Fuel Poverty

Wednesday 26th October 2011 Westminster Hall

[Sir Alan Meale in the Chair]

16:13

[Chris Evans (Islwyn) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship for the first time, Sir Alan. This is the second time that I have secured a debate in Westminster Hall on fuel poverty. The first time was last January, when we had just had the coldest December on record and, as we spoke, many of us continued to feel the effects of the cold. I called for that debate because I was troubled and concerned about the number of constituents who had contacted me to tell me that they were feeling the effects of the terrible cold weather. I said then, as I say now, that fuel poverty is a black mark on society. It is up to us to do something about poverty anywhere, whenever anyone is impoverished. I say that not from the point of view of the Government or as a politician, but as a human being.

I was heartened and encouraged by last January’s debate. After listening to the response of the Minister of State, Department of Energy and Climate Change, the hon. Member for Wealden (Charles Hendry), I really felt that we got it. However, I find myself talking about the subject again today. Ten months later, the average annual bill for a dual fuel customer is £1,293, or 6% of median household income, compared with 3.3% in 2004. That means that an average family on an average income are edging ever closer to the disastrous figure of 10% of their income going on fuel bills.

[Anne Marie Morris (Newton Abbot) (Con)]

I share the hon. Gentleman’s concern. My constituency in Devon, which is a rural community, has low income and great rurality. There is a higher percentage of pensioners in Devon than in any other part of the country. Many members of my rural community use fuel oil, as opposed to gas, and it is twice the price, so I share his concern about this problem.

[Chris Evans]

I thank the hon. Lady for raising that concern. Rural communities are harder hit because, as she has said, they use oil, the market price for which is out of control. Something needs to be done. I will not mention that too much during the debate, but I hope that the Minister of State, Department of Energy and Climate Change, the hon. Member for Bexhill and Battle (Gregory Barker), will touch on it when he responds.

If an average family is being put into fuel poverty, we have serious problems. We talked about fuel prices in the main Chamber last Wednesday and it was evident that the Government need to review their energy policy. I am not going to talk today about how bad the energy companies have been—I mentioned that enough during my contribution to last Wednesday’s debate—but there needs to be root-and-branch reform. If I started going on about that today, I do not think that it would add to the debate in any respect, because, at the end of the day, fuel poverty is a matter of life and death for so many people and so many of our constituents. It means making the heart-breaking decision between eating a meal and heating their house.

I could cite a number of examples of older people who only put on one bar of their fire, or who heat only one room, to reduce their fuel costs. As I said in the Chamber last week, constituents have said to me, “I sit in the living room with my coat on, because I can’t afford the heating,” and, “I go bed at 8 pm, because when I’m in bed I don’t use heating.” It is absolutely terrible.

It is in vogue at the moment to blame the Labour party for everything. When buses are late or trains do not turn up, I am sure that, somewhere along the line, somebody will blame the Labour party. Despite such brickbats, I am proud that the previous Labour Government did all they could to address fuel poverty and improve the energy efficiency of homes.

[Jessica Morden (Newport East) (Lab)]

Does my hon. Friend find it deeply worrying that this Government’s only answer to rising fuel bills is to tell people that they are to blame for not shopping around?

[Chris Evans]

As I said during last week’s debate, it is all very well to tell people to shop around but, if all the energy companies are putting up their prices across the board, how can people shop around? I also said that energy is not a luxury item—people have to have it. It is not possible to have superfast energy in the same way as it is to have superfast broadband. How can people shop around? It is a failure of the market. If we are going to ask people to shop around, the Government need to encourage more entrants into the market.

[Guto Bebb (Aberconwy) (Con)]

I congratulate the hon. Gentleman on securing this debate. On the failure of the market, energy prices in Scandinavia—in Sweden and Denmark—are higher than those in the UK, possibly because the UK has a more free market. In Scandinavia, however, they make a more comprehensive effort to make sure that they are energy-efficient, which makes a real difference in terms of fuel poverty, because their prices are actually higher.

[Chris Evans]

I still believe that the only way to drive down prices is to have more competitors. We have only six companies as competitors, they all seem to be pushing up their prices together—I am not saying that that is what they are doing, because a number of inquiries have said that they are not—and the regulator does not seem to be doing anything about it. I do not agree with that situation. We need to look at ways to bring in more entrants into the market. As I have said, however, that is not a debate for now.

The introduction of winter fuel payments, central heating programmes and the energy efficiency commitment have all played their part in easing the pain that people have felt in meeting their energy costs. However, I cannot talk about fuel poverty or pensioners in my constituency without mentioning the cut to the winter fuel payment.

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Gentleman on bringing this matter to the Floor of Westminster Hall. Today, I met a group of about 20 people from Age Sector Platform in Northern Ireland. They indicated that approximately 770 people died from the cold in Northern Ireland last year. Does he share my concern that the changes to the winter fuel payment will contribute greatly to more people dying because they are not able to get the correct money?

[Chris Evans]

I agree with the hon. Gentleman completely. In Wales, 1,700 people are dying from the cold every year. As I have said, in this day and age, what does it say about us as a society when people are dying from the cold? It is absolutely terrible. I cannot put into words the shame that we all should feel if somebody dies from the cold.

On the reduction in the winter fuel payment, the Chancellor and Government Members have said, “It was only ever a temporary increase and we stopped the increase because Labour put it up.” It is all very well saying, “Oh, it was a temporary increase,” but once someone has got used to that money coming in, they tend to feel the pinch when it has gone. The Government need to reconsider that terrible decision.

The hon. Member for Strangford (Jim Shannon) mentioned the number of pensioners dying from the cold in Northern Ireland. In my constituency of Islwyn, there were 41 winter deaths. If we get nothing else from the Minister today, I hope that he will make a commitment to do all he can to ensure that nobody else is added to that tragic statistic.

[Katy Clark (North Ayrshire and Arran) (Lab)]

My hon. Friend represents a Welsh constituency. Some 26% of Welsh households are said to be in fuel poverty. In Scotland, that figure is 32.7%. We are expecting a cold winter. Does he agree that there is a crisis and that the Government need to consider introducing measures to ensure that we do more to help people with their heating costs?

[Chris Evans]

Absolutely. I agree with my hon. Friend entirely. Scotland and Wales have a lot in common. We are Celtic cousins, as is the hon. Member for Strangford. We share the same problem of fuel poverty and something needs to be done as a matter of urgency. I hope that we will hear something from the Minister about that.

Today, I want to talk about a group of people who are hardly ever mentioned. I want to pay tribute to Macmillan Cancer Support, to which I have spoken about cancer patients. This is a very important issue. Anyone who has had the heartbreaking news that they have cancer or who knows someone who has cancer does not need to be told how hard life can be. They are faced with months of treatment, heartache and worry, and the last thing that any family of a cancer patient should worry about is whether they can pay their energy bills.

Cancer patients are particularly vulnerable to plummeting temperatures and rocketing fuel bills. Many will be faced with fuel poverty because they have increased energy needs at a time when their income has dropped dramatically. Since getting involved in this campaign, I have heard many harrowing stories that underline just how hard people living with cancer feel the effects of high energy bills. The following story stood out. One woman said:

“My immune system is so weakened that I am very prone to colds and infections but I can’t afford to keep warm all the time. I cover myself in blankets and hot water bottles to help keep my joints warm. I am always in debt and behind with payment to the energy companies, even during the summer. It makes me panic. I try and give them £10 whenever I can, but to be honest I’d rather be in debt than get even more ill. I wish the government would realise that it’s not just the old who get cancer and suffer the cold.”

During treatment, 70% of cancer patients under the age of 55 lose, on average, 50% of their household income. That is why fuel poverty disproportionately affects those with cancer, and why one in four cancer sufferers also suffer from fuel poverty. Despite evidence that living in fuel poverty has a negative impact on the health and well-being of people with cancer, one in five cancer patients turn off their heating during winter because they are so worried about their bills. The problem is made worse by the fact that people living with cancer spend longer at home when they recuperate and as a result may be less active. They also have a higher use of appliances, such as washing machines and tumble dryers. The effects of chemotherapy may also make cancer patients more susceptible to the cold. As I have said in the past, one way of combating fuel poverty is by increasing the income of those who find themselves struggling with bills.

[Jim Shannon]

Is the hon. Gentleman concerned, as I am, that stress over financial issues adds to the health problems of people with cancer? It is important for those people to have money to get through such hard times.

[Chris Evans]

As I said, when someone has cancer, the last thing they need to worry about is money, paying the bills or meeting any other financial obligations. The top priority of someone with cancer and of their family should be to get better and beat that evil disease.

Cancer patients do not receive the support they need. For instance, the winter fuel payment is only paid to those who are over 60. Only 7% of cancer patients in fuel poverty are on a social tariff, and only those on certain benefits linked to low income are included in the carbon emissions reduction target super-priority group. People affected by cancer who are under 60 are not entitled to that support, even though roughly one in four cancer patients have not yet reached their 60th birthday. If this debate achieves anything, it is my sincere hope that the Government will give serious consideration to extending the winter fuel payment to particularly vulnerable groups, such as those with a terminal illness, the disabled or those undergoing treatment.

Cancer patients are poorly served by the Government’s schemes to reduce fuel poverty. Many rely on additional sources of financial help to pay high gas bills and, as a result, risk falling into debt. The warm home discount scheme is run by energy companies and provides certain groups of fuel poor energy customers with an annual rebate of £130 off their energy bills. That rebate can be provided either automatically or to other vulnerable groups as defined by the energy companies. Cancer patients will only be able to apply for support if they fall within the categories set by the energy companies. It is my fear that, unless the Government provide tighter guidance to energy companies regarding the eligibility for the WHD, vulnerable cancer patients will miss out. For instance, under the social tariffs set by energy companies, only 7% of cancer patients in fuel poverty receive support. I therefore hope that the Minster will say he will look again at the eligibility criteria of the warm home discount if it becomes apparent that it is not reaching the most vulnerable people.

One of the major problems with fuel poverty is that the people who are suffering from it are not always aware of the issue. I shall give an example. Many years ago, when I was working for my predecessor Lord Touhig, we secured a fuel poverty debate in Westminster Hall. At the time, he was president of the National Old Age Pensioners Association for Wales. He asked me to speak to the secretary. I phoned him up and said, “Ralph, Don is doing a debate on fuel poverty tomorrow and he is wondering whether you have any examples of it.” He said to me, “Well, the problem is that most people do not realise that they are suffering. Energy bills are a way of life. If we get cold, we put on an extra pullover or we put an extra bar on.” People do not seem to know that they are suffering from fuel poverty, which is a major problem when it comes to discovering other groups in fuel poverty, such as cancer patients.

The English housing survey currently used by the Government to calculate fuel poverty figures in England does not include questions related to a person’s cancer diagnosis, despite including questions about other disabilities. The Government must start collecting that data if they are to successfully target resources at those most in need. We need to consider targeting the winter fuel payment at the terminally ill. The Government should consider changing the English housing survey to include a question about cancer, alongside questions about other disabilities. Only by doing that will Government data give an accurate depiction of the number of cancer patients suffering from fuel poverty.

It is clear that more must be done by the Government to proactively prioritise people with long-term health conditions in fuel poverty who require support. The Government have acknowledged that the green deal will not work for fuel poor households as they are likely to be under-heating their homes and will be unable to take on debts or make significant savings. The Government have made provision to address that with the energy company obligation, which will subsidise energy efficiency measures for fuel poor households. However, I am concerned that the money available under the ECO will not be large enough to help all fuel poor and vulnerable households. Many cancer patients will not be able to access the support if eligibility is restricted to certain groups on very low incomes or qualifying benefits. That is why I am looking for assurances from the Minister that those diagnosed with cancer will be able to access support when the ECO comes into effect.

Energy companies are seemingly increasing their prices at will, and we are faced with the difficulty that people will fall into fuel poverty as soon as energy prices rise. My predecessor as Member of Parliament for Islwyn, Lord Touhig, was fond of quoting James Maxton, whose words have a special meaning now. He said that poverty is man-made and therefore open to change. If anything, fuel poverty is man-made, and with the political will we have the tools to do something about it.

16:29

[The Minister of State, Department of Energy and Climate Change (Gregory Barker)]

I congratulate the hon. Member for Islwyn (Chris Evans) on securing the debate, and his continued and tenacious advocacy of action on fuel poverty. We all admire the way in which he is pursuing this agenda on behalf of his constituents, and I assure him that the coalition shares his concerns about those living in fuel poverty. It is a disgrace in the 21st century that so many people are cold in winter. For example, we know that it is very likely that each winter more people will die of fuel poverty than will be killed on the roads, which is a shocking statistic.

I assure the hon. Gentleman that my officials and I regularly meet with a wide range of consumer groups and other stakeholders, including not just Citizens Advice but Macmillan Cancer Support, which is taking this issue to heart, and Carers UK, which is doing a great job of speaking up for the most vulnerable in our society. I particularly recognise the issues that those living with cancer may face because they spend more time at home and need to keep warm. Through our policies, those people living with cancer on a low income should be able to access assistance to keep their homes warm more affordably.

I assure the hon. Gentleman that the Government are committed to protecting those who need help most, and committed to making change where change is needed. That is why we have asked Professor Harrington, the independent reviewer of the work capability assessment, and Macmillan to look at how the WCA assesses people who are receiving treatment for cancer and whether it can be improved. Professor Harrington and Macmillan have now submitted their report to the Government. We are considering the report and will come forward with proposals soon.

I agree with the hon. Gentleman that the fuel poverty statistics make depressing reading. While I do not seek to blame the previous Labour Government for slow-running buses, between 2005 and 2009, during the third term of the previous Labour Government, the number of fuel-poor households across the UK more than doubled. It did not do so from a small base; it went from 2.5 million to 5.5 million people. Of those, 4.5 million were in vulnerable households. The elderly, families with young children, the long-term sick and the disabled were all caught up in this rising epidemic of fuel poverty. The latest figures from the Welsh Assembly Government estimate that of the 1.34 million households in Wales, 332,000 households were in fuel poverty in 2008. If we are going to reverse this iniquitous trend something big has to change. We need to completely rethink, redesign and re-engineer our policies.

In order to find the right solutions, we need to make sure we ask the right questions. That is why we invited Professor John Hills, of the London School of Economics, to undertake an independent review of both the fuel poverty target and the definition. He has been asked to look at fuel poverty from first principles—what causes it, its effects and how best to measure it.

[Stephen Gilbert (St Austell and Newquay) (LD)]

Will that review include off-grid customers, those whom my hon. Friend the Member for Newton Abbot (Anne Marie Morris) spoke about in relation to domestic heating oil? They have seen prices go up by 90% in the past year and are looking to the Government to help them to avoid falling into the problems that the hon. Member for Islwyn (Chris Evans) spoke about so eloquently.

[Gregory Barker]

Absolutely. The rural fuel poor are the hardest hit of all. In the last years of the previous Labour Government, they saw, in real terms, the cost of heating their homes increase by 130%—absolutely iniquitous.

[Albert Owen (Ynys Môn) (Lab)]

The Minister will be aware that fuel poverty has been rising in the past 18 months as well. We had one of the coldest winters, and external factors contributed to that. With regard to off-grid, the Minister of State, Department of Energy and Climate Change, the hon. Member for Wealden (Charles Hendry) conceded that he would meet with myself and other hon. Members. Is the Minister saying that he will look at the possibility of Ofgem, the regulator, giving the same protection to people who are off-grid as it does to those who are on the gas mains? They need that protection against fuel suppliers, not competition and regulation.

[Gregory Barker]

The hon. Gentleman makes a valid point. Protection in this area is overseen by my hon. Friend the Minister of State, who has that portfolio responsibility. I am sure that he will be pleased to meet with the hon. Gentleman and his colleagues to discuss this matter, because we are concerned about fairness and practices that have been going on among the heating oil distributors. I know that my hon. Friend takes this issue very seriously.

The independent report being prepared by Professor Hills focuses on whether fuel poverty is distinct from poverty and why measurement is important. It provides an assessment of the current definition of fuel poverty, and identifies and analyses possible modifications and alternatives to the existing definition. I do not wish to be frivolous, but it has been pointed out that under the current definition of fuel poverty Her Majesty the Queen would be in danger of being tipped into those defined as fuel poor, because it takes more than 8.9% of the royal grant to heat the historic royal palaces. We have to ensure that the definition captures those who are in genuine poverty, rather than the more well-off who are making lifestyle choices in spending their income on such things. We have to ensure that we focus our precious resources on those who are genuinely the most vulnerable.

Tackling fuel poverty will be a huge challenge and a key part of the solution is undoubtedly to address the thermal efficiency of the UK housing stock. Britain has some of the oldest, leakiest and most expensive homes to heat in Europe. We urgently need to address this issue. We do not have the highest energy costs; we have among the highest energy bills, because we have to waste so much heating to actually keep warm. Both the carbon emissions reduction target and Warm Front, measures started under the previous Government are continuing, with work being done in the homes of some of those most at risk. However, we recognise that if we were to just continue with these measures, specifically with Warm Front, it would never get us close to meeting our statutory target of eliminating fuel poverty. In fact, Warm Front would take approximately 80 years to get close to dealing with fuel poverty.

We need a game changer and that game changer is the green deal. The coalition flagship Energy Bill, which contains the green deal, has now received Royal Assent. That is a significant milestone on the journey to launching the most ambitious home-improvement programme since the second world war. We expect to commence a public consultation shortly on secondary legislation to develop the precise design and scope of the scheme. We are working closely with the devolved Administrations to ensure that the green deal can be rolled out at scale, really ambitiously, right across Great Britain.

The green deal is necessary to deliver our objectives, but on a dramatically more ambitious scale than anything that has gone before. We aim to retrofit 14 million households by the early 2020s. Assistance for the fuel poor and targeting the most vulnerable will be at the forefront of this action. The domestic green deal is an opportunity for all householders, whether in the private sector, social rented sector or private rented sector, to improve the energy efficiency of their homes at no up-front cost. It will help protect people against price rises in the future through greater energy saving now.

However, there are drawbacks and we appreciate the particular needs and constraints of the most fuel poor. Green deal installations are paid for through future savings, and we realise that they may not be the full answer for all households. As the hon. Member for Islwyn pointed out, it is no good projecting savings on heating a whole house if the widow living there is only able to heat one room. We recognise fully the need for a substantial element of subsidy for the most vulnerable and fuel poor. That is why we will also introduce a new energy company obligation. Integrating the green deal and the ECO will provide further support for those homes that need it most.

We want to ensure that everyone who wants to can access high quality energy efficiency measures, so that they can cut their emissions and heat their homes more affordably, as well as creating a warmer, more comfortable and liveable home environment. The ECO will assist the poorest and most vulnerable households to an affordable warmth target, providing up-front support for thermal performance measures to help households to heat their homes more affordably. In developing the green deal and the ECO, we are removing the barriers to take-up, raising awareness and showcasing benefits to make energy efficiency a no-brainer for everyone.

We are aware that the long-term solution to the iniquity of fuel poverty is to renovate the UK’s building stock. However, we also need solutions to keep people warm this winter, and the coalition is requiring suppliers to provide a rebate of £120 to some of the poorest pensioners through the new warm home discount. We are also providing winter fuel payments and, if we get the anticipated cold snaps, cold weather payments. We recognise that energy prices are hitting many households hard at a difficult time, and understand consumers’ concerns about rising energy bills. That is why we have obtained a voluntary agreement with the suppliers, who will be writing to 8 million customers to advise on how to save money by changing to a cheaper tariff and will place a cheaper tariff signpost on the front page of most bills. Bills are far too complicated, and they need to be simplified and send much clearer messages to vulnerable and general consumers about how to save money.

[Albert Owen]

I support energy efficiency measures and Ofgem’s recommendations for simplifying bills, but does the Minister agree that it is perverse how many energy companies currently charge low users more money? Low users are often the vulnerable people mentioned by my hon. Friend the Member for Islwyn. Was that issue raised at the Downing street summit so that the companies got a clear message that they should not be punishing those low users?

[Gregory Barker]

The Secretary of State was at the summit, but unfortunately I was overseas. I will happily write to the hon. Gentleman to summarise the key issues discussed, but I can assure him that such issues are at the forefront of our minds when we are making policy.

This is the first year of the warm home discount, and we will assist around 2 million vulnerable households. Many will be low-income pensioner households—exactly the sort of constituent discussed by the hon. Member for Islwyn—who are in receipt only of pension credit guarantee credit. We expect to find more than 600,000 of them and to provide them with a £120 rebate off their bill. Most will receive a rebate without even having to claim, a major benefit to such vulnerable people who might struggle with forms or not realise that they can make a claim. The data-matching process to identify automatically the recipient low-income pensioners for this winter is currently under way, and the call centre is now open to take general enquiries regarding the scheme. Over the four years of the scheme, it will be worth up to £1.1 billion which, at a time of widespread budgetary pressures, is a significant increase in funding on the previous voluntary agreement that also assisted many households under the previous Government.

Fuel bills in the winter months can account for around 60% of the year’s total fuel bill. By working with other Departments, we can ensure that we are reaching the most vulnerable with the assistance that they need. The Department for Work and Pensions provides winter fuel payments of £300 to those over the age of 80 and £200 to those over 60. Those payments provide assurance to older people that they can keep warm during the colder winter months, knowing that they will receive significant help with their fuel bills. In addition, the Government have permanently increased the cold weather payment from £8.50 a week to £25 a week, providing real help to those most vulnerable to the cold. Last winter, we made 17 million cold weather payments, worth an estimated £430 million of direct help to low-income vulnerable households when they need it most—

[Sir Alan Meale (in the Chair)]

Order. That concludes the debate.