Pensioners and Winter Fuel Payments

Sarah Newton Excerpts

Tuesday 22nd November 2011 Commons Chamber

[Mr Dodds]

Let me press ahead and make a little progress, and I will take more interventions in a short while.

I want to refer to the situation in Northern Ireland. Last winter, we had the coldest December in 100 years. In 2009-10, there were almost 1,000 excess winter deaths, 80% of which were of people aged 65 or over. On average, we get 910 such deaths per year, and that figure compares with 590 in 2001-02, so there has been a massive increase over that period. We have to understand that in addition to the stark figures on mortalities, for every death from cold there are eight hospital admissions and more than 100 visits to general practitioners and health centres. This is suffering on a vast scale.

The recent interim report from the Government’s independent review of fuel poverty, conducted by John Hills, states:

“Living in cold homes has a series of effects on illness and mental health.”

I will not go into all the repercussions of cold weather and of living in cold and damp housing on people’s mental and physical health. The interim report outlines those very clearly.

The winter fuel payment was introduced in January 1998 as a tax-free annual payment. Its purpose was and is to alleviate fuel poverty by giving specific help to encourage older people to spend more on heating during the winter. What is happening this year? For the past three years, the winter fuel payment has been £250 for those aged 60 and over, and £400 for those aged 80 and over. Despite spiralling fuel prices—we had a debate only a couple of weeks ago in this House on the crisis in the energy sector—and despite the extremely cold recent winters and the forecasts of a very cold winter to come, in 2011-12 the payment for pensioners aged 60 and over has been reduced by 20% to £200, and the payment for those aged 80 and over has been cut by a quarter to £300. That does not affect just a small group of people; it affects more than 9 million households and about 13 million people throughout the United Kingdom. Some 12.7 million of those people are in Great Britain and some 317,000 are in Northern Ireland.

As a result of the changes, the expenditure on winter fuel payments will fall from approximately £2.75 billion in 2010-11 to some £2.136 billion in 2011-12. That is a substantial monetary saving for the Treasury, but at what cost? That is the question that many people are asking. People in charities or third sector organisations who deal with older people’s issues are making it clear that they fear that this cut, which directly hits the pockets and incomes of pensioner households throughout the United Kingdom, will result in more illness, more disease and more deaths.

[Sarah Newton (Truro and Falmouth) (Con)]

The right hon. Gentleman is making a very moving case. I am sure that there is not anybody in this Parliament who is not concerned about excess winter deaths and this nation’s terrible legacy of not tackling fuel poverty among the poorest and most vulnerable. In his analysis for this debate, has he looked at the wide range of other measures that the Government have put in place to tackle the issue this winter and to make more lasting, wholesale changes in winters to come?

[Mr Dodds]

Interventions have an uncanny knack of happening at the precise moment when one is coming on to deal with the very issue that they raise. I will deal with the issue that the hon. Lady has raised. Of course there are other measures aimed at dealing with fuel poverty and coldness-related illness among elderly people. There are the cold weather payments, to which I referred, which some may argue are more specifically targeted. I will come on to that in a moment.

There is also the warm home discount. Recently, the Northern Ireland Assembly unanimously passed an appeal to the Government to think again on this issue, and when the Minister replied he referred to, among other things, the warm home discount scheme. However, the scheme applies only in Great Britain, because the legislation did not apply to Northern Ireland. Half a million pensioners benefit from that scheme in Great Britain, but pensioners in Northern Ireland do not. I am sure that the Minister will address that point.

There are also other measures. On the practical health side, there is the flu vaccination scheme. Northern Ireland has its own warm homes scheme, which I am glad to say was introduced under devolution by a Democratic Unionist party Minister. It has helped 80,000 households and has received widespread support in Northern Ireland. Northern Ireland also has a boiler replacement scheme and the social protection fund, which the Executive have brought forward. I understand that discussions are under way to address the specific issue of fuel poverty and the elderly in Northern Ireland. So yes, there are a range of measures, and we need to keep investing in such things as energy efficiency and home insulation to prevent fuel poverty in the long term.

--- Later in debate ---

[Steve Webb]

Obviously, the VAT increase does not affect fuel prices directly as they are on a reduced rate, but the hon. Gentleman is right that competition in the energy sector is a key concern of the Government, whether that is in gas, electricity or oil. Our colleagues at the Department of Energy and Climate Change are in regular and close contact with the competition authorities, but one thing the Government are doing is ensuring that people are aware of their ability to switch and get much better tariffs—that is particularly the case with electricity and gas. Clearly, we can do things for the long term, such as sort out the housing stock, but we can also do things for the short term, such as ensure that people get the best price available. There is huge potential to do a lot more that does not necessarily involve hundreds of millions of pounds of Government spending but would benefit people substantially.

[Sarah Newton]

Does my hon. Friend agree that the recently commissioned and reported Office of Fair Trading document that specifically, at the Minister’s request, investigated off-grid energy competition was able to recommend a series of actions to improve the market for heating oil this winter, avoiding the terrible problems we experienced last winter? The OFT has now gone on to look at liquefied petroleum gas. The Ministers in DECC are doing everything they can to ensure that the off-grid energy markets are fully functioning.

[Steve Webb]

My hon. Friend is quite right. In Northern Ireland, dependence on heating oil is substantially greater than it is on the mainland and even in a semi-rural constituency such as my own, oil prices, oil supply and so on are big issues. I am grateful for her kind words about our ministerial colleagues as these are important matters.

Let me go back to the issue of fuel poverty. Clearly, it has a number of components and one is income. We focused on a change from last year’s rate to this year’s of less than £1 a week in the winter fuel payment and that is what we are talking about today. Instead, we have taken the basic state pension, which for 30 years has been declining relative to wages, and put a triple lock on it so that every year from now on, pensioners in Great Britain and Northern Ireland will see their pensions rise by the highest number of inflation measured by the consumer prices index, earnings and 2.5%. We are in a strange period in which inflation is greater than earnings, but in most years, earnings have grown faster. That will mean that as we return to more normal times, pensioners will enjoy above inflation standard of living increases year after year.

The cost of that commitment—I hope that the Chancellor is not listening at this point—will add a total of £45 billion to the amount we spend on pensions by the mid-2020s, which gives a sense of the magnitude of what we have announced. That is rather invisible at the moment, because prices are higher than earnings. When I signed the legislation into law last year, I expected bells to peal and for there to be confetti on the floor and so on. That has not quite happened yet, because people have not seen the impact. In the longer term, it will give a sustained boost to the real incomes of pensioners in Northern Ireland and Great Britain.

--- Later in debate ---

[Jackie Doyle-Price]

I am pleased that the right hon. Gentleman agrees with the point about the quality of housing stock. There is a lot of Government support for people to invest in such improvements. The difficult is in take-up. He focuses on the winter fuel payment and identifies it as a cut. Instead of having a broad-brush, one-off payment that is available to everyone, we must tackle the root causes of fuel poverty and identify the households that will benefit the most from such help.

[Sarah Newton]

Does my hon. Friend agree that many of the solutions can be found locally in our communities? For example, Community Energy Plus is working with Cornwall council to use the Government incentives to tackle fuel poverty by offering free insulation to vulnerable households living in fuel poverty in Cornwall right now, this winter. The critical role that we can play as MPs is to work in partnership with organisations in our communities to ensure that people know about and take up the good schemes that are available.

[Jackie Doyle-Price]

My hon. Friend makes a constructive point, which goes to the heart of the point that the Minister made earlier about the lack of take-up, particularly of means-tested benefits. That happens for a host of reasons, including that they are too difficult to take up, that people are too proud, and the lack of awareness among pensioners about the support that they can get to improve the quality of their housing. That is because many of the schemes are nationally designed and rolled out, and the information is not readily available. We can do a lot to push people in the right direction so that they can find help, such as through the project that my hon. Friend mentioned. All Members can play a constructive, championing role, because we are all community leaders. We need to pay our part in pointing pensioners towards the sources of help that they can access to tackle this growing problem.

--- Later in debate ---

[Jackie Doyle-Price]

It is always a challenge for the Government and the public sector to deliver such schemes in a user-friendly way that makes them available to people and does not dissuade them. We need to continue our principle of using all organisations in society and making them approachable. As my hon. Friend the Member for Truro and Falmouth (Sarah Newton) mentioned, we need to use voluntary groups and the other groups that are closest to pensioners, to encourage them to engage. We can see elements of that starting already in welfare reform. The Government are looking to local authorities to be stronger delivery partners, because they tend to be the organisations with which pensioners have the closest day-to-day contact. We need to think carefully about making support people-friendly and easy to access.

I wish to set the winter fuel payment against the broader context of what the Government are doing for pensioners. They have confirmed that they will be keeping other benefits, such as free TV licences, prescriptions and eye tests, and they have set aside £650 million to help local authorities freeze council tax. We should all recognise that council tax has been a real problem and has contributed to pensioners’ financial difficulties. As we know, if local authorities can limit their budget increases to 2.5%, the Government will meet the cost of the freeze. In recent years the average increase in council tax has been quite significant, and it has been a pernicious bill for many households.

I particularly wish to congratulate the Government on restoring the earnings link to pensions and introducing the triple lock to guarantee an increase in the basic state pension of the highest of earnings, prices or 2.5%. That measure will go further than any other in addressing pensioner poverty. It will give pensioners a firm financial foundation from the state and guarantee a more generous state pension. That is the essential goal of what we are trying to do—we want to ensure that everyone is guaranteed an income that will prevent them from being in poverty.

[Sarah Newton]

I completely agree with my hon. Friend’s point about improvements and annual increases in the state pension. Does she agree that some of our reforms to the NHS will also have a hugely beneficial effect on older people? Integrating social care with the NHS and giving the health and wellbeing boards a key health outcome of reducing fuel poverty represents a more holistic approach. We are considering pensioners, their families and their lifestyle in the round, and we are supporting them.

[Jackie Doyle-Price]

The broader point is that many of the issues that face us in later life have been parked for too long. I congratulate the Government on gripping them, and in the ongoing debate we will have to ensure that we have good provision for people in their later years. I believe that will occupy the House’s attention for quite some time, because we cannot afford to get it wrong. We all need to get behind the Government and help to tackle the matter.