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10.52 am

The Parliamentary Under-Secretary of State for Wales (Mr. Win Griffiths): I, too, congratulate the right hon. Member for Caernarfon (Mr. Wigley) on his success in the ballot and on taking the opportunity to raise matters of current concern to all rural communities in Wales.

We had a constructive debate in November last year when the hon. Member for Ceredigion (Mr. Dafis) introduced a debate on the issues that we are discussing this morning. Since then, my right hon. Friend the Secretary of State and I have met representatives of farming communities on a number of occasions. My right hon. Friend the Minister of Agriculture, Fisheries and Food made a statement to the House on 22 December last year in which he announced that, subject to consultation with the European Commission, the Government proposed to provide additional support to agriculture amounting to about £85 million.

Perhaps I should say at the outset that in the eight minutes that are available to me it will be impossible to cover every point that has been raised in the debate. Therefore, I undertake to write to hon. Members. The Hansard record will be scoured and I shall ensure that I respond to everyone who has contributed to the debate.

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In the United Kingdom as a whole, agriculture represents 2 per cent. of the economy. I recognise that in Wales the figures are different. For example, agriculture represents about 3.4 per cent. of the economy in Gwynedd and 7.5 per cent. in Dyfed and Powys. Agriculture is very important and we are acutely aware of its importance to Welsh communities. It is not only an economic matter, because social and cultural matters are also involved.

Planned expenditure on agriculture in Wales this year is about £260 million. That shows the Government's support for the rural economy, and reflects a major contribution by the taxpayer.

Reference has been made to all the problems and to all the changes on the world scene, which mean that agriculture will have to adapt to meet the demands of the 21st century. We want to tackle the challenges. Reforms will come within the European Union. Market trends will have an impact on the industry. We know that markets are becoming more open to competition from the rest of the world. By and large, our beef, lamb and milk products are sold within the EU at much higher prices than those on world markets. Our market position in the world as a whole is weak and vulnerable. We must tackle the problems of overproduction. We must recognise that consumers are increasingly concerned about health issues, and that concern goes beyond the food that they eat. Consumers are concerned about the welfare of animals and the way in which herbicides and other chemicals are used in the growing of crops. These important environmental issues and long-term trends will not go away.

Against that background, we are looking to fundamental reform of the agricultural policy, but we recognise that that will not happen overnight. As a former Member of the European Parliament, I am acutely aware that the wheels involved grind extremely slowly. There is, however, a clear direction that we must follow. We shall do everything possible to encourage Welsh agriculture to begin to adapt now to ensure that our communities meet the challenges that face them.

My right hon. Friend the Secretary of State and I believe that there is tremendous potential in Welsh agriculture for driving up the prosperity of our rural areas. It may not be a very good time to say this when we are on the verge of a serious crisis, but the chairman of the National Farmers Union in Wales, Mr. John Lloyd Jones, argued in his new year message that the way to keep Welsh farming successful in the 21st century was by producing the best. I whole-heartedly agree with that view. In the Welsh Office, we want to work with farmers to ensure that the best is produced. We want to see Welsh farmers and food processors producing more well-branded premium products that can command premium prices, which will mean a greater value-added element in the food supply chain in Wales. We look to being able to

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meet consumer concerns. There are potential opportunities in terms of farm-assured and organic productions in Wales and we believe that Wales is ideally suited to take that course.

Today, a White Paper will be published on the Food Standards Agency by my right hon. Friend the Minister of Agriculture, Fisheries and Food. The FSA is an independent agency, which will be protecting the public. I believe that it will meet the public's expectations, restore confidence in our food markets and be of benefit to the industry.

In Wales, we want to ensure that we fully take part in the process that I have just set out and, therefore, our commitments remain strong. I understand the difficulties that the industry is facing at present, especially the beef sector. The additional money--it is additional--will go to many farmers in Wales and it will help to make a difference, even if it covers only some of the extra costs that Welsh farmers have to face.

Mr. Wigley: Given that the Minister acknowledged a moment ago that the industry is on the verge of a crisis and given that he has just acknowledged that the December money may go to cover only part of the additional costs placed on it by the Government, will the Government be prepared to look again at how much money will be given to the farmers of Wales and elsewhere to ensure that if the crisis really develops, there will be more resources to help them?

Mr. Griffiths: We are hoping obviously that the indications that we have made will help Welsh farming get out of the crisis. There are a number of issues relating to payments, and payments are now coming through. There were problems because the audit system in the Community changed this year and all the computer programs had to be rewritten. Our systems are not the same as those in England and Scotland. However, we are working to reconfigure completely the way in which our payment system works so that in future we will not have these problems.

We are doing all that we can to support Welsh food promotion, about which there has been much publicity recently, and have agreed additional funding to get it through this year. That requires approval from Brussels, because state aids are involved, but we are working on that. We have a number of projects to promote Welsh food. I assure all hon. Members that we are working hard on all these issues. We hope that the lifting of the Northern Ireland beef ban will go through. It has to go to the Community's veterinary committee first and the Council--

Mr. Deputy Speaker (Sir Alan Haselhurst): Order. We must move on to the next debate.

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Fuel Poverty and Energy Efficiency

11 am

Mr. David Chaytor (Bury, North): I am very pleased to be able to open this debate today. It is particularly appropriate that it is taking place this morning, as this afternoon my hon. Friend the Member for Plymouth, Sutton (Mrs. Gilroy) will present her Warm Homes and Energy Conservation (Fifteen Year Programme) Bill--an important Bill--which sets a national strategy to deal with fuel poverty.

It is particularly important that the debate is taking place this week, in the middle of January, as it is the peak period for the annual winter cull of elderly people in this country. The excess winter mortality rate--the additional number of elderly people who die each year, and will continue to die each year--is a scandal that has to be addressed. It is a mark of a civilised society that we do something about it.

I remind hon. Members of the figures. In the past five years, there has been an increase of almost 100 per cent. in the number of people dying unnecessarily in the winter months. In 1992-93, an additional 26,300 people died. In 1996-97, an additional 48,600 people died. Most of these deaths could be avoided. Ninety two per cent. of excess winter deaths are among pensioners. To those who say that this is to be expected, that it is quite normal, that it happens in other countries, I should point out that Britain, has one of the worst records of winter deaths caused by fuel poverty. In Britain, the excess mortality rate is 31 per cent. In countries whose climates are more severe than ours--Sweden, Norway, the Scandinavian countries--the figures range from 10 to 14 per cent. In Britain, we lose more than twice as many of our elderly people in the winter months as countries with climates that are harsher and more severe.

I should also point out that in Britain the figures for different districts in the country show that the greatest excess winter mortality rates occur in the midlands. The figures for last year show that the districts with the worst record--the top 20 districts for excess winter mortality--include places such as Northamptonshire, Derbyshire, Shropshire, Rutland, Cannock Chase, north Dorset, north Kesteven and Staffordshire Moorlands. We have excess winter mortality rates of up to 58 per cent., and these are places that do not have particularly severe climates. The excess winter deaths are due entirely to fuel poverty.

Fuel poverty is the inability to afford adequate warmth in the home because of the energy inefficiency of that home. We know that elderly people need more warmth, that they take less exercise and tend to spend more time sitting, that they tend to have poorer housing, more energy inefficient housing, and that they tend to be on low incomes. We now know that almost one in three homes in Britain suffers from energy inefficiency--almost 8 million homes. Fuel poverty affects about 15 million people. Of the 8 million homes, almost two thirds--just over 60 per cent.--are in the public sector, so there are enormous savings to be made by having a national programme to address fuel poverty. In my constituency, every year more than 100 people die in the winter months because of this problem.

I shall now talk about the very welcome initiatives that the new Government have taken to tackle the issue. I think that every hon. Member will welcome the announcement,

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made in the pre-Budget statement in the autumn, of the additional £20 per household to assist with the cost of fuel in the winter, or £50 for households on income support. Hon. Members will welcome the reduction in fuel bills as a result of the cut in VAT, the abolition of the gas levy, and the release of capital receipts so that local authorities can once again start to invest in social housing, the renewal of housing and the construction of new housing.

Hon. Members will also welcome the reduction in VAT on energy-saving equipment, which has put an end to one of the strangest anomalies in our taxation system. We welcome the establishment, as part of the new deal, of the environmental task force. I am sure that all hon. Members hope that many local authorities and others will take the opportunity to get young people off welfare and into work by launching imaginative environmental task force projects based on energy efficiency schemes. We welcome the continuation of the basic system of cold weather payments.

The previous Government made some achievements in this field. We welcome the fact that they established the Energy Saving Trust in 1993, and passed the Home Energy Conservation Act 1995. An enormous amount of good work is done across the country by local authorities, which have been submitting imaginative schemes under the bidding process of the Home Energy Conservation Act. Good work has been done through the home energy efficiency scheme for low-income households, grant aided by the Department of Environment, Transport and the Regions. A multiplicity of schemes are promoted by the Energy Saving Trust, including the replacement of old fridges; incentives for condensing boilers; the pensioners' energy plan, and many other schemes. An enormous amount of campaigning and promotional work has been done by a wide range of voluntary agencies.

However, it is increasingly obvious that we need greater co-ordination of that work and a more comprehensive, less fragmented approach. We need a national strategy and national targets. We have seen the fragmentation of the current approach and reductions in the budgets of organisations charged with improving energy efficiency. The Energy Saving Trust's budget has reduced from £25 million to £19 million, and will be cut further next year to £14 million. Local authorities have also had continuous budget cuts over the past few years, and, with the adherence of the new Government to the previous Government's spending limits, will face further cuts next year. Energy efficiency schemes are not always high profile, and are sometimes seen as soft options by local authorities, which think that they can make reductions in their budget without too much public reaction.

In the competitive bidding process for so much of this money, success very much depends on the enthusiasm of individuals or on the fairly arbitrary process of competitive bidding. The current system does not guarantee that resources are allocated where they are most needed. That is why we need a national strategy. That is why I commend to the House the Warm Homes and Energy Conservation (Fifteen Year Programme) Bill to be presented this afternoon. It calls for a programme designed to install a comprehensive package of energy efficiency measures in 500,000 homes for each of the next 15 years. Fuel poverty can be defeated if the political will exists, and an attack on fuel poverty will bring enormous savings to the public purse in the long run. It will require investment, but it will produce benefits in the long term.

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This is not only a question of social justice and environmental sustainability; it is a question of common sense and sound economics. That is because it is bad economics to allow so much of our housing stock to be so energy-inefficient. The important Energy Efficiency Bill, promoted by my hon. Friend the Member for South Swindon (Ms Drown), seeks to ensure that all homes are given an energy efficiency rating, and that that rating is clearly publicised in all transactions relating to them.

Fuel poverty is bad economics, because we cannot afford the cost to the national health service of so many people becoming ill each winter when that can be avoided. I am thinking particularly of respiratory illnesses such as bronchitis and asthma, and of heart problems. The latest reliable estimates put the cost of fuel poverty to the NHS at £1 billion.

Fuel poverty is bad economics, because we cannot afford to keep so many people unemployed when so many jobs can be created through energy efficiency programmes. The national programme called for in the Warm Homes and Energy Conservation (Fifteen Year Programme) Bill would create more than 25,000 jobs, which would save the Treasury £245 million a year over those 15 years. I can think of no more valuable way of getting people off welfare and into work.

Fuel poverty is bad economics, because we cannot afford the enormous costs of wasting so much energy, or the excessive costs of maintaining homes that are energy-inefficient. There is a saving of £90 million a year to be made from ensuring that homes are energy-efficient. As 60 per cent. of the homes targeted are in public ownership, that will bring a direct saving to the Exchequer. The Energy Saving Trust has estimated that the average household fuel bill could fall by £250 a year with appropriate energy-saving measures.

Fuel poverty is bad for the environment, because the waste of energy works against our objective of a 20 per cent. cut in carbon dioxide emissions. The 15-year programme outlined in the warm homes Bill, targeting 500,000 homes a year, could contribute between 3 and 4 per cent. of the total reductions that must be made if we are to meet our target under the Kyoto agreement.

I commend the study produced in October by the Energy Saving Trust, which argues in favour of a 13-year programme leading to the year 2010. The trust says:

Given that we have had a 10 per cent. levy to support the nuclear power industry in recent years, surely a 2 per cent. levy is not outrageous.

Finally, fuel poverty is simply bad for human beings. It is entirely wrong that we should sit back and allow so many elderly people to dread the winter, wondering

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whether it will be their last. It is entirely wrong that so many people of all ages who are in low-income families should shiver and suffer throughout the winter when that can be avoided. The real point is that--no matter how generous Governments are in providing extra financial assistance to help with fuel bills--if heat is escaping through the roof, windows or doors, the money is being poured down the drain.

It is important to remember the facts about household spending on fuel among different socio-economic groups. The latest figures from the House of Commons Library tell us that the average spend on domestic fuel in all households is 4.2 per cent. of income. In the poorest 20 per cent. of households, it is 12 per cent.--a staggering 300 per cent. increase. In the richest 20 per cent. of households, it is 2.5 per cent. That means that the very poorest families spend proportionately nearly five times more on domestic fuel than the very wealthiest.

Financial assistance from the Government is most welcome, but it is not tackling the root cause of the problem. I cannot be the only Member of Parliament to question whether the £485 million spent on cutting VAT on fuel from 8.5 to 5 per cent. would not have been better invested in targeting energy efficiency measures on the homes of the poorest people. That tax cut was enormously popular, but in time it may come to be seen as a triumph of political symbolism over sensible social and environmental policy.

I want to raise a related issue concerning the pricing structure for domestic fuel. Sadly, that is no longer within the Government's direct control, but it is a matter for the regulators. The system of standing charges for fuel impacts greatly on pensioners and other low-income households. It is one of the most iniquitous and regressive forms of taxation. In a typical pensioners' electricity bill, the standing charge can be more than 30 per cent. of the cost of the fuel consumed; in a typical gas bill, it can be more than 15 per cent. of the cost of the fuel. Consequently, pensioners and other low-income households whose consumption of fuel is low are paying more per unit of fuel than more affluent higher-volume consumers.

A fair system would operate in exactly the opposite way, with low-volume consumers paying less per unit and with higher charges being introduced at higher levels of consumption to encourage conservation. I hope that my hon. Friend the Minister will discuss the issue with our hon. Friend the Minister for Science, Energy and Industry. There is an urgent need for it to be raised with the regulators.

I hope that my hon. Friend will comment on some of the matters that I have raised, especially the fragmentation of existing programmes and policies for energy conservation, and will tell us what proposals she has to introduce greater co-ordination. I hope that she will comment on next year's proposed budget cuts for the Energy Saving Trust and how they will impact on the Government's objectives, and on the planned reductions in local authority expenditure for 1998-99 and how they will impact on local authority energy conservation measures. I hope that she will tell us whether she has had, or intends to have, discussions with the Minister for Science, Energy and Industry about the pricing structure for domestic fuel. Will she also comment on the relative

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merits--in policy terms--of cash benefits to compensate for high heating bills, and investment in long-term energy efficiency programmes?

I do not expect my hon. Friend to say whether the Government intend to introduce an affluence test for middle-class families who benefit from the cut in VAT, but I should be grateful if she would comment on the whole question of the long-term comprehensive national programme that we need so desperately to end fuel poverty and improve energy efficiency--along the lines of the Bill to be presented this afternoon, or the suggestions in the Energy Saving Trust's October 1997 study.

We can end fuel poverty if we choose. To do so would save money for the national health service by improving people's health, and it would save lives. It would save money in benefit payments by moving people from welfare to work, and by cutting the costs of housing maintenance. It would make a significant contribution to our national targets for greenhouse gas reductions. A 15-year programme, as outlined in the Bill, will produce a net saving to the Treasury. There will be initial costs in the early years of the programme; but, if we can find--without enormous difficulty--several hundred million pounds for a plastic tent to celebrate the millennium, can we not find a few hundred million pounds to celebrate the end of fuel poverty by the year 2000?

If we can find, without difficulty, £1 billion to maintain our weapons of mass destruction, can we not also find additional money to end fuel poverty in Britain? It is not unreasonable for us to seek the small amount of pump-priming money needed to abolish fuel poverty for good, so as dramatically to transform the qualify of life for several million people.

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