Fuel Poverty and Energy Efficiency

Steve Reed Excerpts

Wednesday 16th January 2013 Commons Chamber

[Steve Reed (Croydon North) (Lab)]

It is in poorer areas such as Croydon North where rising energy prices really hurt. More people there than on average depend on prepayment meters and fewer homes are likely to be insulated, because they were built before cavity walls were a requirement. An above-average number of local households are fuel-poor. When rising fuel bills are combined with the high cost of housing and rising train, bus and tube fares, the result is a big squeeze on the disposable incomes of hard-working local people. National and local government must take a lead in giving people the power to change things, because empowering consumers can help to deliver greater fairness.

First, it is time for the energy regulator Ofgem to end the unfairness of the poorest paying higher energy tariffs than the rich. Why should a millionaire in a mansion pay a lower tariff than a hard-pressed family on an estate? One of the starkest examples is that of prepayment meters. Around 6 million people in the UK—many among those on the lowest incomes—use such meters. Most are unable to switch accounts or take advantage of deals to save money, including by using direct debit and fixed-rate contracts. The meters cost substantially more than the standard tariffs offered by energy companies, so the poorest end up paying hundreds of pounds more every year than those on middle and higher incomes. That is unfair and should be put right by a regulator on the side of consumers.

Secondly, it is time to end rip-off energy exit fees. Millions of people face charges of up to £100 in exit fees just because they want to switch their accounts to a lower tariff. That is anti-competitive and contradicts the Government’s advice to customers that switching accounts will save them money. The Government must change the law to make switching energy tariffs free, as other places have, including the Australian state of Victoria.

Thirdly, it is time to get serious about insulation. Last year the Energy Saving Trust said that London was at the bottom of the league table for insulating homes. From 2008, just 5.1% of London’s homes received insulation, compared with 16% in the north-east, which was the best performing region. The Government’s green deal scheme was launched in October to give people the chance to insulate their homes, yet interest rates on green deal loans are as much as 8%, as my right hon. Friend the Member for Don Valley (Caroline Flint) said. To make the green deal work, Ministers must ensure that finance is available at an affordable rate.

Finally, we need to encourage more energy-purchasing co-operatives to start up, to provide competition for the big six. That will require changes to the Energy Bill, which is currently going through Parliament. In 2011, residents on a Brixton housing estate set up the Brixton Energy solar 1 scheme, which was the UK’s first inner-city, co-operatively owned energy-generation project. It has been a huge success, generating renewable energy, providing an annual return of 3% for investors and delivering savings for residents through lower household energy bills. We need the support of the Government to champion co-operative energy in order to catch up with countries such as the United States, where 42 million citizens are members of energy co-operatives. I salute those councils, some of which have been mentioned today, that have already set up collective energy switching schemes to secure lower energy prices for local residents.

Fuel poverty is not an inevitability. The Government should support communities that are already taking action, and they must act themselves to ensure that we have an energy market that is fairer for everyone, with a level playing field for community energy generation and with no household excluded from accessing the lowest tariffs.