Fuel Poverty

Mark Williams Excerpts

Tuesday 11th February 2014 Westminster Hall

[Roger Williams]

My hon. Friend is completely right. The regulation and specification for energy efficiency in new houses today is to be welcomed. Some of us believe that a higher degree of that could have been aspired to.

The Energy Bill Revolution is calling for the revenues from two carbon taxes—the EU emissions trading scheme and the carbon price floor—to be invested in a massive energy efficiency programme that would eliminate the scourge of fuel poverty once and for all. Compared with much of Europe, the UK has a bigger fuel poverty problem because of our poor quality housing.

[Mr Mark Williams (Ceredigion) (LD)]

Does my hon. Friend agree that that is a particular problem in the area he represents and in my neighbouring constituency? It is about the age of the housing stock coupled with the problem, as a rural area, of the absence of any gas provision. It is a case of lacking alternatives, as well as older housing stock.

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[Albert Owen (Ynys Môn) (Lab)]

It is a pleasure to serve under your chairmanship again, Mr Sheridan, and to follow the hon. Member for Brecon and Radnorshire (Roger Williams). He has been a sincere campaigner on behalf of the fuel poor for many years, particularly since we both came into the House in 2001. I very much agreed with the tone of his speech and the outcomes that he asked for. I make no apology for concentrating in my speech on some of the issues that he raised because they are very important.

One statistic, which comes from the Department of Energy and Climate Change, is that, on average, fuel poverty in rural areas is twice that of urban areas. The fuel-poor are concentrated in many of the rural areas of the United Kingdom. I am glad that the Minister is present, because he has given evidence to the Energy and Climate Change Committee on a number of occasions, and I know that he is sincere in his wish for an all-UK solution to fuel poverty, whether for those in a large urban town or city or those in a small rural area.

I would like to give some context on why we must do more for rural areas. I have been campaigning for some time about off-grid gas and for the extension of the gas mains. I am pleased that the Energy Bill Revolution campaign has come up with funding mechanisms for that from the EU emissions trading scheme and the carbon floor tax. That is important, but I would like to add a third stream to that funding equation. Shale gas has great potential for this country’s future revenues. If the exploration goes ahead and the volume of recoverable gas is sufficient, the profits should be used to extend the gas mains into rural areas of the UK.

As regulator, Ofgem insists that its policy is to extend the gas mains, but currently the incentives are just not there for the energy distribution companies. I support the Government’s stance on shale gas, and it is quite right that, if we have a bonanza, there must be local community benefits, but there should also be national benefits. If the Exchequer is going to enjoy greater revenues from the exploration of shale gas, similar to those that we have seen from North sea oil and gas, we should have a national strategy. I would like such revenue to be put towards extending the gas grid of Great Britain and Northern Ireland. I stress Northern Ireland because I am fully aware of the problems that people there have with the high price of oil.

I am as disappointed as other Members who have intervened about the fact that the OFT has not strongly concluded that those who live off-grid do not enjoy the benefits of those who are on the grid. It has looked at competition very narrowly. It is difficult to unpick that, and the Competition Commission has been unable to unpick the unfairness that lies behind people’s lack of choice when they are off-grid. For example, they do not enjoy the dual-fuel discounts that the big six and other energy companies boast about because they do not have dual fuels. They cannot get gas and electricity from the same supplier so that they can enjoy a reduction in their bills. That opportunity does not exist for them.

I am pleased that the Labour party has made the commitment that the regulator will look after those who are off-grid in the same way that it looks after those who are on the gas mains grid. I have pressed the Government on that issue on a number of occasions. It is important that the regulator is the champion of people who live in rural areas. The electricity and gas markets were privatised rather hastily and the regulations were put in place to look after privatised areas. The off-grid issue was neglected in many ways, but it is time for that to end.

With the rise of energy prices, we have seen a fuel poverty crisis in many places. DECC’s own figures show that people who live off-grid and those in rural areas have been hurt more than those who are on the grid, so we must take an important step. The Minister and the Government are looking at extending the gas mains, but will he comment today on the possibility of the revenues from shale gas being used as an incentive for the distribution companies that often have no competition?

The electricity and gas market is not fully competitive. Monopolies set the prices in the transmission and distribution of gas—huge prices that contribute between 19% and 24% of gas and electricity bills. We are not talking about a small fraction like the green levy, which was X%. A quarter of the actual price is the result of distribution and transmission. That must be looked into, because bills are increasing. I was very keen on what the hon. Member for Brecon and Radnorshire said about the comparison with European prices. He said that that included tax, but if he looks at the matter closely, the fact that we have a 5% VAT threshold on energy gives us an advantage, because the rate is higher in many other European countries. I know that he was present at this morning’s debate on the effect of VAT on tourism. The off-grid is disadvantaged. We need a regulator and champion to bring benefits to off-grid consumers.

I want also to talk about transportation in rural areas, because it also has an effect. There is a double whammy: people are paying more for oil and off-grid gas and more for transportation and fuel. I very much welcome the Government’s freeze on fuel duty. I have campaigned for it for a long time, under previous Governments, and previous Chancellors have frozen the duty for many years. Members will recall that the fuel duty escalator was introduced in the ’90s. It escalated quite a lot, and there was a crisis point in 2000, when there were fuel protests in this country. There were price freezes thereafter for a number of years. People in my constituency and many rural areas in the UK are affected by the fact that they are paying VAT on their fuel. That 2.5p in every pound that people spend on diesel or petrol has an impact and creates a cost of living crisis in such areas. We are not talking about cars as luxury items; we are talking about essential means of transport.

[Mr Mark Williams]

Does the hon. Gentleman share my disappointment that the whole of Wales is excluded from the Government’s laudable attempt to achieve a derogation of fuel duty? That is despite Wales being a sparsely populated area by anyone’s standards—his constituency and mine certainly are.

[Albert Owen]

I agree with the hon. Gentleman. I compliment the Government for introducing the fuel duty rebate and for making representations on the issue. I am sure that the Minister and my hon. Friend the shadow Minister will know that I am not shy of criticising my own party, and I was not shy of criticising it when we were in government, because it should have taken that step. Nevertheless, it is wrong now to exclude a whole area—a whole country—because it is within 100 miles of a refinery. No one in my area, the most north-western point of Wales, can plug into a refinery. The independent suppliers are paying extra for fuel because of the cost of transport from those very refineries. The 100 mile radius principle is really a fly in the ointment. People in Wales, unlike those in remote areas of Scotland and in some parts of England, have been seriously disadvantaged. They are paying extra.

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[Mr Mark Williams (Ceredigion) (LD)]

It is a pleasure to serve under your chairmanship, Mr Sheridan, and a privilege to follow the hon. Member for Ynys Môn (Albert Owen) and my hon. Friend the Member for Brecon and Radnorshire (Roger Williams), who has done so much in this area. He has done the House a good service in securing this debate. He set the parameters for the debate clearly and effectively, stating what we can do to improve energy performance and reduce bills in our homes. We heard some interventions from the Opposition about the immediacy of the issue—a point that I do not think is lost on anybody—and my hon. Friend gave a longer-term vision of the action that must start soon. The truth is that both approaches must be undertaken.

This debate is particularly timely, given that last week was cold homes week, a campaign to raise awareness of the Energy Bill Revolution that we have heard about in gatherings here over the last week. I will use this opportunity to discuss some smaller measures that could be taken to make our homes more fuel-efficient and keep them warm, an issue on which my local authority has been active.

Research undertaken by the Energy Bill Revolution campaign has shown that overall, the UK ranks bottom of 16 western European countries with comparable properties on a range of factors, including the affordability of space heating units, the share of household energy spent on heating, the percentage of households in energy poverty, the number of homes in a poor state of repair and the thermal performance of walls. That is particularly pertinent to rural Wales, as I said in an intervention, as much of our housing stock is dated and of a poor standard, with poor heating systems, insulation and so on. It is of great concern to hear that we are performing so badly compared with our European counterparts, but it goes to show that if the issue is dealt with in the right way, it can be addressed effectively, as it has been elsewhere.

[Rushanara Ali]

Does the hon. Gentleman agree that although the Prime Minister spoke well, before he was elected, about having the greenest Government ever, the Government are missing a trick by not investing in the kinds of initiative that can genuinely create a green economy and jobs, and deal with some of the issues that he and other colleagues have raised, including retrofitting and improving energy efficiency? Will he join us in encouraging his Government to take more active steps to consider how to promote the green economy while addressing fuel poverty?

[Mr Williams]

I am grateful for that provocative intervention. I will not join the hon. Lady. I actually aspire, like the hon. Member for Ynys Môn, to a cross-party approach to the issue. The Prime Minister and my party leader made various comments before the general election, many of which have been or are being delivered on, through the green deal. However, I do agree with the hon. Lady that we must be even more ambitious and take the agenda forward, so there is partial agreement.

The Energy Bill Revolution campaign, in whose measures I am particularly interested in this debate, calls for revenues from two carbon taxes—the EU emissions trading scheme and the carbon floor price—to be invested in a widespread energy efficiency programme in the hope of eliminating poverty. The campaign believes that investment in improving the energy efficiency of the UK’s leaky homes would save the average family money, provide the jobs mentioned by the hon. Member for Bethnal Green and Bow (Rushanara Ali) by developing the green economy, and boost growth. Incidentally, it has also undertaken polling that suggests that it would be a popular form of investment. Most people feel that it would bring them more benefit than some of the more controversial road or rail projects.

What makes the debate even more timely, especially for Wales, is the fact that figures released last week indicate that in Wales, fuel poverty has increased by 13% over the past year and that, more worryingly, more than one in four families with dependent children are fuel-poor. Families are struggling to keep their homes warm at a reasonable price due to our poor housing stock, as has been outlined. The hon. Member for Bethnal Green and Bow alluded to work done by Barnardo’s; I concur with that work. Barnardo’s and the Children’s Society support the Energy Bill Revolution. The Children’s Society found, in a survey of 2,000 children across the UK, that about 28% of them thought that their homes were too cold, and this winter more than 3 million families are likely to have to cut back on essentials such as food to pay their energy bills.

Some good moves have been made, as was pointed out by the hon. Member for Gosport (Caroline Dinenage). One of those was the warm home discount introduced in 2011—inadequate in its coverage, of course, and not enough, but important to many. It required the big six to provide £135 towards energy bills to low-income, more vulnerable households. Low-income pensioners are in the core eligibility group. However, energy companies can use criteria to decide whether struggling families qualify. It is scandalous that although it may be known that a family are struggling, they may still not get that support. I endorse the Children’s Society’s call on the Government to ensure that no household is without a warm home discount if it is known that there is a child living in poverty there.

Will the Minister consider encouraging companies to extend the eligibility criteria for a warm home discount so that poorer families are automatically included? Perhaps that would be families who receive extra child tax credits, or households earning less than £10,000. The Government have done wonderful things on tax thresholds for those earning less than £10,000, and have taken many people out of tax altogether. The additional action that I suggest is something immediate and pertinent that could be done. Does the Minister have any dialogue with energy companies, or does he plan to have any, about extending the criteria for the warm home discount to working families in which there are children living in poverty? That would help many of my constituents.

I want to mention some local initiatives. The hon. Member for Hexham (Guy Opperman) spoke about the need to develop bulk-buying oil syndicates; 70% of my constituency, including my house, does not have access to mains gas, and I wonder what the Department of Energy and Climate Change is doing to support the development of such syndicates, for domestic oil in particular. There have been schemes in the past. I think that a predecessor of the Minister’s alluded, in a letter, to a competition; I think it is less a question of a competition than of a drive to encourage the development of oil syndicates. I declare an interest, because my family is the beneficiary of one, organised by an inspiring lady, Jane Wakeham, in the village of Llanddewi Brefi. She has built an oil syndicate for her community; we have talked about the big society, but I think that that initiative was always there. What should the Department do to encourage the development of such syndicates? We need them on a much bigger scale, not least in my area, which is off-grid for gas.

I was delighted, for cold homes week, to visit two projects in my constituency that do fantastic work to help my constituents make the most of the energy on which they spend their hard-earned money. One is Ymlaen Ceredigion, a charity that runs the Keep Cosy initiative in conjunction with Ceredigion county council and Aberystwyth university. It gives residents free advice in a home visit, pointing out ways to minimise energy consumption, including through draught-proofing, energy monitors and radiator backing, and signposting them towards energy schemes. Funding to enable 400 households to benefit has been secured, and built into the project is the expectation that the information on energy conservation will cascade down to other families. I also visited Cymdogion Cynnes—the Ceredigion Warm Neighbour scheme—which aims to help residents by collating all information on available energy grants and schemes in one place. That is a valuable resource; we hear time and again that lack of access to information about schemes is a barrier. That county council project is most welcome.

I was sitting at home on Sunday evening and the telephone rang; it was an automated message offering me a free home insulation service. I was supposed to press 2 on the telephone and an agent would enlighten me and my wife about the benefits on offer. I am not sure where that came from, or whether it was from green deal operatives; perhaps the Minister or his shadow would know. I await enlightenment. It is a good, proactive way to deal with things, but it makes the point that people need to know where to get information, or, in my case, where it is coming from.

[Annette Brooke]

I agree with my hon. Friend that small community initiatives are incredibly important. The point has come my way that some older people, who could have free loft insulation, cannot face dealing with the loft to make it possible; we need voluntary bodies on hand to help and make things easier—and to explain that perhaps it will not be the upheaval they imagine.

[Mr Williams]

I agree. Elderly people are one of the target groups that we want to approach, and briefings from Age Cymru or Age UK make that point strongly. What my hon. Friend says is important; somewhere along the line, more of a one-to-one dialogue will be needed to get those people engaged in schemes.

I want to reiterate the point that the hon. Member for Ynys Môn made when he talked about his passion for getting people on to mains gas. As I have mentioned, 70% of my constituents do not have mains gas in their homes. People talk about swapping suppliers, but we are limited in our choices and there is a need to renew work on that. I am sure—or I hope—that DECC is undertaking such work. I was in the main Chamber earlier, and in a discussion of energy policy in the nations of the UK, the Minister’s predecessor, the hon. Member for Wealden (Charles Hendry), pointed out that there is a need for that renewed emphasis, particularly for rural areas and people who do not have the range of choices that many others have.

The Government have undertaken some good initiatives, and the hon. Member for Ynys Môn was big enough to acknowledge that. We must build consensus on some of those; that is what the campaign that I am associated with is about, and the number of organisations that have joined the Energy Bill Revolution campaign is relevant to that. I want a renewed vision for rural areas. If the Minister will answer me on one matter, perhaps it could be the development of community oil syndicates. I feel strongly about that, because it is a good and proven way for consumers, in the absence of choice, to get something approaching justice in relation to the bills that they pay.