Fuel Poverty

Chris Evans Excerpts

Wednesday 19th January 2011 Westminster Hall

[Chris Evans (Islwyn) (Lab/Co-op)]

I am grateful to you, Mr Gray, for the opportunity to speak in my first debate in Westminster Hall—this is, I suppose, almost like my second maiden speech.

The topic of the debate has been brought into sharp focus by the fact that the recent cold weather has left many constituents struggling to pay household energy bills. Last December was the coldest on record for 100 years. As a result, every home owner used more energy to heat their homes, resulting in more households falling into fuel poverty.

Fuel poverty is a serious and complicated issue. It is defined as affecting those who spend more than 10% of their income on energy bills. It is caused by unaffordable fuel prices, combined with poor housing stock, which is often characterised by inadequate insulation and inefficient heating systems.

Fuel poverty has more than doubled in the UK since 2003. The “Annual Report on Fuel Poverty Statistics 2010” estimated that fuel poverty affected 2 million households in 2003, and the figure rose to 4.5 million in 2008. Official predictions say that that is only the tip of the iceberg and that the worst is yet to come.

On 16 December 2009, an Ofgem presentation forecast that 6 million households would be in fuel poverty. On 24 February 2010, Ofgem warned the Select Committee on Energy and Climate Change:

“there is a real chance that as we go towards the middle of this decade prices will not only go up but will become fantastically volatile. That is not good news for the consumer”—

quite. Age UK says that, between 2003 and 2009, average household gas bills doubled and average electricity bills rose by 60%. The latest estimate of fuel poverty in the UK shows that more than 3.5 million older people are in fuel poverty. Surely that must be a worry for us all.

Fuel poverty is not spread evenly throughout the UK. Nearly a fifth of households in England, more than a quarter in Wales, nearly a third in Scotland and more than a third in Northern Ireland are in fuel poverty. In Wales, the November 2010 fuel poverty figures showed that 332,000 households were fuel-poor in 2008, and that the figure had risen by 198,000 since 2004, representing a 15% rise. In 2008, 26% of Welsh households were estimated to be in fuel poverty. That is despite measures undertaken by the previous Government to address fuel poverty and to improve the energy efficiency of homes.

[Sir Robert Smith (West Aberdeenshire and Kincardine) (LD)]

One lesson that we all have to take on board is that the previous Government put too much reliance, especially in the early stages, on cutting energy prices and on the market delivering lower prices, so when the market put prices up, many people went back into fuel poverty. The hon. Gentleman is therefore right to say that it is important that we permanently deal with the energy efficiency of the housing stock.

[Chris Evans]

Yes, I agree, and I will develop that argument further.

The measures introduced by the previous Government included the winter fuel payment, central heating programmes, which the hon. Gentleman alluded to, and the energy efficiency commitment. All those have played a role in tackling fuel poverty, but their impact has been eroded by the financial crisis and what seem to be annual energy price rises. With rising fuel prices and lower disposable incomes, householders must make a tough decision between heating their homes and paying for other essential household expenses.

[David Simpson (Upper Bann) (DUP)]

I congratulate the hon. Gentleman on obtaining this important debate. He said that 6 million were in fuel poverty, and he mentioned Northern Ireland and that a third of households there are in fuel poverty. Does he agree with organisations such as Action Cancer and Macmillan Cancer, which are concerned that those with cancer-related diseases are more susceptible to the cold weather and that extra focus needs to be put on people with serious disabilities and illnesses?

[Chris Evans]

I am always happy to take interventions, but the hon. Gentleman has just raised one of the major points I am going to make. I will come to that, thank you very much.

In quite a cynical move, when people were about to celebrate Christmas, British Gas, Southern Electric, ScottishPower, and Scottish and Southern Energy, introduced a price rise. In fact, five of the big six suppliers have now announced increases, which have taken effect, although EDF has announced that it will hold its prices until March 2011. Those increases mean that average annual electricity and gas bills are now £1,239.

In November, the regulator, Ofgem, announced that it was reviewing whether the profits made by the industry were too high, but I have to admit that I am quite sceptical about that review. Since 2001, 18 reviews have been conducted by Ofgem, Members of this House, the European Commission, the Competition Commission and the Government, all of which have had little or no impact on prices.

[Tim Farron (Westmorland and Lonsdale) (LD)]

I congratulate the hon. Gentleman on securing the debate. He is right to be sceptical about those reviews, but will he spend some time talking about those who rely on fuel from sources that are not regulated? In many rural areas, including my constituency, for example, about a tenth or a fifteenth of constituents are on off-mains liquefied petroleum gas or oil supplies. Over the past 18 months, their fuel bills have gone up by more than 100%—they are not regulated at all. Should the Government take steps to ensure that such fuel providers are regulated, just as mains providers are?

--- Later in debate ---

[Chris Evans]

Yes, I agree. I will come to off-mains gas later, but let me just say that fuel poverty is really bad in rural areas, and the hon. Gentleman is right to raise the issue.

The impact of price rises on fuel-poor consumers, many of whom are in low-income households, will be devastating. It is likely to push thousands more people, including many pensioners, into fuel poverty.

As a Welsh Member of Parliament, I am deeply concerned that Wales is one of the parts of the UK that is most badly affected by fuel poverty. Many pensioners in Wales have illnesses such as heart disease and diabetes, and many living in constituencies such as mine are former miners with lung diseases. They often have high fuel bills because of their health problems and need to keep their homes at a much higher temperature than other people. That problem is made even worse in older and poorly insulated houses.

Older people in Wales bear the brunt of increases in fuel prices. In my constituency, there were an average of 41 excess winter deaths between 2003 and 2008. Across Wales, more than 1,700 people die in winter every year as a result of fuel poverty, and that figure is certain to rise.

National Energy Action estimates that about 28% of households in Caerphilly county borough, where my constituency is situated, are in fuel poverty and have to spend at least 10% of their income on energy to keep warm. Some 20% of the population does not have access to mains gas. About 40% of fuel-poor households in Wales are pensioner households, and 28% contain single pensioners—often widows and widowers—who are desperately trying to make ends meet. Those pensioners face a double whammy, because electricity prices in Wales are up to £25 a year higher than in England.

A recent report on fuel poverty among vulnerable groups produced by Consumer Focus Wales found that 75% of those with a long-term illness or disability suffer fuel poverty. Some 62% of those aged 65 and over were concerned about paying their winter energy bills and were also more likely to cut back on their energy use at home to save costs. Across the population, the figure was 54%. What is more, more than 50,000 households in Wales are in debt to electrical suppliers and more than 46,000 are in debt to gas suppliers. It should be pointed out that the report was compiled before the recent energy price announcements.

The hon. Member for Upper Bann (David Simpson) mentioned cancer sufferers, and Macmillan got in touch with me to say that cancer patients, in particular, are struggling to pay their energy bills. According to its research, seven out of 10 working-age cancer patients suffer reduced household income, losing 50% on average. It is estimated that about four in 10 cancer patients of working age do not return to work after treatment.

Higher utility bills are one of the major additional costs that cancer patients face. One in five people with cancer turn off their heating in the winter, even though they still need it on. One in four wears outdoor clothing indoors to stay warm and reduce energy bills. Cancer patients have higher heating bills. In a survey for Macmillan, 59% of respondents said they had used more fuel since being diagnosed with cancer. Three quarters of those said that that was because they felt the cold more, and a similar number said that it was because they spent more time at home after being diagnosed.

A statement by the Secretary of State for Energy and Climate Change on 15 December muddied the waters further. He informed the House that the budget for the Warm Front scheme in England is fully allocated for this financial year. We are told that the scheme is fully subscribed and will be unable to take new applications for the remainder of the current year. The reason is that the scheme has a substantial order book of work, which will take until at least March 2011 to complete.

Essentially, the major problem with fuel poverty is that people who are victims of it do not necessarily know that they are. That may seem a strange statement, but many accept the difficulties they live with. When I worked for the previous MP for Islwyn, Lord Touhig, we prepared for a debate on this topic, and spoke to the secretary of the National Old Age Pensioners Association of Wales to ask what effects fuel poverty had on his members. We were both surprised to discover that members simply accepted that rising fuel prices are a fact of life. Whey they get cold they simply have to slip on an extra pullover, or heat just one room. Therein lies the great problem with fuel poverty. It can be difficult even for energy companies to identify customers who are fuel-poor.

[Albert Owen (Ynys Môn) (Lab)]

My hon. Friend is making an important point about vulnerable groups such as pensioners. Indeed, prior to coming to the House, I worked with several agencies, including Age Concern, as it then was, to identify them. That is why a universal benefit such as the winter fuel payment is important. For all its flaws, it gets to those people, who are often very proud and do not make claims. They are difficult to get to. All hon. Members should work with agencies to maximise benefit take-up so that people can get the benefits they deserve to help them with fuel poverty.

[Chris Evans]

My hon. Friend makes an important point. The dignity of pensioners is astounding, but in many respects they do not help themselves, because sometimes they are too proud to claim the benefits they are entitled to. I have said to every pensioner I have spoken to: “If you are entitled to it, claim it.” Those people have served this country. Many are veterans. Some people have devoted their lives to industry. If there is a benefit and they deserve it, they should claim it.

[Jim Shannon (Strangford) (DUP)]

Further to the previous intervention, I am sure that the hon. Gentleman knows of similar cases to what happened in my constituency, where, in the area where I live, the temperature dropped to minus 7° C: it went down as far as minus 19° C in other parts of the Province. The cold weather payment helps, but there was also a severe weather payment of £25. We had fluctuations of temperature in my area but there were places where the temperature was below 0° for a period. It seems that the system does not always work to the advantage of elderly people. Does he agree that perhaps the Government should be thinking about clarifying the system and improving it for people who need the payment most, at the time they need it, so that they do not miss out?

[Chris Evans]

I shall be making a point about the specific targeting of benefits. The severe weather payment is a difficult one, because it is supposed to relate to the temperature dropping at the local weather centre. It may be difficult to work out who is experiencing low temperatures.

To return to the point I was making, when energy companies target support to customers there should be additional support from the Government. That could be through the sharing of data; alternatively, local authorities and other community groups, which often have a better understanding of where support is needed, could be encouraged to work in partnership with energy companies to deliver energy efficiency programmes to vulnerable groups. Of course, as my hon. Friend the Member for Ynys Môn (Albert Owen) said, putting schemes in place is all very well, but if people do not know about them, the opportunity to assist them is lost. Members of Parliament should be doing much more to publicise the availability of existing schemes and to encourage people to take them up. The complexity of fuel poverty means that there cannot be a one-size-fits-all solution to tackling it. It is important that we look for long-term, sustainable solutions for families in fuel poverty.

One way to combat fuel poverty is to increase the income of many of those who are at risk of falling into the fuel poverty trap. There should be a review of the winter fuel payment and it should be better targeted, to reach those in need. Perhaps the payment should be targeted at the fuel-poor of all ages, including children and young people, those living in hard-to-treat homes and those with long-term health conditions, as well as older people. Another effective and sustainable way to tackle fuel poverty is through improved energy efficiency. The provision of energy efficiency measures and advice must be at the heart of all Government programmes, whatever the colour of the Government, to help vulnerable people to heat their homes adequately.

[Mr Gregory Campbell (East Londonderry) (DUP)]

I congratulate the hon. Gentleman on a timely debate. He touches on the question of ensuring that every person who is eligible and vulnerable should try to get help from whatever form of warm homes scheme they have in the part of the UK where they live. Does he agree that perhaps we should consider upgrading the scheme, to target the older properties that he referred to earlier, which are particularly hard to heat, so that elderly and young people can have a warm home, rather than an additional couple of inches of roof space insulation, which some schemes offer?

[Chris Evans]

The point that I am trying to make is that one way to solve fuel poverty is to make sure people do not use so much energy; it brings the price of their energy bills down and they will have a warmer home. They will come out of fuel poverty and will not be in so much danger.

The welfare and public sector cuts that have been announced by the Government together represent a threat to the lives of millions of people. I worry that the number of people in fuel poverty will soar over the coming months as a result.

It is all very well quoting figures, and my telling the House how wicked I think the Government are, but what does it mean to live in fuel poverty? It means that families will have to cut back on essential items to allocate money for rising fuel bills, or will have to turn down their heating, risking their health by increasing the chances of contracting common ailments such as colds, flu or bronchitis. Fuel poverty causes stress in children and adults as well as long-term depression and anxiety. To many individuals and families it can be the main cause of social exclusion, and deteriorating life chances and educational achievement.

I welcome the independent review of fuel poverty targets that the Government have said they will initiate before the end of the year. Making the nation’s housing stock more energy efficient should be at the heart of the Government’s energy strategy in the Energy Bill. The Government have set out plans for their green deal, whereby loan-funded insulation costs pay for themselves through efficiency savings. However, at the same time, as I have said, the coalition have announced that they are cutting Warm Front funding to a third of its current level. That threatens to leave many fuel-poor households even worse off, because they are likely currently to be under-heating their home, so any savings from improved energy efficiency will be taken in additional warmth, and their energy bill savings will not be enough to cover the green deal finance repayments.

Furthermore, some vulnerable customers may be nervous about taking on a fixed charge on their energy bill, despite promises of lower final bills, as that will reduce their option to budget. I fear the green deal is unlikely to be sufficient to help the fuel-poor. That has been confirmed by Age UK, which states that while the Government’s plan to have loan-funded insulation costs pay for themselves through efficiency savings

“is likely to benefit mid and high income households, there remains a big question mark over whether it will work for those in fuel poverty.”

It is therefore vital that the energy company obligation should meet the needs of the fuel-poor. That is particularly important for the fuel-poor, as in some cases existing heating systems may be inefficient, but the existing carbon-focused schemes mean that it is not possible to install a new more efficient system.

In conclusion, given the pain that is being inflicted on people by energy companies, it should be remembered that, unlike consumer prices, wholesale energy prices are half of what they were in 2008. It is a matter of some urgency that the Government should intervene to curb excessive fuel price increases.

[Sir Robert Smith]

I certainly agree that the regulator, and everyone, should try to ensure that we have the lowest possible prices, but in tackling fuel poverty we must confront the fact that the underlying pressures of carbon reduction and world energy scarcity mean that we shall have to have a fuel poverty strategy that will cope with higher prices. We cannot just rely on low prices to get us out of the problem.

[Chris Evans]

As I said earlier, fuel poverty is a complex matter, and there is no magic bullet to solve the problem. We have to consider it in a holistic manner.

If the regulator does not have sufficient power to intervene to prevent huge price increases, the solution is clear. It is time for energy companies to be made to serve society again, rather than the other way round. In February 2010, Ofgem published the findings of its Project Discovery. One of the most radical proposals was to have a central energy buyer, on similar lines to the old Central Electricity Generating Board. At present, the big six energy companies own most of the UK power plants, which supply the majority of the country’s consumers, but a central Government-controlled body could require power plants to sell electricity at fixed rates that would then be sold on to customers, thus bringing an end to the dominance of the big six once and for all.

It is important to remember that fuel poverty is not simply about schemes and programmes. It is a matter of life and death for the many people who are forced to live in cold and damp conditions. We need a new, far-sighted fuel poverty strategy to ensure that fuel-poor households have a decent income and that sustainable energy-saving measures are prioritised.