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Critically, if fuel prices rise dramatically, as they have done in recent years, large numbers of people will become fuel poor regardless of all other circumstances. My right hon. Friend the Member for Holborn and
St. Pancras (Frank Dobson) made a powerful speech on the subject of fuel prices. My right hon. Friend the Prime Minister has used his very best efforts for an international agreement to put controls on the steep rises in the price of the energy we all require. Furthermore, we now face unprecedented times of global recession.
Our first and overwhelming objection to the Bill is its attempt to impose an absolute duty on Government. Clearly, that is a response to the recent High Court judgment, to which my hon. Friend the Member for Hendon referred.
Mr. Burstow: In the remainder of her speech will the Minister make clear to the House her and the Governments intentions? These matters, especially the issue she has just raised, can be addressed in Committee by amendment and debate, and a different Bill could emerge. Is it her intention to speak at such length so as to avoid giving the House the opportunity to divide on the Bill?
Joan Ruddock: The hon. Gentleman may have noticed that it was the will of the House that I have only just begun my speech, because so many Members wanted to contribute to the debate. I have an enormous number of questions to which to respond and, in addition, I want to make clear to the House what the Government are doing. Someif not allof the remarks that have been made today appear to be suggesting that we have not put our backs into the issue and that we are not determined to reach our goal of ending fuel poverty for all by 2016. I need time to explain those matters to the House.
In response to the hon. Gentlemans point about amendment in Committee, we have made it clear to those who sponsored the Bill and advised on it that the duty was a key point. The promoter is very much aware of that. The provision was in the draft Bill, and when it was publishedonly at the end of last weekit was still there.
Simon Hughes: I think that my hon. Friend the Member for Somerton and Frome (Mr. Heath) would be willing to consider applying the sort of principle that is used in the Climate Change Act 2008, which was passed by the Government only in November. That Act imposes an absolute duty, but has a qualification in case external circumstances change. However, I have not negotiated that with him. Let me say, from the Front Bench, that if the Minister has the good faith that I know she has long shown on environmental issues, and given the wisdom, commitment and good faith of my hon. Friend, we could come up with a measure in Committee with which the Government and my hon. Friend would be satisfied.
May I explain why I find it difficult to accept that? The opportunity was there in the Bill. We have considered very carefully what the motivation might be behind introducing the Bill. I believein fact it has, I think, been confirmedthat it is a response to the recent High Court judgment, which I know is on appeal. The judgment was in favour of the Government on the issue of our fuel poverty strategy. We interpret the BillI refer once again to the remarks made by my hon. Friend the Member for Hendonto mean that in future, no matter what the factors outside the Governments control, the Government would be held to an absolute
duty. Taken to its logical conclusion, that suggests that if the matter were tested in court, the expectation is that the Government would be ordered to comply with the duty to the exclusion of everything else.
In support of what I am saying, may I bring to bear the comments of the Association for the Conservation of Energy? ACE, which I understand is the drafter of the Bill, described the High Court ruling as having made the targets
in effect discretionary, not absolute.
reinstate the duty to end fuel poverty.
That is an absolutist position, and it cannot be acceptable to any Government. Let me be absolutely clear: the current legislation has not been overturned. The strategy remains in place, as do the policies that go with it as well as our commitment to meeting the 2016 target of ending fuel poverty as far as is reasonably practicable.
My hon. Friend the Member for Chorley (Mr. Hoyle) referred to the number of people who have gone out of fuel poverty. Between 1996 and 2004, the number of households in fuel poverty fell from 6.5 million to around 2 million. Those were times of low energy prices, and the figures clearly demonstrate the impact of price factors and rises in income levels over that period. It is worthy of note that if energy prices were to fall back to 2003 levels for a sustained period, the number of fuel poor would be likely to fall below the number recorded in 2003, as a result of the rise in average incomes and in household efficiency since that time. So it is a moving target.
As I said earlier, the number of households in fuel poverty and the identity of the householder do not remain static. Around two thirds of fuel-poor households are found in the lowest income decile. Research shows that over half of all fuel-poor households contain at least one person over the age of 60, and 40 per cent. of fuel-poor households contain somebody with a long-term illness or disability. As regards the energy efficiency of properties occupied by the fuel poor, 40 per cent. had a standard assessment procedure rating of less than 30, and so were within band F. The average figure in England is 50, which is within band E. Just 1 per cent. of those in fuel poverty lived in a property with a rating of more than 65.
The latest available figures for the number of those in fuel poverty, which have been quoted today, were for 2006, but we have made estimates for increases since then that suggest that, last year, the figure in England probably went beyond 3.5 million people.
The Bill takes a radically different approach towards addressing fuel poverty from that of the existing strategy, despite the fact that that strategy was the subject of extensive consultation with the same organisations and non-governmental organisations as those consulted by the hon. Member for Somerton and Frome, and was probably supported by all those who seek to promote the Bill. Our strategy aims to tackle, as far as reasonably practicable, the three determining factors that contribute to fuel poverty.
Let me take prices first. As I have said, the Government have little influence over global trends. However, we are tasking Ofgem with providing more advice and action on prices. We know from its first returns that retail costs
peaked in December 2008, a few months after the peak in wholesale prices. We have repeatedly called for energy suppliers to pass on the reductions and now all the major household energy suppliers have cut at least some of their tariffs. Ministerial colleagues and I have made it abundantly clear that we believe that more could be done.
We have also welcomed the Ofgem probe that identified several matters of cause for concern. Such concerns have been frequently highlighted in this Chamber, and they were highlighted passionately today by my hon. Friend the Member for Slough (Fiona Mactaggart). According to Ofgems analysis, standard credit customers and some high-consumption prepayment meter customers were paying a higher premium in comparison with direct debit customers than could be justified by the cost differential associated with those payment methods. Furthermore, some online direct debit tariffs were at least initially below cost.
Suppliers have already changed some of their pricing in response to Ofgems findings and they have responded to pressure from the Government and Ofgem in recent months, with more than £300 million being taken off the premiums paid by customers, including prepayment meter users. They have indicated that further savings of £200 million will be made for those off the gas grid. It is important that consumers can have confidence that pricing will be fair in the future, too. Ofgem has just consulted on a range of potential remedies to ensure that and they include requiring the prices charged for different payment methods to be cost reflective and prohibiting unfair price discrimination or cross-subsidisation between gas and electricity customers. I expect Ofgem to announce the outcome of its consultation shortly as well as to set out how it will take work forward to ensure that customers get a fairer deal.
We expect suppliers to co-operate with Ofgem and agree to the necessary changes to licences. However, the Government have made it clear that should that agreement not be forthcoming, we will not hesitate to act to ensure that the necessary protections are put in place. The most recent statistics show that in England about 18 per cent. of the fuel poor use prepayment meters for electricity and 12 per cent. use them for gas. As my hon. Friend the Member for Slough told us, some customers on token prepayment meters, many of whom are struggling to make ends meet, can suddenly find themselves in debt after their supplier has backdated price increases when meters are reset or replaced. I would therefore urge suppliers, in the light of their social obligations, to treat those facing payment difficulties as sensitively as possible during the process of replacing token meters. Of course, I am happy to look at my hon. Friends suggestions.
My hon. Friend the Member for Chorley described how sharp rises in direct debits are an unwelcome shock to households. These rises can be justified, but suppliers must explain changes clearly and exercise the kind of care that my hon. Friend seeks. I am sure that Members will welcome the fact that the Secretary of State for Energy and Climate Change has written to E.ON to ask that vulnerable prepayment customers are not given large backdated bills.
Ofgem has identified as a key problem the inadequate explanations from suppliers about their rationale for changing direct debits and the methodology for setting them. It is consulting on new rules to enable consumers
properly to assess whether new rates are appropriate. We look forward to seeing the results from that consultation. The Bill would not remedy those problems, but we are determined to do so. Unfair pricing must end, as my hon. Friend the Member for Dundee, West (Mr. McGovern) said. It is our intention to take action if Ofgem does not achieve the changes that we believe to be necessary.
This brings me to the direct financial support that the Government have given to tackle fuel poverty. Since 2000, we have spent more than £20 billion on payments and services. The winter fuel payment was introduced for pensioners in an attempt to help those in fuel poverty and to reassure those who were afraid to turn up their heating in cold weather. Its value has increased from just £20 in 1997-98 to £250 this year for all pensioners, and £400 for the over-80s. There was an interesting exchange between the hon. and learned Member for Torridge and West Devon (Mr. Cox) and my hon. Friend the Member for Ealing, North about the value of means-testing and universal benefits. This is a live debate, but, as I have said, the winter fuel payment was introduced not only to tackle fuel poverty but to give reassurance to a wider group of pensioners. Winter fuel bills account for 60 per cent. of the years total fuel bill, and the payments make a substantial contribution to meeting them.
Cold weather payments have also featured in the debate. Fortuitously, the payments were increased this year from £8.50 a week to £25 a week. Owing to the winter being excessively cold, we have so far paid an estimated 8.3 million cold weather payments, based on the temperature criterion for Great Britain being met up to 15 March. That is more than 1 million more payments than the previous highest level, and more than the combined total for the past seven years. An estimated £209 million has been paid, which is more than three times the previous highest level, and more than the combined total for the past 15 years. I regret the circumstances described by my hon. Friend the Member for Slough, and I hope that the point she made about her pensioner constituents failing to receive such payments will have been heard by my colleagues at the Department for Work and Pensions.
I was also asked about weather stations. The scheme links groups of postcode areas to weather stations that report to the Met Office on a daily basis. Each postcode area is assigned to a station with the most similar mean weather temperature. It is not necessarily assigned to the nearest station. I appreciate that some hon. Members might not find that satisfactory, but that is the explanation. We also attempt to provide a further income boost by including benefit checks in some of our specific fuel poverty delivery programmes.
After prices and incomes, the third, vital factor influencing fuel poverty is, of course, the energy efficiency of homes. That is the basis of the Bill before us today. I acknowledge that the UKs housing stock falls far behind that of most of our continental neighbours, and that all Governmentsand, indeed, the building and construction industry, and householdershave been slow to insulate our houses. This is undoubtedly a legacy of earlier cheap energy.
That is why obligations have been placed on energy companies to deliver energy efficiency measures to households. Building on a previous obligation, we have
introduced the carbon emissions reduction target, which runs until 2011. Forty per cent. of that programme of insulation must be directed at a priority groupincluding the most vulnerable people. Through the CERT, the energy suppliers are required to deliver carbon savings, which are provided through the installation of energy efficiency measures, and we are now consulting on increasing the target for 2008 to 2011 by some 20 per cent. It is estimated that that would drive about £560 million of energy supplier investment into households across Britain, £300 million of which is expected to be in the priority group of households. In total, we expect energy suppliers to need to invest about £1.9 billion in energy efficiency and low-carbon measures into priority group households across Britain between 2008 and 2011.
Overall, those vulnerable customers are more likely than the average householder to be in danger of falling into fuel poverty, and vulnerability to fuel poverty increases with age. Among householders aged 70 or more who do not claim benefit, the average fuel poverty level is around 50 per cent. higher than in the overall population. That is why we have expanded the priority group to include not just low-income customers, but all elderly customers aged 70 and over.
Through the CERT, a range of traditional energy efficiency measures are installed, and there is also an incentive to encourage the insulation of more costly measures appropriate for hard-to-treat homes, which was raised by several hon. Members today. We believe that this is an important step, which has already resulted in some 40,000 homes benefiting from solid-wall insulation in the past three years. By 2011, it is estimated that the CERT will have contributed to around 6 million households to realise significant energy bill savings.
Another area of major activity on energy efficiency, benefiting many poor households, is, of course, the decent homes programme, which has already been referred to in the debate. In the social housing sector, the decent homes programme has helped to transform the standards of many homes; the work completed or planned will have had such an impact by 2010 that we expect 95 per cent. of social housing to have met or exceed the standards set, including the provision of a reasonable degree of thermal comfort.
When we came to power in 1997, we faced a backlog of repairs with a value of £19 billion. Some 2 million homes were failing to meet the basic decency standards and it is only through the sustained and long-term commitment that we have set out, and our ensuring that it is delivered, that we can hope to transform that vital part of the housing stock. We set a target in 2001 to make all social housing decent by 2010. As I have indicated, more than £29 billion has been invested since 1997 and the number of non-decent social homes has been reduced by more than a million. Between 2001 and 2008, we put in more than 1 million new central heating systems into council homes. From my own constituency experience, I recall that I used to have many people coming to see me year after year to complain that their council houses were bitterly cold in the winter, but, recently, no one has come to see me with that particular complaint.
A total of more than £40 million will have been invested by the end of 2010 and work will have been completed on 3.6 million homes, with improvements for 8 million people in total, including 2.5 million
children. I can thus echo the sentiment expressed by the hon. Member for North Southwark and Bermondsey (Simon Hughes) about the significant contribution made by council housing to energy efficiency.
All those are important considerations, but the Warm Front scheme remains the Governments main programme for tackling fuel poverty in the private sector, having developed from the original home energy efficiency scheme. Warm Front has assisted almost 2 million households since its inception in June 2000. Last year alone, we assisted almost 270,000 households, and this included the provision of insulation for more than 58,000 lofts, filling more than 30,000 cavity walls, installing 20,000 new central heating systems and providing 74,000 new boilers. Since 2000, the Government have provided more than £1.8 billion of funding for Warm Front, which is unprecedented in the level of investment and commitment to delivering energy efficiency measures to vulnerable households.
Mr. Dismore: Warm Front has been a real success, but the Minister will have heard the various concerns expressed about it in the debate, particularly the lack of competition and what appears to be a tendency to over-pricing and poor workmanship. Will she comment on that?
I wanted just to remind everyone that we have increased funding to more £950 million in the current spending round until March 2011, including an increase of £74 million announced in September and a further increase of £100 million in the pre-Budget report. We are also providing £50 million to ensure that people receive the help that they need sooner rather than later.
As was pointed out by my hon. Friend the Member for Dundee, West, it appears to be Conservative party policy to cut the budget of the Department of Energy and Climate Change. That would put these programmes at risk, although I took what was said by the hon. Member for Wealden as a plea for us to put even more money into the Warm Front scheme.
Charles Hendry: My point was that although the Government might have put £100 million back into the scheme, there is still £76 million less than there was before they took out £100-odd million. The Government may make big noises about how much they are putting back, but the fact remains that the original amount has been cut.
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