Fuel Poverty

Fiona Bruce Excerpts

Wednesday 3rd February 2016 Westminster Hall

[Fiona Bruce (Congleton) (Con)]

I recently had the privilege of launching in this House a report entitled “The poor pay more”, by the debt counselling charity Christians Against Poverty. It outlines concerns that I want to express today about a specific issue, which is the prepayment metres that 10.8 million people across this country use.

It is a sad fact that the poorest in our country pay more for their fuel. As the CAP report highlights, the reason is that people on prepayment meters face higher tariffs and charges than those who pay in other ways. They simply cannot get on to the best tariffs, so they are forced to pay more, and they often have to turn to payday lenders to do so. Their difficulties are compounded by the fact that prepayment meters are predominantly used by vulnerable consumers: lower-income households, the unemployed, those with long-term disability and often those with mental health challenges, terminal illness or learning disabilities.

I do not have time to cite CAP’s statistics, but they reveal how extensive the problem is. Prepayment meter consumers are more susceptible than others to consumer detriment, because they find it more difficult to engage with suppliers, or to switch to or obtain the best tariff. Higher tariffs are not just a penalty for those in arrears; they affect thousands of people who are unable to engage effectively and switch. Those people need more support to engage effectively, and I hope that the Minister will consider how that support can be provided.

Ofgem estimates that PPM users pay an extra £300 a year compared with those on the cheapest tariff. Moreover, even if those people can engage effectively, they face other significant barriers that prevent them from switching to more competitively priced deals, such as charges for the installation or removal of a PPM, credit card checks and security deposits. Put simply, this is a matter of social justice; the poor should not pay more for such a basic and important commodity.

The unfairness of the situation is starkly illustrated by the statistics in CAP’s report, and behind every statistic is a human story: 8% of PPM users never use their heating in the winter, and a quarter use it for less than two hours a day. People miss hot meals, or do not wash themselves or their clothes. Many people fall behind in making payments, or have no energy supply at all.

Official disconnection figures hide the true statistics. In 2015, there were only 192 instances of official disconnection. However, in most cases where a customer falls into difficulties, energy suppliers install a PPM instead of disconnecting a supply. Then when customers cannot afford to put money into their meter, they are classed as a “self-disconnection”, so they do not fall within the official figures. The number of such self-disconnections is high. In 2014, approximately 300,000 new electricity PPMs and 320,000 new gas PPMs were installed. Customer Focus estimates that one in six PPM users are self-disconnecting. Current methods of measurement simply do not detect the level of disconnection that exists or the human stories behind each disconnection.

I could go on, Sir Roger—there are other points I would have liked to make, for example the need for clarity about standing charges over the summer months. Currently, when PPM users put money in as winter approaches, they often find that all their money has gone, simply to pay for the standing charges. That situation needs to be looked at, and people need help to understand it.

We also need to ensure that more innovative social and smart tariffs are introduced. Steps should be taken to ensure the introduction of smart meters, which promise infrastructure savings for suppliers and cost reductions for PPM users. They should be given as a priority to those who currently have PPM meters. However, with full smart meter roll-out not expected for another five years, action is needed today to ensure that the price differentials that 10.8 million PPM users currently experience are eradicated.