Sarah Newton
Main Page: Sarah Newton (Conservative - Truro and Falmouth)
Chris Huhne
The sort of people the right hon. Lady is talking about are the sort of people we are particularly targeting with our warm homes discount. I heard some of the interventions from Labour Members with mounting surprise, because one of the things that this Government have done, of which I am very proud, is to concentrate help on those most in need—those most vulnerable to rising fuel prices. Through the warm homes discount we have altered the previously voluntary arrangement. I say to Labour Members that their Government operated a purely voluntary arrangement with the big six, so cosy was the relationship between the big six and the right hon. Lady’s boss. It was a voluntary, grace and favour arrangement, whereby support was provided for the most vulnerable. We did not have any truck with that. We decided that we were going to legislate on this, which is exactly what we did. As a result, we will have a two thirds increase in the support made available for these social discounts compared with what was available under the previous Labour Government. So on the matter of fuel poverty, we have been doing exactly the right thing, which is to concentrate support where it is most needed and to make sure that that support is available.
Sarah Newton (Truro and Falmouth) (Con)
The Secretary of State is making an excellent point about targeting resources where they are necessary. Will he congratulate Cornwall council and other councils that are taking exactly that approach and working in partnership with the voluntary sector to provide free insulation and other ways of helping people in fuel poverty to stay warm this winter?
Chris Huhne
I certainly will congratulate the hon. Lady’s local council and every council, of all parties, on that work. I hope that we can maintain a cross-party and consensual view on this. Many councils, some Liberal Democrat-led, some Conservative-led and some Labour-led, have been pioneers in this area, and I want to see them do more. Leading on that is really important for our constituents, and it is something to which I pay great tribute.
People can save money on bills, but they can also save by using less energy in the first place. Far too many UK homes are not properly insulated. Loft and cavity wall insulation can save more than £100—we are talking about very simple changes. The big six energy suppliers, which supply 99% of UK households, all offer free or cut-price insulation, yet many householders still have not taken up the offer. So from December, 4 million of the most vulnerable energy customers will receive letters to tell them they are eligible for free or heavily discounted insulation to their loft or cavity walls. Many of these people will not necessarily save energy because they are currently too cold and keep their bills down. By having that insulation, they will be able to increase their comfort, and that is a very good thing to get through an extremely tough winter. The right hon. Lady is absolutely right to say that one of the scandals in this country, which underpinned the work of the Hills fuel poverty review, is that 25,000 people die each winter because of the cold. We have to deal with that. As has been pointed out, it is a multiple of the number of people killed on the roads and it is a scandal that across this House—I am not going to cast further aspersions on the record of the previous Government—we have not tackled this issue with more vigour until now.
These letters will direct people to a dedicated independent helpline, as part of our programme to ensure an extra 3.5 million homes are properly insulated by the end of 2012. Next year we will also be rolling out the green deal to help even more households save money through energy efficiency.
We must also make sure that help is getting to those who need it most—the most vulnerable households. As I pointed out, discounts have risen very sharply under the coalition, and the extra support will be available this winter. We are requiring energy companies to provide help to about 2 million low-income households through the warm home discount.That is a discount of £120 for 600,000 of the poorest pensioners—substantially more than they have been getting until now. We are spending £110 million on heating and insulation for low-income and vulnerable households through Warm Front.
Guy Opperman
The hon. Gentleman obviously did not hear what the ministerial team said earlier, which addressed that exact point.
The OFT report is a market study, but I seek a formal investigation where there is a reasonable suspicion that the law has been breached in relation to the Consumer Protection from Unfair Trading Regulations 2008. I suggest that that applies to pricing practices, particularly when there is a varying price after a customer has placed an order. In my constituency, there is ample evidence that that has happened.
Sarah Newton
I apologise that I was not here for the first part of my hon. Friend’s speech, but an urgent matter called me out of the Chamber. The experience that he so vividly describes in his constituency is echoed in Cornwall and across the south-west. I, too, welcome yesterday’s OFT report. It says specifically that there is an opportunity for us to go back to the OFT and make the case for a referral to the Competition Commission to look further at the issue of pricing, which he has raised. Will he join me in suggesting that Members whose constituents are affected by this should join together to make representations to the OFT for such a referral?
Guy Opperman
I totally endorse that point, particularly in relation to pricing practices and the considerably enhanced prices charged by many heating oil suppliers. I have done quite a lot of research into this matter. In Hexham constituency the price of oil rose from 41p to 71p per litre between September and December last year. In that time, the wholesale price of oil went up only by about 10%.
In my constituency there are roughly 16 to 18 heating oil providers. However, 11 or 12 of those are controlled by one company. DCC Energy, an Irish-based company, has bought up many of the individual suppliers throughout the country. It operates heavily in west Wales and has been prosecuted there in relation to a trading standards case. It also operates to a considerable extent in Scotland. In Northumberland and throughout the north-east it has a substantial presence. I accept that there is competition in the sense that there are about five genuinely independent companies providing heating oil. However, the other dozen or so are providing heating oil from one global source. There is nothing wrong with that, but when one adds up the figures, it means that one company has 69% of the providers and the multitude of other companies represent 31% of the providers. That should be investigated by the OFT, and it should result in a competition inquiry. If that case does not give the suspicion of price fixing, I do not know what does.
Guy Opperman
The Minister of State, Department of Energy and Climate Change, my hon. Friend the Member for Wealden (Charles Hendry) is not the only one who has been carrying out research on websites. Let me cite the interesting efforts to prove the hon. Lady’s exact point undertaken by the hon. Member for Brecon and Radnorshire (Roger Williams), who ordered more than 2,000 litres of heating oil at a price of 40p a litre—again, from DCC—and received only some of the delivery, at the outset, at that price. Later that December, when the remainder was delivered, the price was 65p per litre—an increase of 25p per litre. I applaud his efforts in this House to publicise that, and previous efforts to deal with the problem, as well as the work of The Sunday Times.
I conclude by saying that I endorse much of the motion.
Sarah Newton
One of the next steps identified by the OFT was for the Government to take, because it acknowledged that people who use heating oil or LPG—or microgeneration, which the report also covers—cannot get dual fuel deals because they are off the grid, and furthermore, they are not eligible for the excellent new £125 warm home discount. This group of people, even if they are in absolute fuel poverty, cannot access some of the very good measures that the Government are introducing. May we ask the Government to consider that specific group of people, and see what could be done to help them?
Guy Opperman
I am most grateful for my hon. Friend’s intervention, and I endorse her point.
It is incumbent on us all to go back to our constituencies—not, as was once said, to prepare for government, but to prepare our constituents for the winter.
John Healey
I do not know whether there is anything peculiar about the contractors and suppliers in St Ives, but that is not the general experience or track record of the scheme throughout the country, and it is not the experience of most hon. Members on both sides of the House.
John Healey
I will not give way for the moment.
The third way in which the Government are failing is that they are letting consumers down by allowing the huge hike in energy costs and bills, which are up 20% in the past year, as we have heard. In six months, there has been an increase of £175. The Secretary of State, who knows the cost of speeding, is not in the Chamber at the moment, but for his benefit, £175 is the price of about three speeding tickets. Every time a family in this country switches on the heating or the lights, the Government are letting them down—and those with the lowest incomes and the poorest households are being let down the most.
Mr Tomes, who could afford £10 a week on his gas, found that he was paying £3 a week just for the gas debt charge, which was taken directly through the meter. The average cost for using the gas each week was £2.30, but the standing charge was £3.31. In other words, he was paying more for his standing charge than for the gas that he used. Why is the system penalising the poorest and benefiting the better-off? Why is it failing those whose consumer power is weakest while reinforcing the market position and choices of those who have money and confidence and can get online? In particular, why is it penalising low users of energy while rewarding higher users? Why are low users, such as Mr Tomes, paying more and losing out more?
The answer is that all the major energy companies have a two-charge system. They justify it by saying that one charge covers the fixed costs of supply while the other covers the variable costs. That means that every major energy company either has a standing charge plus a unit rate or a higher-tier tariff up to a certain threshold and then a lower-tier second tariff beyond that. As a result, the less energy used, the greater the part of the bill that goes to the standing charge, fixed part or higher-tariff component of the costs, which means that low-use households pay more for each unit of energy that they use. Which? has calculated that low-use households pay 23% more for their gas and 15% more for their electricity, and of course low-use households generally tend to be low-income households as well. The system is therefore socially and environmentally regressive. Its reform is well overdue, and it is time for the Government and the regulator to act.
The action needed is clear: we should require energy suppliers to recover a far greater proportion of their costs from the unit rate of energy. To make energy bills clearer and fairer, I propose to the Minister a five-point plan—[Hon. Members: “Hooray!”] They are in vogue at the moment. First, we should abolish variable tariffs for the same energy supply. Secondly, we should require all tariffs to have the same format—a daily standing charge plus a clear cost per unit, including all the discounts. Thirdly, we should restrict standing charges only to cover the costs of the gas and electricity network. Fourthly, we should cover all other costs, including the costs of the Government’s climate change or social policies, through the variable charge, not on a per-customer basis, as is currently the case. Fifthly, to make these changes, we should use Ofgem’s current powers to regulate standing charges, under licensed conditions, plus the energy company obligation.
Those changes would make the system clearer, making it easier for people to compare suppliers’ prices at a glance, and also fairer, so that low-income, low-use households would not have to pay significantly higher prices for the energy that they need. Those changes would be right in practice and right in principle, because climate change and social equity policies are best and most effective when they are more specific and selective in their application rather than having a general application. The costs of climate change should bite more strongly on heavy users, while the cost of supporting poor households should be borne more heavily by higher-using households that earn higher incomes.
Ultimately, people do not have the choice not to consume energy. As a service in a full-scale market, energy is a special case. That places a special responsibility on the Government to do more to protect consumers, who must have the energy that we all depend on.
James Morris
The right hon. Gentleman makes a good point, but the Government had to make some decisions about spending and they matched what the previous Government had proposed for the winter fuel allowance. I think that was a fair and reasonable decision.
Sarah Newton
On that point, many more pensioners will benefit as a result of the warm home payment. Is it not a huge problem for pensioner households that many elderly people do not really understand all the benefits to which they are entitled. Year after year, Age UK runs campaigns to demonstrate how many millions of people are not collecting all the benefits to which they are entitled. If they did, their household incomes would improve and they would have more money. It is important that in talking specifically about winter benefits, we should remind our constituents to make sure that they claim all their benefits. They should go down to their citizens advice bureau, Age UK or the local Age Concern and get a benefit check so that they receive all the money to which they are entitled.
James Morris
My hon. Friend makes an important point about the collection of benefits available. There is an issue about pensioners and other groups not knowing which benefits are available.
The Government are taking some short-term measures, but it is important to note that they need to take long-term measures because this problem will not be solved by a single silver bullet. The Government are going in the right direction. This debate has provided a useful airing of views across the House about how we tackle this important problem.