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3 Mar 2010 : Column 265WH—continued
10.15 am
Mr. Roger Williams (Brecon and Radnorshire) (LD): I apologise, Mr. Cook, for your not being informed that there was a change in the Liberal Democrat spokesperson for today's debate. I congratulate my right hon. Friend the Member for Gordon (Malcolm Bruce) on initiating the debate at this most opportune time and on raising a number of issues that affect my constituency and that of our hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander) as much as they affect his.
The problem affects not only rural and remote areas, but urban areas. Indeed, the difficulty of dealing with energy inefficient homes is particularly acute in the private rented sector, where the cost of improving the efficiency of a home falls on the landlord, but the benefits accrue to the tenant and to the country as a whole through the reduction in carbon emissions. Particularly in houses in multiple occupation, the incentive to invest and contribute capital is sometimes not supported as well as it could be by the current systems.
First, I shall discuss families in fuel poverty and their difficulty in budgeting for fuel costs. Such families are faced not only with variability in the weather-we have just experienced one of the coldest winters for many years, when people needed to use more energy and to produce more heat-but with the incredible volatility of energy prices. As a consequence, it is very difficult for them to budget for their energy needs. People in fuel poverty spend more than 10 per cent.-or, if they are in extreme fuel poverty, more than 20 per cent.-of their income on fuel. Fuel takes up so much of their income that any changes in that amount have a disproportionate effect on the money that they can spend on other things.
The Government have a duty to consider that matter in some way. I know that the Minister cannot influence the weather, although he may wish to do so in the future if he ever gets the opportunity again, but providing some stability in energy prices so that people can budget much better would be to their advantage and would reduce the impact of fuel poverty. There are ways in which that can be done, for example, social tariffs, to which I may return, but first I shall pick up some of the points that my right hon. Friend the Member for Gordon made, particularly about hard-to-treat homes.
The people who live in such homes often suffer from a triple whammy because their homes are not only an older type of property, with solid walls and other types of construction that make it difficult to improve efficiency, but they are off the gas mains. The people who live in
such homes suffer many accumulated problems of fuel poverty. An issue that perhaps has not been discussed very often is listed buildings. Double glazing was raised in another context, I think, but it is often not allowed in listed buildings because of the planning process, so one form of fuel efficiency is often ruled out for such buildings. However, many innovative builders and carpenters are designing double-glazed windows that reflect the architectural traditions of listed buildings and could be used, so perhaps the Minister could intervene with his colleagues in the Department for Communities and Local Government to see whether something could be done along those lines.
My right hon. Friend mentioned external and internal cladding, but one can imagine the planning difficulties that would be incurred if people set about altering the appearance of listed buildings. That is one problem that has not been addressed to any extent. I live in a listed building-perhaps I should have declared an interest-and recently had to apply for planning permission to install solar panels. Although that process has been eased recently, it certainly was not an encouragement to involving myself in that type of improvement.
Households that are off mains gas can experience problems. Households in my constituency use not only oil, LPG and wood, but coal, because many of my constituents live in old mining communities and for a long time benefitted from free coal because they worked in the coal industry. Not many of those families still benefit from that, but the widows of former coal miners still have coal delivered on the street outside their house and have to get their sons or nephews to cart it round the back so that it can be used. There is a range of fuels, but all are much more expensive than mains gas. Indeed, in a little village in my constituency, Garth, I came across a group of elderly people living in local authority accommodation who had decided to switch off their LPG supply because its sheer cost made it impossible for them to heat their homes. The homes were poorly insulated and they were putting their health and lives at risk as a result.
What can be done? My right hon. Friend mentioned extending the gas mains, which really would be a long-term solution for fuel poverty for so many people. However, as the hon. Member for Stroud (Mr. Drew) pointed out, the cost to individuals of having the gas mains extended is often beyond their means, and the investment would probably not produce a return in their lifetime, or even that of their children if they live in the same home after them. Will the Government consider either encouraging or subsidising gas companies to achieve a greater reach for gas mains? As I said, that would be a long-term solution to the problem.
Mr. Kidney: In Ofgem's current price control round on the energy companies-the five-year control period-there is an incentive for the companies to extend mains gas to fuel-poor households, although admittedly the scheme is modest, covering about 20,000 households.
Mr. Williams: I thank the Minister for that comment, which indicates that the Government recognise the value to the fuel-poor of being on mains gas.
I would like to refer briefly to a concern about LPG supply that I raised with the Minister during Energy and Climate Change questions. Following my predecessor's
work on competitiveness in the LPG industry and pressure I put on the Office of Fair Trading, it conducted an investigation into the competitiveness of the LPG market and found several practices that made it difficult for families to change their supplier because of the need to change the bulk tank and other fittings associated with the supply. Regulations have now been brought in that ensure that customers can now shop around between suppliers and get much better deals.
The community in another village in my constituency, Llanspyddid, were able to get together and reduce their energy costs substantially by getting competitive quotes from different companies. My concern is that that is available to those in the know. One thing that the Department of Energy and Climate Change could do is publicise the fact that people can shop around for their LPG supply. I do not think that the companies are proactively competing against one other by advertising better prices, and certainly any improvement arises only when the customers are proactive. Any raising of awareness or advertising of the possibility of changing supplier will make a real difference to people on LPG supplies.
My right hon. Friend the Member for Gordon and my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey both referred to cold weather payments, and we certainly all have our stories about those. The weather station that serves the Ystradgynlais area is situated in Swansea, which makes it sound as though it is by the seashore. Certain parts of the Swansea valley area are by the sea, but parts of it are back up in the mountains in mid-Wales-Coelbren, for example, is about 1,500 feet above sea level and is very exposed. Cold weather payments are not triggered for those living there because the weather in Swansea is more benign and tropical.
We have been campaigning to have the weather station moved to Sunnybridge, which is often on the weather map as the coldest place in the UK. That would be much more beneficial in our area. I was talking to a Gurkha the other day who said he had trained in the Arctic, which was cold but dry, in the jungle, which was wet but warm, and in Sunnybridge, which was cold and wet, he needed a high degree of personal organisation to survive. I recommend it as the site for the weather station that should be consulted in those matters.
I will finish my remarks by referring to social tariffs and the ability to switch between suppliers. I remember participating in a debate in this Chamber on a similar topic, during which we discussed the ability to switch supplier. Of the several Members present in that debate-more than are present today-my hon. Friend the Member for Twickenham (Dr. Cable) and I were the only ones who had not switched, and we concluded that it was an age thing, as we were brought up in a time when we received energy supplied by a nationalised company and did not shop around among other companies. It would be interesting to know which people do and do not switch by age band, and which of those people have access to IT equipment, which makes switching much easier. I am sure that we have all heard horror stories from constituents who have attempted to switch and then found that they were billed by two companies at the same time. All those deterrents make people cautious about whether they would benefit from switching.
Social tariffs are very complex. I looked recently at a few quotations from companies, and they have different standing charges and different prices for the first 100 units and for the rest of the units, so it is difficult to put those details together and know whether a particular tariff would benefit the consumer. If there were some standardisation of the quotes for tariffs, that would make the process much easier, and people would be able to switch with much more confidence and receive greater benefit.
On social tariffs, and further to the point made by the hon. Member for Castle Point (Bob Spink), who is no longer in his place, I have figures for an average household consumption of 4,200 kW of electricity per year. Paying by standard credit, that would cost £977; by direct debit, £902; but by prepayment, £1,049. The people who use prepayment tend to be the most vulnerable: they have more difficulty budgeting for their fuel costs, yet are penalised the most.
The sharing of data between the Department for Work and Pensions and the electricity companies on those who should qualify for social tariffs would be beneficial. There has been some talk of smart meters, and I am advised that there are super-smart meters that automatically change the supply to the most advantageous supplier for the customer's circumstances.
This is a subject that we all have experience of in our own lives, but our most vulnerable constituents have the most difficult experiences. I have read the Government's proposals for green loans, as well as the Conservatives' proposals. They have many good ideas, but we need to implement them and prioritise them, so that the most vulnerable and needy in our communities-the ones who suffer from ill health and are at risk of premature death-get the greatest help.
10.32 am
Gregory Barker (Bexhill and Battle) (Con): I congratulate the right hon. Member for Gordon (Malcolm Bruce) on securing the debate. He has an excellent track record and is widely respected in the House for his knowledge of the subject and the wider agenda. This has been an excellent debate, albeit the contributions have come from one party and from outside England; nevertheless, some sensible ideas and analysis have been offered by the right hon. Gentleman and the hon. Members for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander) and for Brecon and Radnorshire (Mr. Williams).
As well as the points about heating oil and the difficulties of the most vulnerable, and some excellent comments on the potential of wood fuel, with which I thoroughly concur, the right hon. Gentleman's opening remarks were absolutely spot-on. He said that, sadly, after 13 years of Labour Government, it is groundhog day on fuel poverty. In absolute terms, we are back to where we came in, despite the money that has been spent and the progress that we thought had been made. It is depressing that we are back at the bottom of the tall mountain that we have to climb to overcome fuel poverty.
Simply business as usual is not an option if we really want to crack the problem and make progress on a far greater scale and to a far more ambitious timetable. That is why my party proposes a completely new and radical approach to fuel efficiency. The measures to date have not been up to the scale of the task, not for lack of good will on the part of the Government, nor for a lack
of interest in the agenda, but simply because their policies have not been up to it. I am therefore grateful to the right hon. Gentleman for providing an opportunity to set out in a little more detail how we would tackle the twin challenges of carbon emissions and fuel poverty that domestic energy efficiency throws up.
As Members know, carbon emissions from the UK's housing stock are some of the worst in Europe. Without urgent action to reduce emissions, we will struggle to stay on track to satisfy the targets implicit in the Climate Change Act 2008 and the recommended emissions reduction trajectory laid out by the Committee on Climate Change. Moreover, fuel poverty is a ballooning social justice crisis throughout the UK. The average gas bill has increased by 169 per cent. since 2003 and the average electricity bill has nearly doubled. Ofgem predicts that energy bills will rise by another 60 per cent. by 2015 and, with 40,000 people pushed into fuel poverty by every percentage point rise in fuel costs, it is clear in the statistics that we have a serious problem indeed.
It is also clear that there has been systematic failure in this Government's efforts to tackle the problem with the policy toolkit that they have had available. As right hon. and hon. Members have said, there have been too many schemes. They have often been well meaning in themselves, but the sum total of the parts is not a coherent and ambitious whole. There have been too many stop-go initiatives, too much talking and not enough action.
The Government had promised that, at the turn of 2010, no vulnerable household would be left in fuel poverty, yet current estimates suggest that nearly one fifth of UK households were still spending more than 10 per cent. of their income on energy-the key definition of fuel poverty-at the same time that British Gas announced a surge in profits. The Government have relied for too long on falling wholesale energy prices to reduce fuel poverty and have not taken any real, concrete steps to tackle the challenge on a much larger scale. The average fuel bill is now a shocking £1,300 per year, yet competition in the sector is a fraction of what it was when the industry was privatised, nearly 20 years ago.
For off-grid gas customers, the problem is particularly acute, as has been mentioned. Heating oil and electric heaters compare poorly with even fairly old gas heaters in terms of value for money, and off-grid properties tend to be less efficient and harder to insulate as they are often older, single-skinned rural buildings, or, in the case of my constituency, static homes. There is an urgent need to address energy consumption in those often vulnerable households.
Rising bills have been compounded by other Government failures. The value of the winter fuel payment has decreased in real terms. When instigated, it covered one third of the average bill; now, it barely covers one fifth. In addition, the Government have slashed the budget for their Warm Front programme. Whatever concerns we may have about the programme's effectiveness, the bottom line is that the budget reduction from £1 billion to £810 million this year will lead to 50,000 fewer vulnerable households receiving assistance from that programme this year.
Mr. Kidney: Did the hon. Gentleman write his speech before the pre-Budget report? It included another £150 million for Warm Front, which takes the three-year spending figure to more than £1.1 billion.
Gregory Barker: Yes, but, as I understand it, the money announced in the pre-Budget report was exactly that-it will not do anything to help vulnerable people this winter. To put the figures into context, the Treasury collected £9 billion of VAT receipts from UK utilities and £1.2 billion from domestic fuel customers last year.
Rising bills have been fuelled by the Government's lack of a credible energy policy. Allowing utilities to sweat assets and the failure to bring a greater strategic focus to infrastructure renewal have left the UK a net importer of gas with a looming energy crunch. That, combined with only 14 days' gas storage, leaves the UK vulnerable to spikes on the spot market, gives utilities a fig leaf for raising electricity bills, and is a particular threat to off-grid consumers.
The solution to many of those challenges is simple, straightforward and pays for itself: greater energy efficiency. In the home, that means energy saving and insulation. Some 33 per cent. of the heat lost from an uninsulated house is lost through the walls. One could save around £90 on energy each year in an average home by insulating wall cavities alone. That would save about £720 million of energy a year, or 9 million tonnes of carbon-enough to power 1.8 million homes for the same period.
Despite the clear economic and social advantages of increasing energy efficiency at scale, we are not moving at the scale and pace that is needed. That is why, a year ago, the leader of my party announced an energy refit programme, the Conservatives' green deal, that would establish a new model with a far greater sense of ambition for delivering energy efficiency throughout the UK-a new way of tackling this embedded social and economic problem. Under the Conservatives' approach, households would get instant access to measures to make energy efficiency improvements, the cost of which would be paid back, not by the householder, but by the owner of the property who pays the electricity bill over 20 years through a surcharge on bills, just as transmission charges, for example, are currently levied on an electricity bill. That would guarantee immediate savings, so homeowners would see not only an improvement in their quality of life, but an immediate saving. With a street-by-street roll-out in partnership with local authorities and by targeting vulnerable households, that policy will also bring together the dual priorities of reducing fuel poverty and reducing carbon emissions, but on a far more meaningful time scale than has been achieved by the Government over the past 13 years.
When we first set out the principle of our energy efficiency measures, they were then routinely rubbished by Labour Ministers. The Secretary of State for Energy and Climate Change dismissed as a
"a bad combination of...reheated and...uncosted"
policies. They pooh-poohed the figure of £6,500, saying that it could not be afforded, yet the beauty of our scheme is that there would be no overall charge to public funds. The scheme will be privately financed by banks and investment funds; I have met many of their representatives and they are keen to enter this new, exciting market. But one year on, it is no surprise that the Government have realised that they simply cannot go forward with their own policies and have produced, I am glad to see, something that is remarkably similar to the Conservatives' programme, with a few tweaks at the edges. Imitation is the sincerest form of flattery, but it is disappointing that it has taken the Government 13 years
to do that. Now in their death throes, in their last weeks in Government, they have finally had to admit that their policy has not worked and they need to come up with something else. However, that is welcome in so far as it means that, in the new Parliament, there will be much greater consensus on the way forward on tackling this urgent problem.
I am concerned that the Government have not really had a genuine change of heart and that this is just a political ruse. Their policy is undermined by its being twinned with renewable energy and renewable energy feed-in tariffs. Burrowing into the Government's statistics, their own anticipated forecast and target is that by 2020 only 1.6 per cent. of our energy will come from decentralised energy sources supported by feed-in tariffs. If that fact is married to the "Warmer Homes, Greener Homes" strategy, that is a pathetically unambitious and impoverished figure that shows that that is not a genuine adoption of the agenda but is merely a political manoeuvre to try to parry a radical proposal from the Conservatives. I am sorry that the Government are not really, in their heart of hearts, keen to embrace this agenda, but I welcome any moves towards it.
I want to give the Minister time to reply to the many points that have been raised, but in so far as we see any consensus in the Chamber today, there is consensus on business as usual not being good enough. We are not making the progress that we need to make. We need fresh ideas, new thinking and a far more ambitious time scale on implementation. We need to embrace new technologies as well as new financing models. I look forward to hearing what the Minister has to say. Ultimately, the only way that we are going to get to grips with this agenda to do justice to the fuel-poor as well as to our carbon transformation is to sweep away this tired, end-of-life Government.
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