Fuel Poverty

James Heappey Excerpts

Tuesday 11th December 2018 Commons Chamber

[Richard Harrington]

I respectfully disagree with the hon. Lady, and I will outline the £3 billion-worth of Government help.

Our 2017 clean growth strategy sets an ambition of improving as many homes as possible to energy performance certificate band C by 2035, wherever practical, cost-effective and affordable, but the truth is that the most vulnerable must be helped first. We are committed to improving the homes of the fuel poor to band C five years earlier, by 2030, and we have set interim milestones to keep us on track. As many fuel-poor homes as reasonably practical will be improved to band E by 2020, and to band D by 2025.

A key way in which we are delivering energy efficiency measures to meet that ambition is through the energy company obligation, which has led to energy efficiency upgrades to nearly 2 million homes across England, Scotland and Wales since 2013. Recognising the need to support low-income and vulnerable households first, we have taken action to ensure that ECO is targeted at those who need it most.

When the scheme was first introduced in 2013, 30% of ECO spending was focused on addressing fuel poverty, and by 2015 it had been increased to 70%. Today 100% of the energy company obligation is focused directly on low-income and vulnerable households, and we have introduced a new innovative element that will bring down the long-term cost of low-carbon measures.

[James Heappey (Wells) (Con)]

The ECO programme has been very successful indeed, but does my hon. Friend agree that it is not just the barrier technologies of insulation in roofs and better windows, doors and floors that make a difference but the introduction of clean tech in homes? Clean tech can often deliver significant savings, too, so I hope that, as a result of the recent consultation, things like smart thermostats will now be included in the ECO catalogue.

[Richard Harrington]

As usual, my hon. Friend is well informed and well spoken on this subject. I share his hope, and he makes a significant point. I hope he will see this come to pass.

We are also clear that landlords should play a role in upgrading the energy efficiency of the properties they rent out. The private sector regulations will require landlords to improve the energy efficiency of band F and band G properties so that their tenants will be living in properties rated band E or above by 2020. We expect that these regulations, which require landlords to invest up to £3,500 on their property, will enable all privately rented F and G properties to receive support, and about half of these homes will be improved to an energy performance level of band E. This action to tackle the worst homes first—those rated F or G—is consistent with the approach set out in our fuel poverty strategy, but we will be consulting on options to ensure rental properties are improved to the band C target level by 2030. The private rental sector has to make its contribution as well.

We recognise that long-term sustainable solutions such as the ones I have mentioned are little comfort to those who are cold now. It is important to complement this approach with more immediate support, which is why we extended the warm home discount to 2021, so that it can continue to provide more than 2 million low-income and vulnerable households with a £140 rebate off their energy bill each winter.

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[Richard Harrington]

I will make one small change to what the hon. Gentleman said, in that I have read that report and I have met Dieter Helm. I will happily send the hon. Gentleman a copy of the recent energy speech that my right hon. Friend the Secretary of State made. If the hon. Gentleman does not have a copy, I will send it to him with my compliments—I might even get the Secretary of State to sign it for him for Christmas.

We extended the warm home discount to 2021, so that it can continue to provide more than 2 million low-income and vulnerable households with a £140 rebate off their energy bill each winter. In addition, the winter fuel payments provide all pension households—people of pension age in the households—with additional financial support worth up to £300. Cold weather payments also provide relief to the elderly, the vulnerable and those who need extra support with their fuel bills during spells of cold weather. Last year, that alone provided an estimated £98 million in cold weather payments to keep people warm in vulnerable households.

[James Heappey]

The Minister, or at least the Treasury, will know who receives cold weather payments. Is any measure taken of the energy-efficiency of the homes in which those recipients live and therefore of whether, rather than just spending money every time the weather is cold, we might improve the energy-efficiency of those properties and so reduce the requirement for those payments to be received in the future?

[Richard Harrington]

If it is acceptable to my hon. Friend, I will write to him on that subject, because I need to speak to the Treasury about its analysis, which is what his question is about.

We are providing all consumers, including the fuel poor, with more control over their bills. The smart meter programme will mean millions of customers will be in control of their energy use, helping them to save money. A new safeguard tariff coming into effect on 1 January will protect 11 million consumers from high bills. On average, households will save £76 a year, with some saving a lot more. Significantly, as a result of these measures, the average fuel poverty gap has decreased from £379 in 2011 to £326 in 2016. Over that five-year period, the total fuel poverty gap has decreased by £88 million in real terms. Although it is important to recognise that progress is being made, we acknowledge that we still have a long way to go. The clean growth strategy included an ambitious set of policies for homes, the extension of energy-efficiency support through to 2028 and at least £640 million per year. We will be reviewing what the best form of support this will be in 2022, and I would welcome the views on this topic of hon. Members here today.

We will update the fuel poverty strategy for England in 2019, and we look forward to receiving good ideas on how we can make further progress. The new strategy will align our work on fuel poverty with our clean growth strategy and industrial strategy. We had always planned for the fuel poverty strategy to be a living, evolving document, because changing technology and innovation will mean that what worked in the past will not necessarily be the best plan for the future.

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[Rebecca Long Bailey (Salford and Eccles) (Lab)]

As we enter another winter, I welcome the opportunity to stand opposite the Minister in what will hopefully be a collegiate debate. I regret, though, the urgent necessity once again to debate fuel poverty in this Chamber.

Fuel poverty epitomises what a UN statement recently described as the “great misery” that has been “inflicted unnecessarily” on the UK’s poor, and in particular on the millions of children locked into a cycle of poverty. The UK is one of the world’s largest and wealthiest economies, with all the means at its disposal to eliminate fuel poverty, and yet it is not being eliminated. The latest data shows there were more households living in fuel poverty in England in 2016 than in 2015. The figures were higher in 2015 than in 2014, when in turn they were higher than in 2013. It is not just the extent of fuel poverty that is on the rise, but the depth of fuel poverty—that is, the difference between households’ energy bills and what they can afford to pay. Fuel poverty is not only persisting, but getting worse. Members should be in no doubt that this is not an unavoidable fact of life. It is a political choice.

According to the Office for National Statistics, the number of excess winter deaths throughout England and Wales last winter exceeded 50,000. As we have already heard, that is the highest recorded number for more than 40 years. The figures were described by the charity National Energy Action as “preventable and shameful”. According to that same group, at least 10,000 of those premature deaths were due to vulnerable people being unable to heat their homes adequately. I would like Members to reflect on the people behind those numbers. It means somebody’s neighbour, somebody’s parent, and somebody’s child—10,000 people dying before their time just because they could not keep warm.

The terrible impact extends beyond preventable deaths. I have previously mentioned the impact on health. We know that children living in fuel poverty are twice as likely to suffer from respiratory problems, such as asthma and bronchitis, and that fuel poverty is associated with low weight gains in infants and higher levels of hospital admissions in the first three years of life. Adolescents living in cold homes are at five times the risk of having multiple mental health problems. On top of that, there are the negative effects on educational performance, emotional resilience and wellbeing. When combined with the fact that fuel poverty is not evenly distributed throughout the country, but concentrated in pockets of urban and rural poverty, we have the makings of what can only be described as a social crisis. In some parts of my constituency, fuel poverty affects one quarter of all households, and over one quarter of single-parent households. We know that it is a problem locally because, between April 2017 and March 2018, of those people who came to a citizens advice bureau in Salford and Eccles about energy issues, the most common was dealing with fuel debt repayments.

In last year’s debate, I stated that 22% of households in Salford have prepayment meters compared with the national average of 15%, so I was particularly troubled by a report this year by Citizens Advice on the phenomenon of self-disconnection by those using prepayment meters. The report found that around 140,000 households in Great Britain could not afford to top up their meter in the past 12 months and that 88% of those households contained a child or someone with a long-term health issue. Half of those surveyed said that keeping their meter topped up was a daily concern, which is particularly shocking when we consider that more than 4 million households currently use prepayment meters.

Fuel poverty is not just an issue for those on prepayment meters. Following an unprecedented number of energy price hikes by suppliers rushing to increase prices in advance of the price cap, about which I will say more later, household energy debt has surged over the past year by 24%. It is often said that fuel poverty is due to the confluence of three factors that we have heard about very briefly already: low income, high fuel prices, and poor energy efficiency. I wish to say a few words about each.

After a decade of austerity and lost growth, annual wages are still £760 lower than they were in 2008. Is it any surprise therefore that 47% of all fuel-poor households in England are in full or part-time work? For those out of work, the benefits freeze has deepened fuel poverty as families, already struggling on very little, have experienced a real-terms income cut. The industry body, the Energy and Utilities Alliance, has noted that the introduction of universal credit, which leaves households without an income during the five-week changeover, is pushing more people towards making the decision not to heat their home and to face the dilemma of heating or eating. Raising the national minimum wage to £10 an hour, ending the welfare freeze, and reversing cuts to people with disabilities would go a long way to tackling absolute poverty, which is at the root of so much fuel poverty.

On the cost of energy, last month Ofgem finally confirmed that an energy price cap will come into force in January 2019. That is almost two years after the Prime Minister first announced a price cap as Conservative policy, and it is set at a level that is hundreds of pounds higher than the cheapest tariffs available. In the intervening period, the big six energy suppliers have hiked their tariffs, some on multiple occasions. Ofgem has announced that the cap is likely to be revised upwards within months of being introduced.

In addition, wholesale prices are rising, I feel obliged to mention research published just yesterday by the UK Energy Research Centre, which finds that a no-deal or hard Brexit could increase electricity generation costs by £270 million a year. That is another reason, if we needed one, to redouble our efforts in this House to avoid no deal or a bad Brexit deal.

Labour’s 2017 manifesto pledged an immediate emergency price cap to ensure that the average dual fuel household energy bill remained below £1,000 per year. Had that cap been introduced in July 2017, it would have saved households £2.85 billion between July 2017 and November 2018.

[James Heappey]

I know the hon. Lady does a lot of reading into energy policy, so she will know that a price cap can only be a temporary correction to the market. What is her longer-term plan for delivering a fairer energy price?

[Rebecca Long Bailey]

The hon. Gentleman is very learned on the topic of fuel poverty, and I agree with what he said. The Labour party has persistently stated that an energy price cap is a sticking plaster while the wider energy market is reformed, because it is not currently working in the interest of consumers. It forms part of the wider plan of Labour’s energy policy portfolio completely to reform the energy system as we know it.

Network costs represent over one quarter of the cost of a gas and electricity bill, but customers have been getting a bad deal. Citizens Advice estimates that network companies will make £7.5 billion in unjustified profits over an eight-year period. A recent report by the Energy and Climate Intelligence Unit found even more excessive returns captured by distribution network operators than Citizens Advice had predicted, with the six distribution network operator parent companies posting an average profit margin of 30.4%. By bringing energy networks back into public ownership, Labour would reinvest and pass on to customers the money currently paid out in dividends.

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[James Heappey (Wells) (Con)]

I will rattle through what I have to say very quickly, then, Madam Deputy Speaker.

As both Front Benchers have said, the key to solving fuel poverty is twofold: on the one hand, we reduce the price of energy; and on the other, we help consumers to use less energy. In the two minutes and 30 seconds remaining, I will very quickly whizz through some of the things that we could do that are relatively low-hanging fruit for the Government. First, the costs of running the energy system are growing too much, and we have a number of very comfortable, monopolistic companies that perhaps we could screw down on a little in order to see whether the growth in system costs could be curbed.

Secondly, while the price cap is a useful temporary measure, there is a huge opportunity for market reform in order to take advantage of the very cheap renewable energy that can now be generated, and the flexibility that now exists within the system that can make use of those renewables without the need for quite so much in the way of back-up generation.

We can also make some really good progress on allowing energy and heat as a service to come through as a proposition to consumers. I would like Ofgem to do more to work with the companies that are likely to provide those services so that we can put in place a regulatory construct that will allow consumers to start to take advantage of this sort of initiative very quickly. I know that the Government are leading on the changes to the feed-in tariff, but we must start to look at how we encourage people to generate behind the meter for their consumption behind the meter, because that will reduce their energy costs, too.

But generation is just half of the story—using less is very important, too. Many of the measures I have mentioned, particularly things like heat and energy as a service, will naturally lend themselves to greater energy efficiency, particularly as the companies that are delivering those services are quite likely to want to install the energy efficiency measures within a home or business because they make a greater margin by being able to do that in the most efficient way possible. Lots of companies out there are innovating all the time in terms of what can be put in walls, rooms, doors, windows and floors in order to let less heat escape from a business or a home.

[Dr Drew]

Does the hon. Gentleman agree that we need to prioritise the properties that have never been on the gas grid, because they lose out whichever way? I am sure that he has some properties like that in Wells, as I have in Stroud.

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[James Heappey]

Not only do I have lots of them in my constituency—I have just bought one and am in the process of renovating it. The hon. Gentleman is absolutely right. In rural areas, the deadly combination of solid walls and not being on the gas grid can often mean that fuel poverty is at its most acute in areas that look relatively affluent. Tackling that can and should be a priority, but it is monstrously expensive. When someone is going through the process of renovating a home, they are making lots of decisions, and the energy efficiency measures are by far the least glamorous of those that they choose when the alternatives are things like decorating, carpets and all the other stuff.

Those who live in fuel poverty are having to make choices that we really should not be asking them to make when the technology exists out there for us to help them to use less energy through what we put in their walls, roofs and floors, but also through the tech that we put in their homes that can help them to manage their demand in a really helpful way. I know that the Minister is very focused on this and that the Housing and Planning Minister also recognises the enormous value in setting higher standards so that those who live in social housing have better energy efficiency.