Fuel Prices and the Cost of Living

Lord Wharton of Yarm Excerpts

Wednesday 16th March 2011 Commons Chamber

[Alex Cunningham (Stockton North) (Lab)]

Many Members have concentrated on prices at the pump, but there are much wider issues to do with fuel in general and the cost of living, and I want to focus on fuel poverty, which has an immense impact on family life. It is an issue that is close to my heart.

According to the House of Commons Library, between 1996 and 2004 the number of households in fuel poverty fell from 6.5 million to less than 2 million, largely due to the measures put in place by successive Labour Governments. Now, in the face of massive increases in energy prices, the number of households in fuel poverty is estimated to be 5.5 million, or more than one in five households

Petrol price rises add to poverty. That is a new type of fuel poverty—if any fuel-poor households can actually afford a car. Domestic fuel prices fell by 17% in real terms between 1996 and 2003, but then increased by a massive 74% in the following six years. Those dependent on oil have suffered particularly badly, especially those who need oil to heat their homes. Our motorists have also suffered as prices have increased. The average standard credit gas bill for a typical consumer in 2010 was £683, which is 80% above the 2001 low in real terms. In 2009 the electricity bill for a typical consumer was £440, almost 50% above the 2003 price.

I know that energy companies do much to promote energy efficiency—mostly financed through a levy on their customers’ bills, I believe—but they, and the Government for that matter, need to do much more. There are several good reasons to do so. More than three out of four of the poorest 10% of households in England were in fuel poverty in 2008; I do not think they can afford a car, in fact. That means that the poor are getting poorer as prices increase way beyond the inflation rate, and inflation is already far too high under this Tory-led Government.

In 2008 more than half a million households needed to spend more than 20% of their income on energy to maintain a satisfactory heating regime. They are those in so-called extreme fuel poverty. Under Labour’s decent homes programme, 750,000 social homes had insulation works and 900,000 had new central heating systems. Warm Front assisted vulnerable people in more than 1.7 million homes, and large numbers of rented homes were improved under Warm Zones, Warm Wales and other initiatives. Now we need to see clear, comprehensive and well-funded initiatives from the Tory-led Government to deal with fuel poverty, because as they squeeze wages, raise taxes—such as those on fuel—cut benefits and hit our people’s pockets in so many other ways, more people will fall back into the group who will see 10% or more of their money disappear on just buying fuel.

This month the Government have announced that they have appointed a fuel poverty tsar, Professor John Hills. I hope that is not just a publicity stunt, as much more needs to be done to address this issue. His independent review will redefine and measure fuel poverty. I hope that does not mean we just change the numbers, and lift many out of fuel poverty by simply changing the way the numbers are added up. It does not matter what the numbers say: if people cannot afford to heat their home or put fuel in their car tank because they have not got enough money, they are still cold and still poor. I hope there will be no dragging of feet on that.

One area in which we may see some recommendations is the need to ensure that privately rented accommodation is properly insulated—and again, we can do that without waiting. Some of our poorest people live in privately rented property, where many landlords are happy just to pick up the rent without investing as they ought to. I hope the Minister will do a bit of cross-Government thinking today, and tell us how this issue will be dealt with under their new plan to tackle fuel poverty.

There are other solutions, and the Energy Bill, which is currently in the other place and is due to come to the House of Commons, may help if sufficient capacity is built in to make things happen on a similar, or greater, scale than in recent years. It allows for the implementation of a green deal scheme from 2012, which will allow householders to install energy efficiency improvements without having to meet any of the up-front costs. Those will be met by energy companies and will be paid back over a period of up to 25 years—but is that really the good news it is made out to be? We need to ensure that the financial environment in which such schemes are taken forward is the right one. Will potential changes to the feed-in tariff in respect of the installation of photovoltaic panels, for example, provide the right financial incentive to deliver that day-time free electricity for householders? We will need to wait and see, but the Government will miss a major opportunity if they mess about with the tariff and negate the incentive that investors and householders need.

I have concentrated on fuel poverty in terms of the household budget. This Tory-led Government are helping to create a new type of fuel poverty. Many people cannot afford to buy petrol or diesel, and that particularly affects the rural communities in my constituency, such as Stillington.

[James Wharton (Stockton South) (Con)]

The hon. Gentleman speaks passionately on a subject about which I know he cares a great deal. He and I represent different halves of the same town, and we often disagree on political matters, but I suspect we share some common ground on this issue, in wanting to see the costs to our constituents brought down at every possible opportunity. Does he agree that if the Government could introduce a fair fuels stabiliser, that would be useful in allowing people who particularly need to be able to do so to plan their budgets and manage their money better, so that they could help themselves by planning their finances and avoiding the problems of poverty that, sadly, we so often see in the north-east?

[Alex Cunningham]

This is amazing, but I find myself in agreement with my colleague who represents the opposite side of the Stockton borough. Any measure that reduces costs for the people whom he and I represent has got to be important. That is particularly the case in places such as Stillington in my constituency, where people need to commute, often to low-paid jobs, and have limited public transport services. They are hit the hardest by the current economic policies.

I hope that the Government will see sense. I hope that they will avoid a fudge on the need for a comprehensive programme to tackle fuel poverty, and I hope that they will reverse the VAT increase at the pump, and introduce the fuel duty stabiliser—and maybe even keep a couple of the promises they made to our people during the election campaign.