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Low-Income Families (Fuel Costs)

Volume 928: debated on Monday 14 March 1977

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Motion made, and Question proposed, That this House do now adjourn.—[ Mr. Ashton.]

10.15 p.m.

For some time I have been anxious to focus attention on the impact of high fuel costs on low-income families. In recent weeks many householders of very modest means in my constituency, particularly in the Astley Park area, have received quarterly electricity bills of well over £100. I find this quite frightening. We are advised that the price of gas is to increase by a further 10 per cent. This is a totally unnecessary surcharge—it is certainly unnecessary commercially—which is being imposed at the dictates of the Treasury and the International Monetary Fund.

The upward surge in the cost of light and heating has brought distress and misery to many families. Indeed, it was only when I commenced to gather material for this debate that I began to realise the extent of the calamity.

It has long been my plea that in a civilised society there are a small number of basic entitlements that are the right of every person—sufficient to eat; adequate shelter and clothing; medical attention at time of sickness; and a reasonable degree of warmth and light. I do not even advocate that these facilities should be provided without the recipients making a proper payment wherever that is possible. However, I am adamant that no one should be deprived of these necessities because of poverty or misfortune. Nor should the price of any one of these items be so high that it denies someone the opportunity of purchasing the other essentials to which I have referred.

The price of fuel is now so high that many families have to make savings and sacrifices in food and clothing to meet its cost. I contend that this situation cannot continue. It is high time that bold steps were taken to remedy the situation.

I recognise that the Government have introduced various measures to ease the difficulties facing the poorer section of the community. The simple truth is that these measures are totally inadequate in face of the massive increases that have taken place in the price of coal, gas and electricity. Many families are overwhelmed by the enormity of the additional costs that have come about at a time when wages and salaries are severely restricted and when prices that they pay for other essential commodities have also dramatically increased.

There are substantial gaps in the new code of practice adopted by the gas and electricity industries to prevent the disconnection of fuel supplies in the case of hardship. The code is the Government's response to recommendations from the Department of Energy and the National Consumer Council that the industries' powers to disconnect should be curtailed and that domestic debts for gas and electricity should be collected through the courts.

The major provision of the code is that there will be no disconnection in cases where a consumer pays regular instalments large enough to save for the next bill and to pay off the previous one within a reasonable period. This period will be the period before the next bill arrives, leaving about 10 weeks to save up for two bills. A rule-of-thumb method to calculate the size of the weekly payments is to multiply the current bill by two and divide by 10. If a bill for £42 has just arrived and cannot be paid, the weekly payment to avoid disconnection will have to be about £8·40 a week. Most poor families living at or just above the supplementary benefit level will find such savings impossible.

The code also provides that disconnection will be delayed for at least 14 days where the consumer applies to the social services department or the local social security office for help. A consumer will be recommended to apply to these offices for help if the family receives supplementary benefit or family income supplement, if the breadwinner is unemployed, or if there are children aged under 5. But there will be many families in these categories whom neither the social services nor social security can help. The social security office can help only if the family receives or could receive supplementary benefit. The social services department can help with money only where there are children who may otherwise have to be taken into care. Social services departments have limited amounts of money for such help and many have already run out. After the 14-day delay many families with children will still be disconnected.

Another paragraph of the code prohibits disconnection of pensioner households during the winter but during the rest of the year pensioner households may be disconnected. If they cannot afford the weekly instalments and the bill remains unpaid, they may not be reconnected during the next winter.

Finally, tenants will continue to be disconnected if the landlord supplies them with electricity through coin boxes and his own supply is cut off for non-payment. These gaps in the code reflect a belief within the industries and within the Government that help from the Welfare State must be possible in all cases of genuine need. The code is designed to delay disconnection until that help is found. But for many families power is simply too dear for the poor to afford. Many families will be without a supply again this winter.

Less than three weeks ago an employee of the Family Service Unit was able to collect, within a few hours, information about no fewer than 25 cases in which the liaison procedure had broken down one way or another. Nearly always the problem revolves round the system of preventing fuel disconnections taking place by the voluntary deduction scheme. Unfortunately, poor families are suffering deprivation in other areas because such a large proportion of their income is used to meet fuel bills. The standard of living of these families is inevitably reduced to an unacceptable level.

Perhaps I may illustrate this important point by giving a few examples from different parts of the country. In Manchester, an unsupported mother with five children has £23 per week on which to live, after deductions. Again, in Manchester there is a family with three children, all under 5 years of age, and their gas and electricity supplies have just been restored. After deductions, that family has £12 per week on which to live.

In Leicester, a single-parent family has £12·45 on which to survive, after deductions, and there are four children in the household. Yet another single-parent family in the same town, with three children, all under the age of 3, is left with £11 per week after deductions for rent and £8 for electricity payments. There are also many examples that demonstrate that the 50p-per-week-off-arrears rule is not being adhered to.

There are many instances in which deductions for future bills are obviously too high, taking into consideration the appliances being used. An old-age pensioner in Newcastle has £3·50 a weak, for electricity, deducted from his supplementary pension, and he has only electric light and a television set. It is particularly worrying when it is obvious that the amount being deducted is too high, yet it is almost impossible to have it reduced.

This fact is well illustrated by the case of Mr. Smith, from Newcastle, He has an 18-month-old daughter and an invalid wife. He has £4 per week deducted towards his gas bills, and it was proposed that this should be increased to £5 per week. Because he had made his own calculations, he knew that this was too much, but he could not convince the gas board or the DHSS. When he told the local office that he refused to have £5 per week deducted, the office immediately informed the gas board, which sent a disconnection notice. On the appointed disconnection date, the local Right to Fuel Group formed a picket outside Mr. Smith's house with the intention of refusing entry to the gas board official. The result was that Mr. Smith was not disconnected and proper consideration was given to the amount deducted from his weekly benefit. Instead of being raised the deduction was reduced, from £4 per week to £3·50.

One of the reasons behind the introduction of the liaison procedure was to prevent people who received supplementary benefit having their fuel supply disconnected. People can still be threatened with that, despite having weekly deductions made from their benefit.

There is an example of an unsupported mother with six children in Birmingham—the youngest child is 18 months old. Mrs. Jones was having voluntary deductions made towards her gas and electricity bills. When the bills, for £12·50 and £25, respectively, arrived in mid-November, she knew that she had sufficient savings with the DHSS to pay both immediately. She took the bills to her local office at once, but four weeks later she received a disconnection notice from both gas and electricity board. She telephoned the DHSS several times, but got no satisfaction. In desperation, she approached a social worker who had to make 13 telephone calls to the local DHSS office before payment was made. Payment was sent to the boards more than six weeks after the bills were received.

I accept absolutely that some families run into trouble because the head of the household is a poor manager and is unable to cope with the grim circumstances that I have mentioned, but there are few people who could easily cope with the problems that afflict a single-parent family with three, four or five young children. The strain must become almost unbearable. The family deserves and requires understanding and support rather than criticism and condemnation. In any case, what sort of society is it that would abandon people because they prove inadequate in the face of grinding poverty and constant adversity?

On 25th February the Supplementary Benefits Commission produced a far-reaching report on "Heating Costs for Pensioners". It contained the encouraging news that, whereas in December 1971 200,000 heating additions were being paid to supplementary pensioners, the figure has now risen to over 1 million, despite a considerable drop in the total number of supplementary pensioners. None the less, it was disturbing to read in the survey that there may be a further 250,000 supplementary pensioners who qualify for the extra heating additions but are not receiving them.

In my view a vigorous campaign should be undertaken to advise these pensioners of their entitlement, even if it means the recruitment of additional staff. Most sensible people would concede that these new employees would be usefully and gainfully employed.

Of equal importance are the needs of the elderly who do not qualify for supplementary benefit. Indeed, only 23 per cent. of those over pensionable age are drawing supplementary allowances, and nothing can be done by the Supplementary Benefits Commission to help the remaining 77 per cent., many of whom are very little better off than those receiving supplementary pensions. Thousands of disabled people with special heating needs do not receive supplementary benefit.

I turn now to the electricity discount scheme, which will enable householders who receive family income supplement or supplementary benefit to claim a rebate of 25 per cent. from the charge for electricity used in one winter period. Clearly, any programme designed to help those at the lower end of the income scale warrants applause, and I pay tribute to those responsible for this enterprise.

Even so, I must say that the project has many curious and contradictory aspects. Many millions on low incomes cannot possibly benefit from the provision. A great many pensioners and a great number of those unemployed will receive no help whatever from the scheme. The concession, of course, does not apply to charges for gas supplies. Should anyone on supplementary benefit or family income supplement have a coin meter that the landlord empties he will not be eligible for the 25 per cent. discount, despite the fact that he almost certainly pays more for his electricity than most, and certainly those who are sub-tenants or who are in possession of mobile homes are not eligible.

People will not qualify, either, if they pay a landlord or housing association directly for the flow of electricity. Nor will they receive the discount if they pay for central heating with their rent.

When I investigated the sensationally high electricity bills presented to my constituents living in a new housing development near Chorley, I was shocked to find that housing construction is still allowed to proceed with only one source of fuel provided, even when it would be simple and straightforward to install both gas and electricity. It makes one wonder whether we are really concerned about the efficient utilisation of energy.

There is much that can be done to conserve our supply of power and at the same time assist those who can no longer absorb and accommodate the ever-soaring cost of fuel. I suggest an immediate six-point plan to arrest a deteriorating situation.

First, there should be a fair pricing system for domestic consumers and an end to the very advantageous terms for the supply of fuel that have been made available to many sectors of industry.

Secondly, there should be realistic heating allowances for pensioners and the disabled, and assistance for all low income groups, including the unemployed.

Thirdly, there should be a nation-wide programme of home insulation to prevent the casual loss of heat that is at present, tolerated. An enterprise of this nature would pay for itself in a comparatively short time and could provide useful employment for many who are without work.

Fourthly, we should give urgent priority to the development of the slot meter that will accept plastic tokens, which it subsequently sheds. This would provide a popular system of making payments and would discourage meter thefts.

Fifthly, there should be a ready How of comprehensible information about people's rights and entitlements under a code of practice or through the DHSS.

Sixthly, the present method of disconnection without reference to the courts should be discontinued.

I offer my sincere thanks and appreciation to the members of the Right To Fuel Campaign and the National Council for One-Parent Families who have worked hard to keep all hon. Members well informed on this subject. I am grateful for their deep concern for justice and reform in this field.

10.30 p.m.

I thank my hon. Friend the Member for Chorley (Mr. Rodgers) for allowing this brief intervention and congratulate him on the constructive way in which he has presented the case. I want to reinforce his arguments.

I have been much involved in this problem, having brought in a Ten-Minute Bill to remove the powers of the electricity authorities to disconnect. It went the way of so many Ten-Minute Bills, but it gained the attention of Ministers and the organisations to which my hon. Friend referred.

My hon. Friend mentioned the gaps in the present schemes. There is also inadequate social service provision to help people to meet their urgent needs when disconnection occurs. In my con- stituency interviews recently, I heard of a woman with four children who was offered the use of candles in place of electricity in those circumstances. This was not long after a tragedy not far from this place, in which the use of candles led to young children being burned to death. I cannot lay the blame at the door of social service departments; it is simply that their resources are inadequate.

The six points that my hon. Friend made form a constructive plan to overcome many of these problems. The proposed increased charges for gas will mean that the next round of bills, certainly in the winter, will create a serious problem for the elderly, the single-parent families and the 1½ million unemployed. Therefore, my hon. Friend's points must be taken seriously by the Minister. If next winter is severe, bills that have doubled so quickly will be even higher, and these problems will be even more serious than they are now.

10.33 p.m.

I very much welcome this debate on a subject that is of great concern to the Government, as it is to all hon. Members. Although I am replying to my hon. Friend the Member for Chorley (Mr. Rodgers), this problem goes well beyond the concerns of my Department, into energy policy and pricing, housing and housing standards for insulation, and, inevitably, public expenditure. I shall draw the attention of my hon. Friends in the Departments of Energy and the Environment to the specific points that are of concern to them.

Our concern is, essentially, twofold. First, we want to ensure that people, particularly old people, who make up a large part of the poorer section of the community, are warm enough. Secondly, we want to enable poorer people to pay for the heating they need.

The Government fully understand the concern felt about steep increases in fuel prices since 1973, but there is no easy escape from the effects of pay settlements in the coal and power industries and big rises in the price of oil. The country could not protect itself from the dramatic increase in the price of oil demanded by the oil-producing countries. More recently the Government took a decision to phase out subsidies in order to end a situation in which prices bore no relation to costs of supply and production and which had led to serious market difficulties. That is why there have been price increases in the domestic sector since March 1974 averaging 50 per cent. for gas, nearly 70 per cent. for paraffin and heating oil, 100 per cent. for coal and coke, and 125 per cent. for electricity.

However, these increases need to be kept in proper perspective, because when one looks at the position over a longer period one finds that there is a different story. From 1970, fuel prices overall have risen in real terms by only 9 per cent., although I recognise that it is the size of the actual increases, concentrated in a very short period, that has created so much difficulty.

Reluctantly, I have to say that further increases are coming up for 1st April. Gas prices will go up by an average of 10 per cent. Coal prices also will be going up at the same time—15 per cent. on coal and smokeless fuels—though rebates available up to 30th September will substantially moderate these increases. On electricity, the Government have before them proposals from the area boards for new tariffs to take effect in April.

Everyone has felt the impact, each quarter. But the increased cost of fuel presents many people with a choice—what to give up to pay for it? Can they use a little less fuel? Should they invest in some form of insulation, or a heating system that is cheaper to run? The fact that they have such a choice also gives them a breathing space. For people on low incomes the same choice hardly exists, or if it exists it is only in a crueller form, as a choice between necessities—between fuel and food. Even the comparatively modest outlay on loft insulation may be beyond their reach. Certainly, a different form of heating is, even if this were possible. But in many cases it is not. These people live in rented accommodation, or cannot change from an all-electric system.

Nor is it just a question of finding the money for fuel. It is also a question of the method of payment. It is in many ways an unfortunate piece of timing that these price increases have followed a general switch from pre-payment, coin-in-the-slot meters to credit meters, where the bill comes in once a quarter. Of course, credit meters have great advantages. They are more secure from burglars. They are, for example, more easily read. They can be sited outside the door of the flat. They do not fill up. There is no problem about running out of shillings. But they demand a certain skill in budgeting over a considerable period—a skill that may not be possessed by some consumers.

I hope that this necessarily brief account will indicate the Government's clear recognition of the problems—problems that have to some extent been moderated by a succession of fairly kind winters. We seem to have had another one this year, and have eyed the eastern United States with some apprehension, but greater relief.

I take the point. I cannot help feeling that we are overdue for a really harsh winter.

What, then, have we done to alleviate these problems? Principally, we have increased social security benefits. Compared with the rates in October 1973, when the previous Government last increased them, the rates in force since November 1976 are 96 per cent. higher. Since October 1973 prices have risen by about 78 per cent. So the purchasing power of pensions is about 10 per cent. higher than it was then.

The prices index includes the increase in fuel costs, and it is worth noting that the index for pensioner households has closely mirrored the general index. Since the Government took office there has also been a dramatic increase in the number and level of heating additions to supplementary benefit. The number of these additions has more than doubled in three years, so that now over 1 million claimants get them. The rates have gone up by 133 per cent. since 1973. We know that—as the Chairman of the Supplementary Benefits Commission made clear recently—there may still be some people who are not getting an addition but who in fact meet the criteria. But the numbers getting additions are rising steadily, and we are doing our best to ensure that additions go to all those who are entitled to them.

We have put out a poster for display in post offices and doctors' surgeries setting out the criteria briefly and inviting claims from those who think they may be entitled. We are also asking local office staff to bear the possibility of heating additions particularly in mind when they work at cases. We are considering what other administrative measures might be taken to improve take-up, and will not hesitate to take any practical steps to improve the take-up of these additions even further. There are also other steps that the Supplementary Benefits Commission takes. It can make exceptional needs payments to help with fuel bills in certain circumstances—for example, where a claimant has moved to a home with a new heating system and has not yet learnt how to manage it economically, or budget for the bill, or where there has been a period of unusually severe weather. There were about 48,000 such payments in 1975, averaging £22·70.

In many cases, though, there are not the sort of exceptional circumstances that would justify a lump sum payment. The commission and the fuel authorities therefore negotiated arrangements, which came into force last February, designed to avert disconnection where this would cause hardship—broadly, cases where there are young children, sick or elderly people in the household. An amount equal to estimated weekly consumption plus 50p towards the arrears is deducted from the claimant's benefit each week and paid over to the fuel board. If after two years there are still arrears outstanding, the commission will consider clearing these by a lump sum. These arrangements are not the perfect answer. There are cases in which the amount of supplementary benefit paid on top of other income is insufficient to cover current consumption. There are cases in which fuel consumption is very high, and deductions have to be correspondingly high if the debt is not to get bigger.

There are failures of liaison between social security offices and fuel boards, inevitable with large organisations under heavy pressure. Criticism of the scheme along these lines tend to highlight a small proportion of extreme cases. To put the thing in perspective, I remind the House that in the first three months of these arrangements over 14,500 claimants were put on to this system of direct payment. In the same period roughly the same number of exceptional needs payments for fuel were also made.

My hon. Friend cited a particular case in which there is a high level of deduction. He suggested that the direct payment arrangements are causing hardship. But what if there were no direct payment arrangements? Either the claimant he mentions would be saving for herself the same amount from her benefit each week—very likely more—as the fuel boards, with no prospect of settlement of the balance after two years, would perhaps seek a faster rate of reduction of the arrears than 50p a week, or her electricity supply would be disconnected. Let us not forget that this is exactly the choice facing those in full-time work.

There is a third possibility, of course, that the Supplementary Benefits Commission should simply pay the bills of all their claimants who get into difficulties. But in exercising their discretion, the commission must have regard to the limitations put into the Act by Parliament and restrict such payments to cases in which the circumstances are exceptional. I have already indicated the sort of criteria that the commission considers, and these are set out in more detail in publications such as the Supplementary Benefits Handbook. I would add that a policy of simply settling the bills of those who get into difficulties would discriminate unfairly against those claimants—the great majority—who do manage on their incomes. It would also encourage them not to manage. And it would be widely resented by those not on supplementary benefit, whether in work or not, to whom such assistance was not available.

There are no easy answers to this problem, especially where the claimant's fuel consumption is high. To suggest that the direct payment arrangements are causing hardship is not a fair response. Our experience has been that these arrangements have proved of great value to a very large number of claimants in averting disconnection. The commission also uses its power to make lump sum payments for such things a simple draught-proofing, curtains and floor coverings.

My hon. Friend also mentioned the code of practice on disconnections and fuel payment procedures. This document was produced by the gas and electricity industries, and I trust that my hon. Friend will not expect me to answer for these industries on how they interpret it in detail. But I should perhaps explain one thing. Under the direct payment arrangements for supplementary beneficiaries, the normal amount deducted each week towards the arrears is 50p—it may be more, but only where the claimant has larger resources or actually asks for it to be more. Those not on supplementary benefit, or to whom direct payment cannot apply, have to make their own arrangements with the fuel boards for paying off the arrears. In these cases it is up to the boards to fix a rate that will recover the debt in a reasonable period, consistent not only with the spirit of the code but with their commercial objectives. The Government regard this code as a measure to help people avoid debt and prevent really needy people from being disconnected for non-payment of fuel bills. As the code makes clear, however, a continuous assessment of its working will be made and the Government will be watching closely to see what its impact has been this winter.

Moving away from strictly social security provisions, we have taken another important step. In December my right hon. Friend the Secretary of State for Energy announced the details of a scheme costing up to £25 million to pay a 25 per cent. discount to recipients of supplementary benefit and family income supplement on one of their winter electricity bills. The Government recognise that this scheme has been criticised and has elements of rough justice about it, but it is providing a useful measure of help to a large number of people among those who find the greatest difficulty in paying their fuel bills.

As to the methods of payment, a wide range is now offered by the industries. Both gas and electricity have budget payment schemes, so that credit customers can pay by monthly instalments. In most areas and regions stamps can be purchased from showrooms and used towards payments of bills. In some cases weekly and monthly payments are accepted. The industries are working as rapidly as possible to make all their schemes available in all areas. The industries have also agreed that in appropriate cases they will provide a pre-payment meter, provided it is safe and practical. Perhaps I could add here two points. First, it is in the field of methods of payment—

The Question having been proposed after Ten o'clock, and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, puant to the Standing Order.

Adjourned at fifteen minutes to Eleven o'clock.