Ed Davey
Main Page: Ed Davey (Liberal Democrat - Kingston and Surbiton)Department Debates - View all Ed Davey's debates with the Department for Transport
(12 years, 7 months ago)
Commons ChamberI am always pleased to talk about Labour’s record in government, but let us now talk about the other side of the debate about energy prices—that is, saving energy. As Ministers are fond of telling us, the cheapest energy is the energy that we do not use. I am very proud that over 2 million households were helped with energy efficiency and insulation under the previous Labour Government. Through Warm Front, we helped over 200,000 households each and every year. This year, only 40,000 people are getting help.
The last time we debated this matter, the Minister of State, Department of Energy and Climate Change, the hon. Member for Bexhill and Battle (Gregory Barker), said:
“Warm Front does not deliver insulation”.—[Official Report, 11 January 2012; Vol. 538, c. 256.]
He obviously had not browsed his Department’s website, which states clearly:
“The Warm Front scheme offers a package of heating and insulation measures”.
With such insight into his Department’s policies, we can only hope that the job of deciding who was eligible for a Warm Front grant did not fall to him. However, that might help to explain why nearly 30,000 people who applied for help last year were turned down.
Let us reflect on the figures. Under Labour, in each and every year more than 200,000 households were helped by Warm Front. This year, under this Government, only 40,000 households received help and 30,000 were turned down. They were turned down even though there was an underspend in the Warm Front budget of more than £50 million. That is right: hundreds of thousands of families face higher bills next winter and every winter because of cuts to Warm Front, and tens of thousands of families and pensioners who applied for help last year were left in the cold because of the incompetence of the Secretary of State and his Department, while £50 million that is in the Government’s coffers is going back to the Treasury. We asked whether the underspend could be used to provide further help through the programme. The answer, which I received very recently, was that it is going back to the Treasury.
I will try to help the right hon. Lady, because her own Front Benchers are laughing at her. May I take her back to the comments that she made about the Leader of the Opposition? When he was doing my job, he was pressed on what the Labour Government were going to do about energy prices. In 2009, Andrew Marr asked him:
“When it comes to the price of energy…are we or are we not going to have to pay more?”
He responded:
“There are upward pressures on prices, yes”.
I am afraid that the right hon. Gentleman did very little on consumer prices. Labour had a record of failure.
We have not seen much of the Secretary of State since he took up his post. If that is the best he can offer after a number of absences from the Chamber, I worry about this Government and their handling of one of the most important areas for consumers and for jobs.
It is absolutely true that in reshaping the energy market to provide a low-carbon future, there are pressures. We have never denied that. However, today we are talking about the efforts to make the energy market more competitive; how we can ensure that a trail of energy companies is not investigated for mis-selling and dodgy dealing; and the increasing number of families who, under this Government, are paying more than they need to. The Government are stepping away from any responsibility to help the most vulnerable people in this country to tackle their fuel bills and keep their energy consumption down. It is possible to have policies on that, while recognising that there are pressures in the bigger scheme of things. It is a given that there are pressures—it is what a Government do about them that counts. This Government are doing nothing at all.
In government, we put tough obligations on all the big energy companies to use some of their profits to help poorer customers in deprived areas make their homes more energy-efficient. The community energy saving programme was meant to help 90,000 households. Two and a half years into the scheme—most of it under this Government—and with only a matter of months left, just 30,000 households have been helped. What are the Government doing about that? As far as we know, they are doing absolutely nothing.
We do know that the Minister of State, Department of Energy and Climate Change, the hon. Member for Bexhill and Battle, had a meeting with all the big energy companies on 1 February this year. We also know that the energy companies are lobbying the Government to relax the obligations on them or to push back the deadline. The Minister refuses to tell us what exactly was discussed at the meeting, what was agreed and whether he has caved in to the companies’ demands. Why will he not tell us that? He will not share with us—
I am grateful to the Opposition for selecting a debate on the cost of living, which is a very important issue. There can be no doubt that many people in our country have been through, and are going through, some tough times, not least because inflation has cut into their living standards. I am sure that all of us pick that up in our constituencies. I do two advice surgeries a week for my constituents, and the cost of living comes up frequently.
When we talk to and listen to people, we find that the rising cost of electricity, gas and fuel has been hurting the most. We should all be concerned when we see pensioners and families worrying about basics such as food and fuel, groceries and gas. Despite the rhetoric that we have just endured, infused with the memory of an amnesiac, I wish to make it absolutely clear to the House that this Secretary of State and this Government understand those worries, share them and are acting to relieve them. Labour sometimes talks as though it had a monopoly on compassion and caring, but it never has, it never will, and to boot it does not have the record to show that it ever did.
The Government are committed to helping households cope with rising energy bills. We cannot control volatile global energy markets, and I think reasonable people understand that. However, we can act, and are now acting, to ease the pressure on consumers. In the short term, we are making it easier for people to get a better deal from their energy suppliers, about which I will say more shortly. In the medium term, we are making it easier for people to save money by insulating their homes. In the long term, we are making it easier for investors to build clean power plants here in the UK, protecting British consumers from global wholesale energy prices.
I want to set out the short, medium and long-term policies that are helping, and that will continue to help, consumers with their energy bills, not least by explaining the purpose of the energy Bill, as contained in the Gracious Speech, before its publication, which will come shortly. However, before I do so, it is only right to respond to the amendment and the speech of the right hon. Member for Don Valley (Caroline Flint). The key thing I have learned in my first few months as Secretary of State for Energy and Climate Change is that energy and climate change policies take a long time. They involve big infrastructure, huge shifts in the structure of the economy, and changing behaviours that have developed over years. Therefore, to get results, we must act decisively and strategically. This Government have been doing just that for the two years we have been in office.
We are introducing some of the most innovative and ambitious policies to bring forward billions of pounds of investment, which will be essential for our country over the next few decades. Such investment will help our growth, from the green investment bank to electricity market reform, and enable us to decarbonise our economy, especially our electricity generation sector, so we can tackle climate change.
The problem is that the previous Labour Government did not act decisively or strategically, but lurched from one White Paper to the next consultation document. Unable to make up their mind, they delayed and dithered. This Government have been left to pick up the pieces.
However, let me give the previous Government credit. They were very good at setting targets; they just never hit them. Even on fuel poverty, they set a target. However, Professor John Hills has examined their fuel poverty targets in detail, and it turns out that they could not set a target for fuel poverty competently—they could not even measure fuel poverty properly. This coalition will clear up the Labour Government’s legacy on energy as well as on the economy.
Let me therefore explain to the Opposition why living standards have fallen in the last year. It was partly down to high world prices for oil, gas and food, but it was also partly because they left the country poorer and borrowed to hide the truth. When the economy contracts in one of our country’s deepest ever recessions, when the country’s national income falls by 7%, and when the Government borrow to compensate, there must be a day of reckoning. The problem is that the Opposition are incapable of admitting that.
The right hon. Lady and others make out that the problems are all the Government’s fault because of the cuts to feed-in tariffs or because of lower take-up on Warm Front, but they simply do not understand their legacy or the changes we are making.
I have been in the House for 11 years and have watched the right hon. Gentleman progress in his career. I remember him sitting on the Opposition Benches and consistently calling on the previous Labour Government to spend more. It is interesting that he now completely ignores that fact. What are his targets for reducing fuel poverty and how will he deliver them?
I must remind the hon. Gentleman that the Chief Secretary to the Treasury of the previous Government left a message to say that there was no more money. That is the legacy this Government are dealing with. We will take fuel poverty seriously. My predecessor commissioned a report to ensure we have proper targets and measurements of fuel poverty. John Hills has produced a welcome report, on which we will consult—[Interruption.] We have plenty of policies to tackle fuel poverty and I will come to them, but we want to ensure we are tackling the real thing, not the fake one.
Raising the personal allowance to £9,200 is worth about £220 in cash to the average basic taxpayer. It also takes many low-paid people out of tax altogether. Does my right hon. Friend agree that that is one way of protecting people, particularly the low paid, from the rising cost of living?
The Labour Government left office with 1 million fewer people in fuel poverty than we inherited in ’97. No doubt this is a complex area, but the truth is that in the last two years, according to Consumer Focus, there has been a sharp increase in the number of homes in fuel poverty in England and Wales—it has increased from one in five to one in four. What are the Government doing about that?
The right hon. Lady ought to know that we saw a massive V-curve because of how fuel poverty was measured under the previous Government—fuel poverty came down earlier in their period of office and shot up dramatically as global gas prices increased. She is not living in the real world if she thinks that is the correct way to measure fuel poverty. That is why this Government are getting to grips with the problem. We are ensuring we measure the problem properly so we have the right policies, which the previous Government never did.
To return to feed-in tariffs, I remind the right hon. Lady that we have had to reform the scheme designed by the Leader of the Opposition so that huge windfalls do not go to a few people. Our reforms will ensure that many people benefit from solar PV. We are the party of the solar many; they are the party of the solar few.
On Warm Front, the right hon. Lady offered no recognition of the progress we have made to spend our budget; of the reality that a warmer winter last year reduced demand; or of the fact that the shameful scaremongering by Labour Members on Warm Front, who said the scheme was closing more than a year before it will, might just have put some people off applying.
When it comes to Governments being responsible for putting people’s bills up, the right hon. Lady ought to talk to the leader of her party. Let me refer her to the UK’s low carbon transition plan, published by the Leader of the Opposition when he was in my job. Let me further refer her to the analytical annex, page 66, table 9, and the estimate of the cost of the renewable heat incentive on people’s gas bills, as proposed by Labour. The estimated increase in gas bills by 2020 was £179, but this Government stopped that approach, because we were not going to put £179 on people’s gas bills. That is 179 reasons for not taking Labour seriously on energy bills.
I welcome the right hon. Gentleman to his post. I am a member of the Select Committee on Energy and Climate Change, so we will have a bit of knockabout on some issues, but knockabout on fuel poverty is not right. Whether or not we are changing the measures, more people have found themselves in fuel poverty this year and last year, and the previous Government reduced the number by 1 million people. That is a fact, whether the curve is V-shaped or not. What measures are this Government taking to assist those people who have fallen into fuel poverty?
I congratulate my right hon. Friend on the measured approach he is taking from the Dispatch Box. Further to the previous question, does he agree that requiring the major energy suppliers to notify customers of the lowest tariff every year will help many of the people in fuel poverty with their cost of living?
I was just about to come to that measure. My hon. Friend will know that our right hon. Friend the Deputy Prime Minister announced that package, which will be a big help, last month.
On our agenda for helping consumers in a practical way, I should like to highlight three things—they are part of our short-term approach to ensure that we help consumers and get more competition in our markets so we can make it easier for people to take advantage of good deals.
I will in a second.
First, the consumer deal was agreed with the big six last month and announced by my right hon. Friend the Deputy Prime Minister. Secondly, I have pushed collective switching since becoming Secretary of State for Energy and Climate Change, following on from the work I did as Minister with responsibility for consumer affairs. Thirdly, Ofgem is working on tariff simplification. I will describe the detail of the practical measures that we are taking and that the previous Government never took after I have given way to my hon. Friend.
Talking about energy is important, but I would like to draw my right hon. Friend’s attention briefly to another important utility in people’s lives—water. Water rates are a big cost of living and are particularly frustrating in London, given that we are under serious drought orders, despite the rain tumbling down almost every day. Particularly galling is the discovery that the very slow pace of plugging water leaks is apparently well within the target range set by the water regulator. If the water regulator is not on the side of consumers, who is?
Will the Secretary of State give way?
No, I will not.
Our first priority is to encourage consumers to switch suppliers, which could save households up to £200 per year. I am surprised that the right hon. Member for Don Valley was so negative about switching. The problem is that, despite rising prices, only one in six consumers switched their supplier in 2010. She was right that the number of people switching has been falling. There are several reasons for that, one of which, as she will know, is the plethora of energy tariffs. There are currently about 120 tariffs. We want fewer tariffs and much clearer pricing, so that customers can find a better deal more easily. That is the right approach. We support much of Ofgem’s work as part of its retail market review and will work with it to bring more transparency to the energy market.
Last month, my right hon. Friend the Deputy Prime Minister announced the deal that we secured working with the six big energy companies to give customers a guaranteed offer of the best tariff. From the autumn, suppliers will contact consumers annually to tell them which is the best tariff for their household, and if consumers call energy companies, they will have to offer them the best tariff. That is real progress—progress that Labour failed to make but which I have made in my first few months as Secretary of State.
May I tell the right hon. Gentleman about a constituent of mine living in a two-bedroom flat with her daughter and grandson? She works as a teaching assistant in a local primary school and earns just £1,025 a month, of which she pays £201 on utility bills—nearly 20% off her income is spent on utility bills. She is already on the lowest tariff, and she is in massive debt and worried. What can the Secretary of State offer her from the Queen’s Speech?
Actually, the hon. Lady’s constituent will be a big beneficiary of the coalition’s policy to increase the personal income tax allowance. She will benefit from that big income tax cut—bigger than anything that Labour did. In fact, I remember Labour taking the 10p rate away from people such as her constituent, costing them £236 a year. So I am afraid she has shot herself in the foot.
I thank the right hon. Gentleman for providing the House with more information about what the Government are attempting to do. The chief outcome of last autumn’s summit, however, was that the companies agreed to write to people to let them know that they should switch and save. Labour argued that the energy companies should be much more specific and make it clear to people what cheaper tariff they should be on. I take it from what he has just said, therefore, that we have a Labour policy gain today.
That was a good try, but no one believes the right hon. Lady.
We are working with energy companies in a range of ways that Labour failed to do. For example, we are working to ensure that companies put special barcodes on energy bills, so that people can scan them, search for quotes and switch suppliers. We are also working with consumer groups to make it easier for people to band together, get the best deal and bring down bills without having to negotiate them. That is called collective switching. It brings people together to make a collective purchase based on collective, mutual and co-operative principles. One would have expected Labour to use those principles in government. It did not, we are, and it should be ashamed.
We have already seen the big switch campaign from Which?—the first big collective switching scheme—and I am delighted it was so successful. Through the big switch, people have saved £120 on average—but £200 if they have paid by cash and cheque. [Interruption.] The right hon. Member for Don Valley says we did nothing. Let me explain to her. As consumer affairs Minister, last April I published a consumer empowerment strategy, right at the heart of which were proposals to look at collective purchasing. While working on that strategy, I noticed that under Labour no work had been done on that. As a result of our work, we got Consumer Focus to work on collective switching and we talked to Which? and others, and that work is bearing fruit. She is on the wrong track again.
My right hon. Friend knows that I greatly welcome his robust and clear attitude to these issues and the Government’s strong policy. I encourage him to be really tough with Ofgem and the big six energy companies, which have often had far too easy a time. May I put a suggestion to him? Every year, local authorities send out council tax bills and people address their council tax and housing benefit requirements. Will he see whether, within that same mailing, everyone—in all our constituencies—could be sent information about the cheapest tariffs? That would ensure that local authorities share the responsibility for spreading the news about how housing costs can be kept down.
As always, my right hon. Friend has come up with an ingenious idea. The good news is that the Deputy Prime Minister, following my work with energy companies, is already on to that, through this annual communication that the big six will now send out to ensure that people know the best tariff for them. However, my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes) is right that local authorities have a role—in the green deal and many other things. I am happy to talk to him in detail about that.
My right hon. Friend might also be interested to know that the collective switching schemes we are trying to promote through trusted third party intermediaries, such as Which?, are beginning to take off. Many social housing providers and councils are interested in seeing whether they can work with their communities to push these schemes, and People’s Power, a social housing provider, has pushed the huge switch after the big switch. That is exceedingly good news.
One big issue facing all our constituents is the price of fuel for their vehicles. Is it not a sad state of affairs that it costs families more to fill up their cars than to put food on the table? Surely something needs to be done about the 3p increase and other increases.
The Government have taken many measures to try to keep down the cost of fuel, but the hon. Gentleman will know that we do not control the price of oil globally. I am delighted, however, that we are not suffering from a tanker fuel dispute. The resolution of that dispute is extremely important. [Hon. Members: “No thanks to you!”] That shows how little Opposition Members follow these things.
I will shortly be holding a round-table discussion at my Department to continue the momentum building behind collective purchasing schemes. Together with our policies to make markets work better and to help consumers to get the best deal, we are also making it easier for people to save energy. As the right hon. Member for Don Valley reminded us, one of our mantras is that the most affordable energy of all is the energy we do not have to pay for—she is quite right about that—yet too many of our homes and businesses are leaking heat and wasting energy. Making them more efficient will help consumers and small businesses to cope with costs. We can cut those bills and keep people warmer for less.
Later this year, we will introduce the green deal, bringing energy saving within reach for millions of homes across the country. A new Government-backed scheme will enable householders to make energy efficiency improvements at no upfront cost. Trusted local and national brands will pay for the work with the costs recouped from energy bills, and the green deal will help householders to stay warm for less. We estimate, for example, that a three-bed semi could save £120 a year by installing wall cavity insulation.
When costs rise, the poorest are often hardest hit, so we are committed to helping the most vulnerable heat their homes more affordably. I mentioned the warm home discount in response to the hon. Member for Ynys Môn (Albert Owen). It will continue to assist about 2 million low-income households with the cost of heating their homes in 2012-13. Alongside the green deal, parts of the new energy company obligation will deliver heating and insulation measures to low-income vulnerable households, including those in some of the most deprived communities.
Will the right hon. Gentleman provide clarification on the energy company obligation? I understand that about 50% of the money will go to the most vulnerable families and the other 50% to those with hard-to-treat homes—we are talking about solid walls. Within the second group, is he prepared to consider prioritising the most fuel poor, rather than subsidising people on large incomes? We recognise that hard-to-treat homes are a problem, but we must ensure that that side of the budget prioritises the fuel poor and the vulnerable living in such homes and gets the subsidies to them.
Since becoming Secretary of State, I have spoken to Professor John Hills, given all the work he did analysing fuel poverty, and I have made changes to the energy company obligations as originally designed. The Deputy Prime Minister talked about this issue recently. We will be laying regulations before the House for debate this summer which will contain all the details that the right hon. Lady seeks. I say to her in the nicest possible way that she needs to wait a little bit, but those regulations will be laid before this House.
Does the Secretary of State accept that unless action is taken on the interest rates charged by those providing the loans for the green deal, the green deal is unlikely to deliver what he says its likely benefit is? What action has he taken to get that right, and why is he doing nothing further to ensure that the interest rate is compatible with an effective green deal for the future?
I have been looking at the financial arrangements of the green deal. When we are able to announce even more details than we have already, I believe that people will see that it is a very attractive offer. I also believe that there are many low-income households that will actually welcome the rate of credit that will be asked through the green deal, compared with some of the rates of credit that they have to pay other lenders.
I will not give way, because I want to make some progress and address the Queen’s Speech.
We need to make dramatic changes to our energy policies in the longer term. The right hon. Member for Don Valley said, in a rather bizarre passage towards the end of her speech, that we were not really reforming the electricity market—but we are making the biggest reform of the electricity market since privatisation. It is the sort of reform that Labour Members failed to get their head around and failed to deliver, despite 13 years in power.
There are huge challenges for our electricity market, with 20% of our power plants coming offline during the next decade. There is an energy security issue. We will have to ensure that the infrastructure is brought forward in the most competitive way, otherwise there will be a big impact on bills. We will have to attract more than £110 billion of investment in a way that ensures that low-carbon technology can be introduced, so that we can meet our carbon budgets. That is a heck of a challenge, and this Government have developed the policies to meet it.
If we do not act now, we estimate that by the mid-2020s up to 2.5 million households will be affected by blackouts, costing the economy more than £100 million a year. Even without interruptions to supply, our consumers would be exposed to volatile global energy markets if we did not do anything. Wholesale energy costs already make up half of the average consumer bill. Last year, the winter gas price was 40% higher than the year before. That is the real reason why bills have been going up so dramatically. We have to act and make the strategic changes to tackle that issue.
Following on from the point made by the hon. Member for Upper Bann (David Simpson) about road fuel, what stage are the Government at in introducing a fair fuel regulator, which was much talked about while the two coalition parties were in opposition?
I am sure that my right hon. Friend the Secretary of State for Transport will touch on those issues. This Government have done far more on petrol duty than the previous Government did. However, I will not pretend that we can isolate ourselves from world oil prices—the hon. Gentleman will know how high the price of oil has gone internationally.
We will do everything we can to insulate consumers from such price spikes. That is why, as stated in Her Majesty’s Gracious Speech, the Government will introduce legislation to reform the electricity market. The measures in the forthcoming energy Bill will ensure that we have secure, reliable low-carbon electricity supplies. We want to build a diverse portfolio of clean-energy technologies, including nuclear, renewables, clean coal and gas, and let them compete on cost.
Is the Secretary of State aware of the proposed 15% increase in gas prices? There is much talk about the increase in oil prices and other prices, but gas prices are also going to cause real hurt. What steps can the Government take to help those who have gas as their sole source of energy?
The hon. Gentleman is right to say that there are people predicting that wholesale gas prices will go up later this year. We had the announcement from Centrica last week, and we also had the announcement from E.ON. I am sure that other providers will be competing on price. However, I have already laid out some of the measures that we have been taking, whether it is the discussions that we had with the energy providers on gas and electricity bills, the collective switching or the work that Ofgem is doing on tariff simplification. All those measures make up quite a strong package to try to help the constituents he has just mentioned.
Returning to the energy Bill, there are four parts to our reforms: new long-term supply contracts to provide stable incentives to invest in low-carbon electricity generation; a capacity mechanism to ensure that we can keep the lights on; an emissions performance standard to keep carbon emissions from new fossil fuel plants down; and a carbon price floor to give investors certainty to commit capital to low-carbon projects. These reforms will attract the investment that we need to secure our electricity supplies. The investment will bring real rewards: up to 250,000 jobs in the construction and operation of new power plants, 19 GW of new electricity capacity, and an energy system that is fit for the future.
This is one of the biggest delivery programmes that this Government will oversee. It will stimulate growth, support new skilled jobs, upgrade our ageing energy infrastructure and bring down consumer energy bills. Our latest analysis shows that over the next two decades the average household energy bill will be 4% lower than if we did nothing. If we do not act now, we face a higher risk of blackouts and more exposure to price spikes, and higher consumer bills for both homes and businesses. That is not a future that this Government are willing to consider, so we will take the right decisions for the long term. The provisions in the forthcoming energy Bill will keep the lights on and our carbon emissions down, at the lowest cost to the consumer.
As the right hon. Gentleman has made specific mention of the consumer benefit that will arise from electricity market reform, would he care to place on the record this afternoon how many consumer-based levies are in his energy market reform proposals, and what price effect their implementation will have on consumer bills?
When we publish the draft Bill for pre-legislative scrutiny, I will set out a range of details, with a lot of technical documents. What I can say to the hon. Gentleman ahead of that is that there will be fewer levies than Labour planned. Labour planned a levy on bills for carbon capture and storage, which I believe would have cost consumers £9 billion. We are not going ahead with that.
This is a difficult time for many households. I am sure that Members on both sides of the House have heard from constituents who are struggling to pay their bills or keep their businesses afloat. Promises from politicians will not make the end of the month come any sooner, but the Government are doing what they can to help. We are making it easier for people to get a better deal from their energy suppliers; we are bringing energy efficiency to the mass market, making homes in every corner of the country cheaper to heat; and we are reforming our electricity system, to protect consumers from a more unstable and more expensive energy future. These three objectives share a common cause: not only will they insulate our consumers from energy price rises, but they will deliver a cleaner, more secure and more affordable energy system for generations to come. This is government for the long term, and that is what this coalition stands for. We are taking action where the last Government delivered inaction.
I will give way to all sorts of people shortly.
We need to draw on some of the experience of Sweden and other Scandinavian countries. We need parental leave which—almost in a social engineering way—enables and encourages dads as well as mothers to take parental leave.
I will give way to the Secretary of State. Perhaps he is going to answer my question about nuclear energy. He has had enough time in which to think about it.
I have been listening closely to the right hon. Gentleman’s speech. Before I became Secretary of State for Energy and Climate Change I was in charge of employment relations in the Department for Business, Innovation and Skills, and, indeed, did the work that took place before the announcement in the Queen’s Speech of legislation on flexible parental leave, and I can tell the right hon. Gentleman that that legislation will deliver many of the developments for which he is arguing. For instance, it will ensure that dads and members of extended families can be more involved. Shared parental leave, the extension to all of the right to request flexible working, and an increase in unpaid parental leave will tackle all the issues that he has raised. Those are the most radical proposals that have been made in this area, and they derive from the best practice in the world, which I believe is found in Sweden and Germany.