Charles Hendry: nine million people are in fuel poverty

Shadow Energy Minister Charles Hendry spoke in the House of Commons on Friday on Liberal Democrat MP David Heath's Fuel Poverty Bill.

Mr Hendry expressed profound concern about the issue:

"This is without doubt an extraordinarily important issue. As the hon. Member for Ealing, North (Stephen Pound) has just said, the passion it generates is equally strong among Members in all parts of the House; Members in all parties are extremely concerned about fuel poverty and serious in their efforts to combat it. Rather than in any way denying that there is an issue to address, we are all looking for the best way to do so.

...

I greatly welcome the constructive approach taken by the hon. Member for Somerton and Frome. We welcome his willingness to say that we should look to achieve a band C level of energy efficiency rather than a band B level if that would make it easier for the Government to accept the Bill. We also welcome the Bill’s broad nature. It is extremely important that it addresses issues of microgeneration and does not just deal with energy efficiency and energy conservation. It is crucial for us, as a nation, to start to address all those issues with greater clarity and determination.

We all broadly welcome the Bill’s objectives, and I think we can also all agree that fuel poverty has generally been getting worse over recent years and that home energy efficiency in this country is nothing like good enough.

...

We are not on track to have secure energy supplies, low-carbon energy generation or affordable energy, and those three requirements matter very much to this House and to the country outside. The thinking behind this Bill is an attempt to address a couple of those particular challenges. The Government’s fuel poverty strategy has called for the eradication of fuel poverty in vulnerable households by 2010, and in all households by 2016 in England and a little later in Scotland. In an intervention, the Minister said that she was concerned that the Bill advanced an “absolutist position”, yet the Government’s target was to abolish all fuel poverty by 22 November 2016. One cannot get much more absolutist than that, although I know that she has not specified whether it is intended that that will happen before lunch or after lunch on that date.

...

The Government’s figures on fuel poverty only go as far as 2006, and they show that 3.5 million households were in fuel poverty then, compared to 1.8 million in 2005. The estimate is that 5.5 million households, or 9 million people, are now in fuel poverty. There are some 23,000 excess winter deaths, as they are unattractively called, each year as a result of fuel poverty, and the situation is becoming ever more challenging. The annual dual fuel bill is now £1,100, up from £572 in 2003. Every 1 per cent. increase in fuel bills pushes another 40,000 people into fuel poverty. We are all genuinely concerned that the reductions in people’s domestic energy bills have not happened anything like as quickly as the increases that we saw a while ago.

As the hon. Member for Somerton and Frome said, fuel poverty occurs across the country, in urban areas as well as rural, and affects the young, the old, single people and families. The issue is not easy to categorise in terms of one particular group, but affects people of all backgrounds in all parts of the country. We must also address the situation of people who are off grid and do not have access to the same support mechanisms and regulation as we see elsewhere.

It is because of the price increases that we need a swift investigation by the Competition Commission into the relationship between the wholesale price of fuel and what the energy companies charge their customers. We must also recognise that the value of the winter fuel payment has decreased in real terms, while energy prices have risen.

...

Homes in this country are very poor in terms of energy efficiency. Only 40 per cent. of our homes are properly insulated. The average British home leaks twice as much heat and power as homes in Nordic countries. As the hon. Member for Somerton and Frome said, there are great opportunities to provide a badly needed economic stimulus at the same time as we make our homes more energy efficient. Figures that have been provided to us show that, when adjusted for climate, we have the second most inefficient homes in Europe. Even when the figures are not adjusted for climate, we are still worse than countries such as Sweden and Germany, which we would not expect.

...

There is an important debate to be had on whose responsibility it is to tackle these issues. There is a clear link between the energy companies and energy efficiency. In a time of a developing energy gap, they have a clear interest and a clear responsibility to help their customers to use less electricity and gas, but the link between the energy companies and fuel poverty is less clear. Those who are fuel poor are often more generally poor. It is the Government who know best who those people are and where they live because the Government have all the relevant information—on income and benefit entitlements, for example—to identify them. There is a case for dealing with the two issues—energy efficiency and fuel poverty—separately.

Furthermore, although some people are locked into fuel poverty for the longer term, others come into and out of fuel poverty over shorter periods. Take, for example, a pensioner couple whose income from savings has declined dramatically in the past year, while energy prices generally have risen. Although they might not have been in fuel poverty a year ago, they may well be now or in a year’s time. Or take a family with two incomes, perhaps not well-paid but not currently in fuel poverty. If one or both partners lose their job, that family could easily fall into fuel poverty by next winter. Or take the situation of someone who has a long-term but not chronic illness. They may be in fuel poverty for a substantial period, but there is every likelihood that it will not be permanent, and that must be our hope.

The difficulty is that the Bill is aimed a moving target. Our approach is better, I think, because it focuses on poorly insulated houses generally. We would offer every household, whether in fuel poverty or not, an entitlement of up to £6,500-worth of approved energy efficiency improvements. Our figures have been developed in consultation with the best brains in the industry to make sure that they are comprehensive. We think that that is the right way forward because it would enable gas and electricity costs to be reduced immediately, and the costs to be recovered over time by the energy companies, which would have the duty to put the energy conservation measures in place.

...

In conclusion, we are seeking to improve the Bill as it moves forward. Its aims are good, but it could lead to some less desirable unintended consequences. The thinking behind it has been very positive, and I again pay tribute to those who have encouraged the hon. Member for Somerton and Frome to introduce it. Our approach is I think significantly better, so although we cannot give a ringing endorsement to everything in the Bill at this stage, I hope that we will have the chance to explore these issues further in Committee."