I am grateful for the opportunity of raising a matter that I believe—I am sure that the House will agree—is of crucial importance. Many hon. Members realise that a large number of people in the community are dreading this coming winter because of the cost of keeping their homes warm. I refer to those on low incomes. Their fear about fuel costs this coming winter is a very justified fear indeed. Today's news is known to us—that electricity prices are again to go up in September. There will be an 8·6 per cent. increase, even though an 8 per cent. increase came into effect last month. That will only make the situation even more difficult for those people to whom I have referred.
I do not want to make a party speech today, but many of my hon. Friends are also concerned about the increase in paraffin prices. The people who will be mostly affected are the lowest paid or poorest in the community. I see no justification for the action that has been taken in relation to paraffin prices. It is of some interest to note that electricity is now about three times the price of gas.
Of course, there are the pensioners on small incomes. We know of the dangers of hypothermia. It is estimated that about 700,000 pensioners risk hypothermia, even in the milder type of winter, according to a survey carried out by the opinion research centre for the centre on environmental studies. These are elderly people with low incomes. A matter of great concern must be the fact that there are those pensioners who risk great danger to their health by not heating their homes during the cold spell. They want to save on fuel costs and, therefore, take the view that they cannot afford to use the fuel. By so doing, they place themselves in much health danger. I am sure that that is not the type of energy conservation that we want to see applied in the country. When the Under-Secretary of State replies, I hope that she will make it clear that elderly people should not put their health at risk by saving on essential fuel heating arrangements in their homes.
Apart from the pensioners, there are others in the community who need assistance with their fuel bills. There are the disabled, the handicapped and the single-parent families. In addition, we must not forget those who are in employment but who receive a low wage or salary. Very often in such households, where the main income earner gets a small wage, there are young children whose health can also be put at risk by lack of sufficient heating arrangements.
I am aware that the Supplementary Benefits Commission gives additional assistance for heating, although not for those in employment. As I understand it, there are various levels of additional assistance—85p, £1·70 and, in certain cases, £2·55 a week. But in all such cases the level depends very much on the circumstances. These are additional grants given by the Supplementary Benefits Commission, and according to the leaflet that I have looked at it is necessary to show that one comes within certain categories. They are by no means automatic payments to those receiving supplementary benefit.
I also understand that 80 per cent. of heating additions allowed go to pensioners who are in receipt of supplementary benefit. The 1977 annual report of the Supplementary Benefits Commission makes the following comment:
we would … question whether the most appropriate way to help low-income groups to cope with the high costs of fuel is by the use of our discretionary powers to give additional help to our beneficiaries with exceptional circumstances.
I have held the view for some time, certainly since the cost of fuel, particularly electricity, has gone up, that what is really required is a comprehensive scheme that will give assistance much in the same way as assistance is given in respect of rates and concessionary travel arrangements. I remember writing to Ministers in the previous Government, and I made the point then that as heating costs had gone up it was difficult and unfair for those on low incomes to meet the price of the fuel.
At first the reaction was that since the Government were increasing pensions and other such allowances, no additional scheme was necessary. But that was not my view. If it is necessary to help people by way of rate rebates and concessionary fares—matters that are no longer of any controversy in the House—surely it is right and proper to try to find a way of introducing a fuel allowance scheme which, without too much red tape or officialdom, would mean that those in need would receive assistance, including those in employment.
When the Minister replies, I hope that she will comment on this matter. I am sure that she is aware that a number of organisations, such as the Child Poverty Action Group, have pressed both the previous Labour Government and the present Government to introduce a comprehensive system to give the assistance to which I have referred. I hope that she will also make it clear that the electricity discount scheme will remain in operation this coming winter and, moreover, that because of the increased electricity prices, the sums involved will be increased and that the scheme will be extended.
I am aware that the electricity discount scheme has certain weaknesses and anomalies. Recently, I wrote to the Secretary of State for Energy about one of my constituents. When the electricity meter was read in January, the sum involved was under £20. It was next read on 4 April, and because of that my constituent was not entitled to a discount, even though the electricity had been used during the winter months.
I was not happy about the reply that I received. I wrote to the Prime Minister and received a courteous reply, but at the end of the day the fact remained that my constituent—in my view unfairly—would get no assistance. Although there are these anomalies and weaknesses, I believe that the House should accept, as I am sure it does, that the electricity discount scheme has given assistance to many in the community who need such assistance. There can be no justification whatever for discontinuing the scheme.
However, if the scheme is continued, as I hope it will be, and bearing in mind the increase in electricity prices that has already occurred this year—about 17 per cent. by the end of the year—it will be necessary generously to increase the sums involved, otherwise it will tend to undermine the principal purpose of the scheme.
Of course, there are people in the community who do not use electricity—gas and coal users, and the rest—who also need any assistance that can be given. One of the advantages of the electricity discount scheme is that since it applies to those on family income supplement, those in employment who receive a low income can be assisted. Despite its anomalies and weaknesses, the scheme has given asistance, and that is why I want to see it continued.
I am sure the hon. Lady would agree that there is also a need to have better insulation in homes. Far too many homes in this country have poor insulation. If the Homes Insulation Act 1978 were properly implemented, it would provide a better home to begin with and certainly save fuel, which would be the right way to conserve energy. I hope that the hon. Lady will assure us that the Government intend that the Act should be properly implemented by local authorities. There is a strong case to speed up its implementation, if only for energy conservation.
If the Government feel that domestic users of fuel should pay the full economic price, they must also ensure that those who cannot afford to pay are assisted. The policy of the previous Government was thal fuel prices should increase, and that is certainly the belief of this Government. If they allow the price of fuel—particularly electricity—to increase without special provision for those in need, it will put at risk the health of hundreds of thousands of people. Through no fault of their own, pensioners and others do not have anything approaching an adequate income to meet the soaring costs of fuel.
I know of cases of hardship where disconnection has taken place, and I hope that in the coming winter there will be few, if any, such disconnections. I recognise that the fuel boards do not disconnect for fun but because there is a large debt. In many cases the debts are incurred by low-income families who have not been able to cope with their fuel bills, as they cannot cope with other aspects of their lives. There is a code of practice in operation, but there is still concern over disconnections taking place without proper consultation with the social services. It would be preferable if there were automatic liaison between the fuel boards and the social services before disconnection occurred. I do not believe that that is happening. There are cases where the Supplementary Benefits Commission deducts money to pay directly to the gas or electricity board. It is a way of avoiding debt, but it means that people on supplementary benefit are left with only a small sum to make ends meet.
It is a pressing problem, and it is our duty in the House to do what we can for those most at risk. I hope that the hon. Lady will give encouragement that will be of genuine assistance to those people to whom I have been referring.
At about this time of the year I have on a number of occasions in the past raised this topic from the Opposition Benches. I appreciate and share the concern of the hon. Member for Walsall, North (Mr. Winnick). The Government are in no way indifferent to the needs of the elderly and those on low incomes, and are aware of the problems of rising fuel costs. That matter has already occupied a good deal of my time, but there are no easy answers.
Daily we become more aware that fuel must be realistically priced if we are not to waste precious resources, and indiscriminate subsidies are not the answer. External forces have a great effect on prices, particularly the action of the OPEC countries. Fuel must be paid for, and that cost can be met directly by the consumer or indirectly by the taxpayer.
Increases in domestic electricity tariffs. To commence from 1 September, were announced yesterday. The increase is required mainly to offset the rising cost of primary fuel. The price of coal for use by power stations rose by 13 per cent. on 1 July and the price of crude oil has risen by about 30 per cent. since April. Although the latest domestic tariff increase took place on 1 June, it had been intended to apply from 1 April for industrial consumers. It was delayed through the intervention of the Price Commission, and when the Commission reported on its investigations the conclusion was that the rises were justified.
The delay has added to the industry's costs. The profit of £251 million for 1978–79 has to be seen against the size of the industry's operation. It represents a return of only 4·6 per cent. on a turnover of over £5,000 million, and on an inflation-adjusted basis the industry recorded a loss of £166 million. Profits are needed to maintain the financial wellbeing of the industry and enable it to provide for the future.
The hon. Gentleman mentioned paraffin. The previous Government held down the price of paraffin, and that caused severe shortages. Under those conditions it was economic to use paraffin as a premium fuel in place of kerosene in central heating systems, and it was becoming less and less worth while to stock paraffin.
There are those who find it genuinely difficult to pay for the fuel that they and their families need. I am talking not about those who can pay but who choose to court disconnection but about those who are genuinely short of money. The problem is not confined to pensioners; if it were, the solutions would be a good deal easier. Families with young children and sick and disabled people need to keep warm, and people living in all-electric homes face especially high bills.
Within all those groups the degree of need and difficulty in paying for fuel varies widely, and it is not a simple matter to identify those in need of help. Many of the people concerned are dependent on State benefits for their income. We must remember, however, that there are a number of people earning low wages who will be taken out of the tax net or have their tax reduced by the Budget. For people on benefit, national insurance and supplementary benefits go up in November, and at the same time the heating additions payable for supplementary benefit will go up.
Unlike the main benefit rates, those increases will take account of the movements in all fuel prices—coal, paraffin and oil, as well as gas and electricity—as far ahead as we can reasonably predict, certainly beyond November. The lowest standard heating addition is currently 85p a week, and that will go up to 95p, and the other rates will go up by equivalent amounts.
I remind the House of the criteria on which the Supplementary Benefits Commission can give the additions: first, the claimant's state of health; secondly, the ease of the claimant to get out and about; thirdly, whether the claimant is bedfast or needs a constant room temperature day and night; and, fourthly, the state of the accommodation—whether, because the rooms are large, damp or draughty, they are particularly difficult to heat.
The Commission recognises that those facts may give rise to higher than normal fuel costs. The additions vary with the degree of extra need. Furthermore, when none of these criteria applies, the Commission may give additions where a home is centrally heated, according to the number of rooms. Heating additions now go to about 1½ million supplementary beneficiaries. Within that, they go to over two-thirds of all supplementary pensioners. That is not quite as high as the hon. Gentleman quoted. At present, those heating additions cost over £80 million a year. That is a substantial contribution towards fuel costs.
I should like to deal with direct payments for a moment. The Supplementary Benefits Commission is also protecting over 100,000 fuel suppliers through the direct payment arrangements agreed with the fuel industries. The Commission recognised that those arrangements were not perfect, as the hon. Gentleman has quoted. But protection of fuel suppliers in this large number of cases through measures which are generally welcomed by claimants is again a substantial contribution.
Also, we must not forget that since the middle of last year the Commission has been clearing the debts of people on direct payment for two years—that is, where the direct payment is not finishing the repayment of debt. We cannot yet put a figure on the cost of this, but numbers of people will, as a result, have been enabled to have a fresh start with a clean sheet. That is an important step forward.
The Commission sometimes makes single payments to reduce or clear fuel debts in other circumstances, chiefly where the bill is higher than normal, for unexpected or unusual reasons, largely beyond the claimant's control. Following last winter's severe weather, the Commission reminded its staff of the possibility of making such payments. I shall ask the Commission to consider a further reminder this winter. Only limited data are available on the extent of this help, but in 1977—that is before any payments were made to clear debts in cases on direct payment for fuel—those on benefit in December that year had between them received 18,000 payments at an average value of £25. The actual number of payments will have been higher than this, perhaps by as much as one-third. I gather also that the Commission used that method of payment to help in some special cases where the bill came in after the end of the period under the electricity discount scheme, where it was possible to use that means of assisting.
We must recognise—it is a point that the Commission certainly recognises—that help such as the methods I have just described, which is confined to supplementary beneficiaries, obviously carries its own risks. The more help that goes to those on benefit, the more we run the risk of weakening incentives to work, and, on occasions, of aggravating the position of those in work who still have a problem, as compared with those who are out of work Therefore, cash help alone is not enough. It is important that people should get the best possible value, in terms of warmth, for the money that they spend on fuel.
The Supplementary Benefits Commission is also prepared to make lump sum payments for the costs of materials for simple insulation measures such as the draught-stripping of doors and windows. That is highly cost-effective, even if for poor consumers its benefit is likely to be felt through increased comfort rather than lower bills. However, I accept that the Commission feels that it is going beyond its responsibilities to provide money for major home improvements, the benefit of which may go as much to the landlord as to the tenant who claims benefit.
Nor is it for me to try to dictate to the Commission how it should use the discretionary powers that Parliament gave to it. However, I shall be asking the Commission to look again at the help that it is prepared to give to see what else can be done usefully within its powers to help the people most at risk.
Let me turn now to the wider question of insulation. That is a matter for my right hon. Friend the Secretary of State for the Environment. As the hon. Gentleman asked me a question, I should like to comment on the Homes Insulation Act 1978. The powers under that Act provide special schemes under which grants to improve the thermal insulation of homes would be available specifically to those with special needs on the grounds of disability or, for example, lower income. I understand from my right hon. Friend that he is considering the possibility of further schemes in the light of progress on the first scheme last winter. That scheme gave grants of two-thirds of the cost of insulation, up to a maximum of £50. No doubt my right hon. Friend will announce his conclusions in due course.
Apart from insulation, and apart from the help that the Supplementary Benefits Commission gives, we believe that the fuel industries also have a part to play. I am not trying to turn them into welfare agencies. I do not believe that they are careless of the needs and difficulties of their customers, as some critics from time to time allege. I welcome the co-operation of the fuel industries with the SBC in the arrangements for the direct payment for fuel to which I referred. By allowing those covered by these arrangements to repay their debts at a very modest rate—currently 80p a week—they are undoubtedly helping those people.
I look forward to the results of the independent review of the operation of the industry's code of practice on the repayment of fuel bills, which the industries are arranging in concert with the two consumer councils. I hope that the industries will continue to develop their various schemes for paying fuel bills by instalments and that they will advertise the schemes as widely as possible. All those measures help in coping with paying the fuel bills in addition to the other help that may be given to those in special need. Members of Parliament and all those who come into contact with people who find it difficult to pay for their fuel can help a great deal.
Yes. I could not speak on this issue—although it is not a matter for my Department—without referring to it. I was just coming to it in the next sentence or so.
All Members of Parliament and people outside do a great deal to help those who find it difficult to pay. I mention that especially because we can alert people to the existence of the various schemes of the fuel boards and the advantages that they can bring. It is the sensible choice of economical equipment and the sensible use of equipment—how much things cost to run—that should be considered. That information is much more readily available now than it was even two years ago. It is information that we should spread around. In that way the industries are indeed helping themselves as well.
Let me come to the thorny question of the electricity discount scheme and whether it will be repeated this coming winter. This is a matter for my right hon. Friend the Secretary of State for Energy. The hon. Gentleman referred to the weaknesses in the scheme. He especially mentioned the timing of bills, which many hon. Members have brought to me as problems when meters were read before Christmas because of the Christmas holidays. I am not in a position to give the hon. Gentleman the answer that he would like, simply because no final decision has been taken. As the House is well aware, a number of longer—term proposals for schemes for cash help have been canvassed and discussed over the past 12 months. Many of the ideas are ambitious, as they seek to cover all fuels—paraffin, oil and coal—as well as electricity and gas—and they seek to identify, with varying degrees of precision, the groups in need or at risk, those with high fuel costs.
Is the Minister aware that it will be disappointing if no statement is to be made? I believe that most hon. Members understood that there would be an announcement before the recess whether the electricity discount scheme would be continued. I cannot for the life of me understand why her right hon. Friend was not in a position to make the statement. Will a statement be made during the recess or must we wait until we come back?
I am sure that at the rate at which discussions continue some statement will be made during the recess. However, it would be right for us to continue with the work—not just the con- sideration of the scheme that has gone on in previous years but all the ideas that have been coming to us, particularly in the past four weeks, which enable us to look widely at what might be done. I am sorry that I cannot answer the question today.
We must consider those schemes that give benefits precisely according to needs and circumstances. However, they are costly. Therefore, we shall consider all the suggestions that were made to us against the background of the constraints that have been mentioned so many times in the House.
I am glad to have had this opportunity so early in the life of this Parliament to speak about this difficult issue. The hon. Gentleman will hardly have expected me to come here today with an answer to all the problems of fuel costs of all the needy groups in our society. I am sure that he and many of his right hon. and hon. Friends will join my right hon. and hon. Friends and myself in trying to produce further ideas over the years. A satisfactory conclusion to the problem has not been reached.
I assure the hon. Gentleman that we wish to safeguard the health of the elderly and we shall alert the voluntary organisations to help. All that he has said today and all that has been said in many other debates both by myself and many others over the years is being considered carefully. I promise the hon. Gentleman that the Government will give all these issues the consideration that they deserve to help those who will be in need through the winter, whatever the costs of fuel.