Fuel Poverty (Rural Britain)

Mike Weir Excerpts

Wednesday 7th July 2010 Westminster Hall

[Albert Owen]

I agree partly with what the hon. Gentleman says. It is easy to be wise after the event. He will remember that at the time we were in the “dash for gas”, gas was relatively cheap across the whole United Kingdom and our eye was off the ball, because people were getting cheap fuel. Yes, more could and should have been done then, and it should have been done over the past 13 years. I hope that more will be done over the next few years to ensure that we alleviate fuel poverty in rural areas.

The Minister told me he was involved in the option of promoting renewable heating, which is another important way forward. Although I shall argue for the gas network to be extended throughout the United Kingdom, we need, particularly with the low-carbon economy that we are moving towards, to consider renewables. Geothermal energy is important in many areas. It would be helpful if new estates and new housing, including affordable housing, such measures installed at the construction stage.

In my constituency—I am sure that other hon. Members have experience of this—many of the problems are not just with stone houses that are a century old or more, but with estates that were built in the 1960s and ’70s, where the developers simply did not put gas mains in and did not provide for up-to-date fuel, leaving people on the periphery of the gas mains area. I am sure that at that time people would happily have paid for access to the gas mains from those properties, and it would have been a selling point for the builders, who were very short-sighted.

When I talk about areas off the grid, I am talking about not individual isolated properties but more often about small villages, towns and hamlets that are a short distance from the mains. There are issues about getting the pressure to the level needed but, again, I am sure that in the 21st century that can be done relatively simply.

[Mr Mike Weir (Angus) (SNP)]

Does the hon. Gentleman accept that there are two problems with that? First, there are many rural areas where the gas main will simply never go, because of practical difficulties. Secondly, in an era of rising gas prices and a possible shortage of gas, does he believe that gas is really the way forward for dealing with rural fuel poverty?

[Albert Owen]

I welcome that intervention, but that is not the point that I am making. I am saying that we should have renewables as well. Areas close to the gas mains should be offered a choice. I have seen the price differential between the bills of people who are off the gas mains grid and people who are on it, and it is simply wrong and unfair that some people are paying so much more.

--- Later in debate ---

[Mr Mike Weir (Angus) (SNP)]

I am very pleased to take part in the debate and I congratulate the hon. Member for Suffolk Coastal (Dr Coffey) on obtaining it. This is an important issue. I was interested in the concept of building a new Jerusalem in Suffolk Coastal.

I have raised the issue of fuel poverty many times in Parliament and the stock answer that I normally get from Ministers about off-grid gas is that they are taking action to ensure the extension of the gas grid. However, in reality, many of my constituents will never have access to the gas grid. It will never go to the glens of Angus, or to many other parts of rural Scotland, especially the islands, however much it is extended. There is no option for those constituents but to rely on liquefied petroleum gas, home fuel gas or some other alternative fuel. It has been estimated that some 4.3 million consumers—mostly, but importantly, not exclusively in rural areas—are not on the gas network. In some areas, although the gas network is technically available, the cost of connection to it is prohibitive and people cannot do it.

Consumers who are off the gas network face particular problems. A typical gas bill is now rising to around £1,000 a year, but it has been estimated that those who are off-grid face bills of about £1,700 a year. That is a significant difference. I refer hon. Members to the table in the report on fuel poverty produced just before the general election by the Select Committee on Energy and Climate Change. It relates only to England, but it shows the extent of the problem of cost between different fuel sources.

[Sir Robert Smith]

Does the hon. Gentleman think that the differential could become a more serious problem? Given the changing nature of the world market for natural gas, with shale gas and liquefied natural gas potentially bringing the price down in Europe, and if we ensure that the market works and those on the gas main get the benefit of a lower gas price feeding through, it will be all the more important to tackle the situation for people who do not have mains gas, because fuels such as oil and coal are not necessarily following the market down.

[Mr Weir]

The hon. Gentleman makes an excellent point, but there are other pressures, not least climate change, against the extension of the use of gas. The Government are only now considering the decarbonisation of the gas supply and generation from gas. Many issues arise in connection with that.

There are many excellent schemes to help with insulation and energy efficiency, and many homes in rural areas are hard to treat, which exacerbates the situation. The Select Committee report noted that Ministers in the previous Government said that they were very enthusiastic about innovative technologies to tackle the problem, but we expressed disappointment at the slow pace of implementation. I do not think that the Government have yet responded to that report, and it will be interesting to hear what the new Minister has to say.

As has been mentioned, people who are off the grid do not have the same access to the social tariffs as mains gas customers. I accept to some extent that they have access to electricity tariffs, but many off-grid consumers use home fuel oil or LPG as the main fuel for heating their homes and water, and that is likely to be the major part of their energy spending. They do not get the full benefit that others do for those things.

The Department’s annual report on fuel poverty statistics for 2009 states:

“The highest proportion of fuel poverty is amongst households without gas, where nearly 23 per cent of households are fuel poor, compared to around 17 per cent of both standard credit and pre-payment meter customers.”

In Scotland, the situation may be slightly worse because of geography and the lack of a grid in the highlands and islands. The latest Scottish house conditions survey states:

“Households that use electricity, oil or other fuel types (such as coal or peat) are around twice as likely as those who use gas to experience fuel poverty. Also, those who use... ‘other fuel types’ (not gas or electricity) are more than twice as likely to experience extreme fuel poverty than gas users”.

I understand that the number of off-grid customers in fuel poverty in Scotland is around 116,000—about 47% of all who are off-grid.

There are other problems than price. For example, in many areas customers have to make an up-front payment to get a supply—and many suppliers demand a minimum supply quantity. That can be a substantial sum, and those on low incomes cannot afford to pay up front. That causes another problem—people may be forced to go without as a result.

Those who use gas or electricity will have pipes and so on coming to them, but those who use some of the alternative fuels find in bad weather that it is difficult to get a supply. It is interesting to note that in the recent harsh weather the Department for Transport had to allow a derogation from the driving hours regulations to enable deliveries to be made in many parts of Scotland and northern England. However, this is a long-running issue.

At the conclusion of consideration in Committee of the Energy Act 2008, the Energy Minister, the former Member for Stafford, arranged a meeting of representatives of the various bodies concerned with the matter. There seemed to be a willingness to consider things, but frankly the problem lies in difficulties caused by the nature of the market, which has already been touched on. That market is very different from that for domestic gas and electricity, and we need to find ways around the problem because those consumers have fallen through the cracks.

The domestic electricity and gas market is dominated by the six big energy companies, and it is easy to get social tariffs from them. The market for other fuels is much more diffuse and difficult to regulate. However, in many areas I would question whether there is real competition, as there is effectively only one supplier. With recent amalgamations in Scotland, the situation is getting worse. We need radical solutions to tackle the problem.

The Minister may remember that, during consideration in Committee of the Energy Act 2010, I suggested how the matter might be dealt with. Section 10 of the Act allows the Secretary of State to introduce a reconciliation mechanism, such that if one company had more fuel-poor customers than the others, it would not be particularly badly hit. The burden would be spread among all companies and, as far as possible, each would meet an equitable amount of the cost of meeting their obligations under the social tariff.

That principle is a good one, and it could be extended to cover all fuel suppliers, allowing a general sharing of the cost of meeting the obligation to help the fuel poor. Because of the difficulties in that particular market, it would not be easy to introduce individual social tariffs, but a general reconciliation mechanism would bring suppliers within the ambit of the scheme. Allowing the overall cost to be shared between all the energy suppliers would enable us to make progress and extend the social tariff concept to that disadvantaged group.

That is a radical way to deal with the problem. Otherwise, it will always be filed under the “too difficult” heading and nothing will be done. Such a mechanism would ensure that the cost were shared more widely—as the benefits would be. It would ensure that all energy suppliers could operate equivalent social tariffs for all their customers, whether they used electricity, gas or other forms of fuel. In what the hon. Member for Westmorland and Lonsdale (Tim Farron) said are troubled times, Ministers might be attracted by the fact that it would have a revenue-neutral approach for the Treasury. It would not impose a greater burden on the taxpayer, but I can already hear the howls of protest from the major energy companies. However, it would deal with what has become a most intractable problem.

As was suggested by the hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith), the problem will get worse. Whether we like it or not, the price of fuel will continue to rise as we try to move to a low-carbon economy. We will effectively be subsidising various renewables and possibly—and unfortunately—nuclear power, which will have an impact on all electricity bills. I ask the Minister to consider the suggestion.

In another aside—I realise that this is strictly not within the Minister’s brief—the Select Committee report suggested that we should consider how the winter fuel payment is made. It is paid in the winter, the most expensive quarter. For many off-grid customers, winter is not the best time to be given that money. If they were to receive it earlier in the year, they could buy oil or other fuels in bulk when they were cheaper. That would allow them to stockpile for the winter. Staggering the payment for off-grid customers would allow them to take advantage of cheaper prices. Again, importantly, it would be revenue-neutral for the Treasury.

I am trying to be helpful to the Minister by not simply calling for more spending; I am calling for us to consider things in a new way and to look at more radical solutions. If we do not, we shall continue to file the problem under the heading “too difficult” and nothing will happen to help those people. That would be a wasted opportunity, and fuel poverty would continue to increase in rural areas throughout the United Kingdom.

[Several hon. Members]

rose—