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"The Government's position is that in our general policy direction, we are where every Member who has spoken has urged us to be. We have already commenced a consultation on the best way to get a detailed policy so that we can travel forward... I believe that consultation is a very good thing and an important component of getting policy right."-[ Official Report, 3 July 2009; Vol. 495, c. 636.]
The consultation has ended, and we are clear that there ought to be- [Interruption.] I know that the Government have responded, but we need to know what they will do now. It is generally accepted that the current carbon price is not the stable one that this country and the world need, and that it needs to stabilise at something much more like €50 or €60 a tonne than the present €14 a tonne.
Given the European Union directive on clean coal, which will come into force at the end of the next decade, we need a clear position on the future of coal in this country. There has to be a clear statement that there will be no new coal-fired power stations without carbon capture and storage working right from the beginning, not retrofitted later. Without that absolute parameter, the industry will not know where it stands, and Ministers know that we are likely to have new coal-fired, dirty coal power stations that will contribute to worsening the climate crisis rather than help to solve it.
Another question about the CCS levy has been asked a couple of times already. I assume that the Secretary of State-again, he was silent on the matter-does not expect the parts of the energy industry that do not release carbon into the atmosphere to contribute to the levy to fund CCS demonstration projects. I assume that under the regulations that he anticipates-like the hon. Member for Tunbridge Wells (Greg Clark), I believe that it would be helpful to see them in draft-the renewables sector will not have to contribute. It would be nonsense if the sector that does not contribute to the climate crisis and the emissions problem had to pay to develop the technology for making dirty coal clean.
One other point on the technology of carbon capture and storage has not so far been alluded to, and I would be grateful if the Minister of State mentioned it in her response. She has said before how important it is that we share the technology that we develop in this country with developing countries in other parts of the world. It is not just we in the rich west who will need CCS; it is eastern European countries such as Poland, as well as countries such as China. What will happen to the intellectual property of the technology that the prototype plants will produce? I hope that it will be shared and that we do not just develop it to be nationalistic. I understand that all the CCS interests are to be consortiums of companies, some British but mostly international, in locations up and down the east coast, so I hope it is clear that we will share the technology and intellectual property and ensure that we have the power to help the developing world and not just ourselves.
The second section of the Bill is probably the most immediately important to our constituents, because it is about how we deal with rising and, for many people, unaffordable fuel bills. The Government know how embarrassing their record on that is. Again, that is not because of this Secretary of State, but his Government should be embarrassed about the cost of fuel to the poor over the past 12 and a half years. They set a statutory target, which still exists in law, to eliminate fuel poverty in vulnerable households by 2010 and all households by 2016. I understand that 4.5 million or more households now spend more than 10p in the pound on their fuel bills, compared with 2 million or thereabouts only four years ago. We know that there are explanations for part of that and that there has been a massive failure to take up benefits and tax credits that could help to pay the bills. However, it is not just pensioners who are affected but single-parent families and those with long-term illness, who do not benefit from the winter fuel payment. The hon. Member for Sherwood alluded to that. The whole system has failed to ensure that the poor and the vulnerable are protected.
Another group affected, which is often spoken for by Liberal Democrat Members such as my hon. Friend the Member for West Aberdeenshire and Kincardine (Sir Robert Smith), is the large number of people who live off the gas grid. They may live near it, but they have not been protected at all by the system. They have had to buy their liquified petroleum gas or oil fuel and get it into the tank at the bottom of the garden, and nothing has protected them. There have been 12 and a half years in which some of the rural poor have not been assisted at all, along with many of the urban and suburban poor.
Ministers know that the Liberal Democrats are again going to criticise the fact that all the schemes for warm homes have been piecemeal, limited and inadequate responses. They have told us this year that only one in 80 homes in Britain is a warm home, so we need a scheme that encompasses everybody. The carbon emissions reduction target and Warm Front are inadequate. Age Concern tells me that it receives 5,000 complaints about Warm Front every year, and CERT does not have reducing fuel poverty as a key objective. I understand that Warm Front funding will be cut by half next year, from £350 million to about £176 million, because some of the money was brought forward. The size of the grant has been kept the same, but fewer and fewer people are benefitting. We have heard the example of the latest pilot scheme, which is for but a handful of people.
If Ministers had said that they wanted a scheme rolled out across Britain, led by Government and using local councils, to make every home a warm home within 10 years, as we have argued for, they would have had our support. [Interruption.] Of course it costs money, but there are ways of doing it and I have explained them in the House. The Government could underwrite a loan that was paid back over a maximum of 10 years. Of course there would have to be investment for that underwriting, but it would be worth it. It would save on CO2 emissions, produce warm homes, reduce winter deaths and insulate housing.
I would have liked the Government to display that sort of ambition, and I would have liked them to tackle
the problem of those who pay far more than average for their fuel bills because they are not connected to the gas grid. The figures that I currently have are that the average bill of someone on mains gas is £568 a year, that of someone on domestic fuel oil more than £1,000 a year and that of someone on LPG more than £1,300 a year. There is no justification for that inequity in this country today.
There is plenty of evidence and Select Committees have put the argument for change on an all-party basis, but the problem is getting worse. We know that last year, gas bills year went up by 58 per cent. and that this year, when gas prices came down, bills decreased by only 6 per cent. Last year, electricity bills went up by 28 per cent., but when prices came down this year, they decreased by only 8 per cent. The reality is that the system has not properly regulated bills according to the wholesale prices paid by the utility companies that supply the product.
There have been opportunities in this place to legislate along these lines. My hon. Friend the Member for Somerton and Frome (Mr. Heath) introduced a Bill to deal with high fuel bills earlier this year, but the Minister resisted and talked it out, and did not let it proceed. The reality is that it is bit late now, in the last months of a Labour Government, to get a Bill through to paper over the cracks and to try to cover the embarrassment that they know they feel, in however limited a way. They have not delivered to their constituents, but far worse, they have not delivered to the public as a whole.
There is one very odd bit of the Bill that I hope the Minister can explain. Clause 14, "Schemes for reducing fuel poverty", states:
"For the purposes of this Part, fuel poverty is reduced if... (a) the number of people living in fuel poverty is reduced, or...(b) the extent to which any person is living in fuel poverty is reduced"
and clause 14(4) appears to give the Secretary of State by regulation the opportunity to redefine fuel poverty. I should like clarification of that, because we have seen plenty of figures massaged over the years. I know the Government are embarrassed, and they know they are embarrassed, but we need to be clear. If the general understanding is that when we talk about fuel poverty, we are talking about people who pay more than 10 per cent. of their income for fuel, that should remain as the definition. Ministers, whether of this Government or the next, should not have a chance to change it and to pretend that the problem is less than it is.
On the regulation of the energy market, if this was a Bill to really get to grips with Ofgem and produce a regulator that regulated in the consumer interest, people would say, "Amen." However, I sense the Bill will be not nearly as tough as that. The Secretary of State has spoken to Ofgem and told it that if it does not behave, there will be more draconian powers, but the Bill introduces only a modest change to its regulatory authority.
Of course, there is some good stuff. The provision to ensure that energy transmission costs, which could result in higher bills if companies argued that they had low capacity in the grid, cannot be a method of exploiting the consumer is a good thing, and we welcome it. It is also good that the time period for investigations will be extended. There have been lots of abuses. I have seen cases in the paper and I have spoken to people who have had repayments of more than £1,000 from npower, because there has been a fiddling of the tariff and a
misrepresentation of the cost. Those cases were taken up and awards were made in favour of those people. What will happen to cases that are currently timed out, but in which there has been a clear breach? I am not asking for retrospective legislation, but what remedy is there for people who have a clear, justifiable complaint against utility companies that has not been met?
I am concerned that nothing in the Bill will make Ofgem more open to the consumer, accountable and transparent. Ministers know what Consumer Focus, Which? and others are asking for -that Ofgem meet in public and that it include representatives of the public. The regulatory body needs to be much more accountable if it is to have the confidence of the public.
There is now going to be, for the first time, an ability to change the rules on the method of payment and the Government will have the power to control such things. The current voluntary system to which, as I understand it, the energy companies have subscribed, means they do not currently charge more, for example, for prepayment meters. However, I am concerned that some of the companies have indicated, even this winter, that they may be willing to go back on the system and charge more. Scottish and Southern Energy, for example, has said that it intends to withdraw its offer of equalisation at the end of this winter.
The hon. Member for Sherwood led into my speech by saying that this is a modest Bill, which sadly it is. In Committee, we will seek to make it tougher. We will seek to make Ofgem's powers tougher and the rights of the consumer greater and to ensure that the schemes for making our homes in Britain warmer and better insulated are much more extensive. We will also seek to ensure that the CCS proposals do not penalise the renewables sector, which has just been re-incentivised by increased support. We need that support to go on growing, and we must not be seen as punishing or hindering such development.
We hope that we will make the Bill stronger and tougher. The Secretary of State has promised to be bold when he goes to Copenhagen in the next couple of days. I hope he will be, but I also hope that he will leave a message for his ministerial colleagues who will be in Committee that if the last of the Labour Government's Energy Bills is to be worth having, it needs to be much tougher, bolder and socially just.
6.16 pm
Dr. Alan Whitehead (Southampton, Test) (Lab): Hon. Members have this afternoon said that the Bill is a modest one. It is indeed modest if one goes by the number of clauses or what it provides by way of new legislation in the light of what we know are the challenges ahead. However, when considering Bills, it is important to understand clearly what we need to legislate on at particular times. It is important to ask what has already happened legislatively and what is still required. It is also important to ask what the role of regulation is and what are the roles of future initiatives, which stem from powers given by the Bill and other legislation, in meeting the energy challenge ahead of us.
The reality is that the Bill builds on the Energy Act 2008 and a number of other items of legislation to make some progress on issues relating to the energy challenge. In any event, regulatory powers are already available and financial investments can and are being
made. There is a strategy for ensuring that a new low-carbon energy economy properly protects those in fuel poverty, and for ensuring that the future base load of our energy supply, which will inevitably concern coal and gas in future, is properly developed as far as the low-carbon form of energy supply and CCS are concerned. The regulator has the base powers to regulate the energy market as it becomes much more sustainable. They may appear to be modest legislative achievements, but they underpin a much greater step forward.
What we have heard this afternoon concerns me. The Opposition claim that they will allow the Bill a Second Reading and make changes in Committee, but they would, were they to have their way, have a huge legislative programme. They make declaratory statements on everything under the sun as far as energy policy is concerned, including on a great deal of legislation that, unless they have been completely oblivious of what has been happening in the House, they would notice has already actually been passed.
For example, we know that as a result of the 2008 Act, a feed-in tariff for smaller-scale electricity generation will be introduced soon. We know that the year after that a renewable heat incentive will come in. Incidentally, that will be the first introduced by any Government anywhere in the world to ensure that renewable heat is part of a programme of moving towards low-carbon domestic and commercial energy for providing heat.
Having that legislation in place will help when it comes to the next stage in energy efficiency for households and domestic properties, because that will require not just passive insulation and energy efficiency measures but active measures such as the installation of small-scale or district generation in domestic properties. That can reduce the carbon footprint of a house radically over time. Therefore the future relates to regulation following from legislation that has already been passed, and the will to ensure that that happens actively in the future. The claim that an opportunity to pass legislation has been missed in those areas is to misunderstand how one makes progress with a renewable and sustainable energy policy. I do not claim that that is a deliberate misunderstanding, but a misunderstanding it is, nevertheless.
It concerns me when that misunderstanding is compounded by simplistic claims about how progress can be made on these issues. We have heard the suggestion -it was repeated this afternoon-that every household should be given £6,500, and that that will sort out the whole question of insulation and active energy generation concerns. As a result, it is suggested, we will have fully insulated and approaching zero-carbon households, but it is akin to the other short-lived policy we heard about a while ago, whereby everybody was to put £8,000 into the pot and they would then have their health and social care needs taken care of for the rest of their lives. That policy ran into similar mathematical difficulties.
The mathematics of the £6,500 policy-over and above requiring loan guarantees of some £160 billion to £170 billion to be injected into the economy if the guarantee is from the public purse-would require savings of £360 a year, if the loan is to be serviced and assuming that it would not be just given out to householders.
Mr. Goodwill:
The hon. Gentleman is making one or two errors in interpreting our policy. The amount would be up to £6,500, because not every home would require the same level of cost-effective investment. Any private
company that can save money on its electric bills by investment is doing so: the problem with individuals is that they cannot borrow the money in the same way as businesses. This scheme would enable them to draw down their future energy savings to invest in the energy efficiency of their homes. It seems a bit of a no-brainer to me.
Dr. Whitehead: I am delighted that the hon. Gentleman intervened at the moment that he did and in the way that he did because he has completely anticipated my next point. Despite the fact that the leader of his party insisted that every family in the country could spend £6,500 on their household energy efficiency-and the shadow Secretary of State for Energy and Climate Change emphasised that point in the House recently-the truth of the matter is that in practice it would be nothing like that sum. And if it were £6,500, it would be unsustainable to support, in terms of the investment required to underpin it. It is only because the sum would be nothing like £6,500-it would be more like £1,500 on average under the Conservatives' blue-green energy proposals-that funding the policy even starts to become conceivable for most households. Indeed, the savings suggested for an expenditure of £1,500 are the full £360 that would be needed to underpin the £6,500 in terms of the interest that would be lost through granting that sum. It is claimed that those savings would result from measures such as the installation of low-energy light bulbs, cavity wall insulation and roof insulation, all of which have already been legislated for to a considerable extent, or are under way. By 2011, for example, low-energy light bulbs will be in place across the whole of the UK. The Conservative's policy does not take seriously the real job that needs to be done, especially on fuel poverty, or the investment in efficient homes that it will be necessary to undertake.
The recent White Paper, which does take the issue seriously, proposed that all homes should have a whole-house package-to be achieved not by legislative means but through other measures-to include cost-effective energy saving measures plus renewable heat and electricity measures as appropriate by 2030, and all lofts and cavity walls to be insulated, where practicable, by 2015. It also included the development of new ways to provide financial support so that people could make more substantial energy saving and renewable energy improvements. Does it not appear sensible to work out how that can be done properly in order to pursue the policy, instead of magicking a sum of money out of thin air, which would be completely insupportable in the real world? Would it not make more sense to examine placing a charge on the district network operator for the supply to the household? Would it not make sense to consider how loans could come into the equation to overcome the capital costs of such energy-saving devices? Would it not make sense to consider the option of leasing, or to pilot some of these schemes so that what we say and what we can do are the same thing? In a future low-carbon energy economy, the savings will need to match up to the investment so that the householder will be in a win-win situation in terms of their energy bills as well as the security of a well-insulated, low-carbon house.
We need to be clear that whatever the oscillation in energy prices in the future, they will be high and will get higher. There is therefore a particular onus on us to
bring forward serious and well-thought-out programmes to ensure that those people who are not able to afford their energy bills now-let alone future higher energy bills -are proofed against those bills for a long time to come.
We need to be looking at a quantum shift in our understanding of what an energy bill should consist of and what those in fuel poverty face in paying their fuel bills. For the future, I envisage that happening in much the same way that council tax is paid-everybody pays it, but there is a rebate for those in less fortunate financial circumstances-so that a number of people are thereby effectively excluded or only partially included in the process of paying energy bills. Having a requirement in the Bill that social tariffs be introduced by legislation in future, rather than by voluntary agreement, seems to be a move towards that idea. We are all in this together, in ensuring that we have a low-carbon energy economy, alongside what we know will be high prices for energy supplies, but at the same time ensuring that the effects of that high-cost energy economy are not brought to bear in a most cruel way on those who can least afford to finance such an energy economy.
Therefore, a fuel poverty strategy should combine several different factors, not all of which will exactly correlate with each other. It is not the case, for instance, that everybody who is in fuel poverty lives in a badly insulated house, although a good proportion do so. Therefore, a strategy that moves rapidly towards ensuring that the standard assessment procedure ratings-the SAP ratings-of houses across the country are raised substantially, in order to fuel-poverty proof those houses as far as possible, seems absolutely essential. However, it is also not the case that simply doing that will cause everybody who is now in fuel poverty not to be in fuel poverty. It is also not the case that everyone who is in fuel poverty stays in the same house. Therefore, a programme to ensure social tariffs, tariff reductions and affordable tariffs for those in fuel poverty-these might be related as, in effect, a gateway benefit, in respect of other indicators of the fact that a person in fuel poverty lives in a house that is not well insulated-would seem to be a way forward in ensuring, as far as possible, that fuel poverty becomes a thing of the past in our future energy economy.
We have to be honest and reflect on the indicators of fuel poverty. Although it is widely accepted that those who spend more than 10 per cent.-10p in a pound-on their energy bills are in fuel poverty, that definition rises or falls precisely with energy prices. Some 40,000 people will be in fuel poverty if fuel prices rise by 1 per cent., yet they will apparently come out of fuel poverty if fuel prices fall by 1 per cent., regardless of their objective circumstances before or after that price rise or fall. Therefore, attempting to secure a combination of factors in fighting fuel poverty, so that people are fuel-poverty proofed as far as possible, seems to be the right way forward. That will require a combination of legislation and regulation on a series of important fronts. It is therefore interesting to note that the code for sustainable buildings, which will ensure by 2016 that the building of new houses is carbon-neutral as far as possible, which will, among other things, help to increase the SAP rating of UK housing stock, is not based on legislation.
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