Fuel Poverty (Rural Britain)

Thérèse Coffey Excerpts

Wednesday 7th July 2010 Westminster Hall

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

First, I thank Mr Speaker for granting what I hope will be an important exploratory debate. I welcome the number of contributions that we shall hear, and I am delighted that after such a late sitting last night, so many people are still interested in fuel poverty in rural Britain.

Fuel poverty is defined as when someone spends more than 10% of their net income on fuel. As we know, the main contributory factors are a low income, the high price of energy, high energy consumption or houses with low energy efficiency. There have been plenty of debates and petitions on the subject, but I felt that it was important to raise it again at the start of this Parliament and in advance of the spending review, so that Ministers understand the concerns of their constituents in rural areas.

Yesterday, the Commission for Rural Communities published a report entitled, “The state of the countryside 2010”, which made specific reference to fuel poverty, and noted that things are getting worse rather than better. Across the House, we must recognise that fuel poverty has continued to increase rather than decrease, and we need to look for radical solutions to change that. Instead of an ambitious strategy of eliminating fuel poverty for vulnerable households by 2010, the number of households starting to enter fuel poverty has risen from about 2.5 million to about 5 million.

I recognise that this is a devolved matter, and that the Welsh Assembly Government and the Scottish Government have their own schemes. It is important to learn from some of the shared issues, and look at how different challenges are approached.

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

The hon. Lady is right to say that some of the issues that we will debate this morning are devolved. However, other issues such as competition policy are not devolved and are matters for Westminster.

[Dr Coffey]

I recognise that there are issues such as competition, and the impact made by Calor Gas was a successful change. The Office of Fair Trading is monitoring the situation to assess its effectiveness. At some point in the near future, we should like a review to see whether that change has worked, or whether people are still in what is effectively a false market. From speaking to some of my constituents, I understand that the change has allowed them an element of choice, whereas before they were handcuffed to one supplier.

My constituency of Suffolk Coastal has 17% fuel poverty, which is slightly lower than the national average where about one in four rural households face fuel poverty. I should perhaps declare—although I was told that it was not a declaration—that I am off the gas grid and reliant on oil for central heating in my rented cottage in Westleton. I want to focus on people who live with no access to the gas mains, even though 20% of them live within a mile and a half of national gas connections, and I welcome some of the efforts made by the National Grid Company to start connecting more households. All hon. Members share concerns about people who are reliant on oil, solid fuel and liquefied petroleum gas, as that is where the problems lie.

In 2009, in a parliamentary question, the Government were asked what they were doing to tackle fuel poverty, and the answer was Warm Front. However, I am afraid that Warm Front is not working in areas that are difficult to reach, and that is reflected in the evidence gathered by various organisations. Time and again, people in my constituency—or other hard-to-reach areas, such as the constituencies of some Members in the Chamber today—are losing out in such schemes. There has been limited success, and I recognise that some energy companies have been kicked and told that they must start doing something about the situation, but these are early days and we need to kick even harder.

[Sir Robert Smith (West Aberdeenshire and Kincardine) (LD)]

I congratulate the hon. Lady on bringing this subject before the House. She makes an important point about the difficulties and challenges in rural areas. Is not one of the added challenges the fact that so far, schemes have tended to come up with the simplest way of making a house more efficient? It is right to make efficiency a priority because relying on prices proved a mistake for the previous Government. However, in rural areas, much of the housing stock is not constructed in such a way that it is easy to make it more efficient. Any scheme must be far more robust and long-term to transform such houses into places where people can live without fuel poverty.

[Dr Coffey]

My hon. Friend is absolutely right. The extent of solid-wall housing is a particular issue that cavity insulation fails to address. It is mainly prevalent in rural areas, but also in London where the challenge is damp Victorian houses. Instead of national schemes, I would like the Government to consider more local schemes and ensure that any grants available address local needs. My constituents, and many others, would then be able to access help that is relevant for them, rather than being told either that they do not qualify for a scheme, or that a scheme is useless for them. Such local schemes would be welcomed by people who feel that they are on the fringes of society when it comes to Government help on this issue.

[Andrew George (St Ives) (LD)]

The hon. Lady is making good progress on this matter. She mentioned Warm Front, which was a national scheme, and the need for a better, more tailored local delivery. Does she agree that one of the biggest problems with Warm Front—although it was set up with the best of intentions—was the usual difficulty that Governments face due to the strange and highly centralised method of public procurement, which means that they have to narrow down and reduce the number of companies with which they can contract? Therefore, the prices for much of the work undertaken are astronomical and much higher than they would be if provided by a local small company.

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[Dr Coffey]

My hon. Friend is right. The issue is particularly prevalent in rural areas, where prices have meant that less work can be done with the available grant. One of my constituents suggested that I promote a private Member’s Bill on making sustainable energy more local, and I hope that the Government will address that point by absorbing elements of that idea in their thinking on any future schemes.

Many hon. Members are present, so I will move on and speak a little about the market. I recognise that Calor Gas and similar LPG suppliers provide an opportunity for people to heat their houses without having everything provided electrically. A premium is paid for that because of the delivery method. However, I would like LPG suppliers to go further, to challenge their efficiencies and work with particular groups to ensure that the people they serve receive the best value possible. Micro combined heat and power boilers are being developed, and I would like more investment in technology so that we can address those kinds of problem.

There are no social tariffs for oil or LPG, and it is challenging to think about how they could be created for the relatively small group of people who access that type of fuel. I could argue that we should receive some money from the mains gas and electricity companies to redress the balance. I am pleased that people can now hold a post office bank account or, if they do not have access to that, can get a direct debit discount. Without straying too far from the subject, dare I say that the number of post offices in my part of the world has reduced dramatically over the past 10 years? That presents its own challenge.

I understand that at least one company, EDF Energy, offers dual fuel discounts to people who have access only to electricity rather than electricity and gas, although I do not know how much the company advertises the discount. I will do my best in forthcoming weeks to advertise it to my constituents—I might take up the offer myself. I was not aware of it until I spoke to somebody from EDF Energy yesterday.

There are things the market can do. I recognise, though, that as the price of social tariffs or similar measures add costs to industry, they end up being paid for through increasing fuel prices. However, it is an important part of social responsibility to ensure that people in rural areas are not freezing to death and being ignored.

In terms of the Government, I hope that we shall see a change in the balance of schemes. I have talked about more local solutions. I want any possible future investment to be rebalanced in favour of rural schemes and—dare I say it?—not just for people on benefits. A number of people just miss out here or there, but like everyone else, they still need to heat their homes. The cost of oil goes up; the cost of LPG is going up. That is hurting more and more people. We are trying to reach some of the communities that have never been on benefits and do not necessarily want to start now—it is an element of dignity for them. By the way, I want to correct a misconception. Although fuel poverty affects a number of pensioners, and two thirds of my constituents are, I believe, over 60, it affects people of all ages, including people with young families. We need to remember that.

What else am I looking for? We are expecting £6,500 grants, which will be repaid through efficiency savings in fuel bills. I would like rural people to be able to access higher up-front cash advances, because if people have an oil central heating system, they cannot switch suddenly to photovoltaics and everything is fine. They have to rip out the entire heating system and put in a brand-new one.

Such measures would help the people of Suffolk Coastal because our climate is similar to that of Jerusalem. It may not be sunny every day, but there is plenty of sun and little rain. We are missing out on marvellous resources all around us, because the amount of cash that we need to spend up front to change our systems is just prohibitive. Bold thinking, rebalancing in favour of rural communities and tailoring solutions to allow local people to make the decisions that best suit them, rather than having top-down schemes, are some of the issues that I want to raise today in addressing fuel poverty in rural Britain.

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[Albert Owen]

The hon. Gentleman knows me well enough to know that I would not pander to the previous Labour Government when they were in office, and I will certainly not try to defend their record now when I think that it is wrong. The hon. Member for Somerton and Frome (Mr Heath) has an excellent record on this issue, and now that he is in the Government I hope that he will able to use greater leverage on Ministers to ensure that measures are introduced. As Deputy Leader of the House, he is in the privileged cross-governmental position of being able to bring everyone together to get things done as soon as possible, and he will get my 100% support in doing so.

In his helpful letter to me, the Energy Minister said that some schemes are working and that Ofgem has made progress on connecting vulnerable households to the gas networks by encouraging large gas distribution networks to work with agencies to produce results. He said that about 20,000 households would be connected to the grid by 2013, but we simply do not have the agencies or the local authority initiative in my area, so there is no lead partner. I urge the Government to look at that, because we need a thrust from central Government, and from regional and national Government in Wales and Scotland, to push the issue forward. I acknowledge that there are many excellent energy efficiency measures, and I repeat that the Welsh Assembly Government have an excellent record in this field and are taking fuel poverty and their part in dealing with it very seriously, but we all need to work together.

The boiler scrappage scheme was useful in helping many people to replace equipment. That is a big issue, and the hon. Member for Suffolk Coastal is right that there are a lot of associated costs with changing to another source of energy and not least to another supplier. People have to remove the gas storage equipment in their properties, which is costly, although some companies will take over that cost because they will get the business in the future. However, when people apply, they are hampered by additional costs, so the process is not easy. People feel trapped with their supplier, which is putting an extra cost on them.

[Dr Coffey]

This is a genuine question. I was under the impression that rules had gone out saying that universal connectors now have to be supplied, so there is no issue about equipment staying. That is part of the new deal.

[Albert Owen]

Things certainly have improved, but the change has not been advertised very openly. When people were approached in the past, it is clear that they felt trapped. The customer needs clarity to ensure that they can get a better deal from a different supplier.

The core of the problem remains the cost of domestic fuel, particularly in rural areas and areas on the periphery, and that is why the debate is so important. A constituent in her 80s who came to see me in late May was very grateful for the additional Government support that she received through the winter fuel allowance, which helped to alleviate some of the problems that she faced, but she was still paying huge amounts for her propane gas. From 2008 to April 2010, her company supplied her at a unit cost of between 45p and 51p per litre. That gave her an average quarterly bill of between £400 and £700, which is an enormous amount for an elderly person living on her own in an older property. The property and the dozen like it on the same small estate are not that old, but I was astonished to find that the properties that did not have access to mains gas were all paying different prices to the same supplier. The households had to go through something like an auction to get the basic unit cost down—they had to negotiate.

I raised the issue with the company. In addition to the unit cost, there was the cost of associated charges such as the standing charge and gas surcharges, which took the price up considerably. When the company replied to the correspondence I had sent on behalf of my constituent, it said that the variations were due to the geography, the seasons and the type of agreement, but I am talking about households in the same estate paying different prices.

Those issues need to be looked at, which is why I want to move on to the excellent campaign by Which?, the consumer group, which is looking for greater transparency in energy prices. The old chestnut from many of the suppliers and fuel companies is that the retail price is linked to the wholesale price. When wholesale prices go up, the companies say that they are forced to put their retail prices up, but when wholesale prices come down, companies say that the system is very complicated and sophisticated, and it does not necessarily follow that the retail price is linked to the wholesale price. We therefore need greater transparency.

I am asking for a breakdown from suppliers to show exactly the amount of bulk gas that they get at wholesale prices and what they pay for it. Some of the electricity companies, and the companies that supply gas and electricity, are now more open and transparent, and they are gaining from that—greater transparency is in the interests of the suppliers, as well as the consumer. The Committee of Selection is meeting today, and as a member of the new Select Committee on Energy and Climate Change, I will push for greater transparency so that we can see exactly the link between wholesale and retail prices. That is an important move forward, which would benefit consumers, particularly in rural areas, and I would welcome it. The Government should be encouraged to work with the consumer watchdog to bring about greater transparency.

I know that a number of Members want to speak in the debate, and I do not want to detain them, but I have concentrated on off-mains gas areas because they are being hit particularly hard, and we need to look again at extending the network; indeed, hon. Members in previous Parliaments raised the issue. The irony is that although my constituency is on the periphery, I am promoting the concept of an energy island because we have energy generation in the area. We have a nuclear power station and wind farms, and we welcome both because they generate employment and contribute to the United Kingdom’s energy security. We also have projects that are looking at tidal energy, so we are well positioned to provide the new renewable energy that the Energy Minister told me was a way forward. However, although the Wylfa power station in my constituency supplies more than 30% of energy in Wales, some people living in close proximity to it pay some of the highest prices in Wales for their energy because they do not have the opportunity to use the gas network and they do not have the same choice as many people in non-rural and urban areas of the United Kingdom.

I welcome the response that I received from the Energy Minister. He is a sincere man and he will work with the Deputy Leader of the House and others to ensure that we get a good deal for people in my constituency, in peripheral areas and in rural Britain. Once again, I congratulate the hon. Member for Suffolk Coastal, because this is a hot subject. It needs dealing with now, and I hope that we can move forward.