at least 20% of their disposable income on fuel.

Fuel poverty and the ability to properly heat homes really matters for health outcomes. According to research published in June 2020, cold temperatures are strongly related to cardiovascular and respiratory diseases and they double the risk of respiratory problems in children. Cold also suppresses the immune system, increasing the risk of infections and minor illnesses such as cold and flu. Living in poverty exacerbates existing conditions such as arthritis and rheumatism and negatively affects the mental health of the population by increasing the financial stress on households.

We know that 91 per cent of those who have died from the effects of covid-19 had a pre-existing medical condition—commonly, chronic lower respiratory disease. The End Fuel Poverty Coalition has warned that fuel poverty puts households more at risk from the worst effects of covid-19. Reducing preventable ill health arising from cold homes will be vital in protecting the national health service and care services this winter.

Without any doubt, the major contributor to the existence of fuel poverty is the overall level of poverty in this country. The Scottish Government have already implemented a number of specific actions to reduce household poverty by increasing disposable household income, which have been widely praised by the United Nations and the Joseph Rowntree Foundation.

The actions include the Scottish child payment, which will commence in February 2021. It will provide families on low incomes with a payment of £10 per week for each child under six, which the Joseph Rowntree Foundation has said will

“make a significant contribution to tackling child poverty in Scotland.”

There are also community care grants, where £25 million has been paid out to help with one-off cost purchases, to allow those on low incomes to purchase essential household items. Since 2013, an annual package of more than £125 million has been paid to mitigate the impact of the UK Government’s welfare cuts, including the bedroom tax, the two-child benefit cap, the five-week wait for universal credit and the sanctions regime.

The Scottish Government aim to reduce fuel poverty to no more than 5% and extreme fuel poverty to no more than 1% by 2040, but they are constrained by their partial controls over benefits and the levers of the economy. They have also recently introduced a child winter heating assistance programme—a new payment of £200 to help families with severely disabled children.

Using Scottish Government funding and advice, East Ayrshire Council and South Ayrshire Council have had external wall insulation fitted to improve energy efficiency, lower costs and improve health outcomes. In South Ayrshire alone, a programme to fit external wall insulation to 1,900 properties saved more than £400,000 on fuel bills per year and significantly reduced admission rates for respiratory and cardiovascular-related conditions in those areas. That project is an impressive example of what can be done, despite the limitations of the devolution settlement, by the Scottish Government in partnership with local authorities to make a real improvement to lives by reducing fuel poverty.

Despite the fact that Scotland’s energy generation, produced by oil, gas and renewables, is way beyond its domestic demand, energy prices for consumers in Scotland remain high. According to Age Scotland, price capping has made little difference to them.

Fuel poverty is a major issue across all nations of the United Kingdom, but it is particularly serious in Scotland. It has also been brought into sharp relief recently by the number of people working from home or on furlough due to covid-19, and the significant increase in their home fuel bills, by as much as 37%. They have generally not been compensated by employers. The reality of fuel poverty is that today, as winter approaches and we gather here in the relative warmth of Westminster Hall, in all our communities there are families with young children who, through no fault of their own, are out of work; people on benefits; working families on the minimum wage or zero-hours contracts; elderly people alone and isolated; the long-term sick and disabled, and many others, including those who have been excluded by the Chancellor from receiving grants, loans or any other benefits in our society, who have to make the difficult decision daily whether to heat or eat.

Although the Scottish Government have made progress on tackling fuel poverty and improving energy efficiency, the constraints of the devolution settlement, under which 85% of expenditure and income-replacement benefits are reserved to Westminster, prevents the kind of structural change and investment required in a country that has a harsher climate and, ironically, generates far more power than it requires. The immediate impacts on levels of fuel poverty are directly related to general poverty and are the direct result of the austerity policies of the United Kingdom Government over the past 10 years.

To effect meaningful change in levels of fuel poverty, Scotland needs powers on welfare, the ability to cap energy prices to affordable levels, and the control of economic levers, and not only in respect of fuel poverty and overall poverty. That would best be achieved by an independent Scotland or, in the short term, by powers being devolved to the Scottish Parliament as a matter of urgency.