Fuel Poverty

Luciana Berger Excerpts

Wednesday 19th January 2011 Westminster Hall

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

I thank my hon. Friend the Member for Islwyn (Chris Evans) for securing this important debate. He made a heartfelt presentation and raised some serious points.

None of us underestimates the increasing challenge of fuel poverty. It is worth reinforcing the figures that many hon. Members have mentioned. National Energy Action estimates that 5.5 million households, or one in five homes, will live in fuel poverty this year, which is the highest number in 15 years. The previous Labour Government made fuel poverty a priority and legislated to end that tragedy by 2016, introducing measures such as winter fuel payments and the Warm Front scheme. For a time, that investment ensured progress—between 1996 and 2004, the number of fuel-poor households fell by 70%, from 6.5 million to 2 million—but the steep energy price rises to which many hon. Members have alluded mean that despite the previous Government’s best efforts, the targets for eliminating fuel poverty among the most vulnerable have not been met.

My hon. Friend the Member for Ynys Môn (Albert Owen) has referred to the Fuel Poverty Advisory Group. FPAG’s annual report, which was published in July last year, stressed that a typical gas and electricity bill has increased by 125% over the past six years, and uSwitch, the energy consumer group, estimates that homeowners are paying £338 a year, or 37%, more for their gas and electricity than in 2008.

The past few months have squeezed families’ budgets to breaking point. We have just had the coldest winter for decades, with further sharp increases in energy prices. The domestic fuel shortage last month showed the difficulty of heating homes adequately in hard-to-reach rural areas. Many hon. Members have also spoken about the additional challenge of unregulated domestic oil supplies and a lack of transparency in pricing systems. Furthermore, the 2.5% increase in VAT and rising inflation will reduce families’ spending power even further. This will be an even tougher year for households on fixed incomes, so we must redouble our efforts to tackle fuel poverty.

I welcome the fact that the Minister of State, Department of Energy and Climate Change, the hon. Member for Bexhill and Battle (Gregory Barker) recognised in the House on 11 November that

“We have to really attack fuel poverty”.—[Official Report, 11 November 2010; Vol. 518, c. 404.]

I agree. It cannot be right that in Britain, one of the world’s most prosperous countries, families must choose between buying food or keeping warm. As the hon. Member for Hexham (Guy Opperman) has put it, they must choose between heating and eating. It is vital that the Government match their actions to the scale of their rhetoric.

Before exploring the Government’s approach to tackling fuel poverty, I will consider their upcoming consultation and what it might mean for the future. How we define fuel poverty and its causes is key to ensuring that we focus our efforts to tackle it effectively. If the newspapers are to be believed, the Government are still having difficulty identifying someone to chair the review, but we have been told that it will report in the summer. Will the Minister confirm that that is still the case?

One of FPAG’s key recommendations in its latest report was that the Government should lay out a clear strategy for eliminating fuel poverty by 2016. Will the Minister confirm that the Government plan to include that in their review? The outcome of the review will shape what action is taken in the future, so it is important that it is fully independent and has full stakeholder engagement.

The Government currently define a fuel-poor household as one that must spend more than 10% of its income to heat the home to an adequate standard. Many of the stakeholders to whom I have spoken are deeply worried that the review’s aim is to narrow that definition to such an extent that fuel poverty is virtually defined out of existence. I sincerely hope that that is not the case. Will the Minister give us some clarity and assurance about the consultation’s terms of reference? I reiterate that the scale of the challenge must be faced.

It is also important that we examine who is affected by fuel poverty. I am sure that when most people hear the term “fuel poverty”, an image of pensioners comes to mind, but Save the Children highlighted in a report last week that many types of family face a poverty premium, which forces them to pay more for basic goods, services and bills because they do not have access to a bank account or cheaper payment methods such as direct debit and lower social tariffs. Save the Children’s research showed that one fifth of the poverty premium comes from fuel bills. If low-income families who pay the highest tariffs for gas and electricity were charged the same amount as families who pay by direct debit, they would save an average of more than £250 a year. The Government must adopt a range of measures to tackle the underlying causes of fuel poverty among disadvantaged groups. Fuel poverty extends beyond pensioners.

The Opposition’s concern is that the Government are adopting a sticking-plaster approach rather than tackling fuel poverty directly. Hon. Members have said that funding for the Warm Front scheme will be cut by two thirds over the next two years. Given that the Warm Front budget for this financial year has already run out, there is clearly need as well as demand for the scheme, and the reduced budget will not cover all those homes that still need new boilers to bring their heating systems into the 21st century.

The Government plan to introduce their warm homes discount later this year as a more targeted way of tackling fuel poverty. However, according to Consumer Focus, only about 25% of fuel-poor households in England will be eligible for the scheme, based on the most recent data. Two hon. Members have mentioned Macmillan Cancer Support’s campaign. Will the Minister confirm whether the warm homes discount will extend beyond low-income pensioners to other low-income, fuel-poor households, such as those with children or those where someone has a terminal illness?

FPAG advises that the only long-term and sustainable solution to fuel poverty is radically to improve the energy efficiency of every dwelling occupied by fuel-poor households, as many hon. Members have said. The Government have adopted that approach in their proposals in the Energy Bill for the green deal. The Opposition welcome the proposals in principle and will seek to work with the Government to ensure that their plans are workable and centre around fairness for the consumer. However, FPAG has also noted that the green deal’s financial model of measures paid for from bill savings may not be suitable for fuel-poor households, because many in fuel poverty currently under-heat their homes. If the Government are determined to base their approach on replacing Government-funded schemes to tackle fuel poverty directly with market-led schemes, they must ensure that they do not simply withdraw funding, leaving an abyss in its place.

The Energy Bill is starting its legislative journey in the other place, and in a few months’ time we will have the chance to scrutinise it in the Commons. However, will the Minister give us some details of how the Government foresee the green deal and the energy company obligation will work specifically to eliminate fuel poverty? I have heard from many stakeholders worried about low levels of green deal take-up among fuel-poor households and hard-to-treat homes, to which the hon. Member for Suffolk Coastal (Dr Coffey) has referred. It is vital that the Government get it right and ensure that the green deal works to tackle fuel poverty. The Minister of State, Department of Energy and Climate Change, the hon. Member for Bexhill and Battle has said that the green deal will be “the game changer” for fuel poverty. I hope that the Minister will be able to give us those assurances and a bit more detail.

On the Government’s proposals for electricity market reform, the Opposition acknowledge the need for reform. As the shadow Secretary of State, my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier), said in the House on 16 December, we will support fair and sensible mechanisms for reform. On 10 January, however, in a written answer to my hon. Friend the Member for Glasgow North East (Mr Bain), the Government indicated that the impact of their preferred reform options will hit the lowest-income families with the largest increases, stretching families’ budgets even further. I hope that the Government will review that problem as they work through their proposals and ensure that a fair outcome is reached, so that those in fuel-poor homes are not disadvantaged further.