Lord Whitty
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Lord Whitty
Lord Whitty (Lab)
My Lords, we now come to an issue which concerns the final impact of the whole superstructure of energy policy on the lives of millions of people, because we are dealing here with the issue of fuel poverty.
I shall speak also to Amendment 92B. These two amendments seek to insert a reference to fuel poverty into the section of the report which deals with the statement of policy for energy. When we think about it, it is very odd that that reference is not already there. Energy policy has economic objectives and security and environmental aspects, but also a very important social aspect that should appear in the statement. My first two amendments in this group address that issue.
Amendment 104C is, in a sense, more substantive, along with the amendments in the name of my noble friend Lord O’Neill. They relate to the one clause in the Bill that really deals with fuel poverty—Clause 136. However, it is also important that we ensure that fuel poverty features in any statement of policy on energy in the future.
Before I go any further, I should declare a small interest in that I am the chair of a small charity which conducts research into fuel poverty and energy efficiency.
It is actually a bit depressing that right up to Clause 136 we cover almost every aspect of the energy market and do not mention fuel poverty at any point. Fuel poverty is the inability of millions of our fellow citizens to heat their own homes to a minimum standard of comfort. It is also true, I regret to say, that Clause 136 was introduced by the Government at only a very late stage in the Commons procedure, almost the last stage, and received virtually no consideration. The policy statement which backed it up following the Commons procedure—the blue document which the Government issued—set out aspects of their fuel poverty strategy.
The Government have come to this a bit late, in any case. The first period of this Government was a pretty disgraceful one, when they cut back on efforts to help bring millions of households out of fuel poverty. The Warm Front programme, which was taxpayer-funded and treated the homes of 200,000 low-income households every year, was first cut and then abolished, although parallel schemes still exist in Scotland, Wales and Northern Ireland. The Government also cut back on the decent homes expenditure for improving the stock in the social housing sector. They also made clear at a pretty early stage that the aim to eliminate and eventually abolish fuel poverty was being abandoned. This aim, set out originally in the Warm Homes and Energy Conservation Act, had been pursued by the previous Government with growing difficulty over the past few years as global oil and gas prices rose. Not until this Bill and the document to which I have already referred was that abandonment formally acknowledged.
The Government also closed the CERT scheme—previously known as EEC—which placed an obligation on the supply companies to provide energy efficiency improvements and was skewed towards the fuel poor. Admittedly, the Government have replaced that with the ECO provision, which is reflected in this Bill and the earlier legislation, but the ECO is supposed to do a multitude of things. It is supposed to replace Warm Front and CERT, but actually the feedback we get—and I am sure the Government get—from the ground is that it is not achieving anywhere near its targets. The feedback from the supply companies, the installation companies, the insulation companies, consumer groups, fuel poverty campaigners and the Government’s own fuel poverty advisory group is that what is supposed to be conducted under the ECO is less in volume and more expensive per item than under the previous system.
I am not blaming everybody in the Government. I am not even blaming every DECC Minister, because I know DECC has fought quite hard on this front from time to time. I know that it was Her Majesty’s Treasury that forced Chris Huhne to abandon Warm Front. I also know that there are attacks on Ed Davey and the DECC position which are now expressed in terms of removing green taxes, but one of the items that is described as a green tax is actually an allocation to help the fuel poor and to tackle the problems of fuel poverty. There is talk that the Government believe that that should come no longer from consumer bills, but from general taxation. But the first thing the Government did was to abolish the scheme which was paid for by general taxation. Can the Minister let us know what she thinks is now the prospect of HM Treasury agreeing to a new major scheme funded by taxation to address fuel poverty?
Of course, the Government do have some money. A little remarked fact about the latest developments over the past few years on energy prices is that one of the beneficiaries has been HM Treasury, with VAT on energy prices and on a lot of the so-called green taxes and, of course, with the VAT consequences of introducing the carbon floor price. The estimate is that upwards of £4 billion is going out of higher energy prices into the coffers of the Treasury and not one penny of that has yet been allocated to addressing the acute problems of fuel poverty.
I accept also that the Government have done one other thing: they have introduced a warm homes discount to override the tariff so that there is a cut in the energy bills of the fuel poor. However, that is not a solution. It is a welcome cushion for those people but it does not tackle the basic problem. The Government have not only dropped or seriously curtailed all previous energy-efficiency programmes, but also, during the course of this Bill, rejected propositions from myself and others that we should try to get a structure of tariffs which help the fuel poor.
In Committee, they rejected my proposition of a standing charge and removal of discrimination against people who pay by prepaid meter, which hits the fuel poor particularly, or having any structure of tariffs which favours the low-paid and the fuel poor. All were rejected by the Government in Committee and in another place. It is also true that one of the effects of the Prime Minister’s intervention in this—the so-called simplification of tariffs, aspects of which I approve of—has led to a number of supply companies dropping their specialised tariffs directed to the special needs of pensioners, who form a substantial proportion of the fuel poor.
I accept that it is not entirely DECC’s fault but the net effect of all this is to aggravate a seriously dreadful problem in our society. From about 2005, rising energy costs have made it very difficult to make a dent in fuel poverty. I know that Chris Huhne came to government in the first instance wanting to look at a new strategy. Indeed, it is no secret, because someone told the press that at one point he approached me as a former Minister in this area to conduct an assessment. I was flattered and surprised, and slightly tempted, by the proposition. But eventually I found out that DECC was under pressure to redefine fuel poverty so that it was not such a problem or such a requirement on government energy policy. I rejected the approach on that basis, as did others, because it was clear that whatever happened and however you defined fuel poverty, it is a big number which is going up under present world conditions.
I am glad that Professor John Hills took on this task. He has produced a very solid document in terms of strategy for tackling energy fuel poverty, very little of which appears in the Government’s blue book. He produced a new definition of fuel poverty, which has some merits and addresses some of the problems of the previous definition, but in my view is not adequate. It has knocked a few million off the total figure of fuel poverty but it is still, as I said at the time, a big number which is growing. The gap facing the fuel poor to keep their families warm is growing all the time.
This whole Bill is about how we run, regulate and provide for energy supply to our population and to our businesses. All we have is the pretty feeble Clause 136 as a hook on which to hang an as yet undefined and weak fuel poverty strategy. The first two amendments in the group try to make sure that fuel poverty is up there with the other objectives of energy policy in the Government’s statement of policy. I cannot see how they can possibly object to that reference. The third amendment relates to the strategy. It attempts to turn a very woolly clause into one which has targets—and clarity of those targets—that relate to the improvement and efficiency of the dwellings of the fuel poor, as well as to the reduction and eventual elimination of fuel poverty in this country. If the strategy does not have ambitions and targets, it will not receive the priority and future consideration in energy policy that fuel poverty deserves.
I accept that the Government probably need to do more work on that strategy, and that is why my amendment does not specify exactly what those targets should be, but it does require the Government to set out those targets for 2020 and 2030. My noble friend Lord O’Neill is more specific on that in his amendments in this group. Either way, to give any confidence to the millions of people who are in fuel poverty out there, and the many more who are aware of the problem—who are sympathetic and demanding action—the Government need to accept that the policy and the strategy they come up with should actually mean something.
We need to refer to fuel poverty clearly in the policy statement. I hope, therefore, that the Government can accept the first two of my amendments without any great difficulty. I also hope that they will accept either my third amendment or that of my noble friend Lord O’Neill, or at least commit themselves to coming forward at Third Reading with something very like it which gives a structure and a framework for fuel poverty. As we know, fuel poverty is a terrible curse on our country. It causes people to skimp on food, and to not buy necessities for their children. It causes serious lung and heart conditions in thousands of our citizens at an estimated cost of £1.3 billion a year to the National Health Service. It causes whole families to live in discomfort, in anxiety, in the cold, and in distress. It is shocking that this Bill and the energy policy of the Government do not give greater prominence to the need to tackle this curse.
These amendments, if the Government can accept them, would go some way to deal with this. The Government need to accept the first two amendments as they are, because they do not of themselves present an obligation but they indicate a commitment to tackle this issue. I hope that the Government will also accept something like my third amendment, so that we can start making it clear to the rest of Government and to the population out there that this Government do care about fuel poverty, are prepared to do something about it, and will do so as rapidly as they can in the context of the big reform of the energy markets. I beg to move.
Lord O’Neill of Clackmannan (Lab)
I am pleased to follow my noble friend. In addressing his amendments he covered, in part, some of the points I will raise in relation to my own. It is fair to say that the four amendments I tabled seek to add a bit of muscle and detail to the Government’s commitment. I will talk about this more in my later remarks, but the rather late insertion of concerns about fuel poverty into the Bill mean that it is rather late in the day for some of the amendments that we put forward, which are of a probing character. Therefore, one would hope that the spirit of these amendments will be carried into secondary legislation: that is, statutory instruments, of which many are likely to be forthcoming.
The existing legislation, namely the Warm Homes and Energy Conservation Act 2000, was steered through this House by the noble Baroness, Lady Maddock, who I regret is unable to be here today. All credit should be given to her for her efforts in that area, although I was always a little bit dubious about plucking a date out of the air. I know that the date was the subject of some arm-wrestling between the then Labour Government and the Back-Benchers. However, the fact is that it was an attempt. At the time there was a degree of optimism because, as noble Lords will recall, energy prices, particularly gas prices, were falling. We could see households moving out of what was known at the time as fuel poverty in quite considerable numbers. Not only were gas prices falling and thus people’s disadvantage in the energy market diminishing, there was also a sense that the general economic prosperity of the time meant that the situation of the poor would become easier and, as the Americans say, all the boats would rise together. Unfortunately, all the boats did not rise but the price of energy subsequently did, and the poor were left stranded in their inadequately insulated and poorly built homes.
Lord Whitty
I thank all noble Lords who have taken part in this debate. It proved to be rather more wide-ranging than I had anticipated, largely thanks to the first intervention by the noble Lord, Lord Howell. I agreed with some of it, but he provoked a debate we have already had several times in the course of the Bill. I disagree with his central point and I think we need to take advice from the noble Lord, Lord Deben. It serves nobody’s interest to trade off the interests of the fuel poor against the objectives of reducing carbon in our energy. We have to tackle both as far as we can: it is not a trade-off. Indeed, many of the measures we are talking about to help the fuel poor, in particular improving the energy efficiency of homes, also help to reduce total demand for energy and reduce carbon. There is no conflict: they are synergetic, if that is the word, in many respects. It was a bit of an unfortunate diversion, but at least it livened up the debate.
The noble Lord, Lord Jenkin, and the Minister, to some extent, accused me of a volte-face. Certainly when the Government—between proceedings in the Commons and the Lords—came up with Clause 136, there was a sigh of relief, which I shared, that fuel poverty was being addressed in this huge reorganisation of the electricity market and energy policy generally. I have no doubt that other noble Lords on this side shared the relief that fuel poverty was at least appearing in the Bill. The problem is that it appeared at a rather late stage and that, as I said and maintain, it is a rather thin clause. It refers to the Government “setting out an objective” at some date “for addressing” fuel poverty—it does not even say “reducing fuel poverty”. We therefore want a little more meat on the bone. Some of it can no doubt be done by secondary regulation, but it would be better, frankly, if the Government were open to strengthening Clause 136.
The issue immediately before us is slightly different. Amendments 92A and 92B suggest that we should clearly signal within the statement of energy policy that fuel poverty is one aspect. Indeed, the programme, the policy and the strategy that the Government intend to bring forward under Clause 136 should be seen as part of that. It needs specific mention because it was not there for most of the Bill’s existence, it does not appear in most of the Bill, it was not there at all for the whole of the Commons procedure on the Bill and it needs to be clear now. This is our last opportunity in consideration of the Bill to make sure that fuel poverty is a major dimension of overall energy policy.
That is a fairly simply thing for the Government to accept. I am sorry that the Minister thinks that it is superfluous or otiose, as it is very important. If the objective of fuel poverty is not in the minds of not only DECC Ministers but those who are concerned with social policy and health policy, those in the Treasury and those who determine the priorities of this Government when we come to energy policy, we are in some difficulty.
Baroness Verma
My Lords, I make it very clear to the noble Lord that the amendments that we have tabled give a clear timetable for bringing forward proposals for a new target and a strategy to achieve it. Therefore noble Lords can have great certainty that we will put in place a comprehensive framework within a fixed time of the Act coming into force.
Lord Whitty
My Lords, I accept the Government’s good faith—and certainly the Minister’s—in this respect. Certainly, Clause 136 gives the Government the opportunity and the requirement to do that. However, my point on these first two amendments is that we cannot ghettoise fuel poverty into one clause of the Bill and one aspect of government thinking. All approaches to tariffs, investment and the source of energy, as well as to measures to improve the energy efficiency of homes and other direct measures to help the fuel poor, need to be seen in the totality of energy policy as part of the Government’s obligation. That is why Amendment 98A proposes that a reference to fuel poverty should be written clearly into the policy statement. It is nothing more than that, but it is very important that that is reflected. I would have thought that the Government could have accepted it, but given that the Government are clearly not prepared to accept it I wish to test the opinion of the House.
Lord Whitty
My Lords, I would briefly like to add our support to these amendments. It is very good that the intentions of the noble Baroness, Lady Maddock, have been taken on board by the Government, and it should lead to a significant improvement in the way in which consumers understand this market and their own bills. At the end of the day, with the massive changes that are expected in energy policy, unless consumers are themselves convinced that this is all part of a coherent and positive strategy there will be serious political problems down the line for the Government in power, whoever they are. I therefore think the Minister has been very sensible. I congratulate her on taking this initiative and making it her own, and give my thanks to the noble Baroness, Lady Maddock, and the noble Lord, Lord Roper, for pursuing it in the first instance.
Lord Phillips of Sudbury (LD)
My Lords, I will comment briefly on this clause because in my life hitherto I have spent a great deal of time trying to help the great British public understand some of the contracts that have come their way. I am afraid to say—and I do not think anyone in the House will disagree—that a good deal of cynicism has been employed by some of the very large energy suppliers, and indeed other suppliers in recent years, designed expressly to confuse the consumer with a view to preventing ordinary folk from understanding what their best tariff, for example, might be. This is a clause of great virtue, which should be supported.
Lord Pearson of Rannoch (UKIP)
My Lords, very briefly, I, too, support this amendment. My only regret is that perhaps it does not go far enough in suggesting that all the various environmental levies should be broken down to show how much has been spent on wind power, and what percentage of electricity consumed and paid for came from wind. If that were revealed to the general public through this amendment, it would hasten the end of the absurd and socially unfair wind farm project.
Lord Whitty
My Lords, this has been an interesting debate. Nobody who spoke was against transparency of costs. In passing, as an avid reader of the Daily Mail, I say to the noble Lord, Lord Lawson, that the Mail has made a pretty good job of drawing the consumer’s attention to the fact that there are such charges—although not always accurately, as the noble Lord, Lord Teverson, implied. It may be that from all points of view that a different form of transparency would make things clearer.
My noble friend Lord Campbell-Savours hoped to get a knee-jerk reaction from his Front Bench in support of this, and that was my initial inclination. I am in favour of transparency for consumers. I am not in favour of concealing any costs which make up the bill, including those imposed by the Government, whether the charges were started under the previous Government or were, like the carbon floor price, started by this Government. The problem all Governments have with this is that it is all very well to argue for this all going onto direct taxation—intellectually that must be the case and in terms of fairness one can argue it—but I am afraid that there are those in government, one of whom is not unknown to the noble Lord, Lord Howell, who would object to significant amounts of money coming from direct taxation. To be frank, I do not think any Government would easily be persuaded, having put these charges on consumer bills, to move them back to direct taxation. However, that option is always there.
The other, less drastic option is to make these charges less regressive, because they are effectively a poll tax. However, I am not completely joining the surrounding of the Minister on this because, while it is right to seek transparency, it is not right to do so in order to attack the Government’s green or social charges. We should look at the totality of costs which make up the consumer bill. The noble Lord, Lord Teverson, is right, but it needs to go further.
The corporations have used the green charges to explain price rises. Sometimes they have been right and sometimes they have been, at best, misleading. There are other things which go on within supply companies. We do not know the cost of the network. Network charges are a significant part of costs. Nor do we know how the internal finances of the energy companies operate. Some of these companies are vertically integrated. Are they buying from themselves? What is the actual price that is reflected in the bill?
The Minister should take this away and look at how we would break down all costs in a way which consumers could understand, and which did not highlight just one aspect of them. With my noble friend Lord Campbell-Savours and the noble Lord, Lord Teverson, I support green charges. I do not think they are geared in the proper way, and perhaps schemes funded by taxation might be better, but I am in favour of green charges. I am also unafraid of scrutinising them and getting greater transparency, but that should be done in the context of looking at all the costs which make up a bill.
The list here is incomplete. If it had been a longer list, or if it had stopped as a general principle at the word “consumer” in the last line of the main paragraph, I think that the Minister could accept it and I would support her. I hope she—
Lord Forsyth of Drumlean
How can the noble Lord say that the list is incomplete when the last item on it is,
“any other categories of cost”?
Lord Whitty
Because it draws attention to the first four, which relate to other matters. It does not allow for the lumping together of tax costs and environmental charges, as some companies voluntarily do. Rather than end with a vague, catch-all phrase we should be balanced, we should look at the totality of costs and we should list them. I hope that the Minister will take away the spirit of this amendment and the wording of the first couple of sentences, and look at it in a rather wider context, perhaps coming back at Third Reading with a rejigged amendment. However, I cannot support the amendment of the noble Lord, Lord Forsyth.
Baroness Verma
My Lords, I thank my noble friend Lord Forsyth for moving the amendment on behalf of my noble friend Lord Marlesford and the right reverend Prelate the Bishop of Chester. I sympathise with the aims behind this amendment. Consumers have a right to know what they are paying for, particularly when it is a basic essential, such as energy. The Government recognise the importance of providing clear and consistent information about the content of bills. Every year my department publishes a breakdown of costs that make up an energy bill along with a detailed assessment of the impacts of our policies. We feel strongly that suppliers should be open and honest about the costs that they incur, and noble Lords will have heard my colleagues in the other place repeating this call in recent weeks.