Energy Prices

Lord Watts Excerpts

Wednesday 11th January 2012 Commons Chamber

[Mr Dave Watts (St Helens North) (Lab)]

Does my right hon. Friend agree that it is not what people say, but what they do? The last Labour Government took pensioners and families out of poverty, while introducing help and assistance for fuel costs. This Government have cut fuel cost assistance and are putting more people into poverty. Is that not the difference—not what we say, but what we do?

[Caroline Flint]

My hon. Friend is absolutely right: actions speak louder than words. The actions going on at the moment mean that the number of people in fuel poverty is going up and there is less support coming forward to help the most vulnerable. We are heading for a car crash when the Warm Front scheme ends and we wait to see whether the green deal will happen in a way that will help people. I shall say a little more about that later, and I am sure my hon. Friends will want to make some points about it in their contributions.

Let us talk about helping low-income families with their energy bills. The Secretary of State likes to boast about the warm home discount scheme. He says it is a statutory scheme and that Labour had only voluntary agreements—never mind that those voluntary agreements secured £375 million to help almost 1.6 million households with their energy bills over three years. What the Secretary of State forgets to say is that the present scheme exists only because Labour legislated for it when we were in office. When the present Government decided to take it on, we warned that, on the basis of their plans, they could exclude hundreds of thousands of people from the help that they needed.

In Committee, my hon. Friend the Member for Liverpool, Wavertree (Luciana Berger) said

“there are concerns about the make-up of the broader group and the discretion given to energy companies to fund it.”

She asked for assurances

“that the Government will evaluate how effective the discretionary nature of the broader group will be and, if necessary, take steps to expand the core group if households are falling through the gap”.—[Official Report, Third Delegated Legislation Committee, 28 March 2011; c. 6.]

The Government did not heed those warnings, and, as research by Save the Children revealed last week, only 3% of families who are eligible for help from the warm home discount scheme will receive the support to which they are entitled this year.

The Secretary of State may try to tell us that more people will be helped as the scheme develops, but those families need help now, not in three or four years’ time. This is not about spending more money or adding to customers’ bills; it is about standing up to vested interests in the sector, and telling them that they have a responsibility to their customers and to the public.

The Government are not only cutting help for people in need, however. They are also hitting families who want to do their bit—who want to do the right thing, to have more control over their energy bills, and to make their homes more energy-efficient. The Government’s disastrous and chaotic cuts in the feed-in tariff for solar power will be back in court on Friday. In defence of their plans, Ministers have been forced to resort to ever more outlandish claims about how much it is costing the public. First it was £26 a year, then it was £40, then it was £80. The actual figure—what it is really costing consumers—is just 21p per household per year, compared with average bills in excess of £1,300. What the Government do not seem to understand is that one of the reasons why so many people, especially pensioners, chose to install solar was the fact that it enabled them to control their energy use and cut their bills.

--- Later in debate ---

[Caroline Flint]

I am going to make a bit of progress. The Department of Energy and Climate Change website actually states:

“The Warm Front scheme provides heating and insulation improvements to households on certain income-related benefits”,

and it goes on to refer to grants for loft insulation and draught-proofing—I rest my case.

Perhaps the Government will also respond to firms, such as those I have met, undertaking cavity wall insulation, which provide a sensible, professional product under the carbon emissions reduction target—CERT—scheme. Some 6 million homes have cavity walls without insulation, and 10 million lofts do not have insulation. That provides enough work for a whole industry to do—work that is good both for the public and for the environment. However, I understand that, under Government proposals, if this work is to be undertaken under the green deal, a full assessment of the property will have to be made—the householder’s lifestyle and behaviour will be included in this. The assessment sounds as if it will have to be paid for by the consumer, yet the work that they wish to have done may be blindingly obvious. I hope that the Government will ensure that the public and businesses are still able to improve the energy-efficiency of homes without being forced through a bureaucratic and unnecessarily costly process.

With the end of the Warm Front scheme, and of the community energy saving programme and CERT, what will happen to families in fuel poverty, or in hard-to-treat homes, for whom the green deal might not be suitable? The Government’s solution is the energy company obligation—ECO—but only a quarter of the money from ECO will help households in fuel poverty; the rest will go to able-to-pay households. So the Government’s promise that ECO will do more to tackle fuel poverty than either CERT or the Warm Front scheme just does not stack up. In what way is ECO’s £325 million a year for fuel-poor homes greater than last year’s Warm Front budget of £370 million or the CERT spending of nearly £600 million on priority groups?

We know that as well as coming up with policies, even in these tough times, to help families with spiralling energy bills now, we must also reform the energy industry to secure a new bargain in the future. I have said it before and I am going to say it again: to start with we have to deal with the sheer number and complexity of tariffs on offer. We have 400 tariffs, with about 70 new ones in the past year. They are confusing and unfair, and they must be reformed. At his infamous energy summit in the autumn, the Secretary of State implored people to switch. Perhaps he could tell us today exactly how many people took his advice and switched, and how much they have saved. The problem is not that people are not shopping around enough; the real problem is that there are too many tariffs on offer, that they are too complicated to understand and that even when people do switch, they do not always get a better deal.

[Mr Watts]

Does my right hon. Friend agree that it is clear that the energy companies have made the tariff system as complicated as they can? Is it not a fact that even when people do switch and take the Prime Minister’s advice, they often find that they get a worse deal than the one they started with?

[Caroline Flint]

I am afraid that that is the case. I have met a number of the energy companies over the past few months and they are obviously hurting as a result of the public criticism being directed their way. However, when we examine today’s Which? report, we find that 4 million people complained in the past year and that the number of complaints rose by 26% in the past three months, so something is seriously not right. The real problem is that there are too many tariffs on offer. Having more than 400 tariffs is not about competition or choice, and it does not serve the public interest; it serves only the interests of the energy companies. So we need, as we have said before, a simple new tariff structure that is clearer and fairer, and that will help all customers to get a better deal. I know that consultations are going on at the moment, but the Government really need to step up the pressure. We should not be unable to knock a few heads together, and we need to do that sooner rather than later. We must keep the pressure on as that is the only way to make the companies change. The Which? report has highlighted the terrible situation with bills that were overestimated or incorrect as well as the mis-selling that went on in the past. We need a proper investigation and proper compensation for people who have been ripped off. Only then will we start to rebuild trust in our energy companies.

As well as a more responsive energy industry, we need a more competitive energy market. The energy market is dominated by just six firms that supply more than 99% of electricity and gas. Today we heard that EDF will cut its gas prices by 5%, but the public will ask why energy companies are still so quick to put up people’s bills when wholesale prices go up but slow to bring them down when they fall as well as when the other big energy companies will follow suit.

--- Later in debate ---

[The Secretary of State for Energy and Climate Change (Chris Huhne)]

Thank you, Mr Deputy Speaker. I shall try to take on board your injunction for brevity.

Last year, we saw a big energy price rise, which came on top of increasing petrol and food costs. With the cost of gas imports now falling, I welcome today’s announcement from EDF, which has responded to the smaller companies leading the way such as Co-op and Ovo by joining them in cutting domestic gas prices. Some of the big energy suppliers were quick to pass on rising costs last year and it is only right that they should now pass on cost reductions to hard-pressed householders as quickly as possible. I urge the remaining five large energy suppliers to follow suit and give consumers some respite this winter. If suppliers do not reduce prices, consumers can send them a clear message by voting with their feet and taking their business elsewhere.

[Mr Watts]

On that point, has the Secretary of State contacted those energy companies and made it absolutely clear that if they do not drop their prices, he will take action to force them to do so?

[Chris Huhne]

I have been very rapid in my reaction to the EDF announcement and I have been pressing the energy companies and saying that they need to act to inform their customers about the cheapest tariffs.

The House last debated this topic in October, when I said that simply expressing concern and sympathy for those who are struggling to pay their bills is not enough. It is our responsibility to do everything we can to help. The clear steps we have taken to increase competition are working and it is right that energy companies should feel the pressure to keep bills down. We are not complacent and I can report that the action I promised then to help people with their bills is taking place now.

--- Later in debate ---

[Sarah Newton (Truro and Falmouth) (Con)]

I simply do not accept the criticism we have heard this afternoon from the Opposition that the Government are sitting on their hands and letting people die in their homes this winter. In the few minutes available to me, I shall demonstrate that, as Opposition Members have said, actions do, indeed, speak louder than words, and I shall describe a fraction of the things that are being done in my constituency to tackle fuel poverty now, as we speak.

Cornwall council and the council of the Isles of Scilly have led a successful bid to the Department of Health for more than £140,000 for a campaign called “Warm homes, healthy people”. It is estimated that each year about 300 people in Cornwall die as a result of living in cold homes, which is, of course, 300 too many. Partners in this campaign include the NHS in Cornwall and the Isles of Scilly, Age UK, Community Energy Plus, the citizens advice bureaux, Cornwall Voluntary Sector Forum, Truro Homeless Action Group, the home improvements agencies, St Petroc’s, the Cornwall drug and alcohol team, New Connection and the councils’ own housing and adult social care teams. All of them are combining their efforts to tackle this problem. They will identify those most at risk of fuel poverty. They are going to make sure that people access all the advice and support that is already available for them. As the right hon. Member for Don Valley (Caroline Flint) said, millions of pounds go unclaimed in benefits and compensation from energy companies. This practical programme will make sure that the people who need support actually access it.

[Mr Watts]

Will the hon. Lady give way?

[Sarah Newton]

I will not, because I want to allow more colleagues to join in.

The programme is going to give people really good advice on how to protect themselves from the risks of high humidity and on insulating their homes, and it will make sure that they are taking up the available grants. It is also going to make sure that people really take advantage of the many existing free programmes.

This programme has had widespread support from people in Cornwall. The council cabinet member responsible for health and well-being has said:

“This is a great example of community and voluntary organisations coming together with the public sector to offer a joined up approach to a big issue. The funding is very welcome indeed as it will help all the agencies involved target support to those in most need and at most risk. By working together, frontline workers and volunteers will have systems in place to make sure that vulnerable people are directed to the service most able to help them.”

Our director of public health for Cornwall and the Isles of Scilly has also warmly welcomed this investment, saying that it will be used alongside money that Cornwall council and the NHS already spend in subsidising the Warm Front scheme to ensure that all the costs of insulating people’s homes are met.

In addition, the council cabinet member responsible for housing has said that this funding is “great news” and is going to back up the money already being received from the Government to tackle homelessness. People who are homeless or living in very poor quality accommodation—in the mobile homes and park homes that we have heard about; in poor quality, poorly insulated private rented sector accommodation—will be able to top up the money the Government are already giving to people at risk of homelessness, which will actually make a difference this winter.

In addition, I have been working with all these different voluntary sector organisations, and, together with Church groups and poverty forums, we have come up with a practical guide that will be widely distributed to people. Anyone and everyone who is worried about heating their homes this winter will have the full range of advice about all the benefits and services available to them.

I challenge my colleagues on the Opposition Benches. Yes, actions do speak louder than words, and rather than spending hours in these sterile and futile debates, why do they not roll up their sleeves, go back to their constituencies and work with those who really want to make a difference to people this winter?