Government Levies on Energy Bills

Lilian Greenwood Excerpts

Monday 3rd March 2014 Commons Chamber

[Lilian Greenwood (Nottingham South) (Lab)]

Over the past three months, I have repeatedly raised my concerns about the impact that the Government’s panicked changes to the energy company obligation are having in my constituency, and I make no apology for doing so again today. As we have already heard, the energy company obligation is not covered by the levy control framework, even though the framework’s stated purpose is to cap the cost of levy-funded schemes and ensure that the Department of Energy and Climate Change achieves its fuel poverty, energy and climate change goals in a way consistent with economic recovery and minimising the impact on consumer bills.

The Government claim to be making changes to the ECO precisely because they are concerned about the impact on energy bills. My worry is that they seem to be ignoring the devastating effect of the changes to the literally thousands of my constituents who live in cold, solid-wall homes, which are expensive to heat. The hon. Members for Truro and Falmouth (Sarah Newton), for Brigg and Goole (Andrew Percy) and for Angus (Mr Weir) spoke about the impact on their constituents in off-grid and rural locations. I want to talk about solid-wall properties in urban settings.

Nottingham’s Greener HousiNG scheme is a partnership between our social landlord Nottingham City Homes, experienced insulation contractor VolkerLaser, local energy efficiency charity Nottingham Energy Partnership, and local people. The scheme offered up to 4,500 households in Clifton in my constituency the opportunity to save hundreds of pounds a year on their energy bills, enjoy warmer homes and contribute to national targets for cutting carbon emissions.

The scheme offered external wall insulation at an affordable, fixed price, with residents paying a contribution of between £1,000 and £1,300. The remainder of the cost was provided by funding from British Gas under its energy company obligation. Our ECO-funded scheme was to be delivered in two phases, commencing in September last year and finishing in March 2015. It was planned that the insulation works would be rolled out street by street across the Clifton housing estate to council properties and privately owned homes alike.

The launch of phase 1 of the scheme in the north of Clifton in early September was received with real enthusiasm, and within weeks hundreds of residents had signed up. Clifton is a close-knit community. Built on green fields by the council in the early 1950s to address post-war Nottingham’s need for homes, the estate is a popular place to live and raise a family. Three quarters of the homes are now privately owned, as long-term residents have exercised their right to buy. Many of the original residents still live there, and often their children and grandchildren are nearby, so word about the scheme soon got round.

When residents saw how good the insulation looked and heard about the difference it made to both bills and comfort, they started to get in touch from across the whole of the estate even though the publicity had only gone out in the phase 1 area. In total, there were about 330 council homes and a potential 1,100 private homes in phase 1 and a further 900 council homes and about 2,500 private homes in phase 2. By the end of November, more than 90% of council tenants had agreed to have the work done and there was 65% take-up among the private sector properties, with 729 private residents or landlords having signed up and paid their contribution towards getting the work done. A further 352 private owners had signed up and paid from the phase 2 area of Clifton South. Dozens of the owner-occupiers had also spent thousands of pounds installing new double-glazed windows or other preparatory work to maximise the benefits to their homes once the insulation was applied. In many cases, people had spent their savings or borrowed money to fund that work.

On 1 December, I was in Clifton chatting to residents on Farnborough road and Sturgeon avenue, some of the first streets where work had begun as part of the scheme. The feedback was incredible: people told me that their homes were warm for the first time ever. They were saving money. Many people on the estate are on low incomes so use prepayment cards to manage their gas and electricity bills. They immediately saw a difference in their household budgets and were really proud of the improved appearance of their homes and the neighbourhood. People waiting for the work told me how much they were looking forward to it starting. Some even told me what colour they had chosen for the render.

It was all going so well, but the very next day the Energy Secretary came to the House and announced a panicked change to the energy company obligation—a levy that was introduced by his Government and which underpinned Clifton’s Greener HousiNG scheme. He was under pressure: the big energy companies, in turn, were announcing price rises of up to 10%. He had no policy to counter Labour’s popular promise to freeze prices until 2017 and reform the energy sector. However, rather than take on the big six and tackle their overcharging, he gave in to them, did exactly what they wanted and announced that he was going to cut the ECO—a Government levy that makes up about 3.5% of the typical annual energy bill.

It seemed obvious to me that that change would put my constituents’ insulation scheme at risk. I voiced my fears and asked the Energy Secretary to guarantee to protect our scheme and its fuel-poor residents in hard-to-treat homes. He told me that as a Nottingham lad who had visited our city to see some of its successful insulation work, he agreed with me and went on to say:

“We must ensure that communities around the country are benefiting”.—[Official Report, 2 December 2013; Vol. 571, c. 633.]

He also said that he was happy to look at the case. Following that reassuring reply, I wrote to him reiterating my concerns. I am sorry to say that I have yet to receive a reply to my letter.

At the autumn statement on 5 December I tried again. The Chancellor dismissed the concerns of Clifton residents, including my 85-year-old constituent Ennis Peck, whose home may no longer be insulated under the scheme, telling me that energy bills would come down by £50. Of course, energy bills went up in January by an average of £60 and Ennis and many other constituents now stand to lose out both on warmer homes and on savings of £300 to £400 a year on their bills.

Our worst fears were confirmed on 8 January when British Gas gave 90 days’ notice that it was terminating its involvement in the Greener HousiNG scheme. It said:

“In light of the Government’s proposed changes to the ECO, it was necessary for us to review our current ECO contracts. These changes mean we can no longer fund some projects and unfortunately this is the case with our planned programme with VolkerLaser and Nottingham City Homes.”

Therefore, as a direct result of the Energy Secretary’s policy shift, thousands of my constituents stand to lose out.

Partners in the scheme are doing all they can to complete as much of the planned insulation work as possible for those who had signed up and paid their contribution, but the 9 April deadline is fast approaching. Although we hope that more than 1,000 homes in Clifton will be better insulated next winter, a further 3,000 Clifton families will be left in the cold. More than 20,000 households in solid-wall homes across Lenton Abbey, Wollaton Park, Aspley and other parts of Nottingham, who had hoped to benefit from the roll-out of the levy-funded Greener HousiNG scheme to their areas, are in a similar position.

Hundreds of local people employed to carry out the assessments and organise and install the insulation find that their jobs are gone or at risk, including eight new apprentices. A further 12 local unemployed young people who were due to start year-long apprenticeships leading to national vocational qualifications have been left in limbo. Their opportunity for green jobs in what should be a growth industry has been snatched away.

I want to the give the last word about the impact of the Government’s green levy changes to my Clifton constituents. Their stories convey more powerfully than I ever could why Ministers have dealt with changes to levies on energy bills in the wrong way. Mr and Mrs Rennie of Bainton grove told me:

“We signed up for the insulation last November. Due to lack of funds we chose the loan from the Credit Union to fund it. As advised by Nottingham Energy Partnership we undertook the replacement of our drainage pipes/guttering/soffits and fascias. We also had our rotten back door removed and a window put in place. We had the work done in December because we were told it would be January when the insulation work would start. The builder left the adequate gap in the fascia boards so the insulation would just fit in. The replacement wall beneath the new window was not rendered because it would all be covered by the insulation. We spent the last of our savings having this work done.

The main reason for us having the insulation is the damp which is especially bad in the front facing rooms of our house…We have water running down our walls, black mould growing, the paint bubbles off the walls. As well as this looking cosmetically bad it is not good for my wife’s health. Marie has multiple sclerosis and it’s important to keep warm and comfortable due to temperature sensitivity.

We are deeply upset and angry about this situation. As the weeks go by we are becoming more and more worried which is adversely affecting my wife’s health. She does not need this added stress!

If we do not get the insulation we have spent two thousand pounds we really could have done without…What do we do now? Please help us”.

The importance of the scheme for those with health problems is a recurring theme in letters from my constituents of all ages, but older and disabled residents are of course particularly susceptible to the cold. A constituent on Swansdowne drive wrote that

“we were hoping for a lot cheaper fuel bills and to be a lot warmer as these houses are made of concrete which holds the cold. We get a lot of condensation which is bad for our health. My husband is a poorly man and my son suffers from asthma and the damp doesn’t help.”

Arthur from Bainton grove, who is one of Clifton’s older residents, was looking forward to affordable warmth. One line in his letter—

“I’m a 76 year old man sitting with one bar on the fire”—

paints a vivid picture. Another of my constituents, who lives on Dovenby road, spends a lot of time in the house. She is 80 years old and lives on her own. She feels especially let down because all her bills are from British Gas, and she signed up at the launch meeting on the very first day of the scheme. Cheryl wrote on behalf of her mum, who lives on Wrenthorpe vale:

“Mum is 77 years old and has early stage Alzheimer’s. Being in most of the day she has the heating on most of the time. It has only recently been installed. Her bills have gone up phenomenally as the house, being concrete, is very cold. The difference to her heating bills and quality of life will be substantial. It’s all very disappointing.”

Of course, not just pensioners are affected, although they are particularly vulnerable to the cold and often face the most severe fuel poverty, which the levies are meant to help with. There are also problems for low-income families, such as my constituent on Colleymoor Leys lane who says:

“I am trying everything to heat my daughter’s bedroom. I have lined it with thermal wallpaper but it is still like an icebox. I cannot afford to keep the heating on and have to add layers to her and put a hot water bottle in with her and she’s only 3 years old. This is what I have been waiting for ever since I purchased this house in 2006. To have this stopped would be catastrophic. Please let my house have this. It will also help with my suspected rheumatoid arthritis. My daughter and I need this insulation urgently as it adds to her eczema due to the cold”.

The health of her children is also a concern for Carol who lives on Farnborough road. She says:

“I have 3 children living in my house. Myself and my 7 year old have asthma. The walls are damp and black and it smells in the rooms. I am spending money on heating up the house rather than buying food for my children. I am a single parent working and paying bills to get a loan to pay for this insulation. It’s killing me to have to get a loan, but for my health and my kids’ health I have to get it done. We’re living in 2014—things should be better now.”

Carol is right: it should be better than this. That is why Labour is prepared to protect consumers from excessive bills, reset the market and continue to invest in energy efficiency and measures to help those facing fuel poverty and the ever-rising cost of living.

The need for tough action on prices is very clear from the letter I received from a constituent who says:

“I was looking forward to being able to have more control of my heating costs in these trying financial times. As I approach retirement on a fixed income the spiralling energy bills are a constant concern”.

My constituent from Foxearth avenue speaks for many people when he says:

“British Gas should have been made to honour their commitment, they make enough profit”.

Three months on from the Energy Secretary’s announcement, we still have not had the consultation on his energy company obligation changes, and we have not seen any impact assessment. I know the impact that his changes are having in my constituency right now, and my constituents know what impact they are having. Action to tackle rising energy bills is vital, but the changes to green levies announced last year are not the way to go about it.