Fuel Poverty and Energy Efficiency

Lord Barker of Battle Excerpts

Wednesday 16th January 2013 Commons Chamber

[Mrs Main]

I will not, because she did not give way to me when she was being particularly vociferous on how good Labour was on fuel poverty.

As I said in a debate on fuel poverty in the previous Parliament, my constituency is usually regarded as an affluent one, but it does have areas of multiple deprivation needs. In 2006, St Albans had 2,400 households in fuel poverty; in 2008, it had 3,500; in 2010, according to the latest figures available, there were even more. A degree of humility about such calculations is, therefore, important. It should also be recognised that in constituencies such as mine, a higher amount of family income is spent on rent and mortgages, so many people feel fuel-poor, whether or not they are technically in fuel poverty. I welcome the fact that under this coalition Government most families will be put on the best tariff that suits them if that is possible.

We have very little time to debate the matter today, but the green deal will be an affordable way of tackling fuel poverty. I believe we would be casual with taxpayers’ money if we simply splashed out the dosh—the right hon. Lady said that it was £50 million, but the correct figure is £30 million, which will be reinvested. The Labour party would have continued the Warm Front deal, which, as Members on both sides of the House have said, was fraught with difficulties. When elderly constituents of mine were told how intrusive the Warm Front deal would be in terms of where the boilers would be located, and how they had to go along with what they were being offered, rather than having it tailored to suit their needs, they backed out of it, and were left with nothing. Rather than imposing something, the green deal gives people choices to tailor a system to suit their household.

[The Minister of State, Department of Energy and Climate Change (Gregory Barker)]

My hon. Friend is making a characteristically brilliant speech that succinctly crystallises what many of us had been thinking. She has put her finger on one important point: under the Warm Front scheme, one company was a monopoly provider with the contract for the whole country. Under the ECO and affordable warmth, real competition and consumer choice will be allowed, meaning better value for the bill payer and more choice for the people who have installations in their homes.

[Mrs Main]

I thank the Minister for that strong clarification. People said to me that they would have liked to take up some of the opportunities offered by Warm Front, but they did not like the installers, who were sometimes rude and ineffective, they did not like being dictated to about how their house would be operated on to make it more efficient, and they did not like a take-it-or-leave-it package without the opportunity to pick and mix. What the Minister refers to is yet another proposal from the coalition Government that is much better for the consumer.

[Gregory Barker]

My hon. Friend has given practical reasons why hundreds of Members of Parliament on both sides of the House received thousands of complaints about the Warm Front scheme.

[Mrs Main]

I thank the Minister for that comment. That is why it would be ridiculous just to insist that Warm Front continues and to splash the money about until it is gone. The coalition Government have a forward-thinking plan on how to offer consumers what best suits them, including the best deal on tariffs, and how to help all families, whether or not they are technically in fuel poverty.

I hope that if nothing else comes out of the debate, we agree that we should not waste energy. Whether or not we agree on climate change, wasting energy will be ruinous for people in the future.

--- Later in debate ---

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

As I listen to the debate, I wonder how many people in Selly Oak are sitting shivering tonight, frightened to turn on their heating, or worrying that what they are buying is disappearing owing to the draughts and lack of insulation. In February last year, in response to a survey that I carried out among my constituents, 63% said that they were using less heating in their homes as a result of energy price rises, while 43% said that they were cutting back on other items to afford their energy bills. Consumer Focus points out that the number of households in debt to their electricity supplier has risen by more than 25%—1 million households—yet the energy companies are on target to see their profit margins rise by 14%.

Let me ask a question that others have asked. Why, at a time when the number of people struggling with fuel costs is on the increase, have the Government spent only half the budget of the Warm Front scheme and turned down thousands of people? Nearly 13,500 families have been rejected. Given all the problems with the green deal, what would be wrong with extending Warm Front for another year, or at least until after the total budget has been spent? That would not only help those most in need, but help the insulation industry, which is experiencing job losses because funding is being withdrawn prematurely. Nearly 200 jobs have gone in the west midlands, and about 100 people have been given notice of redundancy.

[Gregory Barker]

The hon. Gentleman may not have picked up the Secretary of State’s words earlier. We can confirm today that the whole Warm Front budget will be spent on measures for the fuel-poor. We will be introducing Warm Front measures, but they will not be introduced exclusively through Warm Front. The balance—the underspend—will be spent on exactly the same people, but through a local authority competition that will deliver the measures more quickly and effectively.

[Steve McCabe]

I did indeed hear the Secretary of State’s words. What I understood quite clearly from them was that he is filching money from the Warm Front scheme to pay for a scheme that he announced some time ago, and that he did not tell us at the time that he was robbing Warm Front. It is what, in the trade, is normally called sleight of hand.

Ongoing concern about green deal finance means that it is unlikely to get going until around autumn this year, if ever. The Government’s own impact assessment shows that their plans will cause the loft and cavity wall insulation industry to fall off a cliff. Why does the Minister not act now? He does not have to say that it was the idea of my right hon. Friend the Member for Don Valley (Caroline Flint); he could announce an interim plan in a couple of weeks, and take all the credit himself. That would be OK: we would not tell anyone.

I want to be fair to the Government, so I will assume that they did not set out to rob people as they are doing through so many of their other policies. I think that on this occasion their problem is that they simply do not know what they are doing. As a flagship policy, the green deal is costly and complex. The scandal of punitive up-front assessment fees needs to be tackled as a matter of urgency before the whole idea falls into disrepute, and the Government need to look again at the interest rates associated with the project. At 7.5%, it will be far cheaper for those who have the cash to pay up front for improvements than to use the green deal, and, of course, those who cannot raise the cash will simply shiver or find themselves exploited by a Government scheme that is beginning to look like it was modelled on payday loans. Then there is the helpful penalty charge if people want to pay it off early, which means they will be rinsed for another few thousand pounds. I am afraid that any objective analysis of this programme suggests it will fail, and the Minister really ought to act now before it is too late.

There is speculation about the abolition of Ofgem. What I and my constituents want is a regulator with some teeth and some backbone who will stand up for their rights, who will not be conned over wholesale price rises and who will force energy suppliers to pass on price cuts when wholesale energy costs fall.

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[Nia Griffith (Llanelli) (Lab)]

This Government are failing to tackle fuel poverty because they have not managed to tackle the energy companies and bring in the tough regulation needed to make them moderate their prices. As we have said, we would make the energy market more transparent and create a tough new energy watchdog to replace Ofgem.

I will cite just one example of why we need a much tougher watchdog. Ofgem allowed Swalec, which is now part of SSE, to double its standing charge between September 2011 and October 2012—a massive 100% increase. Since October 2012, Swalec has been charging customers a standing charge of £100 a year for their electricity and an additional £100 a year should the customer also get their gas from Swalec. Such charges just feed into the bills of my constituents. Swalec’s prices are of particular concern to people in south and west Wales, because Swalec is the traditional supplier for the area, and Wales has one of the lowest percentages of people who have switched energy company for their electricity.

That doubling of the standing charge in less than 15 months is hitting low users disproportionately hard, punishing people who are struggling to keep their bills down and who switch off appliances whenever they can. No matter how much they switch off, whether to save money or to save the planet, Swalec is taking £100 off them just to stay connected—£200 if they get gas from Swalec as well. I am sure that if these people had computers, they would be thrilled to know that the SSE site tells them that £50 per customer per fuel is profit—is that not wonderful news for them? It is an absolute kick in the teeth for loyal customers. SSE knows jolly well that many customers who have stuck with the traditional south Wales company for years are probably the least likely to switch provider. It is all very well to say that customers can shop around, but unless people have easy internet access it is impossible to compare the prices. Even where people do have that access, the process can be extremely confusing. In any case, people are wary of switching. They hear horror stories and they are worried about being caught out by some sort of penalty charges for switching, or worried about the goalposts being moved just after they have switched and finding that things have changed yet again.

As my hon. Friend the Member for Rotherham (Sarah Champion) explained, people are wary also of going on to direct debit because they are pretty well convinced that the companies take more than they should be taking, and that they will take advantage at every turn to make sure that the money is in the banks of the energy companies, rather than in the pockets of the people that they are taking it off. The energy companies tell us that that is for simplification purposes, but I am cynical about that. By increasing the standing charge, energy companies avoid the problem of having to decrease energy prices if there are fluctuations in price. They have heard that that is what people are talking about. They have heard that we, the politicians, would like to see them decrease energy prices, but if they stick the increase on the standing charge, they will not need to do that.

Energy companies have also heard that we might want them to put people on to the cheapest tariff. So what are they doing? They are raising the cheapest tariff, aren’t they? They are making energy more expensive for the lowest users. The cynic in me says that the companies have good reasons for upping the standing charge. The effect is regressive. Like any form of regressive taxation, it means that those who have the least money are proportionately punished the most.

It is right and proper that the Government’s cold weather payments should be raised when energy prices are rocketing, but they are for exceptional circumstances. For the vast majority of the UK it is not often that temperatures for an entire seven-day period average zero. It is far more likely that there are three or four days of cold weather, then a slightly milder period, then more cold weather and so on. There are fluctuations, so the number of times during the year when people will be able to claim those payments is extremely limited.

Finally, I wish to say a word about the Warm Front scheme. I am horrified to hear that £50 million is not being spent on good insulating programmes. I contrast that with the Welsh Government, who are continuing with their Arbed and Nest schemes, which they have adapted. They have looked at many different ways—

[Gregory Barker]

I can assure the hon. Lady that that is exactly what is happening. Any underspend from the Warm Front scheme is being spent on exactly the type of measures that she mentioned.

[Nia Griffith]

So are we clear, then, that that money has been ring-fenced and that it is in addition to any other planned money that was going to come into energy schemes anyway?

[Gregory Barker]

We are scaling up the proposals that we had for the community challenge in order to deliver into that programme a much greater amount of money than would otherwise have flowed.

[Nia Griffith]

I hope the Government will follow the example of the Welsh Government, who have also drawn down European money. I am sure the UK Government could do that for the areas of the UK where that might be possible. The Welsh Government have rolled out a number of programmes in their Arbed and Nest schemes, which cover a range of different types of property, particularly those that are hard to heat and those that are part of social housing, as well as properties that are privately owned.

--- Later in debate ---

[The Minister of State, Department of Energy and Climate Change (Gregory Barker)]

We have heard many excellent speakers from across the House and I am grateful for the opportunity to conclude the debate.

Unfortunately, the many excellent speakers did not include either of the speakers from the Opposition Front Bench. That really is sad when we are debating such a serious issue. Any sensible, objective observer would recognise that this has been a problem under successive Governments. Labour did not have a magic wand. During the last Parliament from 2005 to 2010, when the right hon. Member for Don Valley (Caroline Flint) was in government, fuel poverty rose substantially, as my hon. Friend the Member for Wealden (Charles Hendry) pointed out. The right hon. Lady is in total denial about that fact. It does her credibility no good if all she does is to make narrow partisan points, because there are a lot of people on both sides of the House who speak with a great deal of knowledge. We might not always agree and we might not share the same conclusions, but to be in total denial of the basic facts and to trot out ridiculous partisan points lowers the tone of the debate across the whole Chamber. When Members on both sides of the House have spoken with such passion, it is a shame that those on the Opposition Front Bench, particularly in opening the debate, looked as if they were auditioning for a part in “The Thick of It”. It really is a little beneath them.

I am more concerned not that the Opposition Front Benchers have undermined their own political credibility, but that they are trying to score party political points by talking down the green deal. In doing so, they are talking down all those small and medium-sized enterprises that are investing in the green deal and all those people who are trying to inspire confidence to get people to invest in order to bring forward what I am certain will be the most transformational energy efficiency programme that this country has ever seen—a programme that is built for the long term. All the Opposition want to do is to use the efforts of people in business and their employees to score cheap party political points. I am sorry that that is how they have decided to play this important issue, which ought to command significant cross-party consensus. In opposition, we tried, where possible, to build that consensus. Obviously, they are going to plough a very different route.

This week’s cold weather has focused our minds on those who are at the bottom of the ladder, struggling to keep warm. The coalition understands the urgency and scale of the challenge. We are not going to make cheap political points or pretend that the situation is anything other than very concerning. However, unlike the Labour party, which had 13 years in government to do something transformational, the coalition Government have a plan. Not only do we have a plan, but after only two and a half years, we are taking action—very real action. We have already passed the substantial Energy Act 2011 and are well on the way to taking another substantial Energy Bill through Parliament. The Labour Government had 13 White Papers, and what did they have to show for it in the end? More than 5 million people in fuel poverty. We are doing a great deal that we can be proud of.

During the debate, we heard a number of positive contributions. There was a measured and sensible contribution from my hon. Friend the Member for Edinburgh West (Mike Crockart). There was a powerful demolition of Labour’s policies, which were irresponsible with consumers’ and taxpayers’ money, from my hon. Friend the Member for Spelthorne (Kwasi Kwarteng). He clearly pointed out that, yes, we can do good, and Warm Front made a difference to a lot of people. In terms of value for money, however, that extraordinary amount could have been spent much, much better. The fact that it was a monopoly provider, that there was no competition from other firms and no choice for people at the bottom of the ladder, was not to the scheme’s credit. Under the ECO—an integral part of the green deal—we will deliver much better value and, pound for pound, many more measures than we were able to provide with Warm Front. Year on year, significantly more people will be helped through ECO than were helped through Warm Front. The fact is that the Labour party confuses spending large amounts of money with getting the best outcome.

My hon. Friend the Member for Harrogate and Knaresborough (Andrew Jones) spoke with great expertise and passion not only about energy efficiency but about renewable energy. That point was picked up by another champion of the sector, my hon. Friend the Member for Plymouth, Sutton and Devonport (Oliver Colvile), who showed how we can marry those two agendas—in fact, we need to need to marry them as we go forward.

Perhaps the most candid and powerful speech of the afternoon came from my hon. Friend the Member for St Albans (Mrs Main), who really put the record straight on fuel poverty and effectively blew the whistle on Labour’s claims. She was right to say that whatever we think about climate change and renewable energy, it is always wrong to waste energy and for people to live in poorly insulated, poorly heated homes.

We must remember that reaching out to the most fuel poor and vulnerable is not easy. That was recognised by Professor John Hills and it is not a precise science. Often the households we are trying to reach—I know that Labour Members also want to reach those people because they see them in their constituencies and surgeries—are very dysfunctional. Often, people are in temporary accommodation, and certainly not their own accommodation. They do not read a daily newspaper and might be hard to reach because they probably do not read the information provided by the local council. Trying to get to those hard-to-reach homes is a difficult job, which is why we need a new approach.

We could have carried on with Warm Front and the status quo, but it would have taken us over 80 years. In fact, we may never have got there because over the past five years, despite the amount of money that Labour threw at the problem, fuel poverty was going up. We need a transformation in the way we deliver fuel poverty solutions, as well as delivering more investment. The green deal and the ECO are our best possible shot.

I do not deny that the green deal is not perfect, and I have no doubt that we will want to improve the scheme in light of experience. However, those on the Opposition Front Bench are trying to write it off before we have even begun to roll it out and the first green deal plan has been signed, and before it has really got going. I think that is despicable. I am pleased to say that Labour councils up and down the country are not taking the same negative partisan approach. Talk to Manchester, Birmingham, Leeds or Newcastle. Those councils do not have that narrow partisan view of the world that we have seen demonstrated tonight. They are taking a responsible view—as are many Opposition Back Benchers—and working with us in the interests of the fuel poor to deliver better outcomes for people in their areas.

My hon. Friend the Member for Bedford (Richard Fuller) asked me to assure him that we will target our fuel poverty solutions in the best possible way. There will be tighter criteria. Pound for pound the ECO will be more effective and transparent than Warm Front. It will not be a monopoly and it will deliver a better service and greater choice.

We know that the cost of living is a huge concern to all our constituents. That is why the coalition Government are taking radical action, and instead of Labour’s countless White Papers—