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measures to ensure the efficient use of energy, that as far as reasonably practicable persons do not live in fuel poverty.
Charles Hendry: I am grateful for the Ministers intervention, which gives me an opportunity to put on the record my genuine appreciation for the years of work that she has done and for her significant commitment to trying to tackle fuel poverty and deal with other energy issues. However, I think that it was the emphasis that was different; in the early years, the emphasis was always on the fact that fuel poverty was going to be eradicated and that that was the Governments goal. It is only as that has appeared to become more difficult that the emphasis on whether it is practicably possible to achieve that has started to creep in.
Stephen Pound: The hon. Gentleman is right to pay tribute to the Minister. I hope that he will also mention the work done by the hon. Member for Southend, West (Mr. Amess), who introduced that earlier Bill and who has done a great deal of work over the years to overcome fuel poverty.
Charles Hendry: In the spirit of cross-party support and encouragement, I am more than happy to recognise the work of my hon. Friend the Member for Southend, West (Mr. Amess) in that regard and as a sponsor of the Bill. My hon. Friend the Member for Rochford and Southend, East (James Duddridge) from the other side of the town shakes his head, just in case we confuse him with my hon. Friend, although he has made equally important contributions on other aspects of tackling these issues.
The Governments figures on fuel poverty only go as far as 2006, and they show that 3.5 million households were in fuel poverty then, compared with 1.8 million in 2005. The estimate is that 5.5 million households, or 9 million people, are now in fuel poverty. There are
some 23,000 excess winter deaths, as they are unattractively called, each year as a result of fuel poverty, and the situation is becoming ever more challenging. The annual dual fuel bill is now £1,100, up from £572 in 2003. Every 1 per cent. increase in fuel bills pushes another 40,000 people into fuel poverty. We are all genuinely concerned that the reductions in peoples domestic energy bills have not happened anything like as quickly as the increases that we saw a while ago.
As the hon. Member for Somerton and Frome said, fuel poverty occurs across the country, in urban areas as well as rural, and affects the young, the old, single people and families. It is not easy to categorise and affects people of all backgrounds in all parts of the country. We must also address the situation of people who are off grid and do not have access to the same support mechanisms and regulation as we see elsewhere.
It is because of the price increases that we need a swift investigation by the Competition Commission into the relationship between the wholesale price of fuel and what the energy companies charge their customers. We must also recognise that the value of the winter fuel payment has decreased in real terms, while energy prices have risen.
The hon. Member for Chorley (Mr. Hoyle), in his impassioned contribution, put much of the blame on the energy companies. I do not agree that this is an opportunity to press the case for a windfall tax. One of the challenges that we face is the real risk that the lights in this country will go out within the decade, and we need to secure massive new investment in our energy plant. A third of the coal-fired stock will be out of commission by 2016 at the latest, and all bar oneSizewell B of our nuclear fleet by the early 2020s. If we have a windfall profit tax, the energy companies that we expect to invest in the new stock will simply look elsewhere in the world. The chief executive of E.ON has already made it clear that it does not see the UK as the most attractive place to invest.
Homes in this country have very poor energy efficiency. Only 40 per cent. of our homes are properly insulated. The average British home leaks twice as much heat and power as homes in Nordic countries. As the hon. Member for Somerton and Frome said, there are great opportunities to provide a badly needed economic stimulus at the same time as we make our homes more energy efficient. Figures that have been provided to us show that, when adjusted for climate, we have the second most inefficient homes in Europe. Even when the figures are not adjusted for climate, we are still worse than countries such as Sweden and Germany, which we would not expect.
We have heard about the role of Warm Front, which has been the Governments chosen vehicle for addressing some of these issues. There is general agreement that it is not delivering as much as it should. To some extent, we can see why. We know in early 2008 the Government cut Warm Fronts grant by 25 per cent. That cut was partially reinstated, and £100 million was put back into the budget, but that still results in an overall deficit of £76 million in Warm Fronts spending for 2010-11, compared with 2007-08.
The Government say that the £100 million that they have put back in will mean that an additional 60,000 homes will be brought more up to date in energy efficiency and the installation of modern boilers. Using the same calculation, however, the £76 million still missing from the budget means that the Government are condemning a further 45,000-plus households to fuel poverty.
Warm Front grants are, as we know, often not sufficient to cover the total cost of insulation. Many of our constituents cannot afford to pay the top-up element that is required and so have to forgo the grant. Concerns have been expressed, too, about the contractors used. Too often, the contractor used is not the cheapest available and national contractors do not give the best possible price. Clear improvements are needed and the Bill represents a genuine effort to achieve them, although I point out that, a few weeks ago, the Conservatives set out some of our thoughts on how to achieve a low-carbon economy, and I believe that our approach is more comprehensive.
The Bill sets out the need for targets and a delivery plan. All too often, targets are set without a road mapwithout a delivery plan or solid methods of measuring progress towards the targets. One has to question the value of targets set in that way, so I welcome the fact that the Bill includes a delivery plan. I have a practical concern, however: how can the Secretary of State identify accurately all the houses involved? The challenge is to tackle poor insulation, so that houses have adequate energy conservation, but we have to recognise that residents come and go. Rented accommodation is a particular problem. There is often a significant turnover of tenants, some of whom are fuel poor, some not; none the less, at one moment in time the property will be categorised to determine whether it needs to be upgraded.
There is an important debate to be had on whose responsibility it is to tackle these issues. There is a clear link between the energy companies and energy efficiency. In a time of a developing energy gap, they have a clear interest and a clear responsibility to help their customers to use less electricity and gas, but the link between the energy companies and fuel poverty is less clear. Those who are fuel poor are often more generally poor. It is the Government who know best who those people are and where they live because the Government have all the relevant informationon income and benefit entitlements, for exampleto identify them. There is a case for dealing with the two issuesenergy efficiency and fuel povertyseparately.
Furthermore, although some people are locked into fuel poverty for the longer term, others come into and out of fuel poverty over shorter periods. Let us take, for example, a pensioner couple whose income from savings has declined dramatically in the past year, while energy prices generally have risen. Although they might not have been in fuel poverty a year ago, they may well be now or in a years time. Alternatively, let us take a family with two incomes, perhaps not well-paid but not currently in fuel poverty. If one or both partners lose their job, that family could easily fall into fuel poverty by next winter. What about someone who has a long-term but not chronic illness? They may be in fuel poverty for a substantial period, but there is every likelihood that it will not be permanent, and that must be our hope.
The difficulty is that the Bill is aimed at a moving target. Our approach is better, I think, because it focuses on poorly insulated houses generally. We would offer every household, whether in fuel poverty or not, an entitlement of up to £6,500-worth of approved energy efficiency improvements. Our figures have been developed in consultation with the best brains in the industry to make sure that they are comprehensive. We think that that is the right way forward because it would enable gas and electricity costs to be reduced immediately, and the costs to be recovered over time by the energy companies, which would have the duty to put the energy conservation measures in place.
That is the approach taken in the United States, where National Grid is a supplier as well as a distributor of electricity and is legally required to work with consumers to reduce their energy demand. We think that that is a model worth following. I believe that the Minister has been misinformed about our policy and how many homes would be included, but I emphasise that we want it to be rolled out across the entire country.
The Bill also includes energy assistance packages, which provide that, until their homes have been fuel poverty-proofed, the fuel poor must be offered the lowest tariff availablelower than any other tariff. However, that is hard to define because of the huge range of tariffs offered. One energy provider says it has 700 tariffs because it operates in four parts of the country supplying both gas and electricity and has single and dual tariffs and so on. As the hon. Member for Somerton and Frome said in introducing his Bill, this can therefore be an extremely complicated issue. Tariffs that might sound cheaper when first offered may end up not being cheaper when one looks at the consumers actual consumption pattern. They may be using more electricity at peak times simply because they are elderly and are at home when other people are at work.
There could be a potential conflict of objectives here. One of the reasons why we have supported smart metering so enthusiastically is that it would change peoples consumption patterns. They would use less electricity at peak times, which, in turn, would reduce the need for building new generating capacity. They would, for example, be encouraged to put their washing machines and dishwashers on overnight, and would find that a better way of using their electricity. However, the Bill would make it illegal for energy companies to offer to someone who commits to using their washing machine overnight a lower rate than to somebody in fuel poverty who chooses to run theirs during the day.
The longer-term goal of smart meters is to allow better demand management. People would be offered a better tariff if they allow their electricity supplier to switch off or reduce their power supply to their fridge or lighting at different times of the day when there is peak demand. However, the Bill potentially makes that illegal, because it says that the energy supplier must, at a minimum, offer a customer in fuel poverty a tariff lower than any other tariff available to its other customers. In its current form, the Bill also says that the supplier must not just offer that tariff, but supply it. So in the event that it was offered to somebody but they did not take it up, according to the way in which the Bill is phrased I hope that we can work out such issues in Committee it could be illegal if it was not actually supplied at that rate.
Therefore, what we need is an adaptable system. Tariffs need to adapt to changing circumstances. Somebody on a low wage who happens to lose their job and is therefore at home much more needs to be on a different tariff from the one they were on before. The danger, however, is that the company will have broken the law by not offering a revised tariff, even though it could not reasonably have expected to know that that persons circumstances had changed. Nor do we yet know from the Bill what the penalties will be, although it does give an indication of the level of penalties and what would happen in such a case.
Again, I believe that our proposed solution is better, because we would require every energy company to offer social tariffs to vulnerable households. That would help to achieve the same objective, but it would not potentially criminalise companies for offering price incentives to customers to use their electricity in an environmentally sound way. We would require energy companies to provide information on their energy bills that clearly showed customers whether they are on the cheapest tariff offered by their company. If they are not, it would show exactly how much they would save if they switched to the cheapest tariff and how they could do so. This approach would be constantly up to date and would reflect consumption patterns. We would also ensure that peoples bills show how their household use compares with a similar household in their neighbourhood, so they could make comparisons and informed choices.
On top of that, we would reform the Post Office card account to enable people to pay their utility bills through direct debit-style payments, cutting the energy bills of up to 4 million people who currently do not have access to a bank account. We would certainly look to introduce smart meters, which in the longer term offer the potential to eliminate completely the charges for prepayment meters.
In conclusion, we are seeking to improve the Bill as it moves forward. Its aims are good, but it could lead to some less desirable unintended consequences. The thinking behind it has been very positive, and I again pay tribute to those who have encouraged the hon. Member for Somerton and Frome to introduce it. Our approach is I think significantly better, so although we cannot give a ringing endorsement to everything in the Bill at this stage, I hope that we will have the chance to explore these issues further in Committee.
Mr. Andrew Dismore (Hendon) (Lab): I begin by congratulating the hon. Member for Somerton and Frome (Mr. Heath) on bringing in his Bill today. He has done the House a real service in doing so, thereby allowing us to debate some extremely important issues associated with fuel poverty. Nobody in the House today has argued to the contrary of the Bills general purpose. We can all agree with the purpose of the Bill as set out in clause 1to eradicate fuel poverty.
My main concern lies in the detail of the Bill, especially the points that I put to the hon. Gentleman earlier. My hon. Friend the Member for Ealing, North (Stephen Pound) said that the Bill was aspirational. Indeed, but my concern is that it is also extremely prescriptive and, to quote the phrase used by the hon. Member for Wealden (Charles Hendry), that it will have unintended consequences.
My Committee, the Joint Committee on Human Rights, has done a lot of work recently on justiciability in the context of the Bill of Rights, and in particular in the context of social and economic rights. I suppose one could say that the hon. Member for Somerton and Frome is trying to introduce a social and economic rightthe right not to be in fuel poverty. However, I am not convinced that that is what he is doing. He is bringing in a social and economic duty rather than a right, and there is a significant difference between the two.
A duty on the Secretary of State to do something is one thing. A right on the part of an individual citizen as against the state is something else. There is nothing in the Bill that gives the citizen the right to have the measures taken to deal with fuel poverty. It is simply the other side of the coin. That approaches the issue from the wrong direction. On the one hand, there is the duty on the Secretary of State. On the other hand, where is the liberty of the individual?
What, for example, if someone does not want to have those measures taken? It is unlikely, but it is possible that some old lady might say, I dont want to have the work done. Its too disruptive. Id rather pay the bigger bills. I know they are big bills and I dont like them, but I cant face the idea of workmen coming in. But it may well be that the only way the Secretary of State could meet the duty under clause 2(1) as drafted is by forcing that individual to have the work done. That cannot be right.
Everyone has the right to respect for his private and family life, his home and his correspondence.
the economic well-being of the country.
Kelvin Hopkins (Luton, North) (Lab): I am not a lawyer but I support the principles of the Bill. I desperately want to see fuel poverty eradicated. Are these not things that could be dealt with in Committeechanging the wording to make sure that it meets my hon. Friends concerns?
Mr. Dismore: Obviously, I share my hon. Friends concerns about fuel poverty and I am glad to see him in his place today. I had hoped that these matters could be resolved in Committee. However, I put the point to the hon. Member for Somerton and Frome earlier, but he was adamant that he wanted to see the absolute duty in the Bill. Therefore the inference must be that he would not be prepared to make concessions on the matter in Committee.
Yes, I do believe there should be an overall duty. However, if the hon. Gentleman recalls, I pointed out in my speech that there would be properties where the individuals concerned did not want the work
done. I entirely accept that there may be a need for an amendment in Committee to make provision for those circumstances. I am grateful to the hon. Gentleman for pointing out the issue. With respect to the overall duty, I see a strong parallel between the overall duty in the Bill and the duty that the Government have not only encouraged but extolled around the world in the Climate Change Act 2008a duty that also falls on the Secretary of State and with which, I understand, colleagues have no problems.
Mr. Dismore: I am grateful to the hon. Gentleman for that intervention. I referred to one of the unintended consequences. We could potentially put it right, but he stands by his bull point, which is the duty in clause 2 as currently specified. That is why I must take issue with him.
I am quite satisfied that, in this case . . . Parliament would have taken as axiomatic that the pressures on budgets are intense and that government would have to take the necessary steps in the context of other pressing needs for funds. I cannot conceive that Parliament can be taken to have intended that, whatever the expense, so long as not disproportionate to the benefit, the government should be obliged to expend whatever funds might be necessary to eliminate fuel poverty.
That is a correct interpretation of what Parliament decided when it enacted that Bill. I participated in the debates and supported the Bill, and that interpretation is entirely in keeping with what I thought we were voting for.
One of the unintended consequences of the absolute duty is this. Let us suppose that the costs involved with the provision escalate dramatically because rising fuel prices mean that more people come within the definition of fuel poverty, because the cost of the work has gone up or because the Governments resources decline. Which hon. Member will want to say that the hospital promised for their constituency should not be built because the Secretary of State has to meet that duty, or that the primary school in their constituency should not get the new boiler that it needs because the priority is ensuring that homes are warm? Which hon. Members would vote for such things, which would be a consequence of the duty as it is phrased in the Bill? Those things would be the consequence, although unintended, of making the duty override all other demands on Government spending. As the Minister said earlier, the previous Bill was phrased precisely to overcome that barrier; furthermore, the judge whom I mentioned interpreted the law accordingly. That was the correct way to approach the issue.
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