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3 Mar 2010 : Column 258WH—continued
None the less, the intervention by the hon. Member for Castle Point (Bob Spink) is pertinent. The situation is most confusing. Too many things are going on, and there are too many obligations. People who by definition are poor have to worry how the heck they are to access all those things, including whether they are getting the best deal and who they should ask for advice. Those are questions also for those who are not technically fuel poor, but who wish to improve the energy efficiency of their homes and to use greener energy systems.
I do not know whether other Members have tried this, as I have, but when one seeks information someone will say, "This is who supplies solar, and these people do wind, and these do heat pumps." People then phone those suppliers, but of course they want to sell them the products that they market. What people really want is access to an objective, impartial energy audit that says, "Your house needs this in the way of insulation and would benefit from that energy mix. Here is a range of the people who can provide you with installation quotes and costs, and they work to approved standards." If that happened, I suggest that people would then want to know what grants and long-term loans were available.
One scheme that seems to have been successful is the boiler scrappage scheme. Those running it say, "The phone is ringing off the hook with people wanting to replace their boilers and take advantage of the scheme." I say in passing that it is regrettable that the scheme has not been extended to Scotland. I know that Scotland has the money and may be spending it differently, but I am not trying to make a party political point. However, given the scheme's success, I suggest that the Scottish Government could usefully consider it.
John Mason (Glasgow, East) (SNP): Is not the scheme being introduced in the same way in Scotland?
Malcolm Bruce: If so, I am glad to hear it. The latest information that I have is that it is not available, but perhaps it will be, and I would welcome that. It is a simple scheme and it works. Devolution allows the Scottish Administration to do things differently, but I believe that if the scheme works we should use it. That is all I wish to say about the matter.
People also say that we should have smart meters, but smart meters are of value only if they tell people what is going on. They have to be able to record in real time, so that people can make active decisions. We should be clear when talking about smart meters that we need the whole package, not just half of it.
Home energy reports are of rather limited value-almost a gesture. They could be much more rigorously enforced. Indeed, if we are raising standards, the standard of home energy reports should rise with them. People should know their real value and, if they are below value, what should be done. That should be included in the negotiations on buying and selling houses-people should know what they have to do to bring the reports up to standard.
We are in the middle of the deepest recession in living memory. We face the huge challenges of hard-to-treat homes, fuel poverty and the need to develop and introduce greener forms of energy. I can think of nothing that would do more to stimulate employment, investment,
economic growth and recovery than a major investment programme in that area. My concern is that the Government have failed to come forward with a comprehensive way to ensure that we deliver the materials and the installation capacity, and the carbon reductions and poverty reductions that should go with them.
I have no doubt that the Minister will refer to yesterday's announcement. He will not be surprised to hear that, like so many announcements, it is a statement of good intent that sounds attractive, but when will the detail be available and when will anyone be able to use it? If people want to invest in energy efficiency and renewable energy in their home, they will want not only the best advice, but the right financial package to cover the cost of installing it and to give them savings at the same time.
I welcome the principle behind yesterday's announcement by the Secretary of State, but I shall be much more convinced when I see the colour of his money and we hear details of how people can get hold of the money. I suspect that it will not be this side of the general election.
We are debating an important subject with many dimensions to it, and I am sure that other Members will wish to mention other aspects. I hope the Minister can answer some of the key points that I have raised.
9.56 am
Danny Alexander (Inverness, Nairn, Badenoch and Strathspey) (LD): It is a great pleasure to speak under your chairmanship, Mr. Cook. I congratulate my right hon. Friend the Member for Gordon (Malcolm Bruce) on securing this debate, which is on an important topic and is being held at an apposite time.
I agree with all the points that my right hon. Friend made, but I particularly endorse what he said about the effect that the location of the weather stations has on the cold weather payment. I am sure that Members from all parts of the north of Scotland have similar problems with the location of the weather stations; it leads to communities living in certain geographical circumstances that experience very cold weather being disadvantaged when it comes to the allocation of those moneys.
I hope that the Minister takes on board what my right hon. Friend said about the weather station in his constituency, and that he is willing to extend the principle. Perhaps he will don his snowshoes or his skis and tour the north of Scotland, to experience for himself some of the variations in weather that occur in geographically contiguous areas.
The Parliamentary Under-Secretary of State for Energy and Climate Change (Mr. David Kidney): It was not in the highlands or in the snow, but I was in Aberdeen last month.
Danny Alexander: I am delighted to hear that. I hope that the Minister enjoyed his visit. He is welcome to visit the north of Scotland at any time, not least if one purpose of his visit is to consider the issues raised by my right hon. Friend.
This debate is taking place during a long period of severe winter weather. When I arrived home in Aviemore last Thursday, I found my home under 2 feet of snow. When I woke in Friday morning, almost another foot
had fallen, which meant that I had to work from home. All the roads were closed and I could not fulfil my constituency engagements. As my right hon. Friend said, with snow on the ground in Aviemore and many other parts of my constituency consistently since 16 or 17 December until now, and probably for several weeks more, such matters are particularly important.
I wish to speak about a particular group of people-those who live in rural and remote areas. As my right hon. Friend said, many use heating oil or liquefied petroleum gas to heat their homes, as they are almost exclusively off the mains gas grid. That has a number of consequences. First, people are more likely to suffer fuel poverty. Secondly, more are likely to suffer extreme fuel poverty. Thirdly, they are more likely to have much higher energy costs, and they tend to live in harder-to-treat homes.
I bring some evidence to the debate. It is based on a survey that I carried out with my right hon. Friend the Member for Ross, Skye and Lochaber (Mr. Kennedy) last autumn. We focused specifically on the rural parts of my constituency and his-Badenoch and Strathspey in my constituency, parts of rural Inverness-shire, Ross-shire, and Skye and Lochaber in my right hon. Friend's constituency. The evidence demonstrates that fuel poverty is felt more extremely in those parts of the country.
We found that 15 per cent. of people spent more than 10 per cent. of their household income on energy bills. Of those people, 21 per cent. spent more than 20 per cent. of their income on energy bills, which, as my right hon. Friend the Member for Gordon said, is the definition of extreme fuel poverty. For 49 per cent. of those people, the main source of heating was heating oil. Ten per cent. were using LPG, some were using electric heaters and a few were on mains gas. Over the past year, 70 per cent. had seen their bills rise and 43 per cent. had struggled to pay their energy bills. Various points were raised about energy sources. It was interesting to note how few people received help through social tariffs and how few had tried to switch suppliers.
Mr. Drew: Does the hon. Gentleman agree that a weakness of the CERT-carbon emissions reduction target-scheme is that the lack of transparency means that energy companies do not have much incentive to prioritise groups that are in fuel poverty? Too often, they go for the early easy wins, which are homes that are easier to heat.
Danny Alexander: I agree with the hon. Gentleman. In many stone-built houses without double glazing, the energy-saving light bulbs that have been sent through the post are piling up, when different sorts of help would make a bigger difference. He is right about the transparency and support in CERT schemes. That is also a problem with social tariffs, which can be hard to understand and to get information on because of the complex systems that vary from company to company. Those things militate against people receiving the help to which they are entitled.
I wish to raise a number of issues with the Minister in relation to hard-to-treat homes where heating oil or LPG is the main energy source. The first point is about regulation. There are obligations on major utility suppliers, such as gas and electricity companies, to engage in schemes such as CERT, to provide support and to offer social tariffs. There is no such regulation of heating oil
providers. There is also a major gap in the access and involvement of statutory consumer bodies such as Consumer Focus, which take up and pursue issues.
Dr. McCrea: Does the hon. Gentleman agree that there is great concern within communities about the price of heating oil? When the market price rises, the consumer price immediately goes up. However, when there is a reduction in the market price, the price that people pay for oil to heat their homes is not reduced at the same speed. There is a demand for transparency in that regard.
Danny Alexander: I am grateful for that intervention, which made one of the points I was intending to make. That trend applies not just to the oil sector, but to gas and electricity. Companies are quick to increase the price but not as quick to pass on reductions. Certainly in my constituency and across the north of Scotland, small providers in the heating oil sector do their best to pass price reductions from the major oil companies on to their customers as quickly as they can. The lack of will is not with the local providers, but with the major oil companies from which they receive their supply.
David Simpson: Does the hon. Gentleman agree that one difficulty with the pricing of fuel, including gas, is that it is traded at least four or five times through commodity dealing before it reaches the shores of the United Kingdom, whether in Scotland, Northern Ireland or elsewhere?
Danny Alexander: I bow to the hon. Gentleman's knowledge of the trading conditions for such commodities. I accept that there probably is such a problem, although it is not an area on which I am particularly expert.
Bob Spink: On this important point, does the hon. Gentleman agree that the situation is even worse than has been stated because many energy companies forward-buy their oil or gas at a fixed rate? Therefore, when prices rise, they do not necessarily go up for the companies straight away; often it takes up to six months. However, they are quick to increase prices for the consumer. The regulators need to take more firm action to make this matter transparent and to stop it.
Danny Alexander: I am grateful for that intervention. I am sure that the Minister heard the point and will respond.
Some smaller heating oil companies in my constituency endeavour to help people struggling with their bills, for example by allowing them to spread payments regularly over weeks or months so that they do not have to pay huge lumps of cash up front when the oil tank has to be filled up every couple of months. My constituents have had to fill their oil tanks more frequently over the past two or three months because of the severity of the winter conditions. After Christmas, the road conditions made it difficult for oil companies to get oil to people's homes and there was a serious risk of shortages. I am grateful to the Government for acting to lift some of the working-hours regulations to address that issue. Many companies would like explicitly to provide social tariffs in this sector to people in the most difficult financial circumstances, but are unable to do so because of their relationships with large oil companies and the lack of regulation.
My second point about such households concerns access to home insulation and other energy efficiency measures, to which my right hon. Friend the Member for Gordon rightly devoted a large portion of his speech. As such help is delivered partly through electricity and gas companies, those who have an unregulated oil provider have less access to such help to improve their homes.
I have investigated the systems that have been put in place in Scotland, such as energy helplines. Although in theory there are measures available to help people in older homes that use heating oil, in practice they are hard to get. One organisation I talked to could give only one example of someone having an air-source heat pump installed as an alternative to oil, but could give hundreds of examples of people who had received a bit of loft insulation. I am not decrying the importance of loft insulation, but the people I am describing tend to need more expensive measures that are just as necessary, if not more necessary, because of the circumstances in which they live.
Mr. Gregory Campbell (East Londonderry) (DUP): The hon. Gentleman is touching on an important point. In parts of the UK, particularly Northern Ireland, advantageous schemes are unveiled by devolved Ministers. Sometimes, as advantageous as the schemes are, the people who could benefit most from them, namely the lower socio-economic groups, are unaware of the advantages. Unless such schemes are promoted more vigorously, the people who are supposed to benefit are also the ones who are least likely to avail themselves of them.
Danny Alexander: I would state the point in a different way: many of the schemes sound good, but are difficult to access for the people who need them most, who are often those living in older homes, for whom the schemes would be more expensive. They are difficult to access partly because of the information and the lack of awareness of what is available, but partly because the way in which the schemes are administered often means that the priorities are more to do with volume than with helping the people with the greatest need. I would like the Minister to address that issue.
Malcolm Bruce: My hon. Friend will have been to many presentations in this House by energy companies, where they offer all kinds of new technology but point out that the costs are disproportionately high. Does he agree that if the Government got their act together and put all of the schemes together, the market would be unlocked and a whole new industry created, which would reduce costs and benefit everybody, whether poor or better-off?
Danny Alexander: I am sure that my right hon. Friend is right. An extension of the principle behind the boiler scrappage scheme to other technologies over a fixed period would provide an incentive, which would encourage industries to flourish and the training of technicians. That would make a big difference to the availability of such support.
Before I move on to another issue, I should say that I would be interested to hear the Minister update hon. Members on the status of the renewable heat incentive. I have big concerns about a scheme that is based on
adding to the costs faced by those people who already have the highest costs-people who use oil, gas and coal-to fund improvements that are necessary to reduce those costs. The financial burden of those sorts of improvements should not fall most heavily on people who are already facing the highest costs. The Government were consulting on and considering that issue, so I would be grateful for a status update and an assurance that the Government do not intend to place extra financial burdens on users of heating oil and LPG, whatever the environmental merits of the schemes that will be paid for.
I also want to ask the Minister one or two questions on another form of fuel that can help to deal with such issues and provide an alternative to healing oil: wood fuel. Wood fuel is renewable, available and, very often, local. For example, in a housing development where I live in Aviemore, a district heating scheme warms 100 homes and is fuelled by a wood fuel boiler that uses wood material sourced from the sawmill 7 miles down the road. That has reduced costs, had significant environmental benefits and is an example of the sort of thing that could be done more often with wood fuel.
A very good European co-operation programme is going on between people in Scotland and other European countries. It has been set up by an organisation called Highland Birchwoods, which is considering how the use of wood fuel can be encouraged and how wood fuel boilers on a domestic scale can be pushed forward.
I would be grateful for the Minister's help on the issue of the VAT regime on wood fuel. Hon. Members will know that VAT on fuel is charged at 5 per cent. As wood has a wide variety of uses, however, suppliers of wood fuel face a VAT charge of 17.5 per cent. at wholesale level. The Government provide very little information proactively to suppliers of wood specifically for fuel uses-whether to providers of pellets wood chip, or anyone else who might be taking wood on a wholesale basis and converting it into wood used specifically for fuel-about how to reclaim the VAT difference.
In my constituency, for example, log suppliers have in good faith understood that they were required to charge VAT at 17.5 per cent. on logs when, in fact, they should have charged 5 per cent., which would have made a big difference to relative costs, principally to the consumer. Government should try to make clear the VAT rates on wood fuel and ensure that information about how to reclaim the difference is made easily available to small suppliers. That would make a big difference to promoting wood fuel.
More skilled technicians who can install wood fuel boilers as part of a domestic or district heating scheme are also needed. I commend to the Minister the work being done at Inverness college in my constituency to train up such technicians. As the technology becomes available and is more widely promoted, and the supply chain for domestic wood fuel builds up, it is important to ensure that there is a network of people who can install the technology.
I shall end on the same point with which my right hon. Friend the Member for Gordon concluded. We are just coming out of the depths of the worst recession that this country has experienced for 60 years, and there is a significant need to create jobs. We have the opportunity to move the economy in a more environmentally sustainable direction. However, we need to ensure that any changes
operate on the basis of the overriding principle of fairness that I certainly believe in and that is so well established in this country.
An effort to enhance support for measures to tackle fuel poverty-particularly home energy efficiency and home insulation-and to bring people in remote and rural areas who use much more heating oil and LPG within the reach of those measures, would have a dramatic impact on jobs, on the financial burdens on families who are struggling to make ends meet, and on ensuring that our society is fairer. For all those reasons, I urge the Minister to take any steps that he can to ensure that people in remote and rural areas who rely on off-gas-grid heating sources are given a much higher priority than they receive currently in the Government's thinking.
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