Cost of Living

Baroness McIntosh of Pickering Excerpts

Thursday 3rd February 2022 Grand Committee

[Baroness McIntosh of Pickering (Con)]

My Lords, I am delighted to follow the noble Lord. I declare my interest as president of the advisory board of National Energy Action. I congratulate the noble Lord, Lord Whitty, on securing the debate, but especially on securing it today; it could not have been more timely. I entirely endorse his comments about the role of the regulator, which raises a lot of questions that I will refer to in my short contribution.

I approach this primarily from the perspective of rural areas, such as North Yorkshire, Northumbria, Cumbria, County Durham and many isolated and deeply rural parts of England especially. Residents of rural areas have been particularly hard hit during the energy crisis since wholesale gas prices increased in October. I do not think that this has been sufficiently addressed by my noble friend the Minister, who I welcome to his place today, his department or the Government more generally.

Those who live off the grid in rural areas are not currently covered by the price cap. They have been left to rely on oil, LPG and solid fuels, which are not and will not be covered by the cap. My first question to my noble friend is: what assessment have he and the department made of the impact of rising energy costs on rural dwellers in general?

I am sure that my noble friend and the Committee will accept that there are pockets of deprivation in rural areas, which are often overlooked. There is also the challenge of an increasingly elderly population living in rural areas on fixed incomes, who are particularly challenged by the increasing cost of food, to which the noble Lord, Lord Whitty, referred, and the cost of heating and electricity, which is before us this afternoon. Like others on low income, this winter they are frequently faced with the choice of whether to heat their homes or eat.

There are currently 4.5 million people in fuel poverty and it is generally understood that, come April, another 1.5 million may be pushed into poverty. National Energy Action has costed a number of its proposals, which I ask my noble friend urgently to consider. For what reason could BEIS not adopt those mentioned by the NEA? One is a one-off rebate, or crisis income support, to cover the 4 million low-income households before April. Another is to expand the GB-wide warm home discount, to which the noble Lord, Lord Shipley, referred, so that everyone currently eligible will receive the support that they deserve. Another is to provide support for an additional 2.4 million low-income working-age households across the UK by expanding the winter fuel payment. Another is to accelerate the repayment of utility debts across the UK and, by next winter, to supplement these measures with deeper price protection or a new mandatory social tariff to help those in the cohort of low-income energy users to make their energy more affordable.

The noble Lord, Lord Shipley, and others have referred to a windfall to the Treasury in addition to the price increases since October, yielding an estimated £100 million extra in VAT through domestic electricity and gas bills. Also, the doubling of households bills from April to £2,000, as was referred to, will apparently yield an extra £77 million for the Treasury. There is also the increase in respect of UK ETS permits, yielding an additional £3 billion.

The Treasury, for some reason, has not sought immediately to recover the £4.3 billion in fraudulent Covid loans identified so accurately by my noble friend Lord Agnew. I pay tribute to his work in the Treasury in this regard. I understand that up to £30 billion more of such money has been identified across all departments. The noble Baroness, Lady Crawley, and I served at the same time in the European Parliament, when the level of EU fraud was a source of some embarrassment. It was an appalling disgrace, as we were told by our British colleagues in the Westminster Parliament. It was, but so is this national ongoing fraud. The money must be recovered; it would add to the funds available to the Treasury in order to finance what National Energy Action is asking it to do.

Also, climate change presents greater challenges. We have seen three catastrophic power failures already, not helped by the fact that 30% of energy is lost through overhead line transmission. That has to be addressed.

Finally, I turn to the role of the regulator. Clearly, competition is not working in this sector as it was intended. Recent failures of energy companies mean that the cost has been passed on to the customer. An additional 25% of our energy bills is going on green levies. Why is the energy sector alone allowed to fund its increases through the customer, whereas others such as the water sector have to go to the market? I urge my noble friend to address these issues as urgently as he can.