Fuel Poverty

Caroline Lucas Excerpts

Tuesday 21st March 2017 Commons Chamber

[Mr Hurd]

I agree with my hon. Friend. We all know from our constituents about the stress that is caused by anxiety about fuel. I represent a relatively affluent constituency in London, but the statistics show that 8% of my constituents qualify as fuel-poor. This issue affects constituencies across the country. I certainly give my hon. Friend that assurance, and I hope that he will be very satisfied by the material in the consumer Green Paper that will be published imminently.

Recognising that improving household energy efficiency is the most sustainable long-term solution to tackling fuel poverty, we are not complacent, and we are going further to take action. Today, the Electricity and Gas (Energy Company Obligation) (Amendment) Order is being debated in the House of Lords. It will extend the scheme from 1 April 2017 to 30 September 2018. Should the scheme proceed as planned, we expect more than 500,000 homes to be improved over the coming 18 months. The order will also reform the energy company obligation so that 70% of the support available under it will be directed at low-income homes. That represents a real-terms increase from £310 million to £450 million per year, which will be invested in improving the energy efficiency of homes that most need support.

[Caroline Lucas (Brighton, Pavilion) (Green)]

I have no doubt about the Minister’s personal commitment to this agenda, but I wonder why the Government will not make energy efficiency into a national infrastructure priority. Why is energy efficiency not part of the national infrastructure assessment? That would be the way to scale up and meet the ambition he claims the Government have.

[Mr Hurd]

It is not a claim about ambition; the ambition is set out in long-term statutory targets. The figures I have given show that these are substantial investments. As I will come on to clarify, there is some £770 million of support for low-income and vulnerable consumers in the financial year 2017-18, so there is no shortage of ambition or of investment. The hon. Lady and I share a strong belief in the importance of energy efficiency. I am trying to stress that what we are doing will increasingly focus on the most vulnerable, and, with public finances constrained, that must be the right priority.

[Mr Hurd]

I could not agree more with my hon. Friend. As I have said, previously, he is one of the most thoughtful Members of the House on this subject. He will know that we are on the cusp of something very interesting in our relationship with energy and our ability to manage it more intelligently. Such an opportunity must be just as much available to well-to-do people as it is to those struggling with their bills, and that must be a priority for us. That is partly why I stressed the point that the reforms we are making to the existing policy instruments will increasingly focus on the most vulnerable and the poorest in our communities.

However important it is to improve the energy efficiency of people’s homes, it will inevitably take time, and Government recognise that people also need immediate support with energy bills. We therefore have in place the second pillar of the strategy, the warm home discount. This scheme now provides over 2 million low-income and vulnerable households with a £140 rebate off their energy bill each winter, when temperatures are lowest and bills are highest.

Together the schemes mean that, as I have said, there will be at least £770 million of support for low-income and vulnerable consumers during the financial year 2017-18. This is a significant level of support for households across the country. Other policies will also make a contribution, such as the prepayment safeguard tariff, which I hope the House welcomes, and the roll-out of smart meters. Smart meters are regularly debated in this place, and the evidence is already showing the consumer popularity of this technology and its ability to help people save money and manage their energy use in a smarter way.

Making progress cannot be just about subsidy; regulation will play an important role as we take action to ensure that tenants can live in a home that keeps them comfortably warm. The private rented sector regulations will target the least efficient F and G-rated properties from 2018 by requiring landlords to improve those properties to at least a band E, unless a valid exemption applies. The Department is currently considering options for the implementation of the regulations, with a view to ensuring that they can be implemented effectively by April 2018.

Of course, there is more work to be done. One key area will be to improve targeting on the households most in need. The Digital Economy Bill, which is currently going through Parliament, will be important in that regard, as it will make available better data on householders and properties. We believe that that will in turn reduce the costs that energy suppliers face in identifying the households most in need, and allow more measures to be installed for the same cost.

The actions I have described are all led by the Government. However, fuel poverty is a problem for all of society, and the Government cannot tackle it alone. That is why partnership is a key theme of the fuel poverty strategy. It is important for the Government to play a leadership role, but also to work in partnership with local government, businesses and the charitable sector. Only by making the most of the varied skills and resources of each of those partners will we, collaboratively, be able to tackle fuel poverty.

[Caroline Lucas]

According to the Government’s own statistics, the EU ecodesign directive has helped households, small businesses and industry to save thousands on the cost of energy. Indeed, the average annual saving from ecodesign policies for homes is expected to be £153 by 2020, which is 20% of the average annual energy bill. Will the Minister assure us that such rules on energy efficiency will continue to be implemented and updated both during and after our renegotiation with the EU?

[Mr Hurd]

I certainly agree with the hon. Lady about the importance of good design. In fact, some of the most important progress we have made as a country on energy efficiency has been through building regulations and standards for the quality of our homes and offices. The Government remain ambitious in that respect, and she will know how important that is. She will know that I obviously cannot at this stage clarify our intentions post-Brexit, because that is tied up in a series of wider issues, but I hope I can reassure her that we understand completely the importance of continued ambition in this area. We are very clear that there remains considerable scope for harnessing creativity and innovation in using design to improve standards, which will in turn reduce costs.

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[Caroline Lucas]

I will gently move the hon. Lady back to energy efficiency. She is making a very compelling public health case for the need to tackle energy efficiency and fuel poverty. Does she share my frustration that the national infrastructure assessment is a golden opportunity with respect to putting energy efficiency front and centre in the Government’s low carbon green strategy and industrial strategy? They should do that, because it could help to sort out not only the health crisis, but the climate crisis.

[Rebecca Long Bailey]

I completely agree with the hon. Lady. I share her frustrations and I will come on to that point shortly.

Looking at the efficacy of the Government’s fuel poverty initiatives thus far, they made a manifesto commitment to install one low-cost insulation measure in 1 million homes over the five years of the parliamentary term. That is welcome, but I suggest the Government need to be far more ambitious. Labour, for example, delivered 2.5 million insulation measures installed in homes in just one single year.

Turning to the funding through the warm home discount, whereby money is given as relief to bill payers, this is commendable and it should certainly continue, but it is physically insulating homes themselves that will provide the long-term solution. On the energy company obligation, the main mechanism by which the Government take action on fuel poverty, it has a clear pathway only to next year. There is currently no clear indication of what will happen to the obligation after 2018 and the Government’s consultation on its future has not been forthcoming. I would be grateful if the Minister provided in this debate an update on progress on that area.

The Minister will be absolutely distraught to hear that the UK ranked 14 out of 16 western European countries for fuel poverty, and ranked bottom for the proportion of people who cannot afford to adequately heat their home. I think he would probably agree that this is not a brilliant record for the country with the fifth-largest economy in the world. A helpful comparison to draw is Sweden, where incomes are similar to the UK’s but winters are much colder and gas is more expensive. One might think that Sweden would have a significant fuel poverty problem that far outstripped that of the UK, which by comparison has mild winters, but levels of fuel poverty in Sweden are approximately half those found in the UK. The major difference is that Swedish homes are properly insulated. A typical Swedish wall is three times more energy efficient. A commitment to that kind of innovation, along with providing the necessary funding, will truly tackle fuel poverty.

The Labour party is keen to make that commitment as part of its industrial strategy to end social injustice and to build a world-leading UK-based renewables and energy efficiency sector with UK-based supply chains. Labour agrees with the NEA, and the hon. Member for Brighton, Pavilion (Caroline Lucas), which states that the National Infrastructure Commission and the UK Government must act on the strong case for domestic energy efficiency to be regarded as a hugely important infrastructure priority. The Minister might wish to outline the Government’s position on that and whether he agrees with Labour.

Economic analysis by the well-regarded Frontier Economics suggests that the net present value of investing in insulating homes could be as valuable as the HS2 project. Cambridge Econometrics found that for each pound spent on insulating homes £1.12 is generated for the Treasury and £3 for the economy in GDP, and 42 pence is saved by the NHS. It is clear that investing in insulation has a positive effect not just for those in fuel poverty or for climate change, but for the wider economy. Unfortunately, however, the fact is that if we compare major insulation measures being installed today to 10 years ago under the previous Labour Government, there has been a huge 88% fall. Put another way, the long-term solution to fuel poverty gets 12% of the support that it originally received.

The fuel poor, by definition, are not in a place to insulate their own homes. It is therefore incumbent on the Government to step in. It is also important for the Government to recognise the wider benefits a real fuel efficiency infrastructure plan would have for all income groups, industry and the wider economy. A little more support from the Government, both to those affected by fuel poverty and to industries waiting to blossom in the renewables sector, could unleash untold economic and social benefits.

To conclude, the Government’s intentions, and those of Ministers, might be good, but there is still a mountain of work to be done. The Labour party is open to working across the House to end fuel poverty for all our constituents. I do hope the Minster has listened to my concerns and will respond accordingly.

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[Caroline Lucas (Brighton, Pavilion) (Green)]

I had not intended to speak today because I thought this was going to be a packed debate; that was my misjudgment. This is a crucial debate, however, and I want to add a few words. One of the frustrations that many of us feel is that tackling fuel poverty by investing in energy efficiency can really be a win-win situation in getting people’s fuel bills down, tackling climate change and creating jobs. The creation of those jobs has led to the conclusion that by investing in tackling energy efficiency problems we can actually raise more money than we need to invest. That was rightly mentioned by the hon. Member for Salford and Eccles (Rebecca Long Bailey).

Evidence shows that £3 can be returned to the economy for every £1 invested by central Government, so when the Government say that they cannot afford to invest more in this agenda, it is only right for us to point out that, if the agenda were tackled properly, it could save them money as well as having very real impacts such as reducing the serious harm being done to so many in our communities and preventing premature deaths. So, given that there are so few win-wins in politics, it seems particularly perverse that the Government are turning their back on this one. Taking action in this way would help to ensure that the 2.3 million families living in fuel poverty across the UK had some kind of hope for the future.

We have heard from several hon. Members that fuel poverty is not just an inconvenience; it is nothing less than a national crisis. Forgive me for referencing this for, I think, a third time, but this is so frustrating because we know that we need to scale up investment in energy efficiency, and the national infrastructure process would have been an obvious way to do that. It would be a way to channel funding into this incredibly important area, which otherwise risks being overlooked in many ways.

I want to mention the Committee on Climate Change, whose report last week made it clear that improving energy efficiency through better insulating our homes is key to meeting our climate targets. In that respect, will the Minister give us an indication of when the severely delayed clean growth plan will be published and whether it will include a comprehensive energy efficiency plan, including a statutory commitment to ensuring that all fuel-poor homes have an energy performance rating of at least C by 2030 at the latest?

With one in 10 households living in fuel poverty, it is also a matter of concern that the Government have no scheme for comprehensively insulating fuel-poor homes in England. Meanwhile, the changes being made to the energy company obligation are likely to decrease the support available to fuel-poor households, with those on low incomes unable to replace inefficient gas boilers, for example. We know that 9,000 excess deaths were linked to fuel poverty last winter, and if we are to take seriously the claims being made about the Government’s commitment to this issue, we need to know when they will put in place the kind of actions that are needed.

Finally, I want to say a little bit about how people can, to coin a phrase, take back control. That phrase has been used a lot in recent months, and if there is one area of our lives where we should be taking back control, it is in relation to energy. Right now, our energy system is in the hands of the big six, and for ordinary consumers, it can feel very hard to have any kind of leverage. We are always told that we simply have to switch our power supplier, but again, that puts responsibility on the consumer and we are still at the mercy of whatever the different energy companies come up with.

Instead of having the big six, we should have 60,000. We should do what Germany is doing and have real community energy, not just as a nice-to-have extra bit of luxury but as the bread and butter of our energy system. If we were to do that, we could really give people more control over energy. We could ensure that the huge energy companies were not siphoning off big profits and that investment was going back into the community. We would need to ensure priority access to the grid for community renewables, and a community right of first use—at wholesale, not retail, prices—of the energy generated. We would also need a planning framework that was able to determine locally the degree of community ownership required as a precondition of permitted development, and a right to acquire or own the local distribution network and to sell long consumption—in other words, demand reduction—alongside demand management and renewable energy. I can also imagine a role for the Green Investment Bank, if it was still properly in our hands rather than being flogged off to Macquarie, as seems likely to happen.

We have heard a lot today about the importance of tackling fuel poverty, and that is exactly right. We have also heard a lot about the impact of fuel poverty on our constituents. If we were to take a slightly bolder view, we could solve fuel poverty at the same time as bringing energy properly back into community hands—into the hands of us all—and that is a vision worth fighting for.

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[Jesse Norman]

Mr Deputy Speaker, I had until recently hoped to be greeting your female colleague—Madam Deputy Speaker—as you and I have spent so much time in the Chamber over the past few days. In her absence, it is a delight to welcome you to the Chair.

I thank colleagues on both sides of the House for their contributions to this debate. I will respond to some of their many points but, first, I will recap the situation. The most recent statistics, as highlighted by my hon. Friend the Minister for Climate Change and Industry in his opening remarks, show that there were approximately 780,000 fewer homes in the lowest energy efficiency rating bands—E, F and G—in 2014 compared with 2010, which demonstrates real, sustainable progress towards the 2020 and 2025 milestones. It is clear from the statistics that the fuel poverty milestones and target are backloaded and that the scale of improvements required to reach each of the target dates increases over time.

Today, the energy company obligation regulations are being debated in the House of Lords. They seek to increase the proportion of support directed at low-income homes. Although the ECO policy has reduced in size compared with the scale of recent years, support for low-income households has been protected. In fact, the regulations for the new scheme to launch on 1 April 2017 represent an increase from £310 million to £450 million a year.

Combined with immediate support on the cost of energy bills provided via the warm home discount, there will be at least £770 million of support for low-income and vulnerable consumers over 2017-18. That is a significant commitment towards some of the households that are faced with the challenge of keeping their home warm. It is therefore far from true that, as the hon. Member for Brighton, Pavilion (Caroline Lucas) said, the Government are turning their back on the situation. Quite the opposite.

The shadow Minister, the hon. Member for Sheffield, Brightside and Hillsborough (Gill Furniss), criticised what she described as the Government’s “quite abysmal” record. I can do no better than to point out that, in the years from 2003 to 2010, the last Labour Government succeeded in increasing the number of fuel-poor households from 2.41 million to 2.49 million. The result of what she regards as an effective energy policy was to increase the number of people in fuel poverty.

Regulation, particularly for landlords, will also play an important role in making progress towards the milestones, as will other actions such as the safeguard tariff for pre-payment meters and the roll out of smart meters. In the longer term, the Government will be assessing the resources and policy mix required to meet the 2030 fuel poverty target. However, flexibility is important given the long-term, structural nature of fuel poverty. We should not, in 2017, seek to say precisely how best we can meet the target or commit future Governments to 13 years of spending in a particular way given that so much could change in the energy sector and in applicable technologies.

[Caroline Lucas]

On the Government’s commitment to this agenda, can the Minister answer the fact that the notional annual spend on the overall ECO programme has reduced from an original £1.3 billion to £640 million? The new cap on heating measures with the ECO leaves a big gap in provision for low-income or vulnerable consumers who cannot now afford to repair or replace existing gas boilers. What is his answer to that?

[Jesse Norman]

If the hon. Lady had attended closely to my opening remarks, she would have heard me acknowledge that the scheme has been reduced in size but that funding for more vulnerable groups has been increased. If we combine that with the wider support through the warm home discount, let alone the national living wage and other applicable measures, we see that the Government are doing a great deal in that area.