Fuel Poverty

Lord Callanan Excerpts

Monday 13th June 2022 Lords Chamber

[Baroness McIntosh of Pickering (Con)]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper, and I refer to my interest in the register as president of National Energy Action.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, in our latest official projection, there would be an estimated 3.03 million households in England in fuel poverty in 2022, according to the low-income, low-energy efficiency definition. The Sustainable Warmth strategy, published in February 2021, details our approach to tackling fuel poverty in England. Energy efficiency remains the best way to tackle fuel poverty in the long term, reducing the amount of energy required to heat a home and contributing to lower energy bills and of course, carbon emissions.

[Baroness McIntosh of Pickering (Con)]

I thank my noble friend for that Answer. The figure used by the NEA is 6.5 million households in fuel poverty. Of course, that figure would have been substantially higher had it not been for the generous measures given by the Government in late May of this year. Does my noble friend recognise that there is now another type of fuel poverty, and that is the fact that it is costing £100 to fill the tank of an average family car? In those circumstances, does he accept it is causing real hardship in rural areas, and particularly for carers travelling between their clients? Will the Government, as a matter of urgency, reduce the VAT of 20% on fuel and the 57% fuel duty and make sure that is passed on to the forecourts?

[Lord Callanan (Con)]

I totally understand the points that my noble friend is making, and the Chancellor has, of course, already reduced fuel duty. Domestic fuels, such as gas and electricity, are already subject to the reduced rate of 5% VAT. Going further, I would not guarantee that prices would fall, given that most of the price rises are driven by a number of factors that can be seen worldwide. The other problem is that cutting VAT would also be a tax cut for everyone, including wealthier people in society.

[Lord Teverson (LD)]

My Lords, among the most vulnerable groups are park home owners—some 85,000 of them—whose energy supply is often controlled by landlords. These are often, I regret to say, rogue landlords. How will the Minister guarantee that those park home residents will be able to take advantage of the Government’s rebate schemes and the various other things to alleviate energy prices over the next few months?

[Lord Callanan (Con)]

The noble Lord makes a very good point, and that is one of the aspects we are looking at—indirect suppliers through the consultations that we are holding on the various support schemes. I also point out that park home owners are already benefiting from a number of our energy-efficiency improvements, and there have some excellent examples of retrofitting park homes that have been carried out under schemes such as the local authority delivery energy efficiency scheme.

[Lord Winston (Lab)]

My Lords, does the Minister think it rather peculiar that old people like myself get 200 quid a year for fuel, which is really not needed? Should there be a way of means testing the amount of money that is given to people like me?

[Lord Callanan (Con)]

It is very generous of the noble Lord to offer to give it up, but of course the point he makes is valid. It is a combination of the expense and bureaucracy of means-testing schemes as against the universality principle, but the vast majority of support schemes, of course, are means tested and focused on those in receipt of benefits and on the lowest incomes, and that also applies to all our energy efficiency schemes.

[Lord Howell of Guildford (Con)]

My Lords, I declare energy interests as in the register. Does my noble friend accept that by far the largest driver behind these hideous energy and fuel prices, with more apparently to come, which are really damaging and frightening millions of households, would be tackled if there could be far more oil and gas pumped into short-term world markets to bring down the price of oil, petrol, gas and electricity very quickly indeed? Some of us would really like to see evidence of more co-ordinated vigour and diplomacy in international markets in driving down these prices. Something can be done. Could we see more effort in that direction, please?

[Lord Callanan (Con)]

My noble friend makes a very good point. There is a lot of diplomatic action going on with organisations such as OPEC, precisely in the terms that he alludes to. We are also, of course, attempting to produce as much oil and gas as we can from our existing British North Sea fields as well.

[Baroness Warwick of Undercliffe (Lab)]

My Lords, I declare an interest as chair of the National Housing Federation. Some 150,000 housing association residents currently have their heating and hot water delivered via communal or district heat networks. Can the Minister confirm that the Government will make the £400 energy grant available to residents on heat networks, who have seen some of the largest fuel price increases in the country?

[Lord Callanan (Con)]

The noble Baroness makes a very good point. Heat networks are another of the difficult areas we need to address as part of the consultation we are doing. I also point out that we are, of course, taking powers to regulate heat networks, which are currently unregulated, in the forthcoming energy Bill, because it is an area that we need to expand in this country and there is no protection for those residents currently on heat networks, either in housing associations or in the private sector.

[Lord Fox (LD)]

My Lords, the Minister knows that, in fact, as he stated, very little of our gas, for example, comes from the world market, yet it is the world market price for gas that is driving up the cost of fuel and energy, in terms of electricity, for our citizens. Is there not a case for reviewing how the basket of electricity is costed, so that it actually reflects the cost of generation more effectively in this country, rather than it being driven by the highest marginal cost of gas?

[Lord Callanan (Con)]

The noble Lord is partially right. Of course, 40% of our gas supplies come from our own domestic production. We get quite a bit from the world market through Norway and quite a bit from LNG as well, so we are, of course, subject to world market fluctuations. But there is a lot of validity in the points that he has made.

[Lord Lennie (Lab)]

My Lords, the government figures are out of date. The chairman of NEA is right: 6.2 million households is nearer the figure than the 3.2 million that the Minister referred to. The pressures of doubling fuel prices on top of this trend will continue to worry householders across the country. In 2015, the Government estimated it would take until 2030—another eight years from now—to end fuel poverty, but on current figures it will take more than 60 years. What new measures are the Government proposing to ensure they get back on track to meet their original deadline of zero fuel poverty by 2030?

[Lord Callanan (Con)]

The figures that the noble Lord quotes are, of course, using different metrics. There is a big debate about which is the appropriate metric to use, but we can all accept, whatever metric we use, that this a very difficult time and people are suffering. The best route to end fuel poverty is through energy-efficiency measures, and that is why we are spending £6.6 billion this year in precisely targeting energy-efficiency measures—home improvements, retrofits—towards those in society on the lowest incomes, but of course we will need to do more.

[Baroness Jones of Moulsecoomb (GP)]

My Lords, the Government’s windfall tax was clearly very good, because it helped householders pay their bills, but at the same time that money went into profits for the oil and gas companies. The Minister talks about sustainable homes, retrofit and so on, but actually the Government are not putting enough into this, and I wonder whether government policy is influenced by the fact that the Conservative Party gets donations from the oil and gas sector.

[Lord Callanan (Con)]

The windfall tax is taking profits off the oil and gas industry, as the noble Baroness refers to, but as I just mentioned in a previous answer—

[Baroness Jones of Moulsecoomb (GP)]

It is not enough.

[Lord Callanan (Con)]

The noble Baroness says that this is not enough, but of course, we also need many of those companies to continue to invest both in North Sea production and in renewable production. If we are going to move to the totally renewable power system that I am sure the noble Baroness wants to see, as I do, we need tens of billions of pounds of investment, often from the same companies; you cannot spend the same pot of money twice. We are spending £6.6 billon this year on home efficiency measures, and there is a huge amount of work going on behind the scenes on retrofitting and home insulation measures, and through ECO, the local authority delivery scheme and the home upgrade grant. So, a lot of work is going on in this space.

[Lord Sikka (Lab)]

My Lords, the cost of producing oil and gas has not changed substantially, but the selling price has. The refiners’ profits from petrol are up by 366%, and from diesel by 648%. May I urge the Minister to commission an inquiry into profiteering, and to introduce price controls to protect people from it?

--- Later in debate ---

[Lord Callanan (Con)]

The noble Lord needs to look at our past experience of price controls to see how ineffective they are. I am sure the Chancellor will want to bear in mind any examples of profiteering the noble Lord refers to. All tax matters are of course kept under close review.

[Baroness Fookes (Con)]

My Lords, is there any universally accepted definition of fuel poverty and if so, what is it?

[Lord Callanan (Con)]

My noble friend makes a good point, and actually, no, there is not. There is a definition that I refer to, and definitions are used concerning the percentage of someone’s disposable income that is spent on fuel. There was a big debate about the different metrics to use, but whatever metric we do use, nobody can disagree with the fact that it is a difficult time for everyone at the moment, and the Government need to do all they can to help.