Cost of Living

Lord Bishop of St Albans Excerpts

Thursday 9th June 2022 Lords Chamber

[The Lord Bishop of St Albans]

My Lords, I too want to thank the noble Lord, Lord Eatwell, for his excellent introduction to the debate. I was not going to say much about social capital. Like others, I was brought up on Robert Putnam’s Bowling Alone and reading his excellent work. I notice that the noble Lord’s analysis was very much on the economic aspect. From my perspective of having responsibility for over 400 churches across two counties, the voluntary aspect is also an important part of that work.

One of the things that I have observed over the last 40 years is that the decline in social capital is due to a whole lot of reasons, which we really ought to debate in this House, including things such as the Government’s attempts to professionalise volunteers. It has become increasingly difficult to find people to help. As an organisation that is running numerous food banks, debt advice centres, lunch clubs and breakfast clubs for children who are not going to get breakfast before school, we are very eager to be part of this, but it has got more difficult for us to deliver it. I must not stay on that too long, or I will be over my time.

The challenges we are facing are stark, starting with the massive increases in fuel and basic food costs. A Food Standards Agency survey has found that one in five people has recently either skipped or reduced the size of meals to reduce their costs. Our evidence coming in week by week at the food banks is that demand has grown massively. Nobody is engineering that; we are just getting the reports in week by week.

We do indeed need a strategy for the short and the long term. I think it is very good that the cost of living payment is going to be a welcome step to easing the pressure on those on the lowest incomes. I hope Her Majesty’s Government will look at other ways of giving immediate short-term benefits. Without that, there will be the most extraordinary crisis within a very short time.

Having said that, I want to concentrate on one other aspect of the long-term response. The cost of fuel has gone up at a time when there is a desperate need to reduce our carbon emissions. It is worrying to hear that some of the very carbon-productive forms of energy are likely to be extended when we are in a crisis. We need to think about whether some of this can come together in some new ways of thinking. Fortunately, we are not in the difficult position that, for example, Germany and some other neighbouring countries are in who are profoundly reliant on gas from Russia. Nevertheless, we are affected by markets across the world, and the war in Ukraine has revealed how vulnerable we are to fluctuations in gas and oil prices. If we had made much more progress in the past in renewables, we would not be in such a weak position today.

The grants provided by boiler upgrade schemes, which I think were referred to in Questions earlier today, will undoubtedly help in this regard, although it is going to be decades before we make sizeable inroads into that. However, at a time when families are struggling, it is questionable whether they are going to have the capital that they will need to make up the shortfall for that scheme. To make a success of the scheme, we will need further loans which will help people access that market.

Likewise, the urgent need to encourage the private adoption of solar photovoltaic panels to allow households and commercial buildings to generate their own energy will play a modest part in averting the economy’s vulnerability to fluctuations in fuel prices. There is a glaring incentive problem whereby it takes far too long for the average house or business to recoup their capital costs if they install these renewable forms of energy.

If the Government are to make the economy more resilient to better absorb future energy shocks, addressing this incentive problem will be crucial. There are various ways to address it. Of course, in the most extraordinary way, these huge hikes in the cost of fuel are in fact shortening the period over which you can then recoup the costs and begin to benefit from the installation of solar panels.

Another way to tackle this is to introduce legislation so that companies providing electricity are required to pay a much more realistic price for the surplus electricity that households sell back from their solar panels. Under the old feed-in tariff scheme, householders were receiving much more money back from their providers than they do now for their surplus energy. They now receive about one-10th of what they were receiving, depending on which provider you use. Therefore, electricity companies are making a much greater profit out of buying separate energy and selling it at a huge cost back to others. What consideration have Her Majesty’s Government given to imposing a minimum price to increase the income that householders receive back from that spare electricity, thereby incentivising people to bring in these forms of renewables much more quickly?