Fuel Poverty (Wales)

Chris Ruane Excerpts

Tuesday 19th March 2013 Westminster Hall

[Chris Ruane (Vale of Clwyd) (Lab)]

I rise to speak about fuel poverty in Wales. Fuel poverty is defined as when 10% or more of a household income is spent on fuel. Wales has the highest rate of fuel poverty in the whole UK, with 420,000 households, which is 30%, in fuel poverty. To put that in perspective, the figure compares with just 11% in the south-east, so that for Wales is nearly three times higher. The ward in Wales with the highest rate of fuel poverty is Rhyl West, which is in my constituency. The ward with the 10th highest rate is Rhyl South West, where I have many relatives, in which I grew up on a big council estate.

In Rhyl West, 900 hotels and guest houses have been turned over to houses in multiple occupation, and the landlords have made no investment to insulate and improve those homes. They have made money out of misery, charging £85 a week in housing benefit for substandard homes. That is a big problem in my constituency and in Wales.

There is a perfect storm, because disposable income in Wales is going down and fuel bills are going up. Since 2010, the average household fuel bill has gone up by £300 a year. In the past year alone, it has gone up by 7%, and over the next two years, it will rise by a further 7%.

[Jessica Morden (Newport East) (Lab)]

Does my hon. Friend agree that many of our constituents’ disposable incomes will be hit even harder by the impact of the bedroom tax in April, when people will be forced to choose between heating their homes or cutting down on food in order to pay the extra rent?

[Chris Ruane]

I agree entirely and will come to that issue shortly. The TUC in Wales reports that Wales has the lowest levels of disposable income, but the highest falls in living standards. The situation is going to get worse, as my hon. Friend rightly said, because council tax for the poorest will be introduced, although the Welsh Government have mitigated the effect of that by setting aside £22 million for the next year to stop the rise hitting the poorest. Owing to the bedroom tax, someone who has lived in their council house for 50 years but does not want to move, because they love their house and community, will have to find an additional £25 a week. The benefits freeze of 1% could result in people on benefits actually freezing. There is also wage stagflation in Wales.

At the same time, the Government and their allies are giving £44,000 a year extra to a person who earns £1 million a year. The total package is worth £3 billion. Imagine what good work could be done if that money were used to employ unemployed people to insulate the homes of the poorest and most vulnerable.

[Glyn Davies (Montgomeryshire) (Con)]

Does the hon. Gentleman accept that for the whole 13 years of the previous Labour Government, the top rate of tax was 40p? Next year it will be 45p. How on earth can he stand up and say what he just said?

--- Later in debate ---

[Chris Ruane]

I can do it quite easily and I will do it again. Whichever way the hon. Gentleman slices it, the Labour Government introduced a rate of 50%, but the Conservatives and their Liberal allies have taken it down to 45%. That means additional money in the pockets of millionaires and billionaires, and less money in the pockets of the most vulnerable. That is Robin Hood in reverse; it is Robbing Hood—taking money from the poorest and giving it to the richest.

I do not want to sound too negative, so let me say what could be done. Local authorities need to work with the Department of Energy and Climate Change and the Department for Communities and Local Government, and more widely across the Government, to ensure that they play a full role in encouraging collective switching, because that process can lead to big discounts of £200. DECC needs to promote that more with local authorities, because people are not switching at the rate they should be. There might be many reasons for that. For example, an elderly person may be going blind or have early-onset dementia, while poorer people may be functionally illiterate or have no access to computers. There is a whole swathe of people who should be switching but are not, so local authorities should be co-operating with DECC and other Departments to organise collective switching.

Local authorities should introduce community energy initiatives, perhaps with the encouragement of central Government grants. A lot can be done by local authorities. In my constituency, Denbighshire county council used £35 million of prudential borrowing to upgrade fully its 3,000 council houses with double glazing, gas and insulation—it did a fantastic job. It also co-operated with me and Crispin Jones, the director of Eaga Partnership in Wales, to connect 125 former Ministry of Defence soldiers’ and officers’ houses to the gas grid.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

I congratulate the hon. Gentleman on securing this important debate. Before I was a Member, I used to work for Citizens Advice. As part of that role, I was strategic adviser for National Energy Action Cymru, and I also served on the Welsh Government’s fuel poverty advisory group. It was of great interest to us that Wales is a net exporter of electricity, producing nearly twice the amount we need for ourselves, yet we have the highest levels of fuel poverty. Can the hon. Gentleman explain that discrepancy?

[Chris Ruane]

I will come on to that point, and there is a particular north Wales angle to the debate. I pay tribute to the hon. Gentleman’s work with Citizens Advice and on fuel poverty.

A lot can be done by local government, but more can be done by national Government. The Labour Government introduced the winter fuel allowance and helped pensioners in the middle of winter by giving them £200 or £300 to pay their gas and electricity bills. That Government also reduced VAT to 15%, but the Conservative Government, with their allies, increased it to 20%. In 2001, Labour introduced the home energy efficiency scheme. Over the past 12 years in Wales, £150 million was spent insulating and improving the energy efficiency of 127,000 properties. A property that has been improved can cut its gas and electricity bills by up to 25%.

[Roger Williams (Brecon and Radnorshire) (LD)]

The hon. Gentleman talks about VAT but, of course, VAT is charged at 5% on energy and, as far as I know, it has stayed at that level during this Parliament.

[Chris Ruane]

The hon. Gentleman might be right about that, but wider cuts are affecting the disposable income of all families, especially the poorest.

The Prime Minister talks a good talk but he does not walk a good walk. He promised from the Dispatch Box that he would force the energy companies to offer the lowest tariffs to the poorest people, but nothing happened—he did not know the detail. The Government need to do much more. Pressure needs to be put on the energy companies and the big bonuses they are handing out at the same time as they increase prices massively. In the past year, two chief executives have left their energy companies. One was given a £13.5 million golden handshake and the other got £15 million. That is obscene at a time when people will be freezing to death—dying of hypothermia in their own homes.

There needs to be an inquiry into the ups and downs of gas prices. When supply is tight, gas prices shoot up, but when it is loosened, they gently come down. The time lag and price lag need to be fully investigated, because people are being ripped off. If customers are middle class and have a steady income, so they pay by direct debit, they are offered a discount of £100, but if people have to fill their electricity or gas meter with 50p and £1 coins, they are charged the maximum, and that is wrong.

There needs to be certainty and unity within the Government on energy policy. We see the antics of Ministers who are opposed to solar farms in the fens. There are MPs—some from north Wales—who are opposed to offshore wind farms, MPs who are opposed to onshore wind farms, and MPs who are opposed to the feed-in tariff. They know what they are against, but they do not know they are for, and the uncertainty and lack of unity has led to a lack of investment in the renewable energy market in my constituency and throughout the UK.

[Roger Williams]

Will the hon. Gentleman give way?

[Chris Ruane]

I have given way to the hon. Gentleman once; that is all he is getting from me.

The Government have introduced the energy company obligation, for which I give them credit, and £1.2 billion has been set aside for the whole of the UK—[Interruption.] I urge the Minister—he is yakking away over there—to ensure that Wales gets its fair share of that ECO money.

[Susan Elan Jones (Clwyd South) (Lab)]

I wonder whether the hon. Member for Brecon and Radnorshire (Roger Williams) was going to point out that the 5% VAT rate for energy came about due to a successful Labour rebellion in the dying days of John Major’s Government. There may be a good analogy there for us in what will hopefully be the dying days of the current Government.

[Susan Elan Jones]

I am grateful to the hon. Gentleman for his noise.

Does my hon. Friend agree that this matter is one of the most moral issues because it disproportionately affects people on low incomes and pensioners? That is a really important issue right across Wales.

[Chris Ruane]

Those affected are the most vulnerable and elderly pensioners, and, specifically in Wales, they are also those who are off grid but cannot get connected to gas because of topography, geology or geography. Dyserth is an off-grid town in my constituency. I was successful in getting gas connected to Bodelwyddan, because it was low-lying, but unsuccessful with Dyserth.

As the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) said, Wales is a net exporter of energy. North Wales, in particular, is playing its role in renewable energies, and my constituency will have the biggest array of offshore wind farms in the world. I switched on 30 turbines at North Hoyle some eight years ago, and when he was Secretary of State for Wales, my right hon. Friend the Member for Neath (Mr Hain) switched on another 30 turbines at Rhyl Flats. Behind those, we will have 200 turbines at Gwynt y Môr and the 2,000 wind turbines at the Rhiannon wind farm array. When I was switching on the North Hoyle turbines, the Prime Minister was describing them as “giant bird blenders”, at the same time as sticking a mini turbine on his own roof in Notting Hill. He was looking both ways.

North Wales has in Wrexham the Sharp solar panel factory, which is the biggest producer of solar panels in western Europe. Sharp made its future plans when Labour introduced the feed-in tariff. It cranked up production and got all the workers in place only for the current Government to say that they were going to scrap the tariff. We and companies such as Sharp need certainty.

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

Will the hon. Gentleman give way?

[Chris Ruane]

The Minister will have plenty of time to address all these issues later.

North Wales has Wylfa nuclear power station, which will hopefully be replaced shortly. In Dinorwig, we have Electric Mountain, which is a hydroelectric power centre with a lake at the top of the mountain. It can produce electricity in seconds to respond to demand at peak times, such as at the end of “Coronation Street”. My constituency has all these fantastic renewables. Looking to the future, we have the OpTIC centre, which is working on fusion power. In the rest of Wales, we have the possibility of the Severn barrage, which could create 5% of the UK’s electricity needs. There is the Irish interconnector from Dublin to Prestatyn in my constituency, which will allow energy to go from north Wales to Ireland. We also have non-renewables in Wales, as we have the gas terminal in Milford Haven that brings a great deal of gas to the UK, as well as the Connah’s Quay gas-fired power station in north Wales. We create energy in Wales, but we have the highest energy bills in the UK. It is the same with water: we capture water and export it, but we have the highest water bills in the UK.

With 420,000 families living in fuel poverty, Wales already has a higher proportion of households in fuel poverty than any region in England. The problem will only get worse unless the UK Government act. The Welsh Government are doing what they can to improve energy efficiency in Wales and they have an excellent record. However, on the fundamentals of fuel poverty—lower incomes and rising bills—it is the austerity and inaction of the Tory-led Government that are hitting Welsh households hard. The Chancellor has an opportunity in tomorrow’s Budget to ease the strain that his policies are putting on families in Wales. He should adopt Labour’s proposal to force energy companies to pool the power that they generate and make it available to any retailer, as well as the requirement that energy companies put all over-75s on their cheapest tariff. In Wales, that would mean more than 250,000 pensioners being up to £200 better off. That proposal could be part of a Budget that would be much fairer than last year’s, which everybody, including some Government Members, rebelled against, and which asked millions to pay more so that millionaires could pay less.

--- Later in debate ---

[Nia Griffith]

The hon. Gentleman is absolutely right. The November payment is made at exactly the time when solid fuel is at its most expensive, and it would be much better if people had the money earlier so that they could then spend it in preparation for the winter.

There is a particular problem for homes that are not on mains gas, because that limits people’s choice of fuel. They might use solid fuel, more electricity, or bottled gas for cooking. More recently, of course, people have been using liquefied petroleum gas, but some areas face a problem because one supplier of LPG gas has a monopoly. I corresponded with Chris Huhne about that matter when he was Secretary of State for Energy and Climate Change, so I hope that the Minister will be able to continue work to examine LPG competition, particularly when people are trapped into continuing with the same supplier because a whole estate is supplied by one supplier, which creates a difficult situation.

The major problem involving some of the insulation and energy efficiency programmes is a real slap in the face when that is combined with the cuts to the feed-in tariff that the Government brought in. Housing associations, which house some of the most vulnerable people who are often in fuel poverty, were going to roll out a comprehensive solar panelling programme to lower people’s bills and generate additional cash through the feed-in tariff, which would then enable them to improve yet more homes. Following the cut, those programmes are completely gone, which is a real tragedy for those people who would have benefited.

I congratulate the Government on ensuring that cold weather payments keep up with inflation, but Wales rarely experiences seven continuous days with an average temperature of 0º. We are far more likely to see the temperature fluctuate, so the payment is not the answer that we would like to think it is. It is definitely important for emergencies, but it is not something that the Government can be proud of because, at the same time, they have taken £100 off the £400 winter fuel allowance for the over-80s, and £50 off the £250 winter fuel allowance for other pensioners. That has left people over the past two years with an even greater struggle to pay their bills than previously.

It is worrying that the Government have not got a grip on energy companies that are letting prices go up and up. They really need to step in and have a far stronger regulator, which is certainly something that Labour would be doing in government. One thing that has distressed me most is the issue of SWALEC—now SSE—which is a large supplier in south Wales. Because many people tend to be loyal to their original company, they have not switched from their supplier, and that particularly applies to people who are perhaps elderly, or not in a position to make price comparisons on a website. Such people often stick with their original supplier.

The supplier has chosen to impose a standing charge of £100 for people’s electricity, and if they also have gas supplied by the company, they do not get a decrease or a discount—they pay another £100 for the privilege. When I took that up with the supplier, saying that it was absolutely outrageous that the standing charge had rocketed to the extent that the poorest families were paying £200 before they used even 1W of electricity or one therm of gas, I received the answer that the practice was encouraged by the regulator, because it would simplify things. However, it is clear that that is a regressive way of charging people, because those who are trying to scrimp and save—such people are often single pensioners, who make a terrific effort, perhaps by heating only one room and being very careful about what they use—are being hit the hardest.

I am cynical about the motives behind the charge, and one reason why is that I am aware that energy companies know that politicians are trying to suggest that they might offer the lowest tariff to the most vulnerable customers. If the lowest tariff is upped, a buffer is created against politicians doing that. Additionally, bills go up every time energy prices rise. Again, as politicians, we would like to see energy companies decreasing their charges when prices fall, but of course a standing charge will not be decreased. It seems to me that that is an extremely sly ploy to fix a price that will not be hit by the whim of politicians and that will escape such scrutiny. If that is what the regulator is recommending, I ask the Minister to have a serious discussion with it about whether that is the best way forward. I have singled out one company, because it is one in Wales whose actions hit a lot of my constituents.

[Chris Ruane]

The company that my hon. Friend has singled out, SSE, is the company that spent £15 million on a golden handshake for its chief executive.

[Nia Griffith]

That is a real inversion of priorities.

Many other companies are carrying out that practice. In fact, there are few that offer tariffs that do not involve a fixed standing charge. However, the one to which I am referring is particularly obnoxious, because a high proportion of the money that a low-income family ends up paying goes on just the standing charge.

--- Later in debate ---

[Glyn Davies (Montgomeryshire) (Con)]

I look forward to speaking under your chairmanship, Mrs Riordan. I thank the hon. Member for Vale of Clwyd (Chris Ruane) —I, too, sometimes think of him as the hon. Member for Rhyl—for bringing forward for debate one of the most important issues that we face as Members of Parliament. I may not have agreed with everything that he said in his presentation of the argument, but there is no doubt at all that fuel poverty—the choice between eating and heating that so many people now face—is one of the biggest challenges that we have to address.

Much of what happens is probably beyond our ability to deal with. I do not want to make a political point, but what we saw between 2004 and 2009 was an absolutely massive increase in fuel poverty. We have seen the Library figures. The number of households in fuel poverty in this country increased from 2.5 million to 5.5 million between 2004 and 2009. The reason why I do not want to make this a political point—I suppose I could do if I wanted—is that I accept that an awful lot of that was probably beyond the ability of the former Government to control.

[Chris Ruane]

If the hon. Gentleman has the figures with him, will he tell those of us gathered here today what the figures were in 1994—the first figures in the document—in comparison? They were far higher.

[Glyn Davies]

The first figures are for 1996, but I just made reference to the figures for the period from 2004 to 2009, which saw a massive increase. I simply wanted to draw attention to the fact that even though the Government at the time would have been very committed to protecting people from fuel poverty, there were international conditions that resulted in a massive increase. That is why I congratulate the hon. Gentleman on bringing forward a debate on such an important issue. It is one that faces us all. It is a particularly serious issue in Wales, and there are a number of reasons for that.

Clearly, one reason is that we have less insulated housing stock in Wales. The Welsh Government are seeking to deal with that issue, and here at Westminster we have the drive towards the green deal. Across Britain, we are tackling the issue of home insulation, which is massively important. However, there is one issue that we must always be careful of: all these things add costs to new housing; they make it very difficult to build. One of the worries that we have is that we should be focusing all our attention on making sure that properties are well insulated. That is why I so disagree with the sprinkler system that is being introduced in Wales. That puts a high value on new houses when that value should be coming from making houses more insulated.

The second issue is the higher dependence in Wales on oil, which is more expensive. That is an historical issue. And of course, in Wales—this is a big issue in Rhyl and certainly in the north of my constituency—average wages are lower, which increases the level of fuel poverty.

I commented initially on the huge rise in fuel poverty between 2004 and 2009, much of which was due to the international market, which is outside our control. We are seeing now the pressure that comes from international gas prices—probably the biggest contributor to the increase in energy prices that we have seen—which are outside our control. That means that we must be particularly careful about the additional things, which might not have quite as much impact but are within our control. That is why I want to refer again to an issue that I think my right hon. Friend the Minister will be tired of hearing me talk about: the impact of the environmental taxes that are put on the bottom of our energy bills. We are always told how little a factor that is compared with the international market. We cannot influence the latter, but we can influence the former, and I want to explain why we should reduce that increase.

--- Later in debate ---

[Glyn Davies]

The hon. Lady makes a fair point, which is why I think that we must be incredibly careful. We have to do a great deal of research. It is right that Cuadrilla, the company involved, is making certain that it goes to an awful lot of trouble. If there is somewhere in Britain that is unsuitable, we should not be allowing shale gas drilling there. We can allow it only where the potential for bringing down energy prices is such that we have to go forward with testing and seeing what the potential is.

Most of my objection to onshore wind is due to the impact on not only my constituency but the whole of mid-Wales and, indeed, much of rural Britain—much of the wild land of Britain. There is no doubt at all that the level of subsidy that is paid to the international companies that are going forward with the proposals is obscene. It is the biggest transfer of money from the poor people, very often, to massively rich foreign development companies. This transfer of money is the opposite of what we should be seeing, the like of which I have never seen before. The whole thing is obscene. The Government have reduced the level of subsidy by about 10%—I think the order might have been signed off in the past couple of weeks—but there is much more scope for that.

Other hon. Members have referred to the level of subsidy in relation to solar panels, but the same money will produce an awful lot more solar panels. There was a shock to the system when the new levels were brought in. There was what we hoped was a temporary slowdown in the number of solar developments that went forward. My sense is that that is recovering. I think we are now getting a lot more development for the same money.

The trouble with onshore wind is that it hits people in two ways. One is fuel poverty. Onshore wind hits the poorest people; indeed, it hits everybody. The Government force them to hand over money that is then given to mega foreign companies, which can bribe their way, through community benefit, into the hearts of local people. Well, in mid-Wales, that has not been successful; it is having no impact at all.

The other aspect is that energy prices are driving jobs overseas. More and more companies find that the cost of the energy they need to run their businesses is just too high. We talk about all the jobs that renewable energy and onshore wind will create, but the truth is they will drive jobs and business overseas—not just to Europe, but outside Europe, and that will be devastating.

In general, however, today’s debate is about fuel poverty. I am very supportive of what the hon. Member for Clwyd West—

[Chris Ruane]

Vale of Clwyd.

[Glyn Davies]

Perhaps we should settle on Rhyl. This is a right issue, and it is hugely important. I congratulate the hon. Gentleman on raising it, and I think we will return to it.

--- Later in debate ---

[Chris Evans]

I entirely agree. The hon. Member for Montgomeryshire (Glyn Davies) shouted earlier “Mention Margaret Thatcher”, and I will mention her. When she privatised the energy companies, I bet she did not expect that she would remove one energy company to get just six. She would not have thought that we would be talking about a market that has moved from a monopoly to an oligopoly. I am sure she would be ashamed of that. That would not have been her intention. The problem is that there is no competition in the market.

[Chris Ruane]

While we are on the Thatcher era, does my hon. Friend remember the Tory Minister who said that pensioners who were freezing to death in their homes should go to a charity shop and buy an extra second-hand cardigan? That was her solution. Let us hope that we are not going back to those dark Tory days.

[Chris Evans]

I very much remember that, which says a lot about my childhood and my interest in politics. It was a shameful thing to say. We are in a situation where there is a lack of competition and people have nowhere else to go. They have to go to those six energy companies, and that is why we need the debate.

There are a few things that the Government can do. My hon. Friend the Member for Vale of Clwyd has already said that we could ensure that everyone over the age of 75 is on the cheapest tariff and that 250,000 pensioners would be up to £200 better off through that. We could have targeted support through the winter fuel payment for those suffering from cancer and for the disabled and those with conditions such as multiple sclerosis or muscular dystrophy. We need some political will. We cannot afford to sit idly by and watch energy companies pile up profit upon profit. We need to show people that we are on their side. It is no good standing back and allowing people to die. We have a moral obligation to end fuel poverty. James Maxton said that poverty is man-made and therefore open to change. We have a chance to change fuel poverty.