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(d) licensed heating oil suppliers,
(e) licensed liquefied petroleum gas suppliers,
(f) licensed compressed natural gas suppliers, or
(g) licensed solid fuel suppliers..
Amendment 27, in clause 8, page 6, line 35, after electricity, insert or heating oil or solid fuel.
Amendment 28, in clause 8, page 6, line 35, leave out or both.
Amendment 29, in clause 8, page 7, line 10, after electricity, insert or heating oil or solid fuel.
Amendment 21, in clause 10, page 9, line 16, at end insert
(d) include within the definition of scheme supplier suppliers of home fuel oil and liquid petroleum gas..
On a point of order, Mr. Atkinson. I was asked a question by the hon. Member for Northampton, South and I did not have the information immediately before me. If it is in order, Mr. Atkinson, I shall just say now that the budget for the advertising campaign called Act on CO2, shared between five Departments and the Department for Environment, Food and Rural Affairs, is as follows: in 2007-08, £5.5 million; in 2008-09, £13 million; and in the current financial year, £10 million. My Departments share of those costs is £15 million.
Further to that point of order, Mr. Atkinson. It is always appreciated when the Minister clarifies things, as he has just done.
I am conscious that we are debating a group of amendments here. This is an important issue, which seeks to put right an injustice and an unfairness that has affected large numbers of people throughout the country, through no fault of their own. As the hon. Member for Sherwood and others well know, the purpose is to expand the scheme that assists people who have to pay more than 10 per cent. of their income on fuel bills to include those who are not on the gas mains. The amendment seeks to add to the list in clause 8, which currently states:
A support scheme may apply to
(a) licensed gas suppliers,
(b) licensed electricity suppliers, or
(c) both licensed gas suppliers and licensed electricity suppliers.
The amendment would add two more categories
(d) licensed suppliers of liquid petroleum gas for domestic use;
(e) licensed suppliers of fuel oil for domestic use.
The hon. Gentleman will no doubt argue in a minute that it should be widened to its broadest extent, and we support his amendment.
The definition of who is licensed and how the industry works is, of course, different for people who deliver in bulk to the back door, gate, yard or farm entrance, and those who deliver through a pipeline to the property. There is not the same arrangement of the big utilities. This is probably going to be a probing amendment, so that we get agreement on the principle. All of us, with our colleagues from the Scottish National party and Labour partyI am not suggesting that the Conservatives do not support this extensionwould be happy to work together on getting the drafting right, as long as we can get the principle agreed on Report.
I will make three simple points on the issue. First, the latest figures show that the average energy bill will soon approach a record £1,000 a year. All the figures I have seen in recent years suggest that those who are not on the gas mainsand therefore rely on fuel oil or Calor gashave higher than average bills. That category regularly appears at the top of the league tables. I hope the Minister will be able to confirm that. As he may have more accurate and up-to-date figures than we do, it would be helpful if he put on the record what his Department works on as the basis of the average bill for people across the UK with that sort of non-gas energy supply. He may also have figures that differentiate between the four countries of the UK, which would also be helpful; I know that a lot of the four countries records on this issue are kept separately.
Secondly, there are significant numbers of people in that category. In a written question on 14 September last year to the Secretary of State of Energy and Climate Change, my right hon. Friend the Member for Ross, Skye and Lochaber (Mr. Kennedy) asked:
what recent estimate he has made of the number of households designated as being in fuel poverty which use (a) heating oil, (b) liquefied petroleum gas, (c) mains gas and (d) other systems of heating.
The Minister of State replied:
The most recently available fuel poverty statistics relate to 2006. Figures for the number of households in fuel poverty in England are produced from analysis of the English House Condition Survey.[Official Report, 14 September 2009; Vol. 496, c. 2120W.]
The figures that she gave were as follows: 202,000 households in fuel poverty use heating oil, 36,000 use bulk liquid petroleum gas, 1,669,000 are on the mains and 525,000 are in other categoriesa total of 2,432,000, nearly two and a half million people.
Those are the English figures. There are figures collected separately, in different ways, in Scotland, Wales and Northern Ireland. I do not have the most recent figures and my second request to the Minister is that he put on the record the latest figures for each of those countries, so that those who follow these debates with interest, and who see this as a very important issue, can be absolutely clear about the numbers of people we talking about.
The third point is that one reason why this is a regular cause of concern is that until now, a customer who purchased both fuelsgas and electricityfrom the same supplier would often be offered a dual fuel discount. That, of course, is not an opportunity open to people who cannot get their gas from the same supplier because the same supplier has not got piping to reach them.
My point really concerns people who have been consistently disadvantaged and prejudiced against. We will come later to the debate on how to ensure that everybody has the lowest possible tariff and the discussion on trying to ensure that everybody is given not just the best information so that they can choose, but the same opportunity to access cheap fuel, irrespective of the means of payment. There would then be no prejudice against people who pay by prepayment, as opposed to direct debit. The dual fuel advantage is one that can apply only to certain categories of people, and we are trying to make sure that that is not a disadvantage.
My hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander) regularly raises that point with Ministers. He did so as recently as last week, because in big rural constituencies such as hiscertainly in Northern Ireland, Scotland, rural Wales and rural Englandwhole communities are in the category that I have been discussing. The Minister knows that.
The issue is really important to very large numbers of people who, at the moment, pay the highest amount of money to keep warm, to keep the electricity on and look after their households. I hope that the Minister will be sympathetic. The hon. Member for Sherwood, with all his experience and authority as Chair of the Sub-Committee on Environment, Food and Rural Affairs, will, I hope, weigh in on that persuasively in a minute to make sure that his Ministers understand.
If the Minister can be positive, that will be widely well received, by not just the Committee and all the parties, but very large numbers of people outside. Here is an early popularity in the new year for a Minister whom we respect. We have told him we wish him well. This is the chance for him to do himself good, so that we can congratulate him. We look forward to a positive, enthusiastic and entirely committed response.
The hon. Gentleman has interpreted my intentions correctly. I agree entirely with all his positive points about my colleagues the Minister and the Minister of State. They will respond appropriately, because they are both well aware that this is a tough issue to resolve, particularly in relation to those who are not on the gas grid.
Amendments 26 to 29 are tabled in my name and that of my hon. Friend the Member for Carmarthen, West and South Pembrokeshire (Nick Ainger). We both represent semi-rural areas and are familiar with the problems faced by people who are not on the gas mains. It is clear to me and to the hon. Member for North Southwark and Bermondsey that people in that group are disadvantaged, because they have to rely on LPG and other measures that are not in the regulated market. There is a good deal of evidence to show that prices have increased above inflation in recent years and it is also apparent that those people get the social tariff dividend only for their electricity bill.
I will sketch a little more of the context. People go to the countryside to retire. There are no figures available for that, but it is pretty clear that there is a large group of elderly people who are disadvantaged. The hon. Member for Wealden made a point this morning about housing in rural areas. It is extremely difficult, if not impossible, to bring many houses in rural areas up to the required standard. It is therefore important that we take steps to help people in that position.
I want to discuss the principle involved. The Minister knows that something needs to be done, and I am using this opportunity to probe and push a little, and to tell him that he needs to look carefully at the issue to try to find a resolution. Other steps have already been taken, such as the extension of Warm Front and the use of microgeneration, but this is a big and important issue. I hope that the Minister will listen to the debate and to the hon. Member for Angus, take on board the Committees views, consult widely and return with a good solution for a warm new year for people who are not on the gas grid.
I think we are all trying to get to the same place with these amendments. Amendment 21 stands in my name and approaches the issue from an angle slightly different from that of the other amendments in the group. I will explain why after saying something about the issue itself.
I represent a largely rural area, and many of my constituents do not have access to the gas networkwith the best will in the world, they never will; it will never go to the glens of Angus and the islands of Scotland, however much it is extended in future. Many of my constituents have no option but to use LPG, home fuel gas or some other alternative fuel.
It has been estimated that some 4.3 million consumers, mostly but not exclusively in rural areas, are not on the gas network. In some areas, although the gas network may technically be available, the cost of connecting to it is outwith the means of many consumers; they simply cannot afford to connect to the network.
Consumers who are off the gas network face particular problems. As the hon. Member for North Southwark and Bermondsey said, a typical gas bill is now rising to around £1,000 a year, but I understand that it has been estimated that those who are off grid are facing bills of around £1,700 a year. Although the hon. Member for Sherwood mentioned many of the excellent schemes to help insulation and energy efficiency, many of the homes in rural areas are hard-to-treat homes, which further exacerbates their position.
How to deal with the problems of the people affected has long been a matter of frustration to me. They do not have access to the social tariffs that the customers of mains gas can access. I accept that, as the Minister has said, they can access the social tariffs available to electricity consumers, but the fact of the matter is that many off-grid consumers use home fuel oil or LPG as the main fuel for heating their homes and water, and that is likely to be the major part of their energy spend. The Departments Annual Report on Fuel Poverty Statistics 2009, chapter 4, page 21, states:
The highest proportion of fuel poverty is amongst households without gas, where nearly 23 per cent of households are fuel poor, compared to around 17 per cent of both standard credit and pre-payment meter customers.
I would add that in Scotland the situation may be slightly worse due to the geography and lack of grid in the highlands and islands. According to the latest Scottish house conditions survey:
Households that use electricity, oil or other fuel types (such as coal or peat) are around twice as likely as those who use gas to experience fuel poverty. Also, those who use...other fuel types (not gas or electricity) are more than twice as likely to experience extreme fuel poverty than gas users
To answer the point made by the hon. Member for North Southwark and Bermondsey, I should say that I understand that the number of off-grid customers in fuel poverty in Scotland is around 116,000about 47 per cent. of those who are off-grid.
Citizens Advice produced a paper for the debate on Second Reading and it took up the issue. I will not quote from it at length but I refer hon. Members to the case that it cites from south Wales of someone who could no longer afford fuel because it had gone up from £150 a few years ago to £750. Citizens Advice also raised the issue, which many of my constituents face, of people having to buy a full tank because it is difficult to get smaller deliveries. It cites a case from Northumberland of neighbours trying to gang together to have one tank to serve all the houses but they could not get a supplier to do it, which seems completely perverse.
There are many other issues that intensify the problemfor example, bulk deliveries, as I mentioned. Many people have to pay substantial sumsCitizens Advice quotes £740up front to get a delivery. It is often impossible for people on low incomes to come up with that money. They simply cannot do it, which means that many are forced to go without heat and hot water. Even if they can pay, problems can occur. One thing that has not come to attention in the recent bad weather is the fact that it has been very difficult for the fuel supplies to get through. If someone has a gas pipe and an electricity supply, the chances are that their energy will get through unless the conditions are particularly extreme. If they need fuel and the roads are blocked, it is a different matter because they cannot get the deliveries through. That has been a problem in some parts of the highlands.
As an asideI know that this is outwith the Ministers competencewe have to consider thinking outside the box on these issues, so should we look at how the winter fuel payment is made? It might be better for off-grid customers for the payments to be made in the late summer or early autumn when they could get the oil more cheaply and fill up their tanks for the winter when it is affordable If they get the money in the winter, the cost is greater and they cannot afford it. That would not cost the Treasury money, but it would be one way of tackling the problem.
The plain fact is that those consumers who rely on other types of fuel often fall between the cracks of the measures to introduce social tariffs. I have pursued that issue for many years. I served with the hon. Member for Northampton, South on the Business and Enterprise Committee, and in 2008, we produced a report that said:
We are concerned that there is not sufficient regulatory oversight of the market for domestic fuel for households which are not connected to the gas network.
We called for more action but, unfortunately, the Office of Fair Trading concluded that the market was working satisfactorily. There is still no effective intervention in the market. It seems that everyone simply takes the view that it is too difficult to take action but, given the statistics on fuel poverty in that group, that view is simply unacceptable, and we must find a way to help.
The main problem is that the structure of the market for such fuels is very different from that for mains electricity and gas, which are, of course, dominated by the big six energy companies. The market for other fuels is much more diffuse and difficult to regulate, although I question whether in many areas there is real competition. Therefore, we need to look at more radical solutions to tackle the whole problem. I fully support the amendment tabled by the hon. Member for North Southwark and Bermondsey, to which I added my name, and which is also backed by the hon. Member for Sherwood. However, I wish to propose another option for consideration, which does not revolve around clause 8 but around clause 10, and would provide the opportunity to introduce a more all-encompassing scheme to help people in fuel poverty.
As I understand it, the purpose of clause 10 is to allow the Secretary of State to introduce a reconciliation mechanism that means that, should one company have more fuel-poor customers than others it would not be particularly badly hit: the burden would be spread among all the companies so that each would meet, as far as possible, an equitable amount of the cost of meeting the obligations under the social tariff. That principle is a good one, and it could be extended further to bring in all fuel suppliers, to allow a general sharing of the burden of the cost of meeting obligations to help the fuel poor.
As I said earlier, one of the problems with the market is that the suppliers are in many cases fairly small, and it would be very difficult to introduce individual social tariff mechanisms for each of them. However, a general reconciliation mechanism that brought those suppliers within the ambit of the scheme, but which allowed the overall cost to be shared between all the energy suppliers, would enable us to make progress and extend the social tariff concept to that very disadvantaged group.
The main purpose of my amendment is simply to bring such consumers into that more general reconciliation fund to bring about more fairness and to tackle fuel poverty. In deciding to press ahead with such a scheme, the Secretary of State should bring in all the suppliers of all forms of energy and allow all their customers to benefit from the scheme. As well as ensuring that no energy company was disproportionately hit by having too many fuel-poor customers, it would make it possible to share out the benefits more widely, and would ensure that all energy suppliers could operate the equivalent social tariff for their customers, whether they were in receipt of electricity, gas or other forms of fuel. Ministers might be attracted by the fact that it would be a revenue-neutral approach for the Treasury; it would not impose a greater burden on it.
I can hear the howls of protest from the major energy companies at my suggestion, but I believe that it is a way to tackle an intractable problem. I recognise that through the years, the Government have taken measures to try to alleviate fuel poverty and to deal with social tariffs, but the group in question has consistently been left out and there is a fuel poverty problem in rural areas in particular as a result. I am not suggesting that my proposal is the be-all and end-all, but I float the idea and think that it is worth considering whether we could come up with a mechanism to achieve the end I have in mindnot necessarily by means of my amendment, but by some similar approach.
The Minister will have seen the extent of cross-party agreementincluding, to a substantial extent, among Labour Membersabout the changes that are being proposed. It is an opportunity for us to give a significant amount of help to 5 million households that suffer badly at the moment. According to my figures, they pay about a third more for their overall energy use than people on the gas and electricity mains. There are issues that need to be dealt with, on which further help and support is undoubtedly required.
The figures also show that 15 per cent. of people who are off-grid for gas, and particularly those who use heating oil, are in fuel poverty, compared with a figure more generally of less than half of that percentage. We all recognise that there is a group of people whom we have the opportunity to help, and I hope that the Minister will respond positively.
There is often a tendency to think that a Bill must come out of Committee exactly as it went in, but I hope that on this occasion the Government will see that we are considering a substantial proportion of the population who suffer badly and need help, and that what is proposed is an opportunity to give them that help. Of course, the proposed changes would not determine how the Minister should impose regulations. There would be scope for him to determine how and at what level measures should be implemented. There would be significant leeway, but the provisions would simply bring within the scope of the Bill a section of the community who have had a pretty rough time, and whom we are all keen to help further.
I support amendment 9, tabled by my hon. Friend the Member for North Southwark and Bermondsey. Although I generally support the amendments tabled by the hon. Members for Sherwood and for Angus, they involve specific difficulties, which they have both acknowledged. Indeed, there is also a difficulty with amendment 9, which my hon. Friend the Member for North Southwark and Bermondsey and I have discussed.
I must declare an interest. I know that the hon. Member for Wealden was referring to my home when he mentioned large stately homes in Yorkshire this morning. The last time that my hon. Friend the Member for North Southwark and Bermondsey visited, we had to open the east wing specifically for him. He remarked, however, that it was quite chilly, and the reason for that is that we use domestic burning oil to heat our humble dwelling. Indeed, I have today purchased 1,000 litres of domestic burning oil for £520, which is 52p a litre. That was roughly the best price I could get. However, when I purchased 1,000 litres of oil on 16 Novemberthis is just for the east wingI paid 37.5p per litre, so in the space of two months the price has gone up about 38 per cent. If that applied to gas or other forms of electricity, there would be absolute outrage and motions would be tabled in the House. The effect is sparse, however, because of the communities in which people live. We do not have a gas main, because it has not been extended from Yorkit cannot get up the hill. The reality is that this is a very serious issue.
The problem, for me, is who we should regard as the suppliers. For example, most of the people who supply oil to me and to other people are small companies that take the oil from the main distribution depots, add a premium, then sell it. That is how the system works. We should, however, regard large oil companies as the suppliers, because that is what they are. Shell and BP provide most of the market for domestic burning oilthe same applies to gas with companies such as Calorwhich gives us a different view of the actual suppliers. In his response to the amendment, I urge the Minister not to get hung up on the issue of licensed suppliers being the people who put the oil or gas into a tank. We should look at the large companies, because they are the main wholesalers of those commodities. That would help us when considering the amendments. My difficulty with the amendments tabled by the hon. Member for Sherwood is they would apply to coal or to solid fuel. I do not think it beyond the wit of Ministers to look at suppliers in a different sense from that adopted by the industry.
I thank all hon. Members who have contributed to this valuable debate. If people expect me to say that I want the Bill to change the whole post-privatisation settlement of the utilities, I am afraid that I am going to disappoint them. I will resist such amendments. On the other hand, if people want to hear me say that we are doing all we can, including measures in the Bill, to help people who are off the mains gas grid and in fuel poverty, the answer is a resounding yes. I am positively with hon. Members on that.
I want to remind the Committee of a couple of things. First, I am aware of the seriousness of the problem, through my work both as a Minister and as a constituency MP. Like all hon. Members, I am invited each year during warm homes week to visit constituents who have a problem keeping their homes warm or who have recently had help making them warm. Last year, I visited an elderly husband and wife, in a village off the gas grid, who had been helped by Warm Front to replace their heating system, with oil in that case. We talked about the huge difficulties in finding the up-front costs of replenishing their supplies, the problem of oil being dearer than gas and how much better it would be to have access to cheaper energy. That is something that I would like to deal with in a moment.
I also want to talk about targeting fuel-poor households. I regret the absence in this country of reliable, accurate information to enable us to target households in fuel poverty as much as we should. We know, in general, that there is a high incidence of fuel poverty among pensioners, among those in the greatest financial poverty and among those who are off the gas grid. It is not impossible for a household to be in all three of those classes at the same time. I accept the premise that there is a high incidence of fuel poverty in areas where people are off the gas grid and that we need to do as much for that group as for any other. In some cases, there are practical difficulties, especially with isolated rural communities. The hon. Member for Angus mentioned the difficulty for lorries of getting supplies through in times of snow, for example. Sometimes there are more or special reasons to give help in those cases, and I appreciate that.
I want to run through the kind of things that are being done, either through the Bill or otherwise, that give help in those circumstances. First, the Bill proposes, as several Members have adverted to in their contributions, to give help to people in fuel poverty through their electricity bills. Clearly, one reason we chose that method for delivering help is so that it reaches everybodys home, including those who are off the gas grid. If we had said that we wanted to reduce everybodys tariff, those in an area off the gas grid would not benefit from a low tariff for gas. This way, everybody benefits from the scheme.
There is another point I would like to make. I do not suggest it is my thinking but it could come out of the debate that we have over the consultation. Clause 8, if left as it is, is sufficiently wide to say that the amount off the electricity bill could be different for different groups of people who are in fuel poverty. If it became the will of Parliament and the will of the public, there could be a higher rebate on the electricity bill for people in fuel poverty and off the grid. The fact that that is a possibility in the Bill is my best defence for saying that people do not need to amend the Bill in order to do more things to help in that situation. Recognising the group and its difficulty is what needs to be done, not changing the law as drafted in the Bill. That is just one measure to help people who are in fuel poverty and off the gas grid.
Another measure, I would remind people, is included in the fuel poverty strategy. The Government made a commitment to deliver mains gas to more fuel-poor households without access. In the next five-year price settlement, as a result of that strategy, Ofgem provided incentives for the energy companies to deliver a mains gas supply to more people in fuel poverty in off-gas areas.
I understand what the Minister is saying, but the difficulty with that concept is that there are large areas of the country where that is simply impossible. There is no gas grid in much of the highlands of Scotland; there has never been a grid in the islands of Scotland. The same will be true of other remote areas in England and Wales. Although that measure may help a few people, the vast bulk of the people affected are not anywhere near a gas main.
I accept that point but, nevertheless, if some are helped by this means, it is a positive contribution. This week, Ofgem delivered news of a new scheme and stated:
Almost 20,000 households could be connected to the mains gas network due to new partnerships between gas distribution networks...and agencies that provide grants for central heating systems or help to make homes more energy efficient.
That might be a small number in the context of the big number, but it shows a contribution to meeting the need that everybody in the Committee wants to meet.
I shall move on to those circumstances in which such a scheme would be impossible. We foresee the possibility of helping people by providing alternatives to the expensive energy sources on which they currently depend. For example, under Warm Front in England, there are pilots of solar thermal energy and air source heat pumps. They may prove successful and popular over time, and help people to change their heating systems. On that point, the introduction of feed-in tariffs this April and a renewable heat incentive next April, would make those much more attractive options for people in fuel poverty off the mains gas grid. I wanted to draw those matters to everybodys attention. Those are the kind of things that are being done and could be done under the Bill without the amendments.
The hon. Member for Angus reminded us of the difficulties that some fuel-poor households experience in finding the up-front costs for fuel delivery. We heard evidence from National Energy Action last week about a project sponsored by my Department working with credit unions to deliver an affordable means of assisting people in that situation to spread the cost of their up-front purchase. We are waiting for the results from the project in March, but I am hopeful that it will be of assistance.
Let me return to what I intended to say before I heard everybody elses contributions. The hon. Member for North Southwark and Bermondsey asked me about statistics. I do not have a great deal of information to add above what we have heard. We know that people in areas off the gas grid pay more for their fuel, and about 20 per cent. of the fuel-poor live off-grid. We heard what that means for households in Scotland from the hon. Member for Angus; in England, the equivalent figure is 616,000 households.
The hon. Member for North Southwark and Bermondsey asked about the discounts offered to dual fuel customers that are not available for those who live off the gas grid. I remind him of Ofgems retail energy market probe, which found that some discounts given to dual fuel customers were much more than was justified by any objective reasoning. One licence condition that came out of that probe outlawed those excessive benefits. That is a way of assuring people who are off the gas grid that they are not subsidising those who have the advantage of the discounts. I remind hon. Members that later in the Bill there are additions to Ofgems powers and to those of the Secretary of State that address the problem, so the matter is already being addressed.
I thank the Minister for confirming the England figures. Can he give us the Northern Ireland and Wales figures, either now or at the earliest convenient moment after the Committee, so we have the complete picture?
Does what the Minister says mean that if a customer has the dual fuel option from the same supplier, they do not still have an advantage because they get a discount? There has been a probe and a conclusion, but those customers still benefit through the reduction of their electricity, or other fuel, bill in a way that someone who has no access to mains gas cannot.
On the first point, I will do my best on collecting more statistics and giving them to the Committee. On the second point, I reject any suggestion that no good has come of the probe, if that is what the hon. Gentleman is saying. A justifiable commercial discount is permitted but anything more than that that is prejudicial to customers has been outlawed by a licence condition change for the energy suppliers.
I understand that. I do not want to disagree, but I want to be clear. Customers who are off the mains have a disadvantage in the cost of their electricity, because they cannot get the discount they could get if they had access to, and bought, gas and electricity from the same supplier. That is not as anti-competitive as it was from the point of view of the supplier, but from the point of view of the customer there is still a clear, inherent disadvantage in having access to only one source of supply from that supplier.
My point is that not only has the inherent discrimination been outlawed, but the distinction in the amount of the benefit is much reduced.
I have spent quite a lot of time directly addressing the points raised in the debate, and I now want to deal with the amendments. Amendments 9, 26, 27 and 28 all aim to broaden the types of fuel supplier that the scheme can apply to. Amendment 29 aims to ensure that the benefits provided under social price support schemes could include lower charges for heating oil or solid fuel. Amendment 21 aims to include suppliers of LPG or fuel oil in the reconciliation mechanism that we intend to introduce under clause 10 to ensure the equitable distribution among suppliers of the costs of social price support schemes. In addressing those amendments, I want to show some of the practical constraints with the proposals.
The powers proposed under the Bill for schemes to reduce fuel poverty refer to licensed gas and electricity suppliers, as hon. Members acknowledged. Those suppliers are licensed under the Electricity Act 1989 and the Gas Act 1986. There is, however, no comparable licensing regime for the suppliers of heating oil, compressed natural gas, LPG or solid fuel.
The reason for that difference in regulatory regimes is that the electricity transmission system and gas pipe networks are both natural monopolies. As hon. Members will know, the risk arising from such natural monopolies is that the networks might be unfairly exploited. That is why, in the Acts to privatise those publicly-owned utilities, a system of regulation was established. Ofgem is the independent economic regulator. It has a duty to protect customers, and one of the key tools it has to do that is using the licensing regime to ensure that suppliers comply with certain rules.
In contrast, a significant number of operators are involved in the distribution of heating oil, LPG, compressed natural gas or solid fuel for domestic use, and there is an open and competitive market. There is no equivalent network monopoly operation. For example, there are more than 200 distributors of heating oil, and around 15,000 outlets retailing LPG to consumers, many of which are small and medium-sized companies, as has been acknowledged in the debate.
General consumer protection legislation, such as the Consumer Protection from Unfair Trading Regulations 2008,and competition law apply to this sector. We believe that regulation is appropriate and proportionate, and for those who want it tested by an outside body, let us remember that in 2004 the market was referred to the Competition Commission and the result, only five years later, is that, by and large, it is competitive. Two orders were made on permitting switching and giving more transparency of information to customers.
By designing our policy around licensed gas and electricity suppliers, we bring many practical and cost-effective benefits. Those include the use of an existing licensing and enforcement regime, an independent regulator with a duty to protect consumers and expert knowledge of the industry. We believe that setting up a new regulatory regime for heating oil, LPG, compressed natural gas or solid fuel for domestic use would take a disproportionate amount of time and money. That seems especially true given that we have identified an alternative, more cost-effective way to help fuel-poor customers who are off the gas grid. For example, subject to consultation, in summer 2010 our intention is to focus social price support on electricity accounts. That will ensure that eligible households can benefit from the policy, irrespective of the fuel the household use to heat their home.
Furthermore, suppliers participating in social price support schemes will most likely pass the costs of participation and providing benefits on to their customers. The costs of setting up a new regulatory regime for the heating fuels covered by this amendment would also be likely to be passed to consumers. There is, therefore, a risk that including those suppliers of heating oil, LPG, compressed natural gas or solid fuel would simply add to the already high prices, which hon. Members are telling me are too high, faced by consumers who are off the gas grid.
I take that reminder from my hon. Friend. After all, we talked about a levy on all consumers electricity bills for clean coal. Under the renewable heat incentive, which I mentioned, the suppliers we are talking about here would be required to charge a levy on all their customers for the payments under that incentive. I am not afraid or lacking in courage in imposing those costs, but we ought to take into account what they might be and who might have to pay for them.
In this debate, where the complaint is that the costs are already punishingly high for some people, we are talking about taking steps that would add to those costs. That is a factor that we should take into account.
Does the Minister not accept that if one were to put the people who are not on the gas main into the same position as somebody who is by trying to deal with those who spend more than 10 per cent. of their income on fuel bills, there would have to be a differential subsidy on the electricity bill and the difference would have to reflect the additional cost of the other fuel for those who are not on the gas main?
It seems to me that unless the Minister is willing to go further than saying, We have the power, potentially, to have differential support, and unless he is willing to say, We completely understand the point; we will have a differential payment for those off the gas main and it will reflect the difference in cost, he will not meet the point about the lack of fairness, which is at the core of the debate.
I thought I was following the hon. Gentlemans point, but he lost me by the end. Perhaps that is my difficulty in understanding what he said, rather than the way he described it. If clause 8 is left as it is, there will be the facilityif we decide, in the end, to proceed in this wayto pay an additional amount to people in fuel poverty and off the mains gas grid. By we, I mean Ministers, Parliament and the public, through the consultation.
As I understand it, that would meet the basic point that people are asking me about and give extra help to those people, without the steps that would need to be taken under the amendments. If the hon. Gentleman is saying that we would then, as well as having differential payments, have differential collections from peoples bills, that does not follow at all from what I said. [Interruption.] He says, from a sedentary position, that that is not what he meant to say. I think, therefore, that we are agreed.
I think the Minister is trying to be very helpful here and I realised, as the hon. Member for Sherwood began his remarks, that this is a very difficult area. If it was easy, we would have done something about it before. However, it seems to me that the Minister is shying away from this difficult issue, rather than trying to achieve a key solution.
Giving somebody an additional social paymentthe fuel-poors subsidiary paymentif they are on electricity only and not on the gas main would add an additional penalty to all the other consumers and the big six electricity suppliers, all of whom would have to find that tariff and pay it back to those customers. That would let off completely the suppliers of compressed gas and oil in particular, who may massively profiteeras they are doing at the moment, because of the poor weather that people are experiencing and the circumstances in which they livebecause they are not controlled by Ofgem.
Those suppliers not regulated, so they can charge whatever they like. They can work together to rip off consumersexactly what they are doing at the momentand get off scot-free. The Minister is saying, We dont want to touch them because its too difficult, but what we might do is charge everybody else, to give their consumers a little help through the electricity bills. That is grossly unfair, Minister. It is also unlike himhe is a decent chap.
I am glad that the hon. Gentleman feels that I am trying to be helpful. I want to be enormously helpful where possible, and I have described how I am doing everything possible to be helpful. I am not simply saying that this is too difficult or that I am not sure about it; I am saying that there is a point of principle in this countrys systems. We have introduced such regulation because of a monopoly. Where an open and competitive market is appropriate and possible, that is how we organise things, and that is how they are organised in this market.
I am not saying that those who are subject to the general law of competition get away scot-free with the kind of behaviour that the hon. Gentleman has described. For five years we had an investigation of this very market by the Competition Commission, and it concluded only last year. On that point of principle, right, strength and might are on my side, not on the side of those who have tabled the amendments. However, I do not want to take away at all from the sympathy that I share with everybody for those who are in fuel poverty and off the gas grid, or from the determination to give them every help we can.
I have given quite a list of the ways in which we are helping, can help and intend to help. With those assurances, I ask those hon. Members who have tabled amendments to accept that, while I share their ambition to help people, the ways in which they propose to do so are not the right ones. That is why I ask them to not press their amendments. If they do, I shall ask my hon. Friends to vote against.
I hear what the Minister says and appreciate that there are extreme difficulties here, but I do not think that he has really addressed my point. I was trying to put forward, at least for consideration, a proposal for a way to tackle the problem. Although I appreciate what he says about the possibility of putting a greater discount on the electricity supply, that does not address the point that many of those people use gas or home fuel oil as the principal method of heating their homes and water.
That point is important, but it will not be covered and people will still find themselves in extreme difficulty. I appreciate the problems, but the issue has been trundling along for a long time and we need to get to grips with it.
The Minister rightly made the pointthe hon. Member for Sherwood also brought it upabout the amounts that we are putting on energy bills. Everybodys bill is going up; energy is not going to get any cheaper. The way oil prices are going, those people will suffer more and more.
The issue has to be tackled, otherwise the incidence of rural fuel poverty will keep increasing, which is unacceptable. There is a real injustice here. I do not propose to press my amendment to a vote, but it is worth consideration. I shall certainly give it more thought and I urge the Minister to do likewise.
I have listened carefully to the Minister, and I know that he has lived with and worked on the issue for a long time. He has first-hand experience of it. He asks us to not press the amendments. In return, I ask him to think carefully and listen carefully to the debate.
May I say bluntly that the issue will not go away? The Bill will go through its various stages of consideration; I do not find the Ministers assurances so far satisfactory. I hope that he will look again at the issueI know that he willand that at some stage there will be an opportunity to make further progress.
I am grateful for the debate on those issues and for the contributions made by the hon. Members for Sherwood and for Angus. I will press my amendment to a vote because we cannot just say, We think the Government have the answer, because we do not think that.
My hon. Friend the Member for Harrogate and Knaresborough said how much the cost of heating his east wing has increased since I was there. He must have had a succession of eminent visitors over the Christmas season if he had to ensure that it was fully heated, but that is very like him. It surprises me that that is so expensive because, although he of course likes to keep his good lady wife in comfort and in pleasant and warm surroundings, he is away quite often, so one would expect the cost to be cheaper, but there he is, sharing the difficulties of people who are off the gas mains.
More seriously, my hon. Friend, like the rest of us, is concerned for constituents across rural England, Scotland and Northern Ireland, and in places that I know very well such as west and north Wales, where my family come from, and where nobody is on the gas mains and everybody has to buy their fuel from the local supplier.
We are aware of the Competition Commission inquiry, but the Minister knows that in many parts of the country there is effectively one supplier. He also knows that, according to the latest figures, not only is local competition often non-existent, but only 1 or 2 per cent. of those consumers annually switch supplier, whereas the figure is far higher for people on the mains who switch electricity and gas companies. We are talking about a group of people who do not have the benefit of competition and a competitive market in the way that those on the gas and electricity mains do.
The argument seems to centre on rural areas, yet the problem impacts on sizable numbers of people who live in what the Americans call trailer parks, which sit in almost all our constituencies, including in urban areas.
The hon. Gentleman is right. Many people on the south coast, in his constituency in the east midlands and in many villages around the country on the edges of cities and towns are in exactly that position. For example, when I was growing up, we lived in a village a few miles down river from Hereford and a lot of that area was not on the gas or water mains, even though it was only 3 or 4 miles from the centre of Hereford, the county town.
The Ofgem figures are clear: 4.3 million households are not connected to the gas network, with particularly high numbers in Scotland, Wales and rural England. That does not mean that nobody is affected in other areasthey are.
The Minister repeated what the Secretary of State said in general terms to my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey last week. The Minister understood my point that, if we are to solve the problem by giving people money off their electricity bills, there has to be differentially high payments for those who cannot be compensated in that way, but he did not address the problem that then arises, which my hon. Friend the Member for Harrogate and Knaresborough homed in on. Due to the marketor the lack of a market, as may be the case locallysuppliers of alternatives to gas can get away with their pricing and price rises and not bear any of the burden. They do not pay any of the costs. That is why we have argued that a scheme needs to include them.
We understand the why about the market being organised differently and that there is not the natural monopoly that has to exist with electricity and gas, which come through one pipe or line, while this fuel comes on tankers and gets delivered, or consumers go to the garage down the road or whatever. None the less, there needs to be a scheme that incorporates people who are off-grid.
The Minister, I hope, understands that although there will be a consultative process, we want to leave the Committee with people outside knowing that this will not simply be a possible option on which there might be progress at some stage in future. We want to know that the Government are committed to dealing with this differential issue. I think that that view is held on both sides of the Committee and across the House.
Lastly, the budgets of most of the people we are talking about will be particularly adversely affected in bad weather. Those people may have a bit more electricity expense during bad weather, but the main extra cost is for the fuel for heating their homes. That heating is normally powered by gas for those of us who are on the gas mains, but for these people it is powered by the oil in the tank that supplies the central heating. In winters such as this one, many more people will have bills of the order we are talking about. The average annual bill is £1,000, but the figures show that on average people off the gas mains pay a third more, so we are talking about average bills of more than £1,300, and I have seen figures that show that some people are paying more than £1,500 a year for their combined bills. In a particularly bad winter, that figure might nudge up towards £2,000. If the 38 per cent. increase in three months that my hon. Friend the Member for Harrogate and Knaresborough has indicated has taken placeof course the market goes up and down, but none the less this is a time at which people will be ordering their fuel in to ensure that they have the security
That is what I did at the beginning, but I am happy to confirm my decision any second now. We are clear that this is a real issue affecting millions of people who feel that they have had a bad deal. The Government need to do much better than show sympathy; sympathy does not pay the bills. We want help with paying the bills, so I shall press the amendment to a vote.
Before we move on to amendment 31, we must remember that the Committee is due to end at about 4 oclock in a weeks time and we are making slow progress. There are a lot of clauses to be covered and a considerable number of new clauses at the end. I ask hon. Members to bear in mind the fact that we need to make progress.
(7A) Payments made under paragraph (7)(a) shall only be made to scheme customers on the cheapest tariff offered by the supplier, and the supplier shall be obliged to place all scheme customers on their cheapest available tariff..
The amendment aims to ensure that people who will be supported because they are fuel poorthey spend more than 10 per cent. of their income on their fuel billswill automatically be on the cheapest available tariff. Heeding your request, Mr. Atkinson, to make sure that we progress and complete this part of the Bill, which I am sure that we all wish to do, I will not elaborate on the point made in debates downstairs and elsewhere that one of the things that has been a bane of peoples lives is the multiplicity of tariffsthousands and thousands of different tariffswhich make it very difficult for people to discover the cheapest one.
The purpose of the amendment is to see whether the Minister agrees with the double proposition in amendment 31. Any paymentsuch as the one he indicated with £100 off an electricity bill, for example, or a differential amount that might mean more off electricity bills for certain peoplewill be made only to scheme customers on the cheapest tariff offered by the supplier, but, and this is the important thing, the supplier should be obliged to place all scheme customers on their cheapest available tariff. It will be dead easy when there is a smart meter, because everybody will be able to see exactly what tariffs there are and the suppliers will be able to organise accordingly. I do not see why it is not entirely possible for peoplewho are either indicated by the Government, because they are on the appropriate benefits that mean they get support, or in other waysto tell the utility companies that person x, household y, or family z should not be on their lowest tariff at all times. I would like the Minister to tell me that he is determined to make sure that the poorest people are not, by accident, still paying, or at risk of payingtomorrow, next week, next year once this Bill is enactedmore for their electricity or their gas than they need to because they are not on the lowest tariff.
Finally, without this precaution, the system is nonsensical, because the Government will arrange for a repaymentit will not be their money, but money from other peopleto reduce a bill which need not have been as high in the first place. That is the whole point, because by definition that person would be on a higher tariff than they need be. That is nonsensical, and the other customers who are not receiving any financial support, and who are therefore paying a premiumpaying additionally to subsidise, or cross-subsidisewill therefore be paying into the hands of the utility companies who clearly make a considerable profit out of the fuel that they supply.
I hope the Minister can be robust and very firm. I hope that he will go further than sympathetic warm words and say that even if the drafting needs to be correctedI am happy to take the amendment away and work with him and officials to get it righthe accepts the principle that people who are going to be supported will be the people, it will be assured, on the lowest tariff that that company offers.
I very much agree with the hon. Member for North Southwark and Bermondsey about the importance of transparency. Indeed, new clause 4, which, I hope, we will debate at some point, looks at how to provide more information to consumers about what would be the most advantageous tariff for them.
I have, however, questions about the workability of the amendment as drafted. We accept that it should be reasonable to have different tariffs to reflect different aspects; for example, people who choose to go for a tariff where they will predominantly use off-peak energy will get a different rate from those who decide not to use off-peak energy. Clearly, for people in vulnerable households that may be more challenging, because they might be at home much more during the day. They will not be out at work at those times, so that option might not be open to them. People might choose to go on to different tariffs because they want to go on to one that is more skewed towards weekends, or they want an environmentally friendly tariff. People are entitled to make their own choices about what suits their own consumption pattern best. It then becomes incredibly difficult to put a burden on the supplier to, at all times, be in a position to move people on to a tariff that happens, in their eyes, to be cheaper, but does not actually suit the consumption pattern for that individual so well.
As ever, the hon. Gentleman makes a very sound point. However, my hon. Friend the Member for North Southwark and Bermondsey and I are trying, through the amendment, to get the Government to agree to the principle that people should be on the lowest tariff wherever possible. Moreover, if an energy company places somebody on the lowest tariff, the individual should then be able to say, in the way described by the hon. Member for Wealden, that, while the company has fulfilled its obligation, they want another tariff for a particular point. We could achieve that quite easily and give the individual consumer the right to negotiate a different tariff.
Yesthere is common ground that could be explored. When some of the heads of the energy companies appeared before the Select Committee, I asked the chief executive of Scottish and Southern Energy Group whether he would ensure that, if anybody rang up to ask about a tariff, it would be company policy to tell them that they would be better off on a particular tariff. He replied that that would be their commitment. There are therefore things that can be done to move us in the right direction, although I am not sure about the way in which the amendment is phrased.
Another cause of concern is the fact that an agreement on a tariff is a legal contract between the electricity supplier and the customer, so any change requires the agreement of the consumer. The reason why we have ended up with an extraordinarily high number of tariffs from different companies is that they make an offer for a certain period then knock a new tariff into another period, but the old one remains available for those who are still on it. Moving people arbitrarily is difficult and challenging, so the element of compulsion in the amendment causes me anxiety.
I have one question for the hon. Gentleman. Does he agree that, by one means or another, we must require the utility companies to reduce the number of tariffs that they offer? Does he accept that principle? We can discuss how it can be done, but does he agree that having about 4,000 tariffs is nonsense and that there ought not to be more than a handful of tariffs available?
After our discussion on this issue in the evidence session, I looked into how many tariffs are generally applicable. The number is not as vast as we might think. I went on the internet as if I was a customer who was going to switch. I clicked on the screen and was asked whether I used electricity or gas, who my current supplier was and what my payment method and meter type were. I then had to put in my current tariffapparently my current supplier has 13 different tariffs that I could be onand my current spend and unit use. Eventually, I started to lose the will to live. However, having gone through the process, I was offered six alternative tariffs from that one company. Each of those tariffs was fundamentally different from the othersthere were saver, eco, environmental and discount versionsand I can see why each one had merit.
The problem is that tariffs that were introduced years ago are still available, because they were not time limited, even though, in some cases, only a very small number of people are still using them. I absolutely concur that, for simplicitys sake, the smaller the number of tariffs, the better. Consumers can only choose if they understand the choices available to them. I accordingly encourage the energy companies to do so. However, the 4,000 tariffs are not all live tariffs; some of them are historical tariffs. When one goes through the process, one ends up with a relatively small number of tariffs to choose from.
I am one of those people who has been bypassed by the technological age. Is my hon. Friend talking about going on computers to get the information? Is he happy that when an elderly person who is not computer literate phones up, he or she gets the advice necessary to make their choice?
My understanding is that it can be done just as readily over the phone. I hope that companies will follow what the Scottish and Southern Energy Group has said and make a commitment to inform anyone who rings up asking about a tariff of the best option for them according to their consumption patterns and choices.
I deeply begrudge unsolicited telephone calls during the evening or on Sundays when people ring me and say, Its your electricity provider here; we would like to talk to you about your tariff. They then say, We have a very good deal for you, and I tell them that I am not interested and do not want to talk to them. I lose my normal good humour, become churlish and horrible, and put the phone down. They may well have a much better option for me, but they do not get past the first sentence on their questionnaire. There are many of us who, once we have locked into something from a desire not to change, may end up with a deal not as good as some of the other tariffs available.
We would all love to know whether the hon. Gentleman decided to change his tariff at the end of the exercise and whether he has done anything about it. The more serious point is that a lot of the people he is talking about are not as capable of making the choices, or dealing with perhaps six options on the phone, or having the long conversation working out all the benefits. They are people with caring responsibilities, loads of children, lesser intelligence, extreme poverty, illness, sickness and so on. For them, the current system is a nightmare and many people do not change at all. I think 50 per cent. do not do so because it is too complicated.
I did not change. The other issue is that many people change on to a higher tariff. This is an area where we clearly need much greater transparency and simplicity. We must give consumers much greater choice, but, at the end of the day, my preference comes down to the importance of giving people choice and helping them to make those decisions. There is an element of compulsion inherent in the amendment, which perhaps goes too far.
In answer to the amendment, the combination of the current voluntary agreement and the ruling by Ofgem on the meaning of social tariff has resulted in 1 million customer accounts being effectively on the lowest available tariff. The solution that the hon. Member for North Southwark and Bermondsey proposes exists under the voluntary agreement. Remember that under the Bill it is intended that the voluntary agreement outcomesthose 1 million customer accounts benefiting from social tariffswill be grandfathered into the new scheme. Part of what the hon. Gentleman seeks to achieve exists already. It is now a question of what we do in terms of the additional support that we intend to deliver.
The two main options for delivering the support are to say to energy companies, Either put the customer on the lowest tariff or give them money off their electricity bill. We in the Department wrestled with the choice between the two; the amendment effectively says bothpeople would get the money off the bill and be put on the lowest possible tariff.
I will explain why we chose the route of taking money off the bill rather than putting people on the lowest tariff. I do not want to stand in the way of energy companies being more proactive in giving assistance to their customers in appropriate cases, but I want to explain why in law I would not want to instruct companies to put customers on their lowest tariff. We have, however, drafted this measure to leave that open as a solution if, as a result of debate and consultation, it is by far the better choice. However, I think mine is the better choice and I want to explain why.
Stakeholders have voiced many times to Government their concerns about the range of social tariffs offered by suppliers under the current voluntary agreement, saying they can be confusing and do not allow consumers to compare tariffs easily when deciding which supplier is offering the best deal, even when the social tariff is linked to the best available tariff offered by that supplier.
Our policy has been developed taking into account that type of feedback from such representatives, so we have chosen to go down the route of a known, stable and clear benefit. I also believe it is in the best interests of consumers to preserve a competitive energy market. I believe that rebates will minimise any distortion to the market by preserving the incentives to suppliers to continue to compete for customers across the entire market. We are keen to avoid certain categories of consumer becoming less attractive to suppliers because of the benefits that they are entitled to receive.
I am not saying it would be legal or illegal. I am saying that, as companies compete for business, they might construct their offers in legal ways that encourage some customers to join them and discourage others from joining them. That is my objection to the hon. Gentlemans proposal.
I wanted to say a little about the hon. Gentlemans long-standing campaign on the number of tariffs, which he has raised with me on many occasions. The big six responded to his request made at the evidence session and have provided information about their tariffs and the number of them. I agree with the hon. Member for Wealdenwhen we have the tariffs in front of us, we see that there are not that many of them.
I raise an eyebrow at the description thousands of tariffs, because the number is more manageable than that. Nevertheless, there are understandable distinctionsfor example, if there are regional differences in the charges to suppliers from the transmission networks, is it reasonable that they take that into account when setting the tariffs for that region? The Ofgem guidance on the lowest available tariffs says in the region for that reason.
At home, I have chosen a tariff that, to the best ability of the supplier, covers energy from renewable sources. I want to encourage suppliers to offer such tariffs, even if it means that they have one more tariff than they would have if they did not offer them. I notice from the evidence that one of the companies has an arrangement with Age ConcernAge UK as it will becometo market a tariff jointly. I would not want to prevent such innovation in marketing schemes.
I do not know about the hon. Gentlemans constituency, but in mine it is easy to contact Age Concern and its representatives. They are a great bunch of people. The name of the company concerned is in the evidence in front of him in the description of the tariffs.
Like the hon. Member for Wealden, I am committed to the most transparent information for customers to enable them to compare and make choices. There are practical constraints associated with mandating a scheme of social tariffs if we are to ensure that eligible consumers receive social price support, irrespective of their supplier. It is important, for example, to be able to measure fairly the contributions made by each supplier that count towards their share of the overall policy costs within the funding envelope set by Government.
We announced in the pre-Budget report that suppliers will be required to spend a combined total of £300 million by 2013-14. Our proposals for a new transparent system involving rebates will reduce any ambiguity surrounding suppliers contributions. That is important among themselves; that is my point.
It is essential to ensure that customers do not become unattractive to suppliers because they are entitled to benefits. That, in turn, is of fundamental importance to allow a reconciliation mechanism to exist that is robust to legal challenge from among the suppliers, and that enables the suppliers to contribute to the costs of the policy in proportion to their share of the domestic energy market. A system based on the best available tariff would not be practicable for reconciliation and would leave the policy open to the very real risk of legal challenge from energy suppliers.
In conclusion, some might wish to impose the requirements contained in the amendment, but we already have the powers to do so in the Bill. Our proposals for a fixed rebate on a households electricity bill will be a simple and transparent mechanism for tackling fuel poverty and directing support to more of the most vulnerable consumers. It is also practicable and legally defensible to administer.
The proposals will, of course, be subject to consultation, and I do not think it appropriate to restrict the scheme to a particular structure, as the amendment would, before we are certain it will work and in advance of consultation that may inform that judgment. Therefore, I ask the hon. Member for North Southwark and Bermondsey to withdraw his amendment.
I am grateful for the comments of hon. Members and of the help, in part, that the Minister has given. I do not think, unless I misheard, misunderstood or did not hear, that the Minister dealt with the fundamental objection to the £100 payback system, or whatever the preferred option may be.
That system is of course transparent; it has that merit. The objection is that unless people were on the lowest tariff an additional burden would, in effect, be placed on the other users, because they would be contributing to a reduction of what was, by definition, not at that time the lowest tariff. I did not hear the Minister deal with that question, and I ask him to reflect on how to address the concern before we return to the matter in others ways, both in Committee and no doubt later.
Briefly, the figure that I have most generally used about the nature of different tariffs comes not from me but from a Which? survey done last year. Which? is well regarded as good and authoritative. The hon. Member for Wealden is correct that a lot of the tariffs started some time ago and cannot be opted into now. The Minister is right that there are differential tariffs in the four countries of the UK, and in different parts of England and elsewhere, and there are all the other variantsfor example, night-time, weekend and green options.
I still believe that if we are really going to give all consumersnot just the hon. Member for Northampton, Souththe chance to make sensible choices and to have a real choice, we need to whittle down the number of tariff options that are available from a company. That is not against the consumer interest, and it would force the suppliers to be more focused about what they offer. I hope that we will return to that issue.
The suppliers have responded to a degree, and the situation is better than it used to be, but it still leads people to lose the will to livein the words of the hon. Member for Wealdenas they try to grasp the issue and sort it out or to decide not to go there because it is not important compared with other issues in their busy lives. As a result, they go on paying considerably more, and the differences can be huge, as the Minister concedes.
My last point is that the measure would be obligatory. What I hear from the Minister is that if the Bill is enacted without the change it will not preclude regulations including a scheme that might be as obligatory. There has to be a consultation process, and I will be interested to hear the utilities responses. They could do two things without any of us legislating for them. First, they could all agree that tariff changes would happen only four times a year at most, at the beginning of a quarter, so everybody would know when they would happen.
Secondly, the utilities could all agreesupported by the Government and, I hope, by Ofgem if necessarythat there could be periodic publication on the web and in the local and national papers of the comparative prices. We might return to that point. If every quarter or three times a year somebody could look somewhere, read across and see which company offered the cheapest deal, that would be real competition because people could make real choicesand not just people with lots of time on their hands and the ability to make the choice.
I am willing to go away and reflect on what the Minister and others have said. I am keen that we make progress, but I hope that the utility companies have got the message that we cannot go on as we are. There has to be a different system, and at the moment a lot of the people who can least afford it are paying much more than they should because they are not benefiting from the regime. I beg to ask leave to withdraw the amendment.
With this it will be convenient to discuss new clause 6Schemes for reducing fuel poverty: further provisions
(1) In this Part benefits may include benefits other than direct financial benefits.
(3) In order to determine the benefits of the technologies referred to in subsection (2) the Secretary of State shall
(a) consider and report to Parliament on the following technologies:
(i) passive flue gas heat recovery systems (PFGHR),
(ii) voltage optimisation technologies,
(iii) standby down-powering technologies,
(iv) dynamic demand technologies,
(v) district network connection technologies, and
(vi) such other technologies as he thinks appropriate; and
(b) include PFGHR systems and any other technologies that he deems appropriate pursuant to paragraph (a)(vi) above in the consultation that he carries out pursuant to section (2) of the Green Energy (Definition and Promotion) Act 2009.
(4) In this section:
PFGHR systems means technology that can use the waste heat from condensing boilers in order to heat water;
voltage optimisation technologies are technologies that lower the input of voltage to electrical equipment from that at which electricity is currently generated;
standby down-powering technologies are methods by which electrical equipment is turned off, or reduced, during periods of non-use.
dynamic demand has the same meaning as in the Climate Change and Sustainable Energy Act 2006;
district network connection technologies are technologies that enable consumers to link up to lower cost and lower polluting local energy generation..
One grave disadvantage of appointing to the Committee Members who believe they know a little about the subject is that, inevitably, a number of amendments containing bright ideas will emerge during the debate. We have seen that with clause 8. I hope that my modest bright ideas pass muster against the other bright ideas we have heard this afternoon.
This is a two-for-one offer: I have an amendment and a related new clause. The wording of the amendment is also in the new clause, but stands by itself, hence my tabling it as a separate proposal.
Clause 8 makes it clear that
licensed suppliers to whom the scheme applies are
to provide benefits to customers determined by or in accordance with the scheme.
Although that provision refers simply to benefits, it is clear throughout the rest of clause 8 and clause 9 that the wording relates primarily to financial benefits. For example, clause 8(6) refers to
the amounts of any benefits to be so provided.
Clause 8(7) refers to payments to be made and charges for supplies. Clause 8(8)(c) refers to
how any amount is to be determined.
Clause 8(8)(c)(i) refers to
determining the amount of any benefit provided.
Clause 8(8)(c)(iii) refers to provision
for any amount of a benefit, clause 8(8)(c)(iv) refers to
payments by a scheme supplier and clause 8(8)(c)(v) refers to amounts of benefits provided. Clause 8(9) refers to
Payments by a scheme supplier and so on.
Throughout the two clauses, most of the supporting subsections that relate to clause 8(2)the main part of the clause that introduces the benefitsmake it apparently clear that those are financial benefits. My concern is that any challenge on the basis that benefits might not necessarily be financial benefits, but might be benefits in kind, could be ruled out on the grounds that the clause appears to make it clear that the benefits are primarily restricted to payments, not benefits in kind. It is important for the Bill to be amended to include a small sentence that makes it clear that benefits may be benefits in kind as well as payments in cash.
My hon. Friend anticipates slightly what I was going to say about new clause 17, which contains examples of benefits in kind that might be provided as a result of a scheme. One can envisage a number of other benefits in kind that suppliers could provide, as part of a scheme, that would not necessarily be directly related to financial payments, but would be taken into account in the operation of the scheme.
New clause 17 suggests that a number of benefits in kind could consist of benefits, particularly for people in fuel poverty, that are not payment-related benefits, but benefits that would make a fundamental difference to both the payments that those people are making in bills and the proportion of their incomes that goes towards bills.
I fully appreciate the reasons for suggesting this inclusion. What I do not understand is how other people will understand what the benefits might be. I have looked at the benefits in new clause 6 and they blow my mindbut I am not a very bright, technical person. I can understand if the hon. Gentleman is talking about saying, Look, if you take this tariff, well give you 200 quid to have your roof insulated. That I understand. However, I do not understand
passive flue gas heat recovery systems, for instance, and I just wonder whether this proposal would not make things more difficult for people.
The hon. Gentleman also slightly anticipates what I was going to say. I intended to attempt briefly to explain what the items mean, should elucidation be required. My central point is that the first proposal need not necessarily be associated with the second one and may relate to benefits in kind. I am sure that we would all clearly understand, in relation to the precise example that the hon. Gentleman gave, that a benefit may emerge that is not a financial benefit, but a benefit that clearly would make a financial difference. I am anxious to ensure that those benefits are not sidelined by the provisions of the Bill. The particular additional benefits in kind that I wish to draw attention to in new clause 17
I do apologise. I am referring to new clause 6. Hon. Members must understand that I am able to explain the meaning of passive flue gas heat recovery systems but I cannot necessarily get the clause right.
I want to draw attention to areas that are very much neglected in our approach to fuel poverty. We talk about either the extent to which tariffs or bills may be modified or financial assistance given to people in fuel poverty, or we talk about passive insulation and energy-efficiency measures for housing that will reduce bills. I am encouraged that we have started to talk about the installation of microgeneration, which may provide an income for those who have such installations on their properties, thus adding to the payback mechanism. Technologies that do not involve the active participation of the householder in their installation, but nevertheless increase efficiency and effectiveness, are rather neglected.
In passive flue heat recovery systems, heat expelled from a condensing boiler, for example, is collected and recycled below the point at which the water comes from the boiler and pre-heats the water, prior to its being fully heated. The process saves substantial amounts of gas, by capturing the emissions of the previous cycle of water heating.
Voltage optimisation technologies reduce the voltage coming into a property, more normally a commercial property, from 240 V to 230 V, because the UK has a substantial derogation under EU regulations on the range of voltage put into a property through the low voltage system. Energy saving is achieved by regulating the voltage coming into a property, while keeping it within the range for equipment to work and not brown out or fail.
Stand-by down-powering technologies save energy by simply switching off stand-by power or reducing the total voltage involved. Dynamic demand technologies are where the fridge can talk to the system, for example. [Interruption.] It would be creepy, indeed. Without the introduction of a smart grid, a dynamic demand technology installation can detect changes in the level of power, which indicates whether the system is overloading. It can literally switch the freezer off or on, without damage to the freezer, and thereby save substantial amounts of electricity. I will leave my discussion of those particular technologies there.
Those examples are modest changes that could be placed into households without the active participation of householders. They could be placed as part of the benefit package, and yet would save substantial amounts of electricity or heat. Stand-by technologies could, for example, save 5.8 per cent. of UK domestic electricity; voltage optimisation could save 8 per cent. of the electricity use of any household or business. Daylight-responsive lighting could save 12 per cent. Flue gas recycling in the summer could result in about 11 to 12 per cent. gas-use reduction and in the winter about 12.5 per cent. of gas use.
Those are not insignificant amounts of savings. Placed together, these technologies could make a substantial difference to the amount of energy used, and without the active participation of the householders. The amendment suggests that the Government look seriously at those technologies with a view to incorporating them, if possible, into fuel poverty offers, so that those savings can be made. The amendment modestly asks that the Government look at them and brings a report forward with that view in mind.
This has been one of the most interesting amendments. As many Committee members want to do, it asks the Government to look more broadly than just giving people a bit of money back in their bills. We have to look at things in a holistic way. The list is interesting because it is not exclusive.
I wonder whether, in drawing up the list, the hon. Gentleman has gone for things that are currently mainstream, or whether he would be prepared to have additions to that list. For example, a company in Sheffield called Disenco amended the Stirling engine, a very old piece of engineering equipment, so that it can not only heat an average four-bedroom house, but in the downside put the equivalent of 3 kW of electricity back into the systemactually generate electricity that can be fed back in the evening. I wonder whether the hon. Gentleman would be open to additions being made to his amendment.
Yes, indeed. There is a little clause in the provision that states:
such other technologies as he the Secretary of Statethinks appropriate. The aim of the amendment is to introduce a number of those sorts of technologies into the realm of the thinking on fuel poverty. Other technologies that are similarly appropriate to saving energy could be added so that the cumulative effect could be greater.
I thank the hon. Gentleman for explaining what each of those things really is and does, because I was certainly not aware of all that. My concern is not with the concept of benefit, which seems very sensible, but with how that relates to the choices being made by the fuel poorthe people we are specifically talking about.
The hon. Gentleman touches on an important point. As we have heard today, part of the issue of fuel poverty is the extent to which those who are offered packages will co-operate with the installation. We have heard, for example, about people with homes with no cavity walls perhaps being required, as part of what looks like a perfectly reasonable offer, to have all their walls stripped down, evacuate the house for weeks and come back at the end of it. At that point those people might say, Im going to live with a fuel-inefficient house if thats alright with you, because I dont want those changes to be made.
Part of the purpose of these sorts of systems is that they can be introduced without that sort of intrusive offer being made. Yet, at the same time, they require no action by the householder once they have been installed; they simply make the savings week in and week out, month in and month out, year in and year out, passively operating in the house. For example, flue gas recovery simply requires a system below the point at which the water is inputted into the condensing boiler. It continues to save the previous cycle of water heating forever and therefore it continues to make a saving every time the boiler is switched on.
To make real breakthroughs on fuel poverty, we need to concentrate on systems in which the householder is able to get out of fuel poverty, stay out of fuel poverty and continue to reap the benefits without having to make an enormously intrusive series of choices as a result of the package offer. Making those packages workable over a period of time seems an important part of a real attack on fuel poverty.
I think I have already over-burdened the Committee with information this afternoon. I shall conclude my remarks and hope that the Minister will feel able to accept at least one of the provisions. If he does not feel able to accept both the amendment and the new clause, I hope that he will at least look at the principles behind them, with a view to making a further approach on the reduction of fuel poverty. That is why members of the Committee are here this afternoon.
We have had a fascinating opening discussion that shows what the Committee ought to be aboutthinking broadly and asking what can be possible. We should be absolutely clear that this Committee will not have the solutions to the energy challenges that we face. Whenever we get to understand some of those solutions, others will begin to emerge and some will begin to be developed in academia or business, and we will not yet know that they exist. The Bill should encourage those solutions to flourish, and promote a range of new alternatives to dealing with energy challenges. The ideas put forward by the hon. Member for Southampton, Test bear a great deal of explanation and discussion.
There is so much genius in business, industry and academia, and we should do everything that we can to facilitate it. To say that support given for fuel poverty should be only in a cash fund seems rather restrictive; a pound will be a pound will be a pound. The pound today is probably worth a little less than it was yesterday, but apart from that, it is still a pound. There are many other ways in which people in fuel poverty can be helped, some of which have been mentioned. If people are given the opportunity to develop certain ideas, they will come up with a whole raft of new ideas as well.
For example, given the purchasing power of some of the energy companies, they could say, We can either give you 100 quid towards your electricity bill, or we can give you 150 quids worth of vouchers for a supermarket that weve got an arrangement with, if that is what you prefer. That is the purchasing power that such companies can bring together.
We have already seen the extent to which companies can distribute energy-efficient light bulbsmany of us have cupboards full of such light bulbs and are wishing that they would wear out rather sooner than they do, so that another one from the cupboard can be installed. We have seen the difference that purchasing power can make, and it would be a missed opportunity if the Bill tied that down to a financial mechanism. There is so much more that could be done.
I, too, support the initiative by the hon. Member for Southampton, Test. His second proposal, new clause 6, has clearly drawn support from across the House, including from the Chair of the Environmental Audit Committee, who is not an unimportant co-sponsor of the new clause.
I have a supplementary point to add to the positive comments made by the hon. Member for Wealden. Not only is there a huge amount of technology and science bubbling away around the country, but there are people on the front line who want to tell us of all the opportunities.
The other day I went formally, for the first time, to the Building Research Establishment headquarters just north of London with some of my parliamentary colleagues. We had the sort of fascinating half-day that I expected, and saw what new opportunities exist for making a house as environmentally friendly as possible. We all have the opportunity to encourage those sorts of innovations in our constituencies. The more the systems run themselves once they are installed, and deliver benefits without further interference, the better for all concerned.
I hope that the Minister will be positive, and take the principal point behind the amendment and the new clause. We want people to benefit from not only a cashback option or other differential payment options, but having other technology in their homes.
I want to reinforce a point that I have made elsewhere in another context. The prerequisite to this initiative working well for everybody is a proper, comprehensive survey that identifies what can be done. Not everything can be done immediately or be within the scheme that the Government buy into when asking utility companies to deliver a system to alleviate fuel poverty. We have household surveyslocal authorities such as mine are doing their stock condition survey again.
If local authorities, along with the industry, lead the process of ensuring that they offer the service in Northampton, Sussex, Yorkshire, London and so on, we can identify the opportunity. Crucially, the service will not be offered by the utility companiesthey would be perceived to have a self-interestbut by local government, which is still trusted to give good, independent advice, although it may well buy in an agency or get the BRE to give advice.
Science develops, of course; a technology that does not exist today may save a lot of money when it is rolled out tomorrow. I would like the Minister to say that the prerequisite should be for people to have a service that shows them what their home could benefit from, so that everybody can understand. Moreover, people who are at the bottom of the income scale should be just as easily able to understand the benefit of the new technology that saves the waste heat and re-pumps it, or that saves it from the fridge so that it does not have to be recharged in order to heat it up on a regular basis. I hope that the Minister will be positive and either accept the amendment and the new clause or say that he will return with something similar on Report.
I am extremely grateful to my hon. Friend the Member for Southampton, Test for tabling his amendment and new clause. On the amendment, I do not feel so perfect as to never be able to be questioned about whether I have got the Bill right first time. He has drawn a point to my attention, and I will deal with it in a moment. On the new clause, I am extremely excited about ideas and visions, and I love discussions of the kind that we have just had. I encourage him to carry on informing us of the technologies. I will say a little more about that later, too.
When I first discussed the amendment with my hon. Friend, I was pretty confident that the word benefits in clause 8(2) was sufficiently wide to include non-financial benefits. Some energy companies provide servicesfor example, ringing up for Heatline adviceand we allow the money to count against their obligation under the voluntary agreement. Some also provide useful benefit entitlement advice and, as the hon. Member for North Southwark and Bermondsey has said, advise people about the things that they need in their property.
Those are current services and they are funded by the voluntary agreement, and to a large extent, subject to what I am going to say in a moment, we want them grandfathered into the scheme. Therefore, clause 8(2) is widely drawn because we want to be able to grandfather those things through.
I was therefore pretty confident that everything was good enough as it was. However, my hon. Friend the Member for Southampton, Test sounded an alarm bell when he voiced his fear that many of the references to the word benefits that appear later in the clause have a financial aspect attached to them. I have therefore asked the lawyers to check, double-check and check again whether the Bill is good enough as drafted to cover my hon. Friends point. There is no way that I want to miss it.
For the moment, my advice remains that the Bill is good enough as it is. If my hon. Friend is willing to withdraw his amendment, I assure him that I will continue to talk to the lawyers and ensure that we are confident that what he wants to achieve will be achieved. If my advice changed, I would want the Bill changed, and he would certainly get the credit for that. I hope that helps him in relation to amendment 30.
Much more fascinating, as we have all just agreed, is new clause 6, for which I thank my hon. Friend. We want the kind of innovation that he is promoting in the new clause to contribute to the step change in this countrys approach to eradicating fuel poverty by improving the energy efficiency of peoples homes. He and others who contributed to the debate have said, or it was implicit in what they said, that the technologies involved are not simply for households and domestic property owners. They are equally relevant to businesses and commercial enterprises in their battle to cut their carbon emissions, reduce their overheads and make their properties more energy efficient.
I am not a scientist, so, like the hon. Member for Northampton, South, I was glad for the explanation of what each word means, but I have come across some of them as a constituency MPfor example, voltage optimisation. When I was at Stafford college for another purpose, I talked to its property manager about a scheme called Salix, provided by my Department, which offers interest-free loans to public sector bodies to cover the up-front costs of energy efficiency measures with a reasonably short payback of a year or less. My local college had taken advantage of a Salix loan to implement voltage optimisation, leading to huge savings in energy costs with a payback of less than four years. Local businesses benefited from the work by doing the installations. I have come across that term.
Another one is standby down-powering, particularly for computers. My local authority, Staffordshire county council, won a green award two years ago for devising a scheme to do that across a whole office in one go, and since then, the Department for Culture, Media and Sport has implemented a similar scheme. We have joined in promoting it across Government and are willing to share the technology with the private sector to ensure that it is spread as widely as possible. I have encountered the technology.
Like the hon. Member for North Southwark and Bermondsey, I have been to the headquarters of BRE outside Watford and seen some of its innovative thinking, particularly on devising retrofit installations to make homes energy efficient and overcoming the knotty problem of finding solutions for hard-to-treat properties, such as solid-wall buildings, that are affordable and acceptable to the occupants, especially if they are in the property while the work is being done.
The hon. Member for Wealden adverted to that problem during this mornings debate. It is fascinating to visit BRE and see the enthusiasm among the researchers there. I am delighted to support them in their work. While I was there, I was lobbied for money for a project that they had in mind, and I have a feeling that their application will be successful.
The Government are not asleep on the issue. Even within the schemes that I have mentioned, such as Warm Front, CERTthe carbon emissions reduction targetand the community energy saving programme, there is some facility to apply technologies to solve individual problems. I have said that Warm Front has trialled air source heat pumps and solar thermal in some projects, and some energy suppliers have found innovative solutions for hard-to-treat properties that have not been given assistance under CERT.
At the innovation level, we work hard to promote the kinds of technology described in new clause 6 and others not described there. We do a lot of work on the issue and will soon publish two separate strategies covering some of the matters referred to. For example, on passive flue gas heat recovery, when we produce the revised microgeneration strategy later this year, I am confident that we will be able to say more about the deployment of household-scale low-carbon and renewable technologies such as passive flue gas heat recovery systems.
In the household energy management strategy, which we all regret is not in front of us for reference, we will continue the discussion that we started in the heat and energy saving strategy consultation last year about discrete heating systems. We are enthusiastic about discrete heating systems fitted to modern circumstances and lifestyles in this country, and we will have more to say about them shortly, when the strategy is published.
The new clause refers to a number of technologies aimed at enhancing the efficiency of the electricity network. My Department is actively exploring ways to increase innovation and encourage the introduction of new technologies on the electricity network. We have published two reports on the potential for dynamic demand technologies, one in August 2007 and another in November 2008, as required by section 18 of the Climate Change and Sustainable Energy Act 2006. We are also exploring, as I adverted to earlier, how increased ICT can help to provide greater understanding of the flows of electricity to operators and consumers.
On the subject of innovation generally, I have been active in persuading the Government to be more informative about the fruits of our investment in investigating new technologies. We are about to publish, through the Department for Business, Innovation and Skills, an annual innovation report, in which I have been intimately involved, and there will be references there to the energy applications of some of the innovations that Government have supported and encouraged.
Let us remember that to accelerate development of smart grid technologies in the UK, we launched a £6 million UK smart grid demonstration fund. We have also recently published Smarter Grids: The Opportunity, a document setting out the case for developing smart grids in the UK.
To reassure my hon. Friend the Member for Southampton, Test, I can tell him that a lot of work is being done and we are finding better and better ways of communicating the advantages and the benefits of what we have learnt from the work done. Crucially, the next step will be to ensure that we apply that knowledge in practical ways to the task in hand, which is improving the energy efficiency of every home and business in the UK.
I hope that all the things that we are doing, some of which I have just described, will make the separate reports that his new clause would require unnecessary. Nevertheless, we are dealing with amendment 30, and I ask my hon. Friend whether he is willing to withdraw it on the basis of the assurances that I have given him.
I am encouraged by my hon. Friend the Ministers response to the amendment and the new clause. I look forward to clear guidance on whether the considerations in new clause 6 are necessary to the Bill, so, on that basis, I am happy to withdraw the amendment.
I know from my experience of the Minister and his reputation that he never, under any circumstance, talks about Bunters cheques. I am sure that the reports will emerge shortly and will, I hope, cover the issues to which I refer. If placing the issue before the Committee has ensured that that happens, moving the amendment will have been worth while. I beg to ask leave to withdraw the amendment.
I am conscious that the Committee has spent a long timemost of the daydiscussing the clause, so I shall be brief. I want to raise an issue that was discussed on Second Reading and that my hon. Friend the Member for North-East Derbyshire raised during our evidence sessions. I have been very impressed with research done by Macmillan, which suggests that 16 per cent. of people with cancer and 19 per cent. those undergoing treatmentpainful treatmentor who have just completed treatment live in fuel poverty. That is double the average figure. There is a compelling case for mandatory social tariffs not only for those with cancer, but for those with chronic long-term illnesses. It stands to reason that if someone is confined to their home, their heating costs are higher.
The Minister is well aware of the problem. He told us earlier that the new programme would involve a kernel of people who, by definition, would be the oldest and most disadvantaged pensioners, but that he was prepared to consider other groups. I want to press the point and explore it this afternoon. Macmillans campaign is about people with a terminal illness. Will the Minister consider that group? Clearly there are issues about targeting, which are not easy.
There are also data sharing issues, and there will clearly be cost issues. One of Macmillans suggestions is that the group should include people who have had medical treatment for cancer in the previous 12 months, have a terminal diagnosis and, particularly, are in receipt of housing benefit or council tax benefit. That would define the group more closely.
Perhaps I ought to declare an interest: my family has links with cancer issues. People in that group have a compelling case that should be listened to, and I would be grateful if the Minister told us how he intends to take the discussion forward. I am confident that he knows that a discussion is needed about how best to proceed to help some people in real and severe need.
I want to make a couple of brief points. I agree with the hon. Member for Sherwood that Macmillan has run a long-standing campaign on the matter, which I hope will be given consideration. I wish to expand the point.
Other groups have also raised concerns about clause 8, and about who will comprise the kernel group. They have made the point that Ministers have suggested that it will be pensioners only. Will the Minister expand his thinking on that? When we took evidence, I was particularly taken by comments from Jonathan Stern, the energy expert at Consumer Focus. In discussing on whom we should focus help, he said:
The group that we particularly focused on was those eligible for cold weather payments. Some 37 per cent. under those criteria are fuel poor. It is not a bad proxy compared with the equivalent for households receiving pension credit, which is 36 per cent.[Official Report, Energy Public Bill Committee, 7 January 2010; c. 88, Q204.]
I was a little surprised that the figures were so low. I would have expected the figure for fuel poverty in both those groups to be considerably higher, but that illustrates the problem we have with targeting the fuel poor. Jonathan Stern also made the point that 41 per cent. of lone parents are fuel poor, and suggested that households with school-aged children should also be included in the mix.
Citizens Advice made the point in its representation that although it does not dispute pensioner poverty and the problem of pensioners, it focuses on single-parent families and those on low incomes, and also those under 60 with long-term health problems. It said that a pensioner on pension credit can expect to get £130 per week, but someone on income support on the grounds of incapacity receives only £91.80.
During the current cold weather, I have received, like many other Members, representations constituents about the cold weather payment, and although that is not one of the Ministers direct responsibilities, obviously the interactions between the cold weather payment, the winter fuel allowance and the social tariff are part of the efforts to combat fuel poverty. I would like to see an extension of the cold weather payment to certain other groups, such as those for whom Macmillan campaigned, but the difficulty isI appreciate that there are limited funds availablethat we have to look more closely at targeting.
Will the Minister expand on the thinking about how we target the fuel poor? Do the Government intend to consider those in receipt of the cold weather payment? Will they just consider pensioners, or are they looking at a wider group to try actively to target those in fuel poverty?
I want to follow on briefly from some of the points made by my hon. Friend the Member for Sherwood and by the hon. Member for Angus. I also want express my thanks for a clause stand part debate being granted, because there would not otherwise be the opportunity to start exploring some of the issues in subsection (4). I am particularly interested in the consultation exercise that follows on from this.
Issues on the consultation were raised during the evidence session, particularly in the questions put directly to the Minister. I just want some explanation, rather than any particular changes.
This morning, the Minister mentioned some of the complexities and problems involved in identifying the support groupnot only the kernel group, but the secondary category risk groupwhen he talked about the number of people who will be affected. It is hard to know how those people will be best identified. We all know who it is that we want to help and support, but how do we establish the best way to identify those people, as the hon. Member for Angus just mentioned? Also, what support should we provide those people with, and what are the best and most cost-effective means to give them that support?
We have some evidence from the voluntary arrangements that were made with the energy companies. I want to know how that practical evidence will feed into the consultation exercise.
During the evidence session, we also discussed who will go into the kernel group and who will go into the secondary group. One thing that will be very important is the phrasing around the consultation, because who we propose putting into the kernel group and who we propose putting into the secondary group will be vital.
We have received some excellent written evidence from Macmillan and a lot of us have had close dealings with Macmillan in our constituencies. I have also done a lot of work with the Derbyshire Asbestos Support Team and with the Trade Union Safety Team, which is based in Chesterfield, near to my constituency, especially in relation to victims of mesothelioma and other asbestos-related cancers. Those cancers are particularly important as far as my constituency is concerned. Once someone has been identified as having one of those terminal illnesses, it is not long before they die.
We need to look at the really extreme end of chronic illnesses to see what impact they have on peoples livesnot just those people who are diagnosed with those illnesses, but their entire family or household. We are not only talking about people losing income because they are unable to work; we are talking about entire families being devastated. So, there is an additional element that we must consider when we talk about fuel-poor households.
When the Minister makes his winding-up speech, I would like clarification on exactly how the consultation will take place, how we will implement it and who makes the ultimate decisions on which people go into which group. I also make a plea that people with chronic illnesses and people who have received treatment for cancer in the past 12 months should be included, if not in the kernel group, then certainly in the secondary risk category group.
I want to pick up on some of the points that have been made very effectively already, and I also want to raise a couple of other issues.
Regarding the campaign by Macmillan, I think that we are all extraordinarily sympathetic to the concerns that it is raising. The hearts of those of us who are in good health go out to those who are suffering and who are ill, and we completely understand the trauma associated with cancer and other long-term chronic illnesses.
However, I have an issue about how the scheme will be dealt with in legislation. I hope that the Minister is prepared to meet with Macmillan to talk about how the scheme might work in practice. We are all keen to meet Macmillans objectives, but how that can be achieved is what will present the challenge.
I think back to my own familys experience in this regard. My father died of cancer when I was a teenager. While he was still alive, we still had hope. Awful things were going on, including the terrible response to trauma and everything else, but some of the real problems came when he died, and the way that this suggestion has been put forward is that the support would end when someone passed away.
That is a very difficult thing to put into legislation, or even into guidance, because there could be an awful situation where a supplier might have to write to somebody to say, We are terribly sorry to learn of the loss of this person in your family, but I am writing to let you know that you are no longer entitled to support under the fuel poverty regulations. We would have all those letters sent on to us and people would say, I cannot believe that, at the worst time in my life, they have been so heartless as to write to me in this way. Therefore, one must find a way that addresses the issues not only of people with long-term illnesses, but of how to support a family when it may be the breadwinner who has died and therefore the familys circumstances become that much more difficult.
Those matters also raise issues about how the companies would find out should be involved. Many people fighting cancer never accept that it is terminal. They believe absolutely, until the end, that they will beat it and that it is not going to get them. They would never write to an energy company or get a doctors note to say, I have a terminal condition, so there would be eligible people who ruled themselves out by their way of fighting a terrible condition.
We are keen to know that the Minister will work with the charities involved in the sector to find the most sympathetic way that we can act on the issue and to ensure that any measures do not have inadvertent side effects, which we are all keen to avoid.
Two general concerns have been expressed about the clause: its complexity and the three different categories. Will the Minister say a bit about that? It has been suggested that two of the categories should perhaps be merged, and I would be interested to know how that could happen.
Will the Minister also say a little more about data sharing, which we have discussed in some of our debates. The Government have facilitated the sharing of information on pensioners, but the rules are clearly intended to help an enormous number of other people. Will he propose changes to the rules on data sharing in that respect as well? The companies involved are concerned about some of the administrative costs that it appears they are not entitled to recoup. Will he clarify the Governments thinking on that issue?
To return to the principal theme, we are all keen to find a way to help people in our society who are at the most awkward, painful and traumatic time of their lives. We are keen to use the Bill to do so if we can. I hope that the Minister can help to find a way through.
The Minister has heard cases well made by the hon. Members for North-East Derbyshire and for Wealden and others on clause 8(4) and its interpretation. Like other hon. Members, I pay tribute to Macmillan Cancer Support, which works throughout England, Wales, Scotland and the Isle of Man from its base just over the river on the Albert embankment in SE1, the most happening bit of London. Macmillan does fantastically good work.
I went through the same experience as the hon. Member for Wealden. My father died of cancer when I had just finished university and college and my younger brother had just started. It was traumatic enough in any event. Probably every member of the Committee has had a family member with cancer. Thank goodness we in this country deal better with cancer now. The Minister of State and I have constituents who go to Guys and St. Thomass or Kings College hospital. Mike Richards, the cancer tsar at Guys hospital, says that the number of people diagnosed with cancer who survive is improving, but the issue is none the less serious.
Clause 8(4) is clearly drafted to suggest that there may be a group of people who would qualify. I will read two statements from real people, given to us by Macmillan Cancer Support. They are absolutely normal, run-of-the-mill experiences of people with the condition, given to us in Macmillans brief. Fiona, 47, from London, diagnosed with breast cancer, says:
I am so worried about this winter. Its stressful enough having cancer but I have to keep warm so I dont get infections and that means bigger heating bills. Im already struggling to pay them, if they go up more, I dont know how Ill cope.
Laura, 37, from Cambridgeshire, diagnosed with cervical cancer in 2009, says:
I was at home with cancer, without a job and on an income of just £60 a week. My husband and I had to make choices between eating or heating; we chose to eat and I sat shivering in bed under two duvets.
Tragically, that still happens. We know that people suffering not just from cancer but from other conditionswhich may or may not be terminal, accepted as terminal or accepted by them as seriousneed additional heat and support. The same goes for the very old, the very frail and sometimes the very young in delicate condition. We are all looking to the Minister to help us make the clause work.
The other point is one to which he is alert and about which his Department has thought a lot. It would be helpful if the Minister could set out where we are with identifying the people, using data sharing and so on, who are fuel poor under the current definition, and spend more than 10 per cent. of their income on fuel bills. The whole exercise depends on the system working and people not being missed out, because they may not claim all the benefits to which they are entitled, as they are proud or do not know, or for some other reason. Will the Minister tell us how this will be meaningful and how any system will catch the people who need help most and miss as few as possible?
Tackling fuel poverty is a priority for the Government. Since 2000, we have invested more than £20 billion in benefits and programmes to raise incomes and improve household energy efficiency and heating. We continue to look for ways in which we can improve or add to existing policies to help us to make further progress. Fuel poverty continues to pose a significant and growing challenge. We know that prices are a key factor influencing fuel poverty and we have seen 16 per cent. increases in energy prices every year between 2004 and 2008. That is why we are committed to build on the success of the current voluntary agreement with energy suppliers, which has already helped more than 1 million customer accounts, but which ends in 2011. To that end, we announced in the pre-Budget report our intention that suppliers will spend a combined sum of £300 million by 2013-14 on the social price support scheme.
Through part 2 of the Bill, our aim is to create a mandated system of social price support to ensure that more of the most vulnerable consumers receive help with their energy costs. Clause 8 enables the Secretary of State to create schemes to reduce fuel poverty. It also sets out the key building blocks of the scheme, including to whom they will apply and the form and method for calculating benefits. The schemes can, under subsection (3), apply to suppliers of both gas and electricity. Some householders receive help with their gas bills through the voluntary agreement. Subsection (2), read together with clause 9(4)(c), would allow payments made under the existing voluntary agreement to form part of the new mandated scheme.
Targeting the fuel poor is incredibly difficulta point the hon. Member for Angus made in his contribution. The fact is that whichever benefit or other proxy we might like to choose, they are wildly different in their effectiveness in identifying the right people. The weaker they are as proxies, the more people not in fuel poverty benefit from something that is supposed to help those who are. That is something we have to bear in mind all the time. No method is entirely precise. Perfect targeting would require real-time information on household make-up, income, energy efficiency and energy prices for all the housing stock. Suppliers have previously made it clear that they would welcome greater guidance on whom to target under the existing voluntary agreement.
Currently, the only guidance they have is that they should try to target the fuel poor or those vulnerable to fuel poverty. We said in the low-carbon transition plan that that is something that we wanted to improve, by providing them with greater guidance and direction. Our current thinking is that we may use different approaches for giving guidance on targeting, depending on our level of confidence about the effectiveness of a particular approach. For example, where we are confident that there are proxies for finding households with a high propensity to fuel poverty that are simple, stable and have a high hit rate, we can give people an entitlement to receive a benefit.
According to our current thinking, such households would be part of a kernel group. The hon. Member for Angus asked me about that. I have given as an example of my thinking on what kind of groups that includes the poorest, oldest pensioners, because they can be identified in terms of their situation and their benefit entitlement. As the poorest pensioners, they are not likely in the rest of their lives to improve their finances so much as to become suddenly not in need of assistance with their energy costs. I give them as an example of an approach, but there is a more general application. If I am satisfied that others could fall into the categories that I have just described, I would want to extend the kernel group to them as well. I hope that that is helpful to the hon. Gentleman.
By the way, the hon. Gentleman was right to remind me that, as ever, resources are not infinite and that, as politicians, we must do this prioritising as we balance the amount by which we want to help people with the number of people whom we want to help and the amount that it is reasonable to raise and budget for with respect to a particular programme.
Macmillan Cancer Support is an organisation that has received widespread support from members of the Committee: my hon. Friends the Members for Sherwood and for North-East Derbyshire, the hon. Member for Angus and the Front-Bench speakers for the Conservatives and the Liberals. I have been a Minister for six months, and for most of that time Macmillan Cancer Support and the plight of cancer patients have not been far from my thinking. That is a tribute to the cogency, effectiveness and strength of the case that Macmillan Cancer Support has advanced.
I can assure hon. Members that the campaign to consider the situation of cancer patients has been very well considered by me and those advising me in the Department. I would like to acknowledge publicly that many Members of Parliament have heard the call for Macmillan Cancer Support to have support from Members and have written to me in support of the organisation. I have written many letters of reply to hon. Members because of their support for that campaign.
I remind hon. Members that disability living allowance is there for cancer patients who need extra help with their heating costs. That might trigger receipt of a cold weather payment in times of severe cold weather. It could certainly trigger help, through Warm Front, for insulating their homes and improving their heating systems. I would not want hon. Members to think that the Government were not sympathetic to cancer patients and their plight. We are, and we believe that we provide mechanisms for giving them support at present.
Today, the debate is about how I see the future with regard to giving support to the class of people whom we have been discussing. We have a duty, under the fuel poverty law, to bring people out of fuel poverty. That applies in particular to vulnerable households, which include people with long-term and chronic conditions; my hon. Friend the Member for Sherwood mentioned that issue. Obviously, therefore, the groups that we are talking about are at the forefront of my mind as we shape and design these policies.
I am considering how best we approach the position of cancer patients within the overall policy and whether there is a sufficient argument for a kernel group, a discretionary group or another approach. The hon. Member for Wealden asked whether I would meet representatives of Macmillan Cancer Support to discuss my thinking and its views, and my answer is an emphatic yes. I am perfectly willing for that to happen at this time.
Before I leave the subject of identifying the people whom we want to support, I should say that I was asked about data matching. I said earlier that the data-matching pilot approved by the Pensions Act 2008 is under way. The actual matching will take place in about April. I have high hopes of that being a successful project that will lead to something big in the future. I have a vision that involves our being able to use data matching to identify accurately more and more of the people to whom we want to give the most help. I would like us, first, to use more data matching, and then to use it for more purposes. For example, as well as delivering social price support, how about help with benefit entitlement checks? How about help with advice about how best people can make their properties more energy efficient, and then how about delivering the energy efficiency measures as well?
All that would require further changes in the law, and I do not minimise the difficulty involved in persuading Parliament to give me the power to share the data. Hon. Members might remember that in the previous Session a Government Billthe Coroners and Justice Billprovided a mechanism whereby it would be easier for Departments to share data for good causes. That provision was regarded by parliamentarians as too widely drawn and had to be ejected from the Bill. This is an area where, rightly, hon. Members jealously guard the confidential and personal data of the millions of citizens of this country. Nevertheless, I hope that if we can convince people of the narrowness of the data-matching activity, thanks to a successful pilot and the great good cause that we are embarking on in removing people from fuel poverty, we will be able to expand in the future in the way that I have said.
The last point that I want to make about the identification of people is that I am currently conducting a review of fuel poverty policies, which my hon. Friend the Minister of State started at the beginning of last year. It is continuing, and one of the themes of the review is how better to amass the correct information and then share it with people, to enable the benefits to be delivered. That work is very much active. I hope that all that is helpful and has answered the questions asked by members of the Committee.
I would like to come to a question asked by my hon. Friend the Member for North-East Derbyshire about how I envisaged the consultation taking place this summer. A fuel poverty advisory group was established under the fuel poverty strategy and law, and it is closely involved in the work that I do. The consultation is a statutory requirement, as proposed in the Bill, and we would expect it to be the fullest possible consultation, for the fullest time possible, with as many people as have an interest in this subject.
We have our own stakeholders in Government whom we would directly involve and we would want to attract as much attention to the consultation as possible over the summer. We will consult as best we can, in the ways that I have described, on how we propose to construct a kernel group, a discretionary group and bring in, by grandfathering, existing benefits under the voluntary agreement.
I hope we will give sufficient detail for people to feel that it is a meaningful consultation that they can engage with and respond to positively. I mentioned in an earlier sitting that I am willing for MPs who have a specific interest in this subject and want to stay involved in it, to stay involved with me on the consultation as we take that through the summer. I hope all of that is helpful to my hon. Friend on the points that she made.
I would also like to say that before I was elected to Parliament, I was a solicitor in private practice who represented many coal miners. The terrible pain and suffering from conditions such as mesothelioma are well known to me, so I entirely understand the point that my hon. Friend made about the sympathy and support that is needed for people in that situation.
Our intention, subject to consultation, is that the new benefit available under the scheme from 2011 should be in the form of a fixed rebate off consumers electricity bills. We believe that that kind of rebate is simple, transparent and more inclusive for those in rural areas and those off the gas grid.
Under subsection (8), the clause also sets out the options for the Secretary of State to determine the financial structure of the scheme. For example, it provides the Secretary of State with powers to set out the method for calculating each suppliers contribution to the mandated schemes. To ensure that no supplier is disadvantaged by the policy, we believe that it is essential that those contributions are made proportionate to their share of the domestic energy market.
In conclusion, I believe that a mandated system of social price support is an essential tool in tackling fuel poverty. The clause provides the foundations for introducing such a mandated scheme.
I asked the Minister about two points, which he has not had a chance to respond to. One concerned the complexity of the system and the representations made to us by industry that they would prefer a simpler system. The other was about the administrative costs.
I am sorry. I did miss those points but I did not mean to, so let me come back to them. I worked really hard with the energy companies to take into account the points that they made to me. I entirely accept that we want a scheme that is not complex. To the best of my knowledge, the simple money-off electricity bill is the simplest form of scheme to administer, so I think I have tried to respond as best I can to their point.
There is an argument about administrative costs. The energy companies are lobbying to ensure that all their administrative costs count against the obligation on them to give the benefits of social price support. That is possible to an extent under the voluntary agreement and I do not want to block that off. However, I do not want to write a blank cheque for administrative costs that could be run up by suppliers and charged against this account. That would deprive the scheme of some of its money to give as benefits to the most vulnerable people. I will not give an assurance that administrative costs would count against the spend. I am alert to the fact that people want that condition to be included in the scheme andwith the caveat that I have given to the hon. GentlemanI am willing to consider how that can be done. I therefore hope that the clause will stand part of the Bill.