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I am being nice to the Government, as my hon. Friend the Member for Cambridge (David Howarth) suggests, because I have talked to the Minister, and I am grateful for the time that she spent telling me about what the Department is doing. I recognise that it is travelling in a similar direction, and I hope that out of its reviews will come a recognition that the present
approach is insufficient and that more energy and resources need to be directed at the issue. I see no difficulty in reconciling what is happening with the Bill. It is a belt and braces approach that says that this Government, or any other Government, need to address the issues. There is a deadline and it is not good enough simply to produce policy papers: we need action.
One issue was a sticking point in my discussions with the Government, and that was the requirement that buildings be brought up to an energy-efficient state consonant with the current band B designation. Ministers were unhappy with that, because they thought that it was a very expensive commitment and would be very difficult to achieve. I do not apologise for putting the band B requirement in the Bill. It is the standard that the Government have designated necessary for all new build, so it is not an absurdly high standard. It is what the Government hope will become the norm for private dwellings, in which case it should be the norm for people in fuel poverty. We should not short-change those people. However, I am happy to make a concession on this point if that will be helpful to the Government, because I do not want the best to be the enemy of the good. I have therefore written to the Minister to say that if she is so minded, I will accept an amendment in Committee to bring the band B requirement down to band C. It will still achieve most of my objectives, such as a step change in the way we address this issue, but it will reduce costs and some of the technical difficulties. It is much more important to achieve consensus on this issue, rather than confrontation, if at all possible.
Mr. Heath: My compromise would save money, and the Government were concerned about the cost. According to the Fuel Poverty Advisory Group, there are 2.4 million households in fuel poverty in England. The change from a band B requirement to a band C requirement would slightly reduce the number of fuel poor from 82.9 per cent. to 76.8 per cent., but it would reduce the cost involved significantly from £24 billion to £12.9 billion. The average cost per fuel-poor household would fall from £9,890 to £5,290. If cost is the blockage, let us make that change. If we achieve band C across the piece we will have done much to take people out of fuel poverty.
Stephen Pound (Ealing, North) (Lab): Pursuant to the intervention by my hon. Friend the Member for Rossendale and Darwen (Janet Anderson), DECC officials calculate that the fall will be from £50 billion to £20 billion, rather than the figures that the hon. Gentleman has just given. Will he explain the origin of his figures and in so doing, perhaps he will address the point that my hon. Friend made?
I cannot give the House any provenance for the figures quoted by civil servants, because they do not accord with those given to me by the Fuel Poverty Advisory Group, which advises the Governmentand has advised meon this issue. It is difficult to reconcile those high figures with what I have been told. I have given the House figures that I believe to be reasonably accurate, and they are supported by experts in the field,
including the Association for the Conservation of Energy, which estimates that raising two thirds of the properties concerned to band B would cost between £1,780 and £7,780 per property. The £4,780 figure per household is therefore reasonable. The hon. Gentleman has no way of crunching the figures, and nor do I, other than to take the advice of experts, and that is what I am doing.
Mr. Hoyle: People are concerned about where the money will come from. I think that we should have a windfall tax on the huge profits made by the energy companies. Is that an approach that the hon. Gentleman would consider?
Mr. Heath: That is part of our partys policy, but this is a permissive Bill. It would allow the Secretary of State to take a view on how its objectives would be best achieved. I do not want to force everybody into the framework of my partys policy. If there is a better approach, I will listen. It will be in the hands of the Government as to how to implement the Bill.
Joan Ruddock: DECC was sent a paper yesterday by the Association for the Conservation of Energy, which is a report that it has compiled with the Centre for Sustainable Energy, on modelling the refurbishment scenarios. It concludes that a retrofit programme to bring 83 per cent. of fuel-poor households to a standard assessment procedureSAP 71rating, which is band C, by 2016 would cost around £21 billion to £24 billion. I understand that those figures have been presented to the hon. Gentleman, but they are clearly at odds with the ones that he has just quoted.
Mr. Heath: If the Minister looks at the figures, I believe she will find that the percentages are slightly different in that respect and that we are perhaps dealing with a different total. As I just said, the 2006 estimate was that 2.4 million households in England were in fuel poverty. The higher estimate4 millionwas made after the end of 2006 and reflects the increase in fuel prices. Clearly, estimates drawn up in different ways result in different figures. I think that that is where the hon. Ladys confusion comes from.
Joan Ruddock: I assure the hon. Gentleman that I am not confused. His Bill suggests that the counting must begin in 2008. He is well aware that the 2008 estimate exceeds 3.5 million. I have no doubt that the paper I quoted is accurate when it states that the cost of reaching 87 per cent. of those people by 2016 would be between £21 billion and £24 billion.
Mr. Heath: The hon. Lady uses estimates which I accept are probably accurate. What she has not mentioned is the fact that, with the larger figure, the estimated average cost per household falls to £4,780. We could argue figures for the rest of the day, but the Minister is committed to dealing with fuel poverty, is she not? We are talking about figures and costs which she and I, if we both have our way, will have to make meet in some way. That is the crucial point.
Mr. John Leech (Manchester, Withington) (LD): Has my hon. Friend assessed what effect the compromise position, if it were adopted, would have on the number of jobs directly created? I understand that the Bill would create 35,000 jobs a year: is that based on the compromise position, or on reaching the band B standard?
Mr. Heath: The original estimate was based on reaching band B, but I do not think that there would be a huge difference in the number of jobs created if we went for band C. Many of the hard-to-reach homes will still need the most work to bring them up to the band B standard; it is a question of what exactly the retrofit involves.
I have spoken for some time now, so let me conclude by running through the clauses. Clause 1, Purpose, is self-explanatory. Clause 2 makes clear the Secretary of States duty to eradicate fuel povertythe duty that the House, until a few months ago, believed it had already enacted. The clause also contains provisions on energy performance certificate measurements, on which I have made it plain that I am happy to compromise with the Government, if that would be helpful.
Clause 3 deals with the key element: the fuel poverty strategy. Under that clause, the Government must produce their plans within six months of the Bills enactment. That is where I hope the Departments current work will come to fruition, so that an effective strategy is developed. The most important elementthe most important difference from previous legislation on this subjectis subsection (3)(a), which refers to
policies to promote energy efficiency measures and the use of microgeneration installations and locally supplied sustainable energy in existing buildings,
which refers to measures such as fuel pumps, which are not used enough at present and which have huge potential, particularly for harder-to-reach properties. I hope that the Government will take up such measures.
The fuel poverty annual report required under clause 4 is very much in line with what the Government are already doing, because of previous legislation. Clause 5 deals with changes to the number of properties involved and provides flexibility for the Government either to accelerate or to decelerateI regard that as unlikelythe scheme to meet changing circumstances. Clause 6 acknowledges the fact that some properties are harder to treat than others. Let us be honest: some properties will not be brought up to standard even if the Bill is enacted, because some people simply will not be interested in treating their houses. Some people will never seek help or let anyone into their house, and we have to accept that.
Clause 7 is about prioritising, because one of the National Audit Offices concerns about the present scheme is that it is not well targeted and seems to miss many fuel-poor people. Clause 8 allows for revision of the fuel poverty strategy and clause 9 imposes a duty to consult, which is always important before the Government publish any measures. Clause 10 deals with social tariffs, but in the form of energy assistance packages. The packages will go slightly wider than simply providing a social tariff and will, I hope, as a result of Government action, impose obligations on the energy suppliers.
Clause 11 is a safeguard: if the energy performance certificate scheme is changed, we will not need new primary legislation to effect those changes in definition. Clause 12 is the money clause and clause 13, Interpretation, sets out the definitions of the various terms used in the Bill. Clause 14 sets out the short title and the extent of the Bills effect. Most of the Bill will not cover Scotland and Wales, but I hope that the Scottish Government and the Welsh Assembly will follow its lead.
What are the arguments against the Bill? I accept that there are potential arguments based on cost. In response, I argue that we cannot afford not to take these measures. The Government are already committed to incurring substantial costs and need to be committed to much greater expenditure if they are to meet their targets. The second argument is that the time is not right, because of the High Court ruling. I have disposed of that argument: I do not believe that the Bill seeks to overturn that ruling or that it cuts across the Governments current consultation. If the Government are going ahead, that is good news and is entirely compatible with the purposes of my Bill.
It seems to me that the Bill is urgent. There are always arguments why the time is not right, but, as my hon. Friend the Member for Chesterfield (Paul Holmes) said, we have been waiting for decades for action and good intentions are no longer enough. In addition, the measures in the Bill will create jobs at a time when it is necessary to make jobs, and will deal in part with the problems of climate change at a time when there is a desperate need to tackle climate change. Whether the Bill passes is a litmus test of how serious the Government are and of whether the Department of Energy and Climate Change is worthy of its name. Finally, the Bill is urgent because if we fail to take these measures, we fail the poor, the elderly and the disabledwe fail people who are living miserable existences, whom we can do something here and now to help.
The least satisfactory outcome of this mornings debate would be hon. Members deciding to use procedural rules to talk the Bill out. I would prefer it if the House voted on Second Reading and I lost that vote because the Government had decided to oppose the Bill. Many people outside will not understand if underhand tactics are used. The Bill is very important. I hope that it will at least reach Committee, where we can have all the discussions that the Government and others want and we can make it a better Billone that secures consensus.
Frank Dobson (Holborn and St. Pancras) (Lab): I congratulate the hon. Member for Somerton and Frome (Mr. Heath) on his good fortune in doing well in the ballot. I broadly support his Bill, because fuel poverty has dire effects on the health and the quality of life of the people who suffer from it. It is a curious irony that the badly-off, who live in badly insulated homes, are not only cold but pay energy companies more to be left cold than the well-off and well insulated pay to be kept warm. We therefore clearly need to address this problem.
Although I welcome the BillI am sure that other people will go through it in detailI want to draw more attention to one of the reasons why there has been a rise in fuel poverty recently: the grotesque rise in the cost of fuel and power, and how the prices that are being charged to the fuel poor are stuffing the pockets of the fuel racketeers. The recent surge in oil pricescrude oil went up to $140 a barreldid not reflect any shortage of oil. There was never any shortage of oil: the surge was entirely the result of speculation. A cargo of oil leaving one of the Gulf states would have been bought and sold a dozen times before it arrived at a refinery in Europe or north America, because the speculators were at work.
Even more unjustified is the surge in the price of natural gas. The price of natural gas, by what can only be described as a cartel subscribed to by most major Governments, as well as the producers, is tied automatically to the price of oil. There is no natural connection at all between the supply of natural gas and the supply of oiljust an agreed fix with the major producers and major-producer Governments that that is what will happen, so there was even less justification for the huge surge in the price of natural gas. I therefore believe very strongly that, among its myriad tasks when it meets, the G20 should, first, declare a determination to stamp out the activities of the fuel price speculators and racketeers.
Lembit Öpik: Is the right hon. Gentleman aware of another unintended by-product of the extraordinary fluctuation in oil and gas prices? For Wales, at least, the Government have not obtained fuel poverty figures since 2004, so the figures are five years out of date. The changes in price that the right hon. Gentleman is talking about mean that we have a hidden exacerbation of the very problem that the Bill is seeking to solve.
Frank Dobson: We all have to recognise, though, that that will leave the Government bound by any decision that we take and subject to something over which, at the moment, they have no control: the variation in fuel prices. If we are really going to deal with the problem of fuel poverty, we need worldwide to do something about fuel prices. Fuel poverty here causes some deaths; fuel poverty in the third world causes hundreds of thousands of deaths. Hundreds of thousands more people have died as a result of the surge in the oil price worldwide, and that is an international disgrace. Indeed, it is even more disgraceful, in that it is a product of what is, in effect, a cartel between the Governments and the oil producers.
Let us consider the apparently reputable oil companies, of which I cite two examples: BP and Shell. Whoever is right about the figures, be it the hon. Member for Somerton and Frome or my hon. Friend the Minister, BP and Shells profits were so enormous in the last financial year that they are roughly equal to splitting the difference between the two estimates, and that is just in one year. So the cost of a programme that is intended over several years to deal with insulation in the whole of Britain is roughly equal to the outrageous profits of just BP and Shell in the last year for which figures are available. I sometimes feel that people lose a sense of the real scale of what is going on in the oil-producing industries.
The oil companies did not make these profits by producing more oil. In fact, sometimes they make more profit by producing less refined oil, because sometimes, that way they can bump up the price of refined oil. One of the biggest things that happened was a huge increase in the value of the oil companies stock assets, and so they made these extra profits. When the oil price soars, so does the value of their oil. Everyone in this country knows that, to say the least, they have not been slow in putting up the price to the consumer. They never seem anything like so swift in working to reduce prices when the reductions come. When it is time for the reductions, they say, Well, there is a time lag, but for some reason or other, when the oil price internationally goes up,
there does not seem to be quite as big a time lag between that and the prices they charge to the consumer going up.
Of course, the same point applies to the gas and electricity companies, which were sold off by the Tories when they were public assets at roughly a third of their real value. So even people as stupid as those who ran the Royal Bank of Scotland, had they been investing in the gas and electricity utilities, could have run at a pretty steady profit.
Mr. Heald: Of course, the right hon. Gentleman is putting a case for the little guy. I invite him to comment on the irony that if any bank wants £25 billion, it gets itHere you go Lloyds, here you go RBS; the people whom he has rightly been criticising for their mismanagementbut when it comes to doing up poor peoples homes so that they have proper energy efficiency, we are told that that is unaffordable. What does he say to that?
Frank Dobson: I am saying that it would be affordable, and if we introduced a windfall tax just on Shell and BP, we could pay for it. However, no doubt some of the people contributing to the Tory partybe they bankers or those in the energy industrieswould be very upset and would say to the Leader of the Opposition, Dont do horrible things like that. That would be most unfair on our shareholders, and we might not be able to help in future. Such discussions, I understand, do go on.
Mr. Hoyle: Somebody ought to tell Sid how we got it wrong when we sold those utilities off, but that is another matter. Does my right hon. Friend not agree that the situation is absolutely absurd? In the summer, we will be exporting North sea gas to the continent, where it will be stored in their gas facilities to export it back to us in winterour own gasat a much higher price. Surely we should be ensuring that these energy companies invest in storage capacity in the UK in order to keep gas prices down. Does my right hon. Friend agree that that would be a good way forward?
Frank Dobson: I am sure that that is the case. I can remember being mocked by the people then sitting on the Government Benches when I was shadow Energy Secretary when I said that the policies being pursuedthe dash for gas, as I formulated itmeant that we would eventually become dependent on gas supplies from such utterly reliable sources as the then Soviet Union or Algeria. Lo and behold, that is just about where we are getting to.
My hon. Friend has almost anticipated my next point. We were told that it was wholly improper for the energy companies to remain in public ownership here. I can remember people being told, In future, Londoners will be able to own London electricity. Well, they do not, but it is nationalised. Electricité de France is a nationalised industry and is now supplying London with its electricity. It must be said that both the big German monopoly and the big French monopoly are charging higher prices here for the electricity that they supply than they are charging in either Germany or France, so there is further exploitation going on.
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