Household Energy Bills: VAT

Matt Western Excerpts

Tuesday 11th January 2022 Commons Chamber

[Mr Clarke]

It is vital that we make sure that we support households to make the changes to their homes that are needed to improve their energy efficiency. That is precisely why we have £471 million of spending, to date, on the social housing decarbonisation fund, which is worth £121 million, and the sustainable warmth programme, which is worth £350 million. Those are estimated to save households an average of £350 to £450 a year on their energy bills. In addition, the Government have consulted on expanding the energy company obligation to £1 billion a year of improvements for fuel-poor households. Those are precisely the kinds of things that we need to do to help with bills and deliver the net zero transition.

[Matt Western (Warwick and Leamington) (Lab)]

I am interested in the Government’s estimate of the cost of transitioning a typical three-bed semi to a zero-carbon home using that fund. How much would it cost to put in an air source heat pump and all the necessary insulation to make it effective in the way that the Chief Secretary described?

[Mr Clarke]

The hon. Gentleman is right to say that we need to be moving towards technologies such as air source heat pumps. That is why our heat and buildings strategy sets out a plan to bring parity with gas boilers by 2030. That is precisely what we want to see, because those costs need to come down, and that is what we are enabling through our net zero strategy.

The Government are focused on protecting jobs, incomes and livelihoods through, by common assent, one of the most challenging periods in our lifetimes. Nineteen months of furlough protected almost 12 million jobs across the UK. The self-employment income support scheme, worth £28 billion, benefited nearly 3 million people. We significantly increased the generosity of the local housing allowance for housing benefit, and more than 1.5 million households are benefiting from an additional £600 a year. For those who need extra help with their housing costs, we provided £140 million for discretionary housing payments. Four million families are getting help with their council tax bills. We have provided nearly £5 billion for schools catch-up and we are rewarding our valued NHS and care workers, with more than 1 million NHS workers receiving a 3% pay rise in a year of otherwise wider pay restraint.

It has been a goal of successive Conservative Governments since 2010 to keep down the cost of living for working families. I mentioned the increase in the national living wage from April, which represents an increase of more than £1,000 in the annual earnings of a full-time worker on the national living wage. That sort of thing matters in places such as Stoke. We are committed to going further so that the national living wage reaches two thirds of median earnings for those over 21 by 2024, providing economic conditions allow.

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[Matt Western (Warwick and Leamington) (Lab)]

May I just put on record how much I miss Jack?

Working families everywhere are feeling the pinch. Energy prices are rocketing, housing is increasingly unaffordable and inefficient, food prices are rising and there is a global gas price crisis. Ten years of failed energy policy has left us particularly exposed, including through the closure of the Rough gas storage facility. It was vital to keep that open. That facility would have ensured some energy stability and resilience. Now, our storage capacity is only 2% of our annual usage, compared with 25% in France and Germany.

Meanwhile, in February Ofgem will announce a new price cap for April 2022 onwards, under which bills can rise by 46% or £600 a year. That compares with wage growth of 4.2%. How on earth are families going to survive this increase? Without Government support, they will not. Research from YouGov shows one in 10 Brits could not afford a £5 per month increase in their cost of living, a third could not afford a £25 per month increase, and half could not afford an additional £50 per month. Almost 4,000 households in my constituency are already in fuel poverty—that is 8.9% of all households—and they will be hit the hardest and have to choose between heating and eating.

Inflation is running away at over 5% and it is going to hit 7%, according to Goldman Sachs and the Bank of England. As my hon. Friend the Member for Leeds West (Rachel Reeves) has said, we are facing a high inflation, high cost and low growth economy. That is why Labour is calling for measures now to reduce the expected energy price rise in April. Removing that price rise and increasing the warm home discount would save most households around £200. The lowest earners and the squeezed middle would save up to £600 on bills, preventing all the expected increases in energy bills.

Pensioners have also been abandoned by this Government through the Chancellor’s failure to protect the triple lock. That simple action would have avoided a short-term crisis but there is more to do to protect our constituents from future shocks. Our housing stock is poorly insulated, the worst in Europe. British homes leak heat up to three times more quickly than the more energy-efficient homes on the continent, resulting in higher bills and colder homes. The last Labour Government introduced a legal requirement for new homes to be zero carbon by 2016. We would have had a million homes built in the past five years if that had been allowed. Labour would make the green deal deliver 19 million warm and insulated homes, saving households an average of £400 a year, but the Government do not see the advantage of that. The Government have also failed to accelerate quickly enough to domestically produced clean energy, as we have heard. Then there is house price inflation and rent inflation, and the exorbitant costs that people living in this country face. I understand how hard this winter is going to be for my constituents, and I believe that the Government have to act urgently to address that.