Fuel Poverty

Chris Williamson Excerpts

Tuesday 11th February 2014 Westminster Hall

[Julie Elliott (Sunderland Central) (Lab)]

It is, as ever, a pleasure to serve under your chairmanship, Mr Sheridan. I thank and pay tribute to the hon. Member for Brecon and Radnorshire (Roger Williams) for securing this vital debate. We could almost say that we have had a Welsh debate, because the three speeches have come from Welsh Members of Parliament, but that is not what it was; it has been much broader, although the speeches highlighted issues that affect rural communities, and much of Wales is rural.

There is wide agreement throughout the House that whatever measurement is used, the number of people in the country classed as fuel-poor is too high. It should be a source of shame that in Europe only Estonia has a higher proportion of its population in fuel poverty. Things appear to be getting worse, and among the reasons for that is the fact that the issues raised in the debate are so complex and wide-ranging that there is not one solution. There are knock-on effects for many Departments. Housing issues have been mentioned a number of times in this debate, but they are not the responsibility of the Department of Energy and Climate Change. There are also issues about the supply of energy to off-grid homes. The solutions to these difficulties will be many and multifaceted, and we must recognise that.

The scale of the problem of fuel poverty is severe. As a result of the age profile of the UK’s housing stock, we have some of the least energy-efficient dwellings in Europe. Earlier, an hon. Member mentioned the U-rating of public housing as opposed to private housing. In my experience, public housing—social housing—is often of a far better standard, particularly in the rented sector, than private rented housing, which has some of the worst energy insulation standards in our housing stock. There are some difficulties. The fact that our country has a long-standing population going back many thousands of years means that we have some beautiful old buildings, but we do not have buildings that are particularly energy-efficient, and some of the issues around modernising them are complex.

Recent figures show that 2.4 million households in the UK are classified as being fuel-poor. Furthermore, the distressing statistic that there were 31,000 excess winter deaths last year shows just how vital it is that we combat fuel poverty. I recognise the important work being carried out by organisations such as the Energy Bill Revolution, which the hon. Member for Brecon and Radnorshire talked about in some detail; the Association for the Conservation of Energy; and Age UK. Last Friday, I went along to support Age UK’s bobble day in my constituency, which highlighted some of the issues that we are debating. Such organisations are bringing the issue of fuel poverty to a wider audience, and I hope that the coalition of groups committed to fighting fuel poverty continues to grow.

I am proud of the good work that the last Labour Government did on fuel poverty, and I am concerned that the current Government are undoing much of it. Projects such as the carbon emissions reduction target, the community energy saving programme and Warm Front were not perfect, but they all helped to lift people out of fuel poverty.

The energy market reforms that my right hon. Friends the Members for Doncaster North (Edward Miliband), and for Don Valley (Caroline Flint), have set out in detail will help to address the issue of rising energy bills. Our reforms will improve competition and transparency in both the wholesale market and the retail market, establish a new energy security board to plan and deliver the capacity that Britain needs, and replace Ofgem with a new regulator with real teeth to prevent overcharging. Moreover, while these reforms are being implemented, we will freeze energy bills for 20 months.

It should go without saying that energy efficiency must also be a key consideration when combating fuel poverty. However, the Government’s record on fuel poverty and energy efficiency has been hugely disappointing. The energy company obligation in its original form, which I should remind Members was the only energy efficiency programme available to the public under this Government, was expensive, bureaucratic and poorly targeted at the fuel-poor. Of course, any scheme that attempts to address fuel poverty must be welcomed, particularly after the Government scrapped Warm Front. However, ECO was a scheme of only modest ambition, aiming to lift only 125,000 to 250,000 households out of fuel poverty, and it has been condemned by the Select Committee on Energy and Climate Change as

“insufficient considering the scale of fuel poverty”.

ECO could certainly be much improved. It could be made more efficient by focusing its delivery on specific geographic areas, and by devoting a far higher proportion of the money that it raises to lifting people out of fuel poverty. Alongside a properly functioning green deal, an improved ECO would also allow us to hit our carbon reduction targets and generate many thousands of jobs.

The Government’s announcement on ECO in the autumn statement was all the more frustrating and disappointing because just as ECO was beginning to achieve limited success, the Government caved in to pressure from the energy companies and let them off the hook, so that they did not have to extend ECO. The effect of that has been disastrous.

Many of the consequences of the changes to ECO are still unknown. In his response, can the Minister tell us when the impact assessment and consultation on the changes to ECO will happen? There are numerous examples of the devastating repercussions that followed the changes to ECO, such as the effect on the scheme in Clifton, which is in the constituency of my hon. Friend the Member for Nottingham South (Lilian Greenwood); there, the Government’s changes allowed British Gas simply to walk away from a project that was due to deal with problems affecting somewhere in the region of 4,000 homes. Does the Minister agree that where deals have been signed but the work has not been done, the energy company should honour its commitment?

The greater worry about some of the changes to ECO is that the more difficult solid-wall insulations will simply not happen and, as is often said, only the low-hanging fruit will be picked. However, until we start to tackle the very complex properties, particularly the solid-wall properties, we will not really tackle the problems.

I will briefly mention the green deal, the Government’s flagship project on energy efficiency. It was meant to dovetail with ECO, but it has been an abject failure. Just over 600 homes have taken advantage of the green deal financial packages. In its current form, the green deal is an unattractive offer, with a sky-high interest rate and an incredible amount of bureaucracy for both home owners and installers. To all intents and purposes, it has become a boiler replacement scheme. There is nothing wrong with boiler replacement schemes, but it was not the ambition and objective of the green deal that it should be a boiler replacement scheme. Boilers need replacing and get replaced, but the issues are so much more complex than that. We need a scheme that really works to address the wide-ranging problems, and that makes finance accessible to everybody to solve those problems.

I must comment on the reference the hon. Member for Brecon and Radnorshire made to Liberal Democrat party policy on energy. Much of it is honourable, and much of it I would not disagree with. However, it is a shame that the Secretary of State for Energy and Climate Change, who is a member of the Liberal Democrat party, does not vote in the House for Liberal Democrat policy. A particular example is the 2030 decarbonisation target. He is on public record as saying that he agrees with it, but he does not vote for it. Everyone I meet in the sector who invests in energy, whether they are in insulation or renewables, says that one of the things they want is that 2030 target, in order to secure investment. I had to draw attention to that.

At every stage of life, living in fuel poverty is a terrible way to live. Young people in cold homes are twice as likely to suffer from respiratory diseases and five times more likely to suffer from mental health problems. For adults, cold homes impact on existing health conditions, and for older people, cold homes can be a killer. We need to improve energy efficiency in all homes in the UK, but particularly in the homes where people need it most. That is why Labour would ensure that the help that is available would first go to people in fuel poverty and others who need it most. Better insulated homes mean warmer homes, lower bills and more comfortable lives, so it is shocking that the Government are scaling back their energy efficiency programmes.

It is our intention in the spring to publish our Green Paper on energy efficiency, which my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) will lead on.

[Chris Williamson (Derby North) (Lab)]

Is my hon. Friend aware of the poll carried out for the Energy Bill Revolution group, which showed that 85% of people—a massive proportion—want the Government to prioritise energy efficiency and make it one of the key things that they use their investment in infrastructure for? Clearly, that would be a popular policy, as well as one that would help to address the implications of climate change and take people out of fuel poverty.

[Julie Elliott]

I thank my hon. Friend for that intervention. Fuel poverty and energy efficiency are important issues. Whenever I knock on doors and talk to people, they are among the main issues that they are very concerned about. People are very worried about their heating bills, and tackling heating bills is not only about tackling energy costs at source but about ensuring that homes are insulated as well as they possibly can be, so that the amount of energy used is as low as possible; that is important because of the impact that it would have on not only climate change, but household bills. Of course, it is not just in the domestic market that energy is a key factor; energy bills are one of the biggest factors in industry, and in employing people. The knock-on implications of energy are massive, so getting it right is very important.

--- Later in debate ---

[The Minister of State, Department of Energy and Climate Change (Michael Fallon)]

I, too, congratulate the hon. Member for Brecon and Radnorshire (Roger Williams) on securing this debate on fuel poverty and cold homes. Like the hon. Member for Sunderland Central (Julie Elliott), I note that all the Back-Bench speakers were from Wales. I make no complaint about that at all; these are important issues. I note that fuel poverty, as a subject, is a devolved matter. I am not trying to escape responsibility—I will try to answer a lot of these points—but perhaps some questions should also be addressed to the Welsh Government and their spending decisions.

Let me begin by saying a little bit about fuel poverty, something on the retail market and prices and something about the off-grid issue, which a number of hon. Members mentioned. I will then try to answer some points made by hon. Members in their speeches. I hope that they will allow me to write to them if I do not cover every point that has been mentioned.

I hope that hon. Members welcome the fall in the last reported fuel poverty figures as much as I do. Of course, that followed a period in which fuel poverty rose between 2004 and 2009, reaching a peak of 5.5 million households. I put that on the record as a criticism not of the previous Government, but of how fuel poverty was measured. To help us meet the challenge better, with the new more accurate measure that we are introducing, which deals with low income and higher cost together, we will be better able to design and deliver effective policies that can cut bills and increase comfort for those on low incomes who live in the very coldest homes. I am pleased that the House agreed to the Energy Act 2013, which allows us to bring in the new definition.

[Chris Williamson]

Does the Minister understand the scepticism out there about the Government’s changing how fuel poverty is calculated? People want to see significant investment in energy efficiency, to ensure that the shocking increase in excess winter deaths last winter is not repeated in future. Fiddling around with the measurement of fuel poverty will do little to address that. People see winter deaths rising and fuel poverty increasing, but they see spending on tackling it falling. The Government need to deal with that, rather than simply changing the definition of what constitutes fuel poverty.

[Michael Fallon]

I am a little disappointed about that. We all deplore any excess deaths arising in the winter months, but in terms of fiddling with the figures, the new definition of fuel poverty that we are securing was reached by agreement with fuel poverty action groups that have welcomed the new focus, which, as I say, is on low-income households as well as high-cost households. The problem with the previous definition was that it essentially picked out large houses and wealthy people can be living in large houses. That was not the right way to tackle fuel poverty. It was also a measure that kept moving; people kept moving in and out of the definition.

We are now moving to a better definition, with the agreement with those who work in the area. That will form the foundation for a new fuel poverty strategy that we will publish later this year, which will be deliverable and on which the public can hold us to account.

--- Later in debate ---

[Michael Fallon]

I will take up that point. It is important for those who are off-grid that there is as much transparency as possible, so that they understand what the costs are likely to be.

I will now address some of the individual points that have been raised. The hon. Gentleman drew our attention to harder-to-treat homes, which probably lie at the core of the long-term challenge. Getting energy efficiency measures into harder-to-treat homes lies at the heart of solving the problem and catching up with the progress that has been made elsewhere in Europe. I accept that those comparisons are not encouraging for us as one of the wealthier member states.

The hon. Gentleman asked about hypothecating some of the carbon taxes towards this objective. If that were to involve additional spending, the revenue from those taxes would have to be produced from elsewhere, or else we would become involved in additional borrowing. None of that is easy at a time when we still face a deficit of more than £100 billion. He asked specifically about extending the gas grid, and the grid is being extended in the current seven-year period that runs from 2013 to 2020. The aim is to connect some 75,000 off-grid homes each year. Those homes will be reasonably close to the existing grid, but that is expensive and a contribution has to be made by the householder, by some other agency or by the local authority. I do not want him to be under the impression that nothing is happening. I will take his points back to the transmission operators and the companies, including his view that more should be done. The aim is to connect more homes to the grid in each successive year.

[Chris Williamson]

I am grateful to the Minister for giving way again. Extending the grid is welcome, but is not the key actually to reduce energy demand? Surely, a huge uplift in investment is needed to address fuel poverty—in other words, properly insulating people’s homes—using the money that is already in the system. Unless we can do that, extending the grid will not address the problem of fuel poverty for millions of people.

[Michael Fallon]

I understand that this problem must be addressed across a number of fronts. The hon. Gentleman is right that energy efficiency has a huge part to play, which allows me now to address the energy company obligation. The ECO has been criticised, so I will first address the suggestion that some of those who work in the ECO scheme have run out of budget. I am advised that, by the end of November 2013, published figures from Ofgem showed that approved ECO measures accounted for some 60% of the affordable warmth obligation that was to be delivered by March 2014, so there is still work to do. There are still affordable warmth targets out there for 2015, and we are now extending the scheme to run through to the end of March 2017. We are also ensuring that, having considered the working of the scheme, it is better targeted at lower-income households.

I welcome the support of the hon. Member for Ynys Môn (Albert Owen) for shale gas, and I am sorry that he will not be able to demonstrate that support for any application in his constituency at the moment. No application has yet been made that would allow him to campaign more openly on the scene of an application, but I note what he says. We simply do not know the full potential for shale, so we are not able to estimate the likely revenues, which is what he was homing in on. I am sure that if shale takes off here, as it has taken off in the United States, there will be many claims on the additional revenues that it brings in. The revenues will, of course, not only simply be brought into the Treasury and reallocated outwards to public services; they will also be brought into local communities through the local community benefits package that the industry has already agreed.

The hon. Gentleman asked about the green deal. Some 130,000 assessments have now been made through the green deal, and it is perfectly true, as I think he said, that not all have taken up green deal finance, but the green deal is being taken up. More and more assessments are being made, and the scheme is proving successful.

The hon. Member for Ceredigion (Mr Williams) welcomes the warm home discount, and he asked about eligibility. He will be pleased to know that 2 million households get the warm home discount each year, but we have committed to extending the scheme not simply for 2015-16, but with an additional spend of some £320 million. More than 1 million additional low-income households will therefore receive the payment, without having to take any action at all.

The hon. Gentleman also asked about oil syndication, which we are pursuing through the twice-yearly round table that I chair. We will pick up experience from his constituency and from other constituencies to see what the Government can do to encourage syndicates. There are some good examples of syndication and oil buying in the north-east of England, in Ceredigion and in Northern Ireland, and I want to see what role the Government can play in incentivising that form of syndication.

The hon. Member for Sunderland Central said that she is proud of the previous Labour Government’s record, but she then outlined the reforms that she wants to make. I am not sure why she should be both proud of Ofgem and determined to abolish it. Her Government set up Ofgem, and now they are going to abolish it. I am not sure that she should be proud of that or of having started with 14 energy suppliers and ending up with the big six. She must develop her policy for a future Labour Government, if there is ever to be such a thing, in her own way.

I preferred the hon. Lady’s earlier remarks, in which she said that the Labour Government did not get everything absolutely right. That is probably a good motto for any Government. I am not pretending that the current Government have all the answers on fuel poverty, which is a deep-rooted problem. A lot depends on the state of our housing stock, which needs to be addressed. The hon. Member for Derby North (Chris Williamson) is right that we need to do more on energy efficiency, but we also need to measure the problem better to ensure that the data that we have are properly matched so that, with all the different schemes, we get help to those who need it most.

I am sure, Mr Sheridan, that you would like me, on behalf of all the hon. Members who have spoken, to thank the hon. Member for Brecon and Radnorshire for bringing this important subject to the House today. I assure him that the Government will respond to him and the other Members who have spoken on all the points that have been raised. This is a serious subject, and we are grateful to him for raising it.