Fuel Poverty (Norfolk)

– in Westminster Hall at 4:43 pm on 25th June 2008.

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Photo of Christopher Fraser Christopher Fraser Conservative, South West Norfolk 4:43 pm, 25th June 2008

I am pleased to have the opportunity to raise this vital issue with the Minister today. I shall start by setting the debate in context. Eradicating fuel poverty is not only a moral issue, but a statutory requirement. In 2001, the Government pledged to end fuel poverty for vulnerable households by 2010 and for all households by 2016. They are almost certainly set to fail in that duty and are facing court action from Friends of the Earth and Help the Aged.

Figures released by Age Concern and National Energy Action suggest that around 4.5 million people in Britain are currently living in fuel poverty. NEA also estimates that 12.7 per cent. of households in the east of England live in fuel poverty. However, in some of the more isolated areas of south-west Norfolk that figure might be twice as high. I am hugely grateful to NEA for providing me with those figures. The latest fuel poverty advisory group report reached a scathing conclusion. It stated that

"it appeared as if the Government had given up rather than looking hard at the position and re-assessing its policies in a radical way when the fuel poverty target started to look very difficult."

How does the Minister respond to the charge that the Government have been complacent on fuel poverty? Does he agree that if the Government had taken sensible, positive action when times were good and oil prices were much lower, people would not be facing the difficulties that we are talking about today?

Media focus has been principally on the rising cost of motoring. In south-west Norfolk—a largely rural area—public transport links are very limited. The private car is a necessity rather than a luxury for many people, and never more so than now, when essential rural services are closing down. We have lost rural banks and shops, and my constituency will shortly lose 15 sub-post office branches. People are forced to use their cars to go to work, and even to buy a stamp, and to go to the bank or buy food at ever-increasing prices. Trips are increasingly expensive.

Constituents are starting to tell me that they cannot afford to drive to work, but they have no other option. Why is fuel at the pump in the UK so expensive? The Government have pointed the finger at growing demand and higher oil prices, but the extortionate tax placed on fuel by the Government also plays a huge part. Before tax, the UK has the second cheapest unleaded petrol and the cheapest diesel in Europe, but we pay the highest fuel tax. A recent report from accountants Grant Thornton indicates that the recent rise in oil prices will generate more than £1 billion in VAT on petrol—more income than the postponed 2p increase in duty. Some estimates have put the figure at nearer £5 billion this year. The rise in duty has been postponed only until October, and hangs like the sword of Damocles over our heads. Is it not time for the Government to confirm that they will scrap that next rise?

Does the Minister accept that, for people in rural areas, fuel poverty can strike as a double blow? Those with no choice but to use a car must also contend with rocketing energy prices to heat their homes. On top of already sky-high price increases, we are being warned that gas and oil could face increases of a massive 40 per cent. this winter.

But what about heating oil? Of all the regions, the east of England has the largest number of households with oil-fired central heating because they have no access to mains gas. According to National Energy Action, at least 50 per cent. of households in south-west Norfolk have no access to the gas network, compared with only 10.3 per cent. in England as a whole. The price of heating oil has risen from about 32p a litre last June to over 60p now. People on fixed incomes are being brought to their knees by these rising costs. Recent figures have shown that the poorest quarter of pensioner households saw their income rise by less than 1 per cent. last year. How can they cope when heating oil nearly doubles? Is it a surprise that oil suppliers increasingly have to come to the rescue of those whose tank has run dry because they waited and hoped for a price reduction? Unlike those for gas and electricity users, there are no social tariffs to help heating oil customers. The situation will only get worse as winter approaches.

Shockingly, National Energy Action has confirmed that the number of excess winter deaths in south-west Norfolk was almost double the national average in 2005-06. Where are we three years on? I have had stacks of letters from depressed constituents, many of whom are elderly, who increasingly face the dilemma of choosing between feeding themselves and heating their home. One elderly couple wrote to me recently and said that they could no longer afford to heat their house during the winter. Last year they needed to turn their heating down to a temperature well below the recommended level for the elderly. They do not know how they will cope next winter and dread running out of oil. Another elderly couple wrote to say that the husband is disabled and needs the heating on 24 hours a day all year round, but their pension will no longer stretch that far. What are they to do? It is a desperate situation, which calls for viable and effective solutions. We cannot just shrug and blame OPEC or City speculators.

I am a realist and I know that the Minister will tell me that measures such as the winter fuel payments are designed to tackle the problem, but will he explain why the value of the winter fuel payment has decreased in real terms while energy prices have continued to rise? The Government have given—[Interruption.] The Minister has a perfect opportunity to respond at the end of my contribution. If he could be patient and listen to the arguments first, rather than jump in before he has heard my whole speech, he could then help my constituents out with his response.

The Government have given the elderly a one-off cash boost this year, but many, including the constituents whom I have just mentioned, say that the payment is nowhere near enough to cover the cost. One of the Government's solutions to fuel poverty has been the Warm Front programme. The Minister is not now listening. If he did, he might hear what I am saying and be constructive in his response, which I want to hear. Why have the Government reduced Warm Front's budget for the next three years when they will almost certainly fail to meet their legally binding fuel poverty targets of 2001? The reduction amounts to £50 million this year alone, and to set the budget cut in context, the Government receive £400 million a year from VAT paid by domestic energy consumers. The Fuel Poverty Advisory Group was

"completely taken aback by their"— the Government's—

"savagery."

What assessment has the Minister made of the impact of the reduction on the number of people struggling with fuel poverty? And how many fewer households will Warm Front be able to assist?

I suspect that the Minister will also say that the Government are using other measures. In April, they secured the agreement of the big six energy companies to increase their collective spend on social assistance to £150 million a year by 2010 under the carbon emissions reduction target scheme. I am concerned that those receiving help under the CERT scheme will not receive the same help that Warm Front offers. CERT's primary remit is to promote reductions in household carbon emissions; it does not aim to end fuel poverty.

I am not disputing the importance of improving energy efficiency when it comes to fuel poverty, but does the Minister agree that the Government must not allow their focus on reducing carbon emissions to subvert their duty to end fuel poverty? Elderly pensioners who receive improved insulation under CERT will hardly be helped if they then need a new central heating system to take them out of fuel poverty. Interestingly, the Fuel Poverty Advisory Group's report confirms:

"Policies on climate change will raise prices and will make the fuel poverty targets harder to achieve."

EDF Energy also agrees that the social obligations to help vulnerable people and the requirement to reduce carbon emissions can sometimes undermine the efficiency of both schemes. What are the Minister's thoughts on that clash of interests?

The fuel-poor are able to apply for grants under the Warm Front scheme and to receive help from energy suppliers under CERT. However, CERT-registered installers who approach households are not obliged to tell customers that they may also be entitled to a Warm Front grant. Does the Minister accept that more should be done to encourage a joined-up approach between energy suppliers and Warm Front, so that vulnerable households do not miss out unnecessarily? Will the Minister also confirm the marketing policy of CERT-registered installers? It is terribly important to find out, so that people understand the installers' objectives. CERT installers approach households that they believe may benefit from improved insulation, but their approach has left many households in isolated rural communities in my constituency out in the cold. Unsurprisingly, installers are less likely to approach homes that are in severe fuel poverty, simply because it might not be financially efficient for them to do so—they have to travel further, with all the added costs of doing so. Does the Minister accept that the Government must address that problem if they are to continue their shift towards energy supplier-led solutions?

I should like to cover another Warm Front issue. Constituents have complained that work carried out by Warm Front contractors is often more expensive than work quoted for by local contractors. That seems to be a common complaint throughout the country. As a result, grants given to Warm Front applicants do not cover all the costs, and applicants have to pay the balance themselves.

I accept that the independent report published last year found that Warm Front delivers a value-for-money programme, but questions remain. Does the Minister recognise the legitimacy of complaints from Warm Front recipients? Will the Government consider a system that puts customers in control by allowing them to choose a local contractor if the quotation is competitive?

In 2001, the Government set high goals for their fuel poverty strategy. They promised to eradicate fuel poverty by 2016. So far, they have fallen short of delivering on that promise. Will the Minister consider the plight of those who live in rural communities, particularly those in my constituency who are up against crippling prices both at the pump and in their home? I also ask the Minister to consider how we can help those on fixed incomes who rely on heating oil to keep warm or even to stay alive, because without help winter 2008 could be devastating.

I hope that the Minister will take this debate in the spirit in which I have presented it, and not come back with a diatribe of what the last Government may have done or Governments before them. As a Member of Parliament, I am dealing with the current Government. If the Minister wants to put it to the country, I suggest that he talks to the Prime Minister. I would like a positive response to a debate on a current issue that has resulted from decisions taken by the present Government.

Photo of Malcolm Wicks Malcolm Wicks Minister of State (Energy), Department for Business, Enterprise & Regulatory Reform 4:57 pm, 25th June 2008

It is a great pleasure to respond to Christopher Fraser. I congratulate him on provoking this discussion. I can quite understand why he is able hand out the polemic but does not want to hear the historical comparisons.

Photo of Malcolm Wicks Malcolm Wicks Minister of State (Energy), Department for Business, Enterprise & Regulatory Reform

Please do not give me that. I have some understanding of the problem.

Photo of Malcolm Wicks Malcolm Wicks Minister of State (Energy), Department for Business, Enterprise & Regulatory Reform

No. The hon. Gentleman may interrupt me. I am happy to have a dialogue in the few minutes that we have left.

Photo of Janet Dean Janet Dean Labour, Burton

Order. We would like a debate without interruption.

Photo of Malcolm Wicks Malcolm Wicks Minister of State (Energy), Department for Business, Enterprise & Regulatory Reform

I showed exasperation earlier because I have some knowledge of the subject, and I have a sense of history. Although most of my speech will be about what we intend to do, I am proud of our record. I am not complacent about what now needs to be done, but I find it rather difficult to take lectures from a member of a political party—the hon. Gentleman may not know of its record—that when it left office felt it appropriate for single pensioners on income support to survive on £69 a week. At that time, there was no such thing as the winter fuel payment, energy efficiency programmes were in their infancy, and excess winter mortality was far greater than it is now—

Photo of Malcolm Wicks Malcolm Wicks Minister of State (Energy), Department for Business, Enterprise & Regulatory Reform

We are indeed. The hon. Gentleman wants to stir up the politics. I always consider the record when analysing what hon. Members are telling me.

Instead of £69—I am not sure whether the hon. Gentleman is defending that record—the single pensioner on pension credit now receives £124. To me, that seems to be part of the issue that we are discussing: in attacking what we call fuel poverty, we need to recognise that a number of mechanisms, including income maintenance mechanisms, need to be deployed. I am pleased that the hon. Gentleman has given me the opportunity to set the record straight.

I am acutely aware of the impact of rising energy prices on the elderly and families on low incomes. I shall say more about the action that we are taking to tackle fuel poverty, but first I shall respond to the points made about energy prices, which is the serious context of today's debate. The high prices are the direct result of the unprecedented global competition for fossil fuels. That has pushed up gas prices; in the UK, those high gas prices have helped to push up electricity prices, due to the relatively high proportion of electricity generated from gas. Our high prices are also caused, to some degree, by poor liberalisation within the European market. Consequently, the Government strongly support the European Commission's ongoing efforts to improve competition in the internal market. At the recent Energy Ministers Council in Luxembourg, we were pleased to help the move towards legal unbundling, which is a halfway house to the liberalisation that we in the UK have been seeking.

Increased gas storage can also help to reduce future pressures on UK gas and electricity prices. There are now 10 gas and liquefied natural gas storage projects in the UK that have gained consent and are under, or are awaiting, construction. The Government are taking steps to improve and streamline the regulatory regimes for constructing gas storage facilities through the Planning Bill and the Energy Bill, which are currently before Parliament.

Heating oil is of particular concern. Prices closely track changes in crude oil prices, so the increases can largely be explained by the rises in crude prices of more than 100 per cent. in the past year. Because there is no duty on heating oil—there is 5 per cent. VAT—the Government can do little directly to reduce its cost. The hon. Gentleman will know that our Prime Minister was in Jeddah at the weekend, at the request of the King of Saudi Arabia, attending an international conference to discuss the reasons for high oil prices internationally.

Tackling fuel poverty is a priority for the Government, and we have in place a range of measures to help vulnerable households that are struggling to pay their energy bills. I am certainly not complacent about that. Since 2000, £20 billion has been spent on fuel poverty benefits and programmes. The hon. Gentleman may wish that more had been spent, but I hope that he will concede that £20 billion spent on benefits and fuel efficiency programmes is a great deal of money. Warm Front is the Government's main scheme for tackling fuel poverty in England: it provides grants to vulnerable households for energy efficiency and heating measures. Funding for Warm Front will be just over £800 million for 2008-11; that is a significant investment in addition to the approximately £1.6 billion that the Government have committed to date.

Sitting suspended for Divisions in the House.

On resuming—

Photo of Malcolm Wicks Malcolm Wicks Minister of State (Energy), Department for Business, Enterprise & Regulatory Reform

I should have said before, Mrs. Dean, that it is a pleasure to serve under your chairmanship during what has been a fairly raucous discussion so far. I am sure that behaviour will improve.

Since 2000, Warm Front has assisted more than 1.7 million vulnerable households. In addition, the carbon emissions reduction target means that the major energy suppliers are now obliged to meet carbon reduction targets, which will lead to the investment of about £1.5 billion over the next three years to install better insulation, improve heating systems and implement a wide range of other measures to help the elderly and low-income households. I listened very carefully to what the hon. Gentleman said about Warm Front, but the total help available for energy efficiency for the elderly and other low-income households will rise by £680 million, compared with the previous spending period, to about £2.3 billion.

I listened to what the hon. Gentleman said about the difference between climate change and fuel poverty policies, but of course better insulation in houses helps to tackle fuel poverty. The energy efficiency commitment, which will soon become the carbon emissions reduction target, has a perfectly proper bias towards helping those on lower incomes.

Photo of Christopher Fraser Christopher Fraser Conservative, South West Norfolk

Will the Minister confirm that the Government have reduced the Warm Front budget for the next three years, with a reduction of £50 million this year alone?

Photo of Malcolm Wicks Malcolm Wicks Minister of State (Energy), Department for Business, Enterprise & Regulatory Reform

I was trying to make the point that we need to look at the subject in the round, because with the money committed to CERT, investment in energy efficiency will increase.

Photo of Malcolm Wicks Malcolm Wicks Minister of State (Energy), Department for Business, Enterprise & Regulatory Reform

Yes, but the extra money for CERT more than makes up for that. Indeed, we will be seeing enhanced expenditure.

I recognise the particular difficulties for rural communities, which often present greater challenges in tackling fuel poverty. Those without access to mains gas face higher heating bills, and the Government face a challenge in finding ways to help them. Some deprived communities will have encountered difficulties in obtaining gas connections at an affordable price, and it would simply not be economically viable to connect others. Those communities, and the households within them, will be reliant on more expensive or less convenient fuel sources.

The Government have explored the scope, therefore, of helping those communities on two fronts: encouraging gas connections where viable, and considering alternative technologies in other cases. The design and demonstration unit in my Department has successfully developed a model for the provision of gas connections to deprived communities by independent gas transporters. The unit has also developed models to provide lower-cost household energy from renewable and other technologies for those deprived communities where gas connections are not economically viable. These approaches are being piloted in deprived communities in the north-east, Yorkshire and Humberside, with the approach chosen being the most appropriate one for the particular community. I should say that the results are very promising and we see scope for rolling out similar projects in other areas.

Photo of Christopher Fraser Christopher Fraser Conservative, South West Norfolk

Can the Minister say whether Norfolk is a county being considered for such transfer of energy from one type to another?

Photo of Malcolm Wicks Malcolm Wicks Minister of State (Energy), Department for Business, Enterprise & Regulatory Reform

I think that something that I will say shortly will be of some help in that regard.

The work in the north-east, Yorkshire and Humberside suggests that for communities off the gas grid, microgeneration technologies can offer an efficient and cost-effective alternative to mainstream fuels. That is why I recently announced, just a week or so ago, a new pilot project that will create a fuel poverty work stream within what we call the low carbon buildings programme. Some £3 million has been allocated to that pilot, and the work will be undertaken in Wales and in three English regional development agencies to fund the purchase of microgeneration technologies and their installation in households in deprived communities.

One of the regions in which we intend to run that pilot is the East of England Development Agency area. I hope that we will see measures that will not only benefit some of the hon. Gentleman's constituents, but show us how we can best use these technologies more widely at a time when we expect the use of renewables in domestic heating to increase considerably. So I hope that that statement will be of some interest to the hon. Gentleman.

It seems to me that in these rural communities, where there are quite isolated households, and given the price of oil, which is at record levels—the price of a barrel of oil has more or less doubled in a year—and the sheer difficulty sometimes of connecting to the grid, microgeneration offers some hope, including technologies such as ground source heat pumps. Through the moneys that we have allocated for the pilot, we wish to test the hypothesis that microgeneration could be a new mechanism to help with fuel poverty. However, the pilot is of course also a mechanism to help other households that are considering which energy technology might suit their particular location.

Photo of Christopher Fraser Christopher Fraser Conservative, South West Norfolk

Does the Minister accept that ground source heat pumps require a considerable area of ground to install them in, that a lot of people living in houses in rural areas in my constituency simply do not have the land around them to allow for that sort of technology, and that they therefore have a particular problem that must be overcome?

Photo of Malcolm Wicks Malcolm Wicks Minister of State (Energy), Department for Business, Enterprise & Regulatory Reform

It is certainly the case that one of the ground source heat pump technologies does require a considerable amount of land, to lay out the pipes as it were, so it is often more suitable for new build. However, there is another kind of heat pump that can be buried in the ground, which does not take up so much space. I now recall that they are called vertical ground source heat pumps—I think that my visual suggested a vertical presentation. Such heat pumps could be useful, which is why I want to pilot them in tackling fuel poverty. Before I go on, I am reminded that there are air source heat pumps, as well, which is one of the new technologies around.

I should add for the record what we are doing on winter fuel payments. We should be proud that the Government have introduced winter fuel payments, which last year helped to keep 11.7 million households in the UK warm in the winter of 2006-07. As alluded to, in this year's Budget the Government announced an additional one-off payment of £100 to the over-80s, making a total of £400, and another £50 to the over-60s, making a total of £250, which will arrive shortly before winter.

Improving the income of households is another key factor in reducing fuel poverty. That is why we offer benefit entitlement cheques to everyone who applies for the Warm Front grant. In 2007-08 those cheques resulted in an average increase in potential income of over £1,400 a year for those found to qualify for additional support.

The Government announced in the Budget action to investigate and tackle the high cost of energy for those using pre-payment meters. Ofgem is conducting a probe into the energy market and will publish its results in September. If we find that pre-payment meter users are being treated unfairly, we will look to Ofgem and the energy suppliers to provide a solution. If they do not make enough progress by this winter, we are prepared to legislate to reduce the differential between pre-payment meters and other forms of payment.

The hon. Gentleman referred to the social tariffs, which the Government have been discussing with the supply companies. Energy suppliers, we believe, have a key role to play in helping to alleviate fuel poverty. They recently agreed to up their collective spend on programmes to help vulnerable customers to £150 million a year by 2010; the spend currently stands at £50 million. Each of the suppliers offers a different form of assistance—for example, social tariffs, assistance with clearing debt, rebates, fixed bills. Our expectation is that the suppliers will continue to provide a wide and varied range of assistance under the new voluntary agreement, but the details are still being discussed.

We are working with the energy companies on those proposals, but also on proposals to see how we can access Government data in a sensitive way, so that we can better target programmes on those who need help the most. The Government have data that could help the most vulnerable—perhaps the over-80s—but we are not able to give them to the supply companies for perfectly proper data protection reasons. The Minister with responsibility for pensions is working hard on cracking that problem. We are in ongoing discussions with him and other colleagues.

I hope that I have left you in no doubt, Mrs. Dean, about the Government's continuing commitment to tackling fuel poverty. More importantly, I hope that I have left the hon. Gentleman in no doubt about that. We have a range of policies in place—from the Warm Front programme, to our pilots to deliver renewables to communities that are not able to access the gas grid. The Government are committed to maintaining significant investment in fuel poverty programmes and benefits—£2.3 billion for energy efficiency, and £2 billion each year on winter fuel payments. We are committed to looking for ways to improve delivery and to exploring further options for alleviating fuel poverty.

Question put and agreed to.

Adjourned accordingly at twelve minutes to Six o'clock.