Off-gas Grid Households

Hywel Williams Excerpts

Tuesday 16th April 2013 Westminster Hall

[Mr Weir]

The market is not clear. I appreciate that there are difficulties in the market. There are some big suppliers, but there are many small ones, and one difficulty is that many suppliers buy on the notoriously volatile spot market. The APPG report highlights another difficulty, which is that people are given a price when they ask for oil, but the price is not guaranteed and can be completely different on delivery. That is no way for someone to run their main home heating supply. The presence of the hon. Member for Strangford (Jim Shannon) reminds me that this is also an issue in Northern Ireland—I was interrupted before I could mention that.

Figures from Oil Firing Technical Association suggest that a typical rural household could save £170 if they bought heating oil in June 2010 rather than in January 2011, nearly doubling the value of their winter fuel allowance. When I introduced my Bill, the House of Commons Library produced a note that stated:

“The average costs of heating and providing hot water for a typical three bedroom house with LPG have been estimated at around £2,300 per year (based on April 2012 prices with a conventional boiler), heating oil is thought to cost around £1,700 and gas around £1,200.”

It is worth noting that over the past four years, the cost of heating an average home with propane or home fuel oil has increased by £850 and £750 respectively, while gas has increased by only £400, so not only are off-grid homes more expensive to heat but the costs have risen much more sharply than for homes on the gas grid. In short, it costs almost double to heat a home with LPG than a home with access to the mains gas grid. It is also important to note that the main use of LPG and home fuel oil is for heating, so although these homes generally have electricity they still face greater costs.

The traditional response of Government to the problem has been to call for an extension of the mains gas grid, and that point is made in the report, but there are fundamental difficulties, not least because in many rural areas there is simply no gas main and there is no possibility of a gas main ever coming to areas such as the islands and highlands of Scotland, rural Wales and rural Northern Ireland perhaps. Even where there is a gas main, the connection cost can be exorbitant.

I recently came across a case in an urban setting in my constituency. Even though there was a gas main further down the street, my constituent was quoted £6,000 to connect to it. That would be uneconomical for most households, which are struggling to pay their fuel bills. If the Government are serious about the extension of the gas grid, they have to do something about connection costs. In the case of my constituent, it might be that the quoted cost was high because they were the first person in their small area who wanted to connect. People connecting in future might get it cheaper, but it is still uneconomical for the first person, and that issue needs to be tackled.

The problem in many rural areas is exacerbated by the fact that much of the housing is old and of a construction that makes it difficult to install energy-saving measures such as cavity wall insulation. I appreciate that the Minister will say that the energy company obligation is meant to tackle such issues—and I am sure that it will— but there is still a huge problem over all rural areas of the United Kingdom.

Those households receive the same winter fuel allowances as pensioners on the gas grid, but the crucial difference is how the energy is delivered. Those who are on the gas grid will receive their winter fuel bill around the time that the winter fuel allowance is generally paid, and it therefore works well for them. Indeed, in the explanatory notes to the regulations that last amended the benefit, the previous Government stated:

“They are paid in a lump sum each winter to ensure that money is available when fuel bills arrive.”

That, however, is not the case for those who are off the gas grid. They face the difficulty of having to pay for their LPG or home fuel oil up front at the beginning of winter, well before they have the benefit of the winter fuel allowance, and the hon. Member for Truro and Falmouth rightly pointed out the cost of a full tank of gas. Many find it difficult to make the payment at that point, and may well not fill up the tank completely, which leaves them having to do so in the depths of winter, which can bring problems of its own, particularly during the severe weather that we have recently experienced.

The Office of Fair Trading produced a report that found that there were many competing suppliers in the market. However, by definition many of them are small suppliers, and although some of the larger players offer greater payment flexibility, many smaller ones are unable to so.

[Hywel Williams (Arfon) (PC)]

My hon. Friend referred to the difficulty of getting gas supplies in the depths of winter, and that was certainly an issue two winters ago in my constituency. Has he come across any local authorities or other bodies that include gas supply as part of their emergency planning?

[Mr Weir]

I cannot say that I have specifically addressed that issue but, to be fair to the Government, two winters ago, they introduced a regulation to amend drivers’ hours, to enable tanker drivers to deliver during the worst of the winter. In spite of that, in my constituency it was impossible for tankers to get up many of the roads because they were blocked with snow. I had constituents who had no gas over that Christmas. The problem is exacerbated by the fact that some suppliers place a meter in the tank, and unless the remote reading shows that the gas is at a certain level they will not deliver because they do not consider it an emergency.

--- Later in debate ---

[Hywel Williams (Arfon) (PC)]

I congratulate the hon. Member for Truro and Falmouth (Sarah Newton) on securing the debate and the all-party group on the off-gas grid on its report. I commend the solutions that the group recommends.

I will not restate many of the statistics that have already been presented this morning, but I will make just a few points. Four million UK households are off the mains gas grid and they use a range of other fuels to heat their homes, including heating oil; gas, as we have heard; mains electricity; and microgeneration. However, they also use solid fuel—coal and wood—and that is a particular issue in constituencies that were previously coal mining areas. Also, there are some rural non-coal-mining areas in my constituency; the point about non-mining areas has already been noted by the hon. Member for Brecon and Radnorshire (Roger Williams).

We know that the cost of using heating oil is substantially higher than the cost of using mains gas—about half as much again as the cost of using mains gas—and the cost of using LPG is about twice as great. However, in my area there is limited opportunity for consumers to switch their fuel source, an issue referred to by my hon. Friend the Member for Angus (Mr Weir). I have heard over a number of years that there are continuing suspicions of what are, in effect, local monopolies, with large companies presenting themselves locally with local names, for example. I do not know if that continues to be a problem, but it certainly has been in the past. There is, therefore, also a difficulty in substituting one supplier for another.

Reference has already been made to the difficulty of adopting some of the solutions that have been recommended by the Government, such as getting better insulation. In my constituency, houses typically are of rubble construction and a large proportion of them are pre-1919. The possibility of insulating those houses more effectively is limited, to say the very least.

Throughout the UK, 42% of rural households are not connected to the mains gas, compared with 8% of households in urban areas, but I think that the percentage of such houses in some parts of rural parts of Wales is much higher. From my experience of living on the Llyn peninsula, which is isolated from the mains in some areas, I know that the percentage is very much higher, which has a specific consequence for those communities, some of which are particularly deprived in the first place.

Rural households rely more heavily on oil and LPG to heat their homes, but there are difficulties in using oil and LPG. I have referred to the problems that I experienced during the particularly hard weather recently. I have a group of pensioners, all of whom depend on LPG and live in an extremely rural area. The lorries carrying the fuel could not get up there. I made inquiries about whether the gas supply was part of emergency planning, and clearly it was not in any real sense, although the local authority acted very promptly, and I might even use the word “heroically”, in getting gas supplies to those people around Christmas time. However, much more attention should be paid to that specific issue.

We have already discussed the fuel poverty that arises from the issue of off-grid gas. We know that fuel poverty leads to ill health. I also looked at the statistics. Cardiovascular diseases and respiratory diseases, such as asthma, are exacerbated in cold, damp and poorly ventilated homes. Again, that is a particular issue in former coal mining areas, where a number of people still suffer from the effects of their involvement in the coal industry. Also, in my area, similar effects arise from people’s involvement with the slate industry.

I will put before the House a case that I came across last Friday. The accepted definition of fuel poverty is

“a household which spends more than 10 per cent of its income on all fuel use and to heat its home to an adequate standard of warmth”,

which is the definition used by the Department of Energy and Climate Change. I came across a case last Friday. A gentleman came to see me who was on benefits; I think he gets about £72.40. By the way, he was very precise about the amount of money he gets—down to the penny, almost—because people on very low incomes have to be. Out of his £72.40, he was considering buying two bottles of LPG, which he thought would cost him around £40. Spending that £40 was going to destroy his finances for that particular week, but he was confident that he could manage, because he had been managing in this way for years. I went through his finances with him very briefly and I asked him in passing, “I don’t think you have allowed there for the cost of a TV or a TV licence,” and he said, “Oh, the TV’s gone years ago,” and that was the way he was coping. I must admit that I scarcely watch TV, but this issue is about being able to take part in society in the way that everyone else does.

[Roger Williams]

Will the hon. Gentleman give way?

[Hywel Williams]

I hope that the hon. Gentleman will forgive me for not giving way, as time is rather short.

You would not want me to wander off the point, Mr Crausby, but may I note that I saw that particular gentleman because he is also going to be paying the bedroom tax at £18.40? I have no idea how he will do that on £72.40, with bedroom tax at £18.40 and buying LPG at £40 a shot. He has no savings, no job and very little possibility of moving.

I will press on to say, very briefly, that households that use oil or LPG as their main source of heating are more likely to use secondary heating than are other homes. In Wales, 85% of heating oil consumers use fuels for secondary heating and most frequently use solid fuel—that is, they use oil, but they also use coal, or some use wood. Only 23% of consumers in Wales with mains gas heating use other fuels for secondary heating, so mains gas is not an answer.

Lastly, I refer to the Bill introduced by my hon. Friend the Member for Angus and commend it yet again. It would allow pensioners to be given the winter fuel payment earlier in the year. I would like to see that extended to solid fuel. My hon. Friend’s Bill was deliberately restricted in scope to increase its chances of being passed, which I hope it is. Again, I press the Minister and the Government to give it proper consideration.

On 16 January, I asked the Secretary of State for Energy and Climate Change whether the Government could make winter fuel payments earlier, so that people would get more value, or more “bang for the buck” as it were. Interestingly, the Secretary of State said:

“My Department has been encouraging people in many parts of the country who are off grid to buy early, because they can get much better deals than if they leave it until later.”

That is precisely the point that I was making. He then said:

“Although the extra payments are welcome to those who get them, they are not received by everybody. They do not address the fundamental problem of homes and appliances that waste energy and money.”—[Official Report, 16 January 2013; Vol. 556, c. 950.]

Well, “hear, hear” I say—that is a very fine point—but I would not want the Secretary of State or the Minister to use their not being able to do something fundamental as an excuse to do nothing at all.

[Mr David Crausby (in the Chair)]

There is time for a very short contribution from Alan Reid.