Fuel Poverty

Lord Bourne of Aberystwyth Excerpts

Thursday 28th January 2016 Lords Chamber

[Baroness Donaghy]

To ask Her Majesty’s Government what is their estimate of the number of households currently in fuel poverty; and what action they intend to take to reduce that number over the next five years.

[The Parliamentary Under-Secretary of State, Department of Energy and Climate Change and Wales Office (Lord Bourne of Aberystwyth) (Con)]

My Lords, the latest fuel poverty statistics indicate that 2.35 million households were in fuel poverty in England in 2013, which was down from the previous year. The average fuel poverty gap—the measure of the debt for fuel poverty—also fell in that year. Our intention now is to focus our efforts more effectively on those in greatest need, and from 2017 a reformed energy company obligation will focus on the fuel poor.

[Baroness Donaghy (Lab)]

I thank the Minister for his Answer. I asked the Question in memory of Lord Ezra, who will be much missed, and who asked this question on a number of occasions. Is it true that one pensioner dies of a cold-related illness every seven minutes in winter, and that the complexities of tariff switching to save money would defeat a mathematician? Will the Government act to place a legal obligation on suppliers to put appropriate pensioner households on the lowest possible tariff, and will they ask Ofgem to develop a backbone?

[Lord Bourne of Aberystwyth]

My Lords, I certainly associate myself with what the noble Baroness said about Lord Ezra, who is certainly much missed. Indeed, one of his great interests was fuel poverty. In relation to measures that can be taken by the Government, as I have indicated, we are now focusing the energy company obligation, which has a value of £640 million every year, on the fuel-poor. Previously it has not been the sole criterion but by 2018, with de minimis exceptions, it will be, which will make a material difference. As the noble Baroness will know, we are also awaiting the CMA report, which we certainly hope will be robust; we are very much on the side of consumers and want to get bills down.

[Lord Howell of Guildford (Con)]

My Lords, I join in the tribute to the late Lord Ezra, with whom I worked. Can my noble friend say how many fuel banks to help people on low incomes with fuel costs currently operate in the United Kingdom, and can he also say what is the latest DECC estimate of the total amount of green charges, levies, capacity payments, national grid emergency payments, and all the rest, which will add to the average domestic fuel bill over the next five years—as in the Question?

[Lord Bourne of Aberystwyth]

My Lords, I thank the noble Lord for his interest in this and his tribute to Lord Ezra. I will get a detailed breakdown of the position on fuel banks to him, because I am unaware of that. As regards the position on fuel bills, he will be aware that the last reported figures, which will be for last year, show that bills are coming down and that we are saving because of the impact of changes on policy costs; the average household will save £30 on policy costs. We are bearing down on that, but in relation to the fuel poor specifically, obviously action is needed, which we are addressing through the energy company obligation and the warm home discount scheme.

[Baroness Featherstone (LD)]

My Lords, I also pay tribute to Lord Ezra. On 1 April 2018, the regulations on energy efficiency in the private rented sector, which is the worst-offending sector, will come into being. That will mean that it will become illegal for a landlord to let a property if it does not meet the E grade standard. Can the Minister update the House on what progress he has made on working with landlords to achieve this most important measure in time for the commencement date?

[Lord Bourne of Aberystwyth]

My Lords, first, I welcome the noble Baroness, which I omitted to do on her first question to the Front Bench on this subject. In relation to progress on the issues she addressed, obviously we are looking very closely at the position of social landlords; that is part of the general review we are carrying out of the energy company obligation in relation to fuel poverty. As she rightly says, it is an important part of the mix, but we are bearing down heavily on bills, which are falling for the first time for five years according to the latest recorded figures, and will continue to do so. But, more importantly, we need the necessary action we are taking through the £1 billion energy company obligation and the warm home discount.

[The Lord Bishop of St Albans]

My Lords, one concern is prepaid meters, which are an expensive way of paying for fuel. Will the Minister update the House on what progress is being made to promote the five principles agreed between Consumer Focus and the largest energy groups some years ago—I think it was back in 2011? Furthermore, will Her Majesty’s Government ask the large energy companies to reconsider income-differentiated tariffs again?

[Lord Bourne of Aberystwyth]

My Lords, the right reverend Prelate is right in relation to prepayment meters—they are a concern. He will know that the advent of smart meters is beginning to see an end to prepayment meters. Several energy companies have announced that they will be phased out because, for the first time ever, we will have accurate billing for all households by 2020. We very much hope that they will be a thing of the past, and I am sure that the whole House will welcome that.

[Lord Palmer (CB)]

My Lords, in this day and age is it not a scandal that any household is living in fuel poverty?

[Lord Bourne of Aberystwyth]

My Lords, yes, of course it is; I share that sentiment. It is a problem throughout the United Kingdom, not just in England, and it is being addressed by the Governments of the respective parts of the kingdom. That is why we are focusing, with the sole consideration of fuel poverty, on the recast energy company obligation, which will be in force by 2018. I think that the whole House should take pleasure in, and credit for, that.

[Lord O'Neill of Clackmannan (Lab)]

The reduction in gas prices that has been announced by the energy utilities is welcome, but is it in fact the maximum that they could cut, given the dramatic fall in the price of both oil and gas? Are the Government monitoring the situation to ensure that consumers get early redress in relation to what has been a high price level for too long in this area, given that basic gas prices are considerably lower now than they were when the prices were first set?

[Lord Bourne of Aberystwyth]

My Lords, the noble Lord will be aware that my right honourable friend the Secretary of State has indicated that we are looking to the energy companies to reduce their prices. Two of them, E.ON and SSE, have today announced reductions and we are looking to others to do the same. We also await the outcome of the CMA report, as I have indicated. We hope that it is a robust report because we are very much on the side of the consumer and want bills to be affordable.