Fuel Costs: Rural Households and Communities

Wednesday 29th March 2023 Westminster Hall

09:30

[Angela Crawley (Lanark and Hamilton East) (SNP)]

I beg to move,

That this House has considered the cost of fuel on rural households and communities.

It is a pleasure to serve under your chairship, Mr Betts, and to bring this debate to Westminster Hall this morning. Around 2 million people across the UK are reliant on off-grid gas supplies to heat their homes, including heating oil, liquefied petroleum gas, coal and biomass. According to the latest fuel poverty statistics, rural homes are much more likely to be reliant on off-grid gas and more likely to be less energy-efficient. That has made rural households across my constituency of Lanark and Hamilton East, and across the UK, much more susceptible to the impact of the rising cost of fuel. In 2022, households in rural areas had the highest rate of fuel poverty, at 15.9% compared with 11.1% for those in urban areas.

In summer last year, I was contacted by Roy, a constituent from Lanark who was worried about heating his home over the winter. In June 2022, the price of kerosene for Roy was £1 plus VAT per litre, with further increases on the horizon. With a minimum order of 500 litres as the industry standard, it was becoming unaffordable to keep up with the price increases. For Roy, the £400 energy bill support, the warm home discount and the alternative fuel payment simply do not go far enough. Paying for fuel up front with the exponential price increases that this winter brought is a significant hurdle for rural households and communities. Issuing alternative fuel payments months after households have already put their fuel order on their credit cards or taken money out of savings to cover the cost simply does make sense.

[Helen Morgan (North Shropshire) (LD)]

Some households have still not received payments because they are having difficulty with their electricity supplier or their landlord. The delay in accessing support for off-grid households is causing real hardship in rural areas. It seems unfair that people who have to pay for their energy up front—often the most vulnerable people—are still waiting in some cases for Government support with their household bills.

[Angela Crawley]

The hon. Lady is absolutely right. Although I welcome the fact that the Government recognised that there is a need, the response has been too slow. In reality, people, especially pensioners, had no more money on which to draw to pay up front. That has had a knock-on effect on many households, in particular many of mine in rural Clydesdale.

[Jim Shannon (Strangford) (DUP)]

I commend the hon. Lady for bringing this subject forward. I agree with her, but it is not just about fuel; it is also about rural isolation. Does she agree that rural social isolation in the farming community is compounded by the rise in fuel costs? Going to young farmers’ club events, or something similar, does not boil down to finding time; it is about whether people have the resources to go. We need not only look at rural households and their fuel costs, but offer greater support to the farming community than it currently receives.

[Angela Crawley]

I thank the hon. Member, as always, for his intervention. He makes an important point. I am truly blessed to be the representative for Lanark and Hamilton East, which is home to a very wide and diverse community, including Clydesdale, the Clyde valley, which has a large population of farms. That community has been adversely affected by these costs.

With all due respect to the Government, there is little that can be done in retrospect to ease the impact this issue has had on livelihoods. Issuing alternative fuel payments months after households have already put fuel orders on credit cards or taken money out of savings to cover the costs does not make sense. It is all well and good for households that have wriggle room or back-up savings, but many do not, as we all know. Rural households are often occupied by pensioners reliant on their pension as their only source of income. They may not have the means to stretch their budget any further.

There are still households that are eligible for the alternative fuel payment but have not yet received it. The picture is even bleaker for those who are not connected to the gas grid and rely on electricity to heat their homes. They are not eligible for the alternative fuel payments, despite the latest fuel poverty statistics indicating that households using electricity as a main source of fuel for heating have the highest likelihood of experiencing fuel poverty.

[Tim Farron (Westmorland and Lonsdale) (LD)]

The hon. Lady is being generous, and I congratulate her on securing a really important debate. Families in rural communities face excessive costs for fuel not only to heat their homes but to get about. There is no public transport for many of us in places such as Cumbria, and when there is, it is very expensive. People need a car just to get to work or study, and to shop. The coalition Government brought in the rural fuel duty relief scheme, but only 10,500 residents in the whole of England qualify for it. People from Brough, Appleby, Kirkby Stephen, Shap, Ambleside, Coniston or Hawkshead who need to travel are not able to benefit from the scheme. Would the hon. Lady advise the Minister to expand the scheme to ensure more communities can take advantage of it?

[Angela Crawley]

The hon. Member has made a compelling case in his own right. I acknowledge that transport is devolved in Scotland, but he makes an important point. Will the Minister say what she is doing to ensure that the remaining households who are eligible for the payments receive them as soon as possible? How does she intend to ameliorate the impact the rising cost of fuel is having on households who are off the gas grid and reliant on electricity to heat their homes?

After facing increasing pressure to introduce a price cap to help domestic fuel customers with high fuel prices, the Government, unsurprisingly, fell on the side of big business. They were too concerned about the impact that placing a price cap on heating oil and liquefied petroleum gas would have on market competition, rather than the impoverishment of households struggling to afford to heat their homes. My office has had the unfortunate job of forwarding the Government’s position on to concerned constituents who are struggling to keep up with the cost of being off grid. One constituent said:

“My concern is that my future financial security will be damaged just to keep my off-grid gas supplier making a healthy profit.”

This year, I have been surveying my constituents to gather their experiences and opinions on the cost of living. When asked what the one thing I could raise in Parliament for them would be, an overwhelming majority of responses were concerned with the immense profits of energy suppliers. This week, there have been increasing rumours that the windfall tax the Government have already put in place may be relaxed. What would the Minister say to my constituents and the many other people who are calling for a more stringent windfall tax regime to be implemented, rather than relaxed?

The winter may be drawing to an end, but the issue remains. For Roy, the price of kerosene in April is estimated to be around 71p per litre excluding VAT. This month, according to the Office for National Statistics, the price sits at around 81p, which is still 35p higher than this time last year, and 32p higher than it was before the pandemic in 2020. I am sure the Minister will be quick to reel off all the support measures the Government have put in place throughout this crisis, and I recognise that a number of measures have been put in place, but many people fell through the gaps, and Roy and many of my rural constituents are among them.

The reality is that the measures introduced simply do not go far enough for those who are off the grid. On top of the pressures of the rising cost of fuel, increases to standing charges have been allowed to happen under the radar. Because of that, while households across the UK may receive some relief through the support measures put in place this winter, they are still feeling the pinch. Will the Government commit to taking more meaningful action to reduce the exponential increases to standing charges? What support is she prepared to put in place to support those reliant on off-grid gas to heat their homes, outwith the context of a cost of living crisis?

I will close my contribution by discussing the picture in Scotland. The Scottish Government’s recent statistics show that one third of households in remote rural areas are classified as experiencing extreme fuel poverty. In Scotland, 65% of rural dwellings are not covered by the gas grid, and our remote and rural communities are facing annual energy bills of more than double the UK average. That discrepancy was ignored in the UK Government’s energy support package this winter and in the spring statement. Scotland is abundant in clean, green and renewable energy and, indeed, oil, but we cannot reap the benefits while under Westminster control. Rural households, which have contributed so much to the export of renewable energy, pay exponentially for being off the grid. That cannot continue. In my opinion, Scotland needs full powers of independence to truly equalise the energy price discrepancies between rural and urban communities. I hope that the Minister will respond with action.

11:10

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Amanda Solloway)]

May I first say what an excellent speech that was, and what thought-provoking words have come from this debate? I express my gratitude to the hon. Member for Lanark and Hamilton East (Angela Crawley) for initiating the debate, and for her additional work on supporting rural households and communities.

The Government have implemented several comprehensive support schemes across the United Kingdom to assist our rural households and communities. In particular, I would like to address the issue of the support being provided in Scotland, given the importance of these communities to Scotland, as well as the wider United Kingdom. I am aware of the significant proportion of Scottish domestic properties not on the gas grid; as the hon. Member said, it is estimated to be about 65% of homes in rural Scotland. These communities face significant challenges. The number of households classed as being in extreme fuel poverty is about three times higher in rural areas than in the rest of Scotland. As hon. Members will know, many factors influence that, including a longer heating season, exposed conditions, and historically poor housing stock. As a result, the Government’s energy schemes have rightly offered much-needed support to rural communities over the winter in the face of high energy costs.

A range of domestic and non-domestic support has been provided to rural communities, and particularly off-grid users. The alternative fuels payment is available to households that use as their main heating source alternative fuels, such as heating oil or liquefied petroleum gas. That includes many Scottish rural households. More than 85% of relevant customers in Great Britain will have received their payment automatically via their electricity supplier in February 2023. Those who have not received the payment automatically will need to apply to the AFP alternative fund via a short online form on gov.uk.

[Helen Morgan]

On that point, I cannot reiterate enough how many people might not be able to access that online portal. I am aware that there is a phone number, but the messaging on and advertising of that number have been quite poor. Constituents have come to us asking about this, and we have pointed them in the right direction, but there will be people out there who are not aware that they can access that support, because they cannot get online.

[Amanda Solloway]

I thank the hon. Member for a very valid point. As she points out, we have been engaging. We have the helpline; we have a contact number. We are trying to reach out as much as possible. I encourage all hon. Members, on the record, to reach out and encourage people to go through the website portal or, indeed, through the helpline.

The energy bills support scheme is being delivered as a £400 discount on electricity bills, provided by suppliers in monthly instalments from October 2022 to March 2023. It has been delivered to 2.6 million households in Scotland. As March is almost over, may I use this opportunity to again urge hon. Members to join the Government in highlighting to their constituents that it is important that traditional prepayment meter users redeem their vouchers for that scheme now? Electricity suppliers can reissue expired or lost vouchers, but they must all be used by 30 June, when the scheme closes. It is vital that households in Scotland that use traditional prepayment meters and receive EBSS in the form of vouchers make use of the support being provided to them. Our latest transparency publication data shows that as of 1 March, almost 340,000 vouchers in Scotland remain unused—a point to which hon. Members have referred.

Households in Great Britain that do not have a domestic electricity supply, such as off-grid households and park home residents, and who have not been able to receive their support automatically, can now apply for their £400 support through the energy bills support scheme alternative funding. I encourage households that are eligible to apply for support before the scheme closes on 31 May 2023, either through the online application form on gov.uk, or by calling our contact centre helpline. I would be happy to share this information with MPs following the debate.

The final aspect of domestic support that we have provided is the energy price guarantee, which reduces electricity and gas costs for domestic customers. It helps to lower annual bills, combat fuel poverty and maintain supplier market stability. The scheme covers approximately 2.5 million households across Scotland and 29 million households across the UK in total. I hope the hon. Member for Lanark and Hamilton East was pleased to hear the recent announcement that the energy price guarantee will be kept at £2,500 for an additional three months from April to June, providing more savings to households.

[Tim Farron]

I am grateful for the Minister’s comprehensive answers. The support that businesses get will expire, which is a problem that we could address. Lumped under the category of “businesses” are our hospices, which have seen a 350% increase in fuel bills. Not only are they getting insufficient support now, but they will soon get nothing. Will the Minister consider a special package to support hospices, which clearly cannot turn the heating down?

[Amanda Solloway]

I thank the hon. Member for that question. I assure him that I am reaching out to a whole host of stakeholders, and am talking to a variety of groups about that very issue. Alongside the support we are offering to households, there is the energy bill relief scheme, introduced in October 2022 for the winter; we will continue to run it until the end of the month. The support offered by this package is worth £7.3 billion and is available across the United Kingdom.

It is right that we balance continued support with energy costs with our duty to the taxpayer. Energy prices are coming down, but we must also recognise that prices remain above historical levels. For that reason, although the energy bill relief scheme is coming to an end, we have pledged to provide further support to non-domestic customers, including our farming industry, from April onwards, through the energy bills discount scheme. Under this support package, energy and trade intensive industries and domestic customers on heat networks will receive more than the baseline element of support.

I thank again the hon. Member for Lanark and Hamilton East. I give my assurance that I am reaching out to a variety of stakeholders, including suppliers. This has been an incredibly important debate, and I sincerely thank her for securing it. It is important to raise awareness of the support for rural communities in these challenging times.

Question put and agreed to.

11:19

Sitting suspended.