Fuel Poverty and Energy Efficiency

Steve McCabe Excerpts

Wednesday 16th January 2013 Commons Chamber

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

As I listen to the debate, I wonder how many people in Selly Oak are sitting shivering tonight, frightened to turn on their heating, or worrying that what they are buying is disappearing owing to the draughts and lack of insulation. In February last year, in response to a survey that I carried out among my constituents, 63% said that they were using less heating in their homes as a result of energy price rises, while 43% said that they were cutting back on other items to afford their energy bills. Consumer Focus points out that the number of households in debt to their electricity supplier has risen by more than 25%—1 million households—yet the energy companies are on target to see their profit margins rise by 14%.

Let me ask a question that others have asked. Why, at a time when the number of people struggling with fuel costs is on the increase, have the Government spent only half the budget of the Warm Front scheme and turned down thousands of people? Nearly 13,500 families have been rejected. Given all the problems with the green deal, what would be wrong with extending Warm Front for another year, or at least until after the total budget has been spent? That would not only help those most in need, but help the insulation industry, which is experiencing job losses because funding is being withdrawn prematurely. Nearly 200 jobs have gone in the west midlands, and about 100 people have been given notice of redundancy.

[Gregory Barker]

The hon. Gentleman may not have picked up the Secretary of State’s words earlier. We can confirm today that the whole Warm Front budget will be spent on measures for the fuel-poor. We will be introducing Warm Front measures, but they will not be introduced exclusively through Warm Front. The balance—the underspend—will be spent on exactly the same people, but through a local authority competition that will deliver the measures more quickly and effectively.

[Steve McCabe]

I did indeed hear the Secretary of State’s words. What I understood quite clearly from them was that he is filching money from the Warm Front scheme to pay for a scheme that he announced some time ago, and that he did not tell us at the time that he was robbing Warm Front. It is what, in the trade, is normally called sleight of hand.

Ongoing concern about green deal finance means that it is unlikely to get going until around autumn this year, if ever. The Government’s own impact assessment shows that their plans will cause the loft and cavity wall insulation industry to fall off a cliff. Why does the Minister not act now? He does not have to say that it was the idea of my right hon. Friend the Member for Don Valley (Caroline Flint); he could announce an interim plan in a couple of weeks, and take all the credit himself. That would be OK: we would not tell anyone.

I want to be fair to the Government, so I will assume that they did not set out to rob people as they are doing through so many of their other policies. I think that on this occasion their problem is that they simply do not know what they are doing. As a flagship policy, the green deal is costly and complex. The scandal of punitive up-front assessment fees needs to be tackled as a matter of urgency before the whole idea falls into disrepute, and the Government need to look again at the interest rates associated with the project. At 7.5%, it will be far cheaper for those who have the cash to pay up front for improvements than to use the green deal, and, of course, those who cannot raise the cash will simply shiver or find themselves exploited by a Government scheme that is beginning to look like it was modelled on payday loans. Then there is the helpful penalty charge if people want to pay it off early, which means they will be rinsed for another few thousand pounds. I am afraid that any objective analysis of this programme suggests it will fail, and the Minister really ought to act now before it is too late.

There is speculation about the abolition of Ofgem. What I and my constituents want is a regulator with some teeth and some backbone who will stand up for their rights, who will not be conned over wholesale price rises and who will force energy suppliers to pass on price cuts when wholesale energy costs fall.

[Mr Robin Walker (Worcester) (Con)]

Given what the hon. Gentleman is saying about the regulator, does he regret the fact that when the Leader of the Opposition was Energy Secretary he left a situation in which fines levied by Ofgem on the industry were given back to the industry, so this coalition Government are having to change the law to make sure fines levied by Ofgem will be given back to consumers?

[Steve McCabe]

I do not think there is any problem with the regulator redistributing that money if it is to the benefit of people. I would be a bit wary of talking about fining people, however. I also remember that this Government’s first direct hit on energy consumers was the VAT rise they imposed not long after coming to power.

We need a tougher regulator because at present the energy companies are running rings around Ofgem. An Institute for Public Policy Research study found that as many as 5 million homes are being overcharged by their supplier, and some households are paying almost £300 per year more than they need to pay. It also states that if the market was a truly competitive market, that could knock £70 off the average household bill at a stroke.

It is not too late for the Minister to take corrective action on Warm Front and the green deal and to help thousands of families and elderly people, as well as protecting jobs. If he does not take some corrective action in respect of the regulator, we will be mortgaging our homes to pay our fuel bills before this Government leave office.