Fuel Poverty

Ian Blackford Excerpts

Tuesday 21st March 2017 Commons Chamber

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

I welcome this debate. I hope the Minister, in summing up, will reflect on the impact of high energy costs and high energy demand on the highlands and islands of Scotland in particular. As a highlands MP, I know that fuel poverty is a massive issue.

We need the Government to listen to our story, appreciate our particular situation and work with all of us to deliver fairness in energy charging that can offer hope that, working together, we can drive consumers out of fuel poverty. According to Scottish Government statistics, 34% of Scottish households are in fuel poverty, while for the highlands the figure is 56%; for the western isles, it is 59% and for Orkney it is 65%. Those are shocking statistics. More than half of households in much of the highlands and about two thirds of households in Orkney are in fuel poverty. Can we in this House accept those statistics?

I have to say that there have been times in the past when the House listened to the legitimate grievances of highlanders and islanders, and took action to improve our situation. Just over 100 years ago, in 1886, the House passed an Act that for the first time gave security of tenure to crofters. The clearances and the removal of people, often in a brutal way, was stopped by the crofting Act’s coming into force. In 1965, the Government established the Highlands and Islands development board, now known as Highlands and Islands Enterprise—a venture instrumental in reversing decades of economic decline in the highlands and islands.

I ask the House today to recognise the unfairness in the market for electricity costs that penalise highlanders and islanders. I am asking for the same consideration that was shown when the highlands required Government intervention in the past. We need it now to create fairness in electricity pricing. I accept that those of us from these areas live in some of the most beautiful parts of not just Scotland and the UK, but the world. But we cannot heat our homes with the breath-taking scenery. It is perhaps an enchanting landscape, but often there are biting winds, driving rain and long dark cold winter nights. The aesthetic beauty of the highlands can gladden the heart, but it will not deliver warmth to a pensioner at an affordable cost over a long winter.

We hear repeatedly that the Government want to help those who are just about managing. In many cases in the highlands, the cost of heating means that too many of our people are having to make the choice between putting food on the table and heating their homes. I mentioned that 56% of highland households are in fuel poverty, but 74% of our elderly population are in fuel poverty, of whom 34% are in extreme fuel poverty. I ask the House to dwell on these statistics and then consider what we can do to challenge this situation.

On the island of Skye, electricity came with the construction of the Storr Lochs hydro scheme in the early 1950s. The facility, apart from a small upgrade over the last few years, will now be virtually fully depreciated. It will be producing very cheap, almost free electricity on to the grid: cheap electricity that islanders then have to pay a premium to get back. It is simply an injustice that in an area of the highest levels of fuel poverty, where we produce cheap electricity, we are being overcharged. That is the reality.

There is the broader point that Scotland is an energy-rich country, whether from fossil fuels or our ability to deliver renewable energy today and in the future. Our unique characteristics as an energy producer should not be trapping our people in fuel poverty. Let us not forget that Westminster has extracted a bounty of £360 billion in taxation receipts from North sea oil since the 1970s. Where is the long-run benefit of this dividend? Why is it that the citizens of an energy-rich country such as Scotland, which has produced a bonanza for the Government, suffer fuel poverty to such an extent? We need to take into account the human cost of this failure to tackle head on the root cause of fuel poverty—high and unfair pricing through the lack of a universal market as one issue.

The charity Turn2us has found that one in two low-income households are struggling to afford their energy costs, despite being in work. Among the hardest hit are people with disabilities, with more than two in three of them, 67%, reporting their struggles. Families are also hard hit: almost two thirds of working parents, 65%, are unable to meet these costs. Worryingly, of the households that are struggling with energy costs, nearly half have done so for more than a year.

The knock-on effect is severe, with a third forced to skip meals and over a fifth experiencing stress and other mental health problems. Some of the comments made to Turn2us included these:

“The bills are killing me, sometimes I have to contemplate paying all the rent or heating my home…There are many pensioners like myself that don’t qualify for any help but still have to decide whether to heat or eat…Starve or freeze? Either way you get ill, can’t work, eat or pay any bills… No lights only candles, only hoover once a week, only use washing machine once a week, no heating, meals that cook quickly.”

This is not an abstract discussion. These are comments from real people who are struggling on a daily basis. I remind Members that 70% of elderly highlanders are in fuel poverty. That is why people get angry when they see a lack of action. When we hear hon. Members questioning the retention of the triple lock on future rises for the state pension, many of us proclaim that this will not happen in our name. I became an MP to stand up for my constituents and I cannot accept that so many highlanders are in fuel poverty. There is a debate on Scotland’s constitutional future, and we will have a vote on our independence. Let me say that in an independent Scotland, we would recognise our responsibilities to those in fuel poverty and would take action to eradicate it.

The UK has a universal market for postal delivery, as for many other services. People pay the same price whether they live in Skye or Somerset, in Ardnamurchan or Avon, in Gairloch or Gloucester. Why is that not the case for electricity distribution charges? Why are highlanders and islanders facing a premium in electricity distribution charges just because of where they live?

The right hon. Member for South Northamptonshire (Andrea Leadsom) said in her capacity as energy Minister in 2015:

“It is not right that people face higher electricity costs just because of where they live.”

I commend the right hon. Lady for those remarks, but if they are to mean anything they have to be matched by actions from this Government. The issue is not just about the highlands and islands; there are 14 regional markets throughout the UK with different levels of network charges. It is not about price competition either, but about a regulated charge varying from region to region through a price control framework. The reality is that if people live in the highlands and islands, they will pay for the privilege—courtesy of the UK Government.

Electricity distribution charges for the north of Scotland are 84% higher than they are for London. Fuel poverty is exacerbated by the lack of a universal market. Westminster calls the tune; highlanders and islanders pay the price. We pay a high price for transmission charges, but we also have a high rate of energy consumption. The highlands and islands are noted for windy and wet conditions. It is not unusual for people in the highlands to have their heating on all year round. Ofgem noted in a study on the matter that households in the north of Scotland would benefit from a cost reduction of about £60 a year if there was a universal network charge. Sixty pounds would make a significant impact on someone on a low income or a pensioner.

In the highlands and islands, not only are people faced with high transmission charges, but many consumers suffer from a lack of choice in energy provision. Most households cannot benefit from a gas grid connection; the choice is often between electricity and domestic heating oil. The hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), who is no longer in his place, noted that prices will go up substantially because of currency movements in the recent past. With such limitations, the last thing we need is price discrimination—for that is what it is—being foisted on us.

Where people live should not result in their being penalised by having to pay higher network charges. Where is the “one nation” that the UK Government speak of so fondly? [Interruption.] I notice that the Under-Secretary of State is laughing. I will happily give way to him if he wants to explain why he thinks this is a laughing matter; it is no laughing matter to people in the highlands and islands.

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Jesse Norman)]

I am delighted to intervene on the hon. Gentleman to ask how he can seriously invoke the principle of “one nation”, to which my party has been an adherent for 100 years, when he is a Scottish National party Member who is campaigning to remove his country from this nation.

[Ian Blackford]

I am glad that the hon. Gentleman has risen to explain that, but he cannot get away from the fact that he sat there and smugly laughed when I made my point about the one nation. The point I am making is that it is your Government—I apologise for using the word “your”, Madam Deputy Speaker. It is the Government who are responsible for over-charging highlanders, because they will not recognise that we should have a universal market. It is the Government of the United Kingdom who should address that. Laughing, which is what the hon. Gentleman did, at highlanders and islanders is not acceptable. I hope people in Scotland were watching what happened on the Government Front Bench just now.

[Michael Tomlinson (Mid Dorset and North Poole) (Con)]

As ever, the hon. Gentleman is standing up to make an impassioned, eloquent and compassionate speech, but may I pick him up on one point? He mentioned “one nation”, and my hon. Friend the Under-Secretary intervened. Earlier in the hon. Gentleman’s speech, he mentioned the triple lock. Is that not something for which to thank the Government, rather than castigate them? Will he acknowledge when the Government get things right, as well as challenge them when he perceives there are errors?

[Ian Blackford]

I will happily do so, and I have spoken about the triple lock on many occasions, but we have had debates here in the recent past in which many Members have questioned continuing with the triple lock. I am asking the Government to commit to retaining that triple lock in order to drive pensioners out of poverty. I commend the Government because they did the right thing in that particular case, but I hope that their commitment to the triple lock will be sustained so that it continues to drive pensioners out of poverty.

When they are right, I happily give credit to the Government, but I do not take kindly to Front-Bench Members laughing when I am standing up for my constituents in pointing out that the definition of “one nation” that the Government talk about is inappropriate when highlanders and islanders are not being treated fairly. There should be equity and fairness, but they do not exist in the UK today.

The highlands and islands of Scotland experience the harshest climatic conditions in the UK and record levels of fuel poverty. There is far greater, area-wide dependence on the use of electricity for heating as well as lighting, but the standard unit price charged is 2p per kilowatt-hour more than in most other parts of the UK, and 6p or more for the various “economy” tariffs on offer. Perhaps 2p per kilowatt-hour does not sound much, but it is a price premium of 15%. That is what this Government are doing to people in the highlands and islands. They are punishing people there on the basis of where they live, despite the fact that, in many cases, we produce the cheapest electricity, as we do in Skye. The Government are culpable over that, which is why I am asking the Minister to address the point when he sums up later this afternoon. That price for living in the highlands and islands is set by the Government, and it is not acceptable.

On top of all this, there is far greater reliance in off-gas areas on using domestic heating oil and solid fuel, which pushes up household heating costs further still. As a result, domestic energy bills in off-gas areas are, on average, £1,000 more per annum than the £1,369 dual fuel national average for 2014. Figures from the Lochalsh & Skye Energy Advice Service in my constituency suggest that the average total heating bills in Skye and Lochalsh amount to an eye-watering £2,218 per annum; for those whose primary heating is from oil, the average is as high as £2,519. To cap it all, electricity customers with prepayment meters, often the least well off, not only have to pay additional standing charges, but are discovering that their notional right to change to a cheaper supplier has become impracticable.

The Government must also accept that having 14 regional markets in the UK, with consumers in the highlands and islands paying a premium, is discriminatory. Many Members claim that responsibility for fuel poverty is devolved, which of course it is, but we have no control over the pricing or the regulatory environment; we can deal only with the consequences of fuel poverty that are symptoms of a market that is wholly under the jurisdiction of Westminster.

Our Government in Edinburgh have taken a range of actions to mitigate the effects of fuel poverty, but we need the tools that would come with having greater powers—notably through independence—to be able to deal fully with the circumstances that lead to fuel poverty. We are having to clear up the effects of the lack of a universal market and the pricing regime. Tackling fuel poverty has been a priority for the SNP Government, and by 2021 we will have committed over £1 billion to making Scottish homes warmer and cheaper to heat.

The financial support to tackle fuel poverty is increasing. The Scottish Government’s budget for fuel poverty and energy efficiency measures in 2017-18 will be £114 million, an increase of more than 11% on the previous year. An independent review of the way in which fuel poverty is defined has been undertaken by a panel of four academic experts in the light of concerns that current definitions may be impeding efforts to target those most in need. In the meantime, there is a new pilot programme in rural areas offering targeted support to cut energy bills.

Although fuel prices are beyond our control and fuel price moves can militate against our efforts to reduce fuel poverty, it is welcome that, owing to relatively stable market conditions, the number of people in fuel poverty in Scotland has fallen by 100,000. That reduction was heavily influenced by the measures that we have introduced. However, it is worth noting that fuel poverty in Scotland would be at only 8% if fuel prices had only risen in line with inflation between 2002 and 2015. High and rising pricing is our biggest enemy—and I use that word advisedly.

Scottish Government action has been commended by, among others, the Scottish Fuel Poverty Strategic Working Group in a recent report, but more needs to be done in a holistic manner to tackle the scourge of fuel poverty. New affordable homes are part of that mix, and this year the Scottish Government will invest £590 million to increase the supply of affordable homes in Scotland. Targeted financial support of £1,900 for low-income families through the Best Start grant also helps—support, incidentally, that is £1,400 higher than what is on offer from the UK Government.

We are taking our responsibilities seriously. Through those measures, through such initiatives as supporting a real living wage and through the recently published Child Poverty (Scotland) Bill, we will use our powers to improve the conditions of many of those who are suffering fuel poverty in Scotland.

Finally, I want to reflect on the recently announced 14.9% increase in electricity pricing by SSE and on the fact that a 5% increase in prices pushes an additional 46,000 people in Scotland into fuel poverty. In the past, I have commended SSE for its customer service and the astonishing way in which its staff respond when bad weather leads to power interruptions, as it sometimes does during the winter months in the highlands. The speed of the response of the company and its customer service have been exemplary. Notwithstanding that commendation, however, it should be recognised that being effectively a near-monopoly supplier in the highlands and islands also brings a duty to act in a spirit of social responsibility. After all, in many respects SSE is a public utility in all but name. A price rise of this magnitude is simply not justified; the company has let itself down.

We await SSE’s financial results for the year to March 2017, but its interim statement forecast a year of growth and dividend increases. In the year to March 2016, its dividends to shareholders increased by 18.3% to £708 million. I would caution the company to ensure that it behaves in a socially responsible manner at all times. Increasing rewards to shareholders so generously does not sit well with the reality of so many of its customers being in fuel poverty, and now being pushed further into fuel poverty by this price increase. I am not against the company’s making a reasonable return on its investments—it must generate sufficient cash to invest in future electricity generation—but it must also balance the needs of all its stakeholders. In particular, affordability and the ability to pay bills must be at the heart of its thinking when it is addressing executive pay and shareholder rewards.

I welcome today’s debate, but we need action from the UK Government, most notably on the creation of a universal market. People should not be penalised because of where they live. Equity and fairness must be introduced, and it is time for the Government to take appropriate action.

--- Later in debate ---

[Jesse Norman]

I have just covered that. I am embarrassed that my remarks should be so ill-attended. The regulations for the new scheme, which launches on 1 April 2017, represent an increase from £310 million to £450 million a year. Combined with the warm home discount, that gives £770 million of support for low-income and vulnerable customers in 2017-18.

We have also taken steps to improve targeting. The eligibility criteria for the ECO scheme, which is proposed to run from April 2017 to the end of September 2018, will improve the targeting rate to 34%. We do not believe that is enough. The targeting rate can go higher, and the Digital Economy Bill, which the hon. Member for Sheffield, Brightside and Hillsborough mentioned, is currently going through Parliament and will enable greater data sharing and give the Government the opportunity to improve the targeting of the next generation of fuel poverty schemes, including the warm home discount.

When the regulations were made last summer, the Government stated that there is more to be done to target the schemes at those who most need them. That is still true, with the current targeting rate of fuel poor households at around 15%. However, Members should note that increasing that proportion in the current scheme, which is committed to 2021, would be at a cost to other low-income households. We will be mindful of that factor when making decisions on the future direction of the scheme.

The hon. Member for Motherwell and Wishaw (Marion Fellows) criticised the Government, whom she regarded as presiding over stagnant real incomes. All I can do is direct her to the fact that, last year, full-time pay grew by 0.7% in Scotland, whereas it grew by 1.9% in the UK as a whole. According to Scottish Parliament numbers, it fell for the three years following 2012.

I yield to no one in my admiration for the hon. Member for Ross, Skye and Lochaber (Ian Blackford), and I was grateful for his support in being elected Chair of the Culture, Media and Sport Committee. He also comes from a nation I deeply revere and whose history I greatly respect, but I am afraid that he has embarrassed himself in this debate with an unworthy attempt to personalise a very serious set of issues. Mine was a response to the gap, which the stricture on unparliamentary language prevents me from describing as anything more than disingenuous, between his words and his deeds. The fact of the matter is that these matters are devolved. Even so, the Government have offered support, as I described, through the ECO, the warm home discount and a hydro benefit replacement scheme of £58 million to reduce energy distribution charges. Were network charges made universal across the country, as he desired, 1.8 million people in Scotland would face higher bills, and only 0.7% would see reductions. Does he really wish to add to the bills of 1.1 million Scotsmen and women?

[Ian Blackford]

It was the predecessor Minister who made the point that people should not be penalised because of where they live—nobody should pay more. It is a matter of fairness that there should be a universal market, as exists in many other European countries. We have such things in other areas in the UK. Why do we not have a universal market for electricity distribution?

[Jesse Norman]

I am grateful for the respectful nature of the hon. Gentleman’s question. The answer is simple: it would increase charges to an additional 1.1 million people in his country, and no responsible Government should look on that with favour.

Finally, the hon. Member for Sheffield, Brightside and Hillsborough referred rightly to the health effects of fuel poverty, and we, correctly, recognise that issue. She suggested that fuel poverty in homes had risen; I have explained how, in fact, it has fallen broadly since 2010—from roughly 2.49 million to 2.38 million homes. She invites the Government to tackle the root causes of fuel poverty, but that is exactly what we are doing.

Further to my comments about the last Labour Government, it should never be forgotten that the real wages of the bottom third of the population of this country stopped growing in 2003, not in 2008—it was a function not of the financial crash but of a whole series of factors and of bad government, and we should recognise that.

The hon. Lady said the Government need to be more ambitious, and we are being extremely ambitious. We have a transitional arrangement that runs through until September 2018. We then expect a further supplier obligation, on which we will consult later this year, to take us through to 2022.

We know that households living on low incomes are all too often left to live in the coldest and least efficient homes. We know that living in a cold home can have negative implications, to say the least, for health and wellbeing. The official 2016 fuel poverty statistics showed that, despite progress towards the 2020 milestone, with 88% of homes rated E or above in 2014, there remains a significant challenge if we are to make progress to the 2030 fuel poverty target.

The statistics show that only 7% of fuel-poor households were rated B, C or higher in 2014, which clearly shows that the fuel poverty target we have adopted, which was set in 2014, is ambitious, and rightly so. That legal target makes it clear that the Government do not accept the situation. [Interruption.] If I may respond to the hon. Member for Southampton, Test (Dr Whitehead), who is chuntering from a sedentary position, it also shows that we are committed to providing support to those households that need it most. Undeniably, that means there is a lot of work to do to ensure that the energy-efficiency of low-income homes is improved. We cannot now, in 2017, prescribe exactly which policies, regulations and innovation will be required to meet the 2030 target—we will consult next year on work to a target until 2022—but we can ensure that we continue as a nation, as a country, together to move forward and take action.

Parliament will, of course, continue to play an invaluable role in holding Government to account against this objective over the next decade, and I thank the hon. Members who have spoken today for their contributions to this worthwhile and useful debate.

Question put and agreed to.

Resolved,

That this House has considered fuel poverty.