Fuel Poverty

Nick Hurd Excerpts

Tuesday 21st March 2017 Commons Chamber

[The Minister for Climate Change and Industry (Mr Nick Hurd)]

I beg to move,

That this House has considered fuel poverty.

I am delighted to open the first annual debate on the important issue of fuel poverty. The fact remains that far too many of our fellow citizens and constituents struggle to afford to keep their homes at reasonable, comfortable temperatures. As I will argue, we are making progress, with some 780,000 fewer fuel-poor homes in 2014 than in 2010, but there is a lot more to do to meet the demanding targets we have rightly set ourselves, as a country, for 2030. It is quite right that the Government of the day are regularly held to account for what they are doing, and encouraging others to do, in the face of this stubborn and complex social challenge.

The debate is important because it is an opportunity for Government and Parliament to hear directly from MPs from across the nation about their experience and insights. In our day-to-day work, we, as MPs, come across the consequences of fuel poverty, not least its impact on the wellbeing and health of our constituents.

Before we get into the discussion, I want to set out the context. Over the past five years, Government have taken action to overhaul the framework for tackling fuel poverty in England. At long last, we have a long-term strategic framework for action on fuel poverty, which is rooted in the 2015 fuel poverty strategy and the long-term statutory target. The journey began in 2012 with the independent review of fuel poverty led by Professor Sir John Hills. The review found that fuel poverty is a distinct issue, separate from income poverty.

However, the debate clearly links to other areas of policy, such as the action the Government are taking to improve living standards by means of the national living wage and by increasing tax thresholds for the lowest-paid. Likewise, we could not have made clearer our determination to make sure that the energy market works for all. Ofgem’s introduction of a prepayment meter tariff cap is a welcome first step. As the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Hereford and South Herefordshire (Jesse Norman), indicated last week, a consumer Green Paper will be out shortly.

Today, I want to focus on the policy framework that is specific to fuel poverty. The journey to this point started with Professor Hills’s review, which reflected on previous activity and measures to tackle fuel poverty. The review highlighted the fact that although the 10% indicator that had, until that point, been used to measure fuel poverty was well-meaning, it was fundamentally flawed. In 2013, the Government confirmed that the findings of the Hills review of fuel poverty would be adopted, including the low income, high costs indicator. That measure finds a household to be living in fuel poverty if its income is below the poverty line and it has higher-than-typical energy costs.

In 2014 the Government introduced the fuel poverty target for England. The target is to ensure that, so far as is reasonably practicable, fuel-poor households are improved to a band C energy efficiency rating by 2030. In 2015 we saw the publication of “Cutting the cost of keeping warm: a fuel poverty strategy for England”, which set out the principles that the Government would apply and the approaches to be taken when making progress towards the fuel poverty target. The strategy set out the importance of effective levels of public accountability and the role that the Committee on Fuel Poverty, a non-departmental public body formerly known as the Fuel Poverty Advisory Group, will play in that. I welcome the insight and challenge that the committee brings as we look to tackle the serious and long-term societal issue of fuel poverty.

Recognising that 2030 is some way off, the strategy includes interim milestones to guide activity in the shorter term, helping to focus our attention on making progress as we move forward. The milestones are to ensure, so far as is reasonably practicable, that fuel-poor households are improved to a band E rating by 2020 and to a band D rating by 2025. That is the framework.

The fuel poverty target is certainly ambitious, and I have not heard anyone argue to the contrary. The band C target is set at a level that only 7% of fuel-poor households currently enjoy. We are aiming high, and it is right for us to do so. As the Committee on Climate Change reiterated in its report last week, the target is extremely challenging. However, we must be clear that meeting that challenge may provide huge benefits for households that need support. Improving those E, F or G-rated homes to band D can reduce energy costs by an average of £400. I am pleased to be able to say that although the challenge is significant, progress is being made.

Looking to our 2020 milestone, the percentage of fuel-poor households living in homes rated band E or higher has already improved from 79% in 2010 to 88% in 2014—the latest year for which statistics are available. Looking at the 2025 milestone, we see that the percentage of homes rated band D or higher has improved from 29% in 2010 to 59% in 2014.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

rose—

[Lady Hermon (North Down) (Ind)]

rose—

[Mr Hurd]

I would be delighted to give way to the hon. Lady.

[Lady Hermon]

There is a competition going on here over who will intervene. It is kind of the Minister to give way. I am sure he is aware that fuel poverty is particularly acute in Northern Ireland. Many households are still dependent on heating oil, the cost of which is increasing. Will the Minister pledge that if, as I optimistically forecast, a devolved Administration is restored in Northern Ireland next week, he will liaise very closely indeed with his counterpart in Northern Ireland to develop a strategy that benefits all households across the United Kingdom—not just those in England—rather than leaving Northern Ireland to fend for itself? That is an optimistic forecast, but we have to live in hope.

[Mr Hurd]

We do indeed. The hon. Lady is entirely right; the fuel poverty statistics for Northern Ireland are particularly striking and stubbornly high. As she indicates, she hopes for better times. Although this is, as she well knows, a devolved matter, the Government are ready and happy to co-operate with the Administration when it is formed.

[Jonathan Edwards]

What consideration have the Government given to developments in currency levels? We live in an age in which sterling is devaluing. The harder the Brexit, the more sterling will have to devalue. The US dollar, on the other hand, is likely to strengthen as a result of Trump’s expansionary fiscal policy, and the Fed has increased interest rates. Oil is traded in dollars, and the gas price is pegged to oil, so those two developments inevitably mean that energy prices in the UK will increase significantly. What are the Government going to do to mitigate that?

[Mr Hurd]

As I said earlier, I do not think that anyone can be under any illusions; the Government are very serious in their intention to make the energy market work more effectively for all. We are all clear that it does not work effectively for all, and the steps that the Government will take will be set out in a consumer Green Paper very shortly.

I was talking about the Government’s performance against the 2025 milestone that we have set, and I stated that the percentage of homes rated band D or higher has improved from 29% in 2010 to 59% in 2014. That represents approximately 780,000 fewer fuel-poor homes rated E, F or G in 2014 compared with the position in 2010. I hope that the House will welcome that. In terms of the trajectory of improvement, there were 174,000 fewer E, F or G-rated homes in 2014 than there were in 2013, which shows that existing policies are making a difference. As an example, since the scheme started in 2013, approximately 700,000 measures have been installed in 500,000 low-income households as a result of the energy company obligation. That is part of a total of 1.6 million homes that have been improved under ECO.

[Alberto Costa (South Leicestershire) (Con)]

My constituents in South Leicestershire want to know that the Government are doing everything they can to ensure that the energy market works for all of us, whether we are in South Leicestershire or across the United Kingdom. Does my hon. Friend share my view that energy companies should be expected to treat all their customers fairly, not just those who decide to switch?

[Mr Hurd]

I agree with my hon. Friend. We all know from our constituents about the stress that is caused by anxiety about fuel. I represent a relatively affluent constituency in London, but the statistics show that 8% of my constituents qualify as fuel-poor. This issue affects constituencies across the country. I certainly give my hon. Friend that assurance, and I hope that he will be very satisfied by the material in the consumer Green Paper that will be published imminently.

Recognising that improving household energy efficiency is the most sustainable long-term solution to tackling fuel poverty, we are not complacent, and we are going further to take action. Today, the Electricity and Gas (Energy Company Obligation) (Amendment) Order is being debated in the House of Lords. It will extend the scheme from 1 April 2017 to 30 September 2018. Should the scheme proceed as planned, we expect more than 500,000 homes to be improved over the coming 18 months. The order will also reform the energy company obligation so that 70% of the support available under it will be directed at low-income homes. That represents a real-terms increase from £310 million to £450 million per year, which will be invested in improving the energy efficiency of homes that most need support.

[Caroline Lucas (Brighton, Pavilion) (Green)]

I have no doubt about the Minister’s personal commitment to this agenda, but I wonder why the Government will not make energy efficiency into a national infrastructure priority. Why is energy efficiency not part of the national infrastructure assessment? That would be the way to scale up and meet the ambition he claims the Government have.

[Mr Hurd]

It is not a claim about ambition; the ambition is set out in long-term statutory targets. The figures I have given show that these are substantial investments. As I will come on to clarify, there is some £770 million of support for low-income and vulnerable consumers in the financial year 2017-18, so there is no shortage of ambition or of investment. The hon. Lady and I share a strong belief in the importance of energy efficiency. I am trying to stress that what we are doing will increasingly focus on the most vulnerable, and, with public finances constrained, that must be the right priority.

[James Heappey (Wells) (Con)]

May I welcome the efforts that the Government have made and their clear success in improving energy efficiency? My hon. Friend is so right to highlight the fact that making the obvious saving of getting people to spend less on energy through using less is much more important than the amount we give people to subsidise their energy costs or any intervention we make in the market to cap energy costs.

[Mr Hurd]

I could not agree more with my hon. Friend. As I have said, previously, he is one of the most thoughtful Members of the House on this subject. He will know that we are on the cusp of something very interesting in our relationship with energy and our ability to manage it more intelligently. Such an opportunity must be just as much available to well-to-do people as it is to those struggling with their bills, and that must be a priority for us. That is partly why I stressed the point that the reforms we are making to the existing policy instruments will increasingly focus on the most vulnerable and the poorest in our communities.

However important it is to improve the energy efficiency of people’s homes, it will inevitably take time, and Government recognise that people also need immediate support with energy bills. We therefore have in place the second pillar of the strategy, the warm home discount. This scheme now provides over 2 million low-income and vulnerable households with a £140 rebate off their energy bill each winter, when temperatures are lowest and bills are highest.

Together the schemes mean that, as I have said, there will be at least £770 million of support for low-income and vulnerable consumers during the financial year 2017-18. This is a significant level of support for households across the country. Other policies will also make a contribution, such as the prepayment safeguard tariff, which I hope the House welcomes, and the roll-out of smart meters. Smart meters are regularly debated in this place, and the evidence is already showing the consumer popularity of this technology and its ability to help people save money and manage their energy use in a smarter way.

Making progress cannot be just about subsidy; regulation will play an important role as we take action to ensure that tenants can live in a home that keeps them comfortably warm. The private rented sector regulations will target the least efficient F and G-rated properties from 2018 by requiring landlords to improve those properties to at least a band E, unless a valid exemption applies. The Department is currently considering options for the implementation of the regulations, with a view to ensuring that they can be implemented effectively by April 2018.

Of course, there is more work to be done. One key area will be to improve targeting on the households most in need. The Digital Economy Bill, which is currently going through Parliament, will be important in that regard, as it will make available better data on householders and properties. We believe that that will in turn reduce the costs that energy suppliers face in identifying the households most in need, and allow more measures to be installed for the same cost.

The actions I have described are all led by the Government. However, fuel poverty is a problem for all of society, and the Government cannot tackle it alone. That is why partnership is a key theme of the fuel poverty strategy. It is important for the Government to play a leadership role, but also to work in partnership with local government, businesses and the charitable sector. Only by making the most of the varied skills and resources of each of those partners will we, collaboratively, be able to tackle fuel poverty.

[Caroline Lucas]

According to the Government’s own statistics, the EU ecodesign directive has helped households, small businesses and industry to save thousands on the cost of energy. Indeed, the average annual saving from ecodesign policies for homes is expected to be £153 by 2020, which is 20% of the average annual energy bill. Will the Minister assure us that such rules on energy efficiency will continue to be implemented and updated both during and after our renegotiation with the EU?

[Mr Hurd]

I certainly agree with the hon. Lady about the importance of good design. In fact, some of the most important progress we have made as a country on energy efficiency has been through building regulations and standards for the quality of our homes and offices. The Government remain ambitious in that respect, and she will know how important that is. She will know that I obviously cannot at this stage clarify our intentions post-Brexit, because that is tied up in a series of wider issues, but I hope I can reassure her that we understand completely the importance of continued ambition in this area. We are very clear that there remains considerable scope for harnessing creativity and innovation in using design to improve standards, which will in turn reduce costs.

[Lady Hermon]

The Minister is commenting on the need to work in partnership, and I absolutely agree. May I just point out that the warm home discount scheme does not apply in Northern Ireland, which makes fuel poverty there even worse? In partnership with the incoming Administration in Northern Ireland, will the Minister pledge to prioritise the need to introduce the warm home discount scheme in Northern Ireland, even if that means that the Government in Westminster have to provide additional funding to the Northern Ireland Executive?

[Mr Hurd]

I listened very carefully to the hon. Lady, but the bottom line is that this is a devolved matter. I am more than happy to discuss the fuel poverty strategy with counterparts in Northern Ireland, but it is categorically a devolved matter.

I was talking about partnerships, and I am glad that the House has filled up a little—when we started it was a little bare—because I am looking forward to hearing from hon. Members about their experience of what is happening with partnerships in their constituencies, including what is and is not working, and more widely about what is going on in their constituencies to help bring about change to support households that need support.

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

The Minister is talking about partnership at the local level. A huge variety of organisations in Greenwich and Woolwich are working on this very issue, not least South East London Community Energy. Is the Department giving any thought to how such organisations can link up with local authorities to avoid the fragmentation that can exist at the local level, and ensure they work in partnership to target people who need their help the most?

[Mr Hurd]

I am very sincere in what I say about partnerships—when I was the Minister for Civil Society, it was absolutely core to our approach—so we are very keen to get good information about what is working and what is not working with partnerships, because they are easy to talk about, but they are actually quite hard to implement in practice. We are doing some work with local authorities, but the hon. Gentleman has made an important point about the sharing of knowledge and information so that we can get a better understanding of what works. Some of this stuff is quite complex in relation to breaking down the social barriers to people accepting help when it is offered.

[James Heappey]

The hon. Member for Brighton, Pavilion (Caroline Lucas) quite rightly said that we must be ambitious in the way we design buildings, and I could not agree more, although I am not sure that this is really connected to Brexit. The fact is that it is not merely the affordability of purchasing or renting a building that is so important, but the affordability of the operation of that building thereafter. By having good design principles for energy efficiency and insulation in its design process, we can make a building more affordable to live or work in, rather than simply making it more affordable to buy in the first place.

On co-operation and partnerships, what are the Minister’s plans for using the data owned by the Data Communications Company from smart meters not only to nudge people to switch tariffs, but to make the data available to other organisations that could advise people on emerging technologies, such as demand management, so that they can load shift to minimise their bills in that way?

--- Later in debate ---

[Mr Hurd]

My hon. Friend makes important points not only about the importance of good design and the opportunities attached to it, but about the potential for data to make us more efficient in targeting support and to help us develop the smarter system that he talks about so eloquently. He will know that there are tremendous sensitivities around the sharing of data, towards which the Government have to take an extremely responsible attitude, but he is right about the opportunities. What he talks about is under active consideration, as he knows.

I ought to bring my remarks to a close so that colleagues can contribute to the debate, but I want to bring us back to why we are here today. Fuel poverty affects households in all our constituencies and it is a problem that we should work together to solve collectively. The fuel poverty strategy made it clear that the Government are committed to ensuring that there is sufficient parliamentary scrutiny of fuel poverty through the means of this annual debate, so I welcome the views of the hon. Members who are in the Chamber.

As I have suggested in my opening remarks, it is clear that we have made progress, not least in setting up, after too long, the much-needed strategic framework and statutory targets that will drive progress and ambition through successive Governments. The numbers show that since 2010 this Government and the previous Government have made progress, but the social challenge we face is very stubborn indeed. I reassure the House that the Government remain extremely committed not just to delivering on our manifesto commitment, but to keeping the country on track to meeting the 2030 target, however challenging.