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Fuel Poverty

Volume 470: debated on Tuesday 8 January 2008

Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Blizzard.]

May I welcome all Members to this first sitting in Westminster Hall following the all too short Christmas recess?

May I return the compliments of the season to you, Sir Nicholas, and, indeed, to fellow Members?

The debate that I have been fortunate enough to secure is topical in many ways, not only because of the recent snow and cold spells that at least some of us have experienced, which reminded us that we still have winter in the UK, but because of the announcement by some energy suppliers of sharp increases in prices for gas and electricity. Those announcements have made the debate one of even greater urgency.

Although the media spotlight inevitably falls on these questions at this time of the year, it is not an issue that has just appeared on the political radar in Parliament. The all-party group on debt and personal finance, which I chair, had a joint meeting with the all-party group on poverty at which parliamentarians met grass-roots representatives, experts from the voluntary sector, fuel companies and industry regulators to discuss fuel poverty. We published a joint report following that seminar, and much of my speech will draw on its recommendations. The report is available on my website, for those who wish to pursue it in more detail.

No one can be certain exactly where energy prices will go in the future. There have been falls as well as increases in recent years, and there are questions about how far recent increases are due genuinely to world energy prices, or to opportunism by some energy suppliers. Some colleagues might wish to expand on that subject later in the debate. It is, however, pretty clear that whatever else happens, the long-run trend in energy prices will be upward due to market trends, growing demand, some diminishing energy sources and Government policies that are designed to reduce energy use and develop certain energy sources. For many householders, rising energy prices will inevitably lead to more fuel poverty, and if price increases on the scale of those that have been announced recently are repeated generally, as looks likely, many more thousands will surely be dragged into fuel poverty unless something is done about it.

I shall outline some areas in which the Government, the regulator and energy companies can do more to deal with the problem of fuel poverty, but I shall also give the Government credit for what they have done to tackle the problem so far. Indeed, the UK was the first country in the world to recognise that fuel poverty was a specific issue, and measures such as the winter fuel payment, central heating programmes and the energy efficiency commitment have all played an important role in tackling fuel poverty. Some 4 million people have been taken out of fuel poverty since 1996, but the reduction has slowed since 2004, when energy price increases started to hit. They have begun to undo much previous good work, and the recent increases will throw many more into fuel poverty if action is not taken.

I congratulate my hon. Friend on securing this important debate at this time, following the announcement by npower, one of the most voracious suppliers. The number of people in fuel poverty has more than stopped going down—it has doubled since 2003, despite the Government’s best and heroic endeavours, to which we pay tribute. Does my hon. Friend agree that Ofgem—he referred to it by implication a moment ago—should be given reserve powers to evaluate the so-called social tariffs, which many suppliers offer, to ensure a decent minimum standard and not just a voluntary, penny-pinching level? I put that point to the Minister just before the recess at Business, Enterprise and Regulatory Reform questions. Does my hon. Friend agree that that is an option for Ofgem’s terms of reference?

I certainly agree with my hon. Friend that Ofgem, and indeed the Government, must do more to make social tariffs a wider reality. If I have the opportunity, I shall refer to that subject in more detail in a few minutes.

My hon. Friend points out that the trend for the number of people in fuel poverty, having been on the downward slope for several years, is going up again quite rapidly. That is why we need new measures to launch a new attack on fuel poverty. I shall suggest some ways in which we can do so, and I shall draw on the recommendations of a report to which I referred. I thank all those who contributed to the ideas that I shall outline.

The hon. Gentleman has secured a very important and timely debate, but the question is not only about introducing more measures. Does he agree that the measures that have already been introduced, such as the excellent Warm Front, need fine tuning? The Warm Front measure is dysfunctional in one particular way. Sometimes, when a boiler needs changing, a Warm Front endorsed contractor must be sent to my constituency from London, of all places, and the work can cost £2,500 to £2,700. That requires a top-up from the individual, but they cannot afford the top-up, so they do not get the work done. However, a good, local contractor could do the work for £1,200 or £1,500. Does the hon. Gentleman think that there should be more flexibility to select good, local contractors who can do such work?

I do not know the details of the situation in the hon. Gentleman’s constituency, but Warm Front and parallel schemes in Scotland and Northern Ireland have been extremely important. They need to develop and evolve, however, and they need to be funded to reflect changes in the market and local conditions. Without committing myself on the hon. Gentleman’s specific point, I think that he makes a good comment about the need to make the most of those schemes and to make them as effective as possible.

I congratulate the hon. Gentleman on securing the debate. He is a fellow Edinburgh MP, and we are both well aware of such measures in a city that can sometimes be very nippy. Does he agree that one group that is often badly hit by fuel poverty is the disabled? Will he pay particular attention to pressing the Minister on what can be done to help that group?

If the hon. Gentleman will wait a minute or so, he might hear my answer to his question.

I shall turn to the recommendations that I want to put to the Minister and hon. Members. The winter fuel payment has been extremely important in helping many millions of pensioners to meet the cost of fuel bills over the winter months, but we must do more to examine ways of ensuring that payment increases take account of the increases in energy costs, because it will be important for many pensioners. In addition, there is a strong case for extending payments to other key vulnerable groups living on very low incomes. That might include households in which there are people with disabilities. People with long-term sickness who are on lower incomes should also be considered for winter fuel payments. There are cost restrictions, and the line must be drawn somewhere, but in many cases those groups are arguably in a worse situation than that of many pensioners. Those groups certainly deserve at least the same winter fuel payment, and I urge the Minister to consider that possibility.

I congratulate the hon. Gentleman on securing the debate. He makes the point that there are cost implications. Does he think that when prices spike and increase dramatically, the Government should consider using at least the VAT windfall to resource the measures that he would like, whether that means additional winter fuel payments, or more help with the insulation of existing and old properties?

That is obviously a possibility. The hon. Gentleman has also pre-empted a point on which I shall expand later.

The resource implications of a general increase in the winter fuel payment must be considered, but I strongly believe that there ought to be such an increase. Because it is a universal payment, an increase in line with those in energy costs would have substantial implications for the Government. In addition, the nature of energy prices is that they go down sometimes instead of up, and there could be all sorts of difficulties if winter fuel payments went up one year and down another.

One suggestion that we floated in our report, and that I suggest the Department should investigate, is an additional substantial winter fuel payment to go specifically towards fuel costs. It would effectively be a fuel voucher, paid in addition to the winter fuel payment to defined vulnerable groups—perhaps to all pensioners on pension credit or to other vulnerable households. It would rise in line with energy prices, if they rose beyond certain thresholds, and could be funded by a levy on energy suppliers or payments from them. When prices go up, energy suppliers tend to make more profit, so it seems fair that they should contribute to meeting the energy costs of those who are the most vulnerable. Such a scheme would not produce an extra cost to the Government, but would ensure a direct additional payment to those in particularly vulnerable situations that would be related directly to energy cost increases imposed by suppliers.

I, too, congratulate my hon. Friend on securing the debate. I am listening to what he is saying and I understand where he is coming from. I applaud the concept of additional financial support being given in some manner to vulnerable groups, but I am conscious that that might be seen by some power companies as an opportunity to push prices up and generate further profit off the backs of taxpayers and vulnerable groups.

I have written in my notes that there could be some drawbacks to such a scheme. I recognise that, but it would certainly be worth while to carry out research into the feasibility of a link between price increases and payments being made by the energy companies bringing them about.

The second matter on which I wish to make some suggestions is payment methods for domestic energy consumers. It is often said that the energy market in the UK is among the most competitive in the world, which is almost certainly the case. Unfortunately, those on low incomes often do not seem to receive many benefits from such competition. In fact, many low-income customers pay more for their energy supplies than other consumers. That can arise because they do not have access or the ability to commit themselves to direct debit payments, or because they prefer, or are forced, to use prepayment meters.

The gap between the energy prices paid by direct debit customers and those paying by prepayment methods, cash or cheque, has increased significantly in the past few years. Energywatch released figures last month showing that prepayment meter customers were paying an average of £195 a year more than customers who could access cheaper online tariffs. In the most extreme cases, consumers found themselves paying as much as £304 extra each year. Prepayment meter users are also three times more likely to be fuel poor, and last year alone 366,000 prepayment meters were installed by companies to recover energy debt, thus effectively barring consumers from switching to cheaper suppliers and payment methods.

It is vital that Ofgem and the Government address the gap between the prices paid by direct debit customers and those paid by customers using prepayment methods. It is not enough for the regulator to suggest that a solution for prepayment meter users is to switch supplier to take advantage of cheaper deals, because many are prevented from doing so as they are locked into a debt to their supplier. We must move away from the situation that the poorer someone is, the more they pay for their energy.

Does my hon. Friend accept that not all energy companies operate an enormous tariff difference? Some—unfortunately a minority—have equalised the tariffs for prepayment meters and direct debits. Does he agree that all companies could do that if they wished? As he says, the question is how those companies can be regulated so that they do so and follow the example of the companies that already have.

Indeed, and I put on record my recognition that some companies have done that, which shows that others could and should do the same.

I turn to a third matter: the social tariffs that my hon. Friend the Member for North-West Leicestershire (David Taylor) mentioned. An important feature of the energy market for domestic consumers is that a range of social tariffs is available to vulnerable customers, offering different benefits to various groups of consumers who might have difficulty in paying their energy bills. Such tariffs could play an important role in ensuring that there is a much more focused attack on fuel poverty, but I suggest that social tariffs are currently of only limited benefit and that much more use could be made of them.

The Government have previously indicated—in the energy White Paper, I believe—that they were considering taking powers in the forthcoming energy Bill to introduce mandatory minimum standards for social tariffs. I ask them to follow up that commitment by including such a measure in the Bill. They instructed Ofgem to examine suppliers’ packages of support for low-income consumers and report back. Ofgem’s report stated that the suppliers were making efforts to provide support to their fuel-poor customers, but it did not rank those measures or consider their effectiveness. That missed the point. There is no framework of standards for what constitutes a social tariff, which has resulted in a confusing situation for customers and those who advise people in vulnerable positions. That has allowed suppliers to attach the term “social tariff” to any product from rebates to existing tariffs, and in some cases the social tariff is more expensive than the normal tariff, which clearly should not be the case.

Are not the real politics of the situation shown in the fact that a statistic called “excess winter death figures” is being counted? I do not believe many statistics, but that one I do. Is it not a scandal that, in this day and age, people are dying of cold-related illnesses? Would any of the measures that my hon. Friend suggests make any difference?

My hon. Friend makes an important point that goes to the heart of the debate and shows why we need a package of measures that will make a difference now, this winter, not just in years to come. It also shows why we need to ensure that social tariffs perform the job that they are meant to do. In my view and that of many people involved in the debate, particularly in the advice sector, and others working on behalf of consumers, there needs to be a minimum standard and a mandatory basic framework for social tariffs to ensure that all suppliers offer social tariffs in such a way that consumers can make use of them to a much greater extent than has so far been the case. I hope that the Government will address the matter of ensuring a wider take-up of social tariffs in the energy Bill.

One group of customers who tend to be fuel poor is those who do not have the facility of mains gas and depend on liquefied petroleum gas and heating oil, which tend to be more expensive, calorie for calorie, than mains gas. Some communities, particularly ex-mining villages in my constituency, find that they cannot secure mains gas. Would not one way in which the Government could act to eliminate fuel poverty be to encourage companies to supply mains gas to more communities?

I am not in a position to comment on the hon. Gentleman’s constituency, but there is clearly a problem in rural constituencies that needs to be addressed. There is also a problem in very urban areas with particular types of housing in which it is difficult to provide adequate heating.

The figure offered to communities for joining up is so ridiculously high that it is a great disincentive. Does my hon. Friend agree that the Government could do something to help with that problem?

As I do not have a particularly rural constituency, I cannot comment on my hon. Friend’s suggestion. No doubt the Minister will wish to comment on that either now or in the future.

I return to energy efficiency. As well as taking measures to help people meet the rising costs of energy, long-term measures to improve energy efficiency and warm up the homes of the oldest and most vulnerable are crucial to solving this problem and will help to ensure that people can live in decent conditions. The creation of energy-efficient homes is important for domestic consumers and can also play a role in tackling the growing problem of climate change. The continuation and extension of grant schemes to assist with the cost of creating energy-efficient homes is crucial, but much more could be done. I do not have time to develop all those ideas now, but energy companies and regulators need to work harder to provide information about the benefits and grant schemes available to customers. That information should be presented in a simple and understandable format. Much is being done, but much more could be done by some energy suppliers in particular. There are specific problems in rural areas and certain types of urban housing that need particular attention and a focused approach.

The hon. Gentleman mentioned the elderly and most vulnerable, but should not families with young children also be high on the priority list for home efficiency schemes? At least 750,000 children live in fuel-poor households.

There is certainly a strong case for that. In my comments, I used the term “the oldest and most vulnerable”. There is a case for such an extension, but I also accept that a line has to be drawn somewhere. People with young children can be in a very difficult situation if they live in housing that is not properly heated or is energy-inefficient.

More could be done, using the energy efficiency commitment and its successor, to ensure that schemes are operated in an integrated manner to provide energy advice locally. Scottish and Southern Energy, and other companies, have made an interesting proposal to develop a single fuel poverty scheme, bringing together both the central heating programmes and the social aspects of energy efficiency commitments. Such proposals are worth investigating.

Finally, on energy conservation, a major effort must be made to improve the take-up of such schemes among private landlords to benefit their tenants. The full opportunity of taking up such energy efficiency and conservation measures has not yet been developed in that area in the way that it has for people living in various types of social housing.

I could say much more, but I want to allow my colleagues to contribute to the debate. Although I have taken quite a few interventions, I do not want to take up any more time on this important subject today. I conclude by noting that fuel poverty is not just about budgets and incomes. As my hon. Friend the Member for Norwich, North (Dr. Gibson) pointed out, it is a matter of life and death for the many people who are forced to live in cold and damp conditions in their homes. Hundreds of thousands more will suffer as a result of recent increases in gas and electricity prices unless something is done about this issue now. The Government set themselves an ambitious target to eradicate fuel poverty by 2010, and I know that my hon. Friend the Minister has been closely associated with that noble vision, both as a Member of Parliament and before he was elected. The difficulties being encountered in reaching that target should not lead us to lower our ambitions. Instead, we should redouble our efforts to ensure that we reach it and that that noble vision becomes a reality.

Order. Before I call the next speaker, I make a plea. Clearly, many Members want to contribute to this important debate, but I want the Minister to have adequate time to reply, as it is important that the Government put their position on this subject clearly and fully.

I congratulate my hon. Friend the Member for Edinburgh, North and Leith (Mark Lazarowicz) on securing the debate. Fuel poverty is linked to deprivation: unaffordable fuel prices combined with poor housing stock, often characterised by inadequate insulation and inefficient heating systems, make life a misery for millions of people in our country. The latest figures show that more than 4 million households across Britain cannot afford to keep warm at a reasonable cost. I am proud that the Government have made great strides in tackling this problem with measures such as the winter fuel payment, but that is becoming increasingly futile, given that the energy companies seem intent on record-breaking price increases.

It is deplorable that, as we greeted the new year, npower, which makes billions of pounds in profit, announced another increase in customer bills. That move, so soon after Christmas, will cause only heartache and misery for millions of people, and I thought it rather cynical to slip out that announcement when most of the country was on holiday, celebrating Christmas and the new year. The average npower customer will now pay more than £1,000 a year for their energy, but many who use prepayment meters will pay even more, as my hon. Friend noted in his opening remarks. I join those who roundly condemn that move, and I am glad that my right hon. Friend the Chancellor has decided to take up this issue and meet the energy regulator. I hope that he will do his absolute best to ensure that the regulator finds ways to intervene in this matter, so that we can have the excessive fuel price increases dramatically reduced.

The impact of such price rises on fuel-poor consumers, many of whom are in low-income households, will be devastating and are likely to push thousands more people, including many pensioners, into fuel poverty. Many people who are fuel poor do not necessarily know that they are. That may seem an extraordinary statement, but many simply accept the difficulties that they are living in. I can illustrate that point rather markedly. Ahead of this debate, I contacted the secretary of the National Old Age Pensioners Association of Wales—I happen to be the association’s president—to ask for examples of how the new fuel prices will impact on pensioners. He did not have any examples, but thought that the majority of his members simply accept that rising fuel prices are a fact of life and said that, when they get cold, they will slip on an extra pullover or heat only one room. That should not be happening in Britain in this century.

Many pensioners in Wales have illnesses such as heart disease and diabetes, and many who are ex-miners have lung diseases. They often have high fuel bills because of their health problems and need to keep their homes at much higher temperatures than other people. That problem is even worse in older and poorly insulated houses. In Wales, older people bear the brunt of increases in fuel prices. Some 50 per cent. of the population there are pensioners, 20 per cent. of the population do not have access to mains gas and 250,000 households live in fuel poverty. Some 43 per cent. of fuel-poor households in Wales are pensioner households and almost 31 per cent. of those pensioners are single—often widows and widowers—and desperately trying to make ends meet. Those pensioners face a double whammy, because electricity prices in Wales are 10 per cent. higher than in England.

A report produced by Help the Aged in 2005 found that 1.5 million inadequately insulated homes across Britain are occupied by someone over 65 who cannot afford the heating costs.

My right hon. Friend spoke about his constituents in Wales. Is he aware of the geographical differences in fuel costs that are caused not just by the prices that the fuel companies charge, but by the cost of heating a home? It is said that it costs 68 per cent. more to heat a home in the north of Scotland than in the south of England, because of climate differences. Does he believe that that must be taken into account?

My hon. Friend makes an important point. There are such differences across the United Kingdom, and we must address them. The quality of life of so many people is affected by the difficulties that she mentions.

The Help the Aged report found that 22 per cent. of households with someone over 75 had no central heating at all. We take central heating for granted. When we get up in the morning, the heating is on and the house is comfortable, but many people do not have what we consider to be normal. That cannot be acceptable today.

The worst thing is that help is available. There is the Warm Front scheme in England and, in Wales, the new home energy efficiency scheme offers grants to older home owners and those living in rented accommodation and in receipt of benefits. Because of the previous Labour Administration, Scotland has done even better: it has a scheme that provides pensioners with new heating and insulation facilities regardless of whether they claim benefits. That is good, and perhaps the energy companies, which are making billions of pounds, might consider using some of their profits to help roll out such a scheme across the United Kingdom.

Help the Aged estimates that £800 million will be spent on Warm Front and home energy projects up to this year. However, it maintains that that is still not enough and that we must consider the whole of Britain if we are to make real progress.

Is not one of the most important things about schemes such as Warm Front the fact that we can link benefit entitlement checks to them? My right hon. Friend may like to know that, in my constituency, where nearly £6 million pounds has been invested by the Warm Front scheme, the average weekly income of the clients who have benefited has increased by £13 a week, which is fairly significant.

My hon. Friend makes an important point. We can see the benefits of actively intervening to tackle such problems.

Of course, it is all very well to have schemes—I commend the work that the Government are doing—but if people do not know about or participate in them, they are very much a waste of time. We must get the message across.

One important way to combat fuel poverty is to increase the income of many of those who are at risk of falling into the fuel poverty trap. My hon. Friend the Member for Edinburgh, North and Leith spoke about social tariffs. Like him, I hope that the energy Bill will include some positive proposals that will result in greater benefit to those who are in danger of falling into the fuel poverty trap.

I have no doubt that the winter fuel payment has had a significant impact on fuel poverty, but the decision taken in the 2005 pre-Budget report to keep fuel payments at the present level for the duration of this Parliament needs to be revisited if the regulator does not have sufficient powers to intervene to prevent the massive increases that the fuel companies are demanding. It is clear that the winter fuel payment has not gone up in line with rising fuel prices. Indeed, figures show that, between 2005 and 2007, the percentage of total fuel bills met by winter fuel payment fell from 36 to 34 per cent. The Government must address that issue.

We should consider ways of increasing winter fuel payments and, as other Members suggested, perhaps even widening the access to other vulnerable groups such as the disabled and, possibly, the terminally ill. With energy companies seemingly increasing their prices at will, we are faced with the difficulty that people will fall into fuel poverty as soon as energy prices rise. The great socialist James Maxton said that poverty is man-made and therefore open to change. Fuel poverty is man-made. It is up to us to do something about the situation and change it.

A happy new year to you, Sir Nicholas. It is a pleasure to follow my right hon. Friend the Member for Islwyn (Mr. Touhig). Many of the things that he said and that my hon. Friend the Member for Edinburgh, North and Leith (Mark Lazarowicz) said in his excellent speech are accepted overwhelmingly in the House.

I congratulate my hon. Friend on introducing the debate, which could not be more timely. I am sure that he will not mind if I recall that just about a year ago, on 23 January last year, I initiated a similar debate in which several points that have been made today were made, and rightly so. The difference was the atmosphere in which the debate took place, which was not like the one today. At that time, wholesale prices had gone down but the energy companies simply refused to pass the decreases on to consumers. Today, at the first hint of an increase in wholesale prices—and the message is there—the prices charged by some companies have gone up, and there is no evidence to suggest that other companies will not follow exactly that line. The House is entitled to be impatient.

I wish to thank the various consumer groups, including Energywatch, which campaigned strongly on the issue. Last year, in due course, we did secure a reduction. It did not really reflect the reduction on wholesale prices, but it was a reduction. We had high hopes that all our worries about the impact on constituents who are elderly, on low pay or in ill health would be addressed. My hon. Friend rightly referred to the Government’s admirable policies. We welcome not just tax credits, pension credits and other benefits but the specific payments for heating, which I understand amounted to some £2 billion last winter. We encourage the Government to recognise their social responsibilities, and I believe that they are doing so. However, there is another point that ought to be made.

Yes, but as many people wish to speak, may I ask the House to allow me to accept just one intervention?

I am grateful, and I shall be very quick. Before the right hon. Gentleman moves away from the issue of honest pricing by energy companies, is he aware that many of those companies forward-buy their energy at fixed costs? Therefore, perhaps it is time to extend Ofgem’s remit so that it can ensure that there is no improper profiteering.

I am grateful to the hon. Gentleman. If time allows, I intend to discuss Ofgem’s remit, which is of crucial importance.

The fact is that the recent price increases impact strongly not just on the quality of life of most of our constituents—certainly some of the most vulnerable in my constituency—but on other things as well. They undermine social obligations to consumers, and they noticeably undermine the Government’s income and inflation policies—I am pleased that the Chancellor has been active on that matter. The increases do not demonstrate a commitment to the most vulnerable individuals. When we raised this issue last year, the chief executive of one of the most prosperous energy companies wrote to Members of Parliament, including myself, and said, notwithstanding his company’s huge profits—the company was later sold to the Spaniards—that we had a responsibility to ensure that all the benefits were taken up and that we should have a better programme for house building.

We genuinely accept our responsibilities, but that does not mean that any Government should be seen to subsidise energy companies. The companies seem to take the view that fluctuations in energy prices should be dealt with purely by consumers, and that shareholders and profits have no role at all. I am not prepared to accept that concept, and believe that we are entitled to express our views because of the impact on our constituents. I want to raise the very important issue of disabled children and their families, which was mentioned by the hon. Member for Edinburgh, West (John Barrett). I am grateful to the Every Disabled Child Matters consortium for providing information on disabled children, which it obtained from a survey conducted by Contact a Family. It concluded that two thirds of families with disabled children struggle to pay their fuel bills each winter. One family of every 10 families with disabled children has had its gas and electricity supply cut off. Just imagine what that means. In addition to the problem of having disabled children, families have to sit in the dark and the cold—that is not acceptable in the new millennium. There is not a single Member of Parliament who would accept that and not say that the companies have a responsibility. They would say so, too, to the regulators.

In the debate that I mentioned earlier, we spent some time considering the issues and the role of the Office of Gas and Electricity Markets. I have had a meeting with the regulator and also exchanged correspondence with him. Ofgem has considerable powers which, for whatever reason, it has not yet chosen to exercise. I urge it to do so now. What is being done to make the energy market more competitive, and to introduce longer contracts? Just look at what is happening in Europe. Ten years ago, a family in Glasgow or in my constituency enjoyed reasonably low energy prices. People in Berlin paid somewhat more. However, because of the long-term contracts that have been introduced elsewhere in Europe, there has not been much difference in the long-term prices in Berlin. Our constituents, on the other hand, have had to deal with the problem of fluctuating prices being passed on to them, and they are uncertain about how to budget for the forthcoming year.

Last year, we had very high hopes of the European Commissioner for Competition, who said that she would not accept the absence of competition elsewhere in Europe. Markets appear to be closed to us. Competitors can invade our markets when prices happen to be low. The result is that there is not an even playing field in Europe. Europe should be more involved in such issues, and I say so with the respect that the Minister knows that I have for him. I am disappointed that Ofgem is not to the fore, using its powers and working with the institutions that exist, both to show that there is genuine competition and accountability and to produce a transparency that does not seem to exist in the energy industry.

As regards the increase in wholesale prices, which we are told is at the heart of our problems, how much of that increase impacts on the prices that have been imposed? I have it on good authority that some people believe that about 40 per cent. of energy company costs apply to fuel prices. If that is the case, I cannot see why there is an average 17 per cent. increase. There are regional variations that are very worrying. In addition to the point made about the north of Scotland by my hon. Friend the Member for North Ayrshire and Arran (Ms Clark), I gather that the increase in London and the east Midlands is about 24 per cent. It is very difficult for the Government to argue—I understand where they are coming from—in favour of an anti-inflation policy, when public sector workers who have been asked to accept limited wage increases face rising prices, particularly for energy.

I want to conclude by indicating the strength of feeling in constituencies such as mine, where people have worked hard in the mines, the steel industry, and engineering. As my right hon. Friend the Member for Islwyn suggested, when we look at the impact on people’s health, particularly elderly people, the need for heat, warm water, and proper supplies of well-cooked food is something that we as hon. Members and the Government must support. It is fine if companies introduce social tariffs, but what is profoundly unacceptable is that, despite the Government’s support, which I welcome, the energy companies think that the obligation to prevent fuel poverty rests with the Government alone. I do not accept that. I hope that when it comes to issues such as social tariffs, the companies will accept that they have a responsibility. The idea that in Britain, with the prosperity that we have otherwise enjoyed, there are people who have to choose between heating and eating is profoundly repugnant, and we believe that something should be done.

I congratulate my hon. Friend the Member for Edinburgh, North and Leith (Mark Lazarowicz) on obtaining this debate. It is not only important, but topical given the recent announcements on fuel price increases, which are, to say the least, swingeing. It is extremely likely that the announcements by npower will be followed by rises from all the other utilities and that they will herald long-term high energy costs.

Against such a background, this Government’s very good progress on reducing fuel poverty has effectively been reversed, at least in terms of the number of people who are in fuel poverty, using the definition of 10 per cent. of household income spent on fuel. Some 6.5 million people suffered fuel poverty in 1996. That figure was reduced to 2 million by 2004, partly because of lower fuel costs over that period. However, since 2004, that trend has been reversed by rising fuel prices.

Even before the most recent announcements, the number of people in fuel poverty had risen in England by about 1.6 million, in addition to those who were in fuel poverty in 2004, simply because of the rise in fuel prices. That figure has fallen following changes to Government policy on benefits and entitlements, which have led to income improvements, and 300,000 people have been taken out of fuel poverty. However, only 100,000 people have been taken out of fuel poverty as a result of energy efficiency improvements, and the recent substantial fuel price increases will stretch the figures much further.

The current estimate is that about 40,000 more people will fall into fuel poverty for each 1 per cent. increase in the price of fuel. Heroic though our efforts have been, we will, in many instances, almost inevitably be fighting a losing battle if we attempt to combat fuel poverty largely by giving those in fuel poverty additional resources to pay the bills that the energy companies put through their letter boxes; this is a sort of caucus race, in which everyone goes round and round, and some get small prizes, but there are no winners in the end.

As hon. Members have said, it is important that benefits and winter fuel payments rise in line with additional fuel costs, but it is almost impossible for the Government to align increases in benefits and other arrangements in that way, given the variability of proposed fuel increases. Therefore, as hon. Members have suggested, other methods will be necessary in the next phase of the battle on fuel poverty to ensure that we take people out of fuel poverty and meet the ambitious targets that have been set. That raises the issue of what happens with winter fuel payments, as well as the central question of how we can give people the wherewithal to fight fuel poverty by making their houses energy efficient, which will make their bills lower and ensure that their houses are proofed against future price increases.

The recently announced carbon emissions reduction target programme, which will oblige energy suppliers to make provision for carbon reduction in households, will perhaps be worth £1.5 billion over the next three years, and the recently announced uprating in pension credit will also make a considerable difference. However, the programme that can and will make the most significant difference is the specifically targeted Warm Front programme, under which grants to undertake energy efficiency measures are made available to households that are overwhelmingly in, or are likely to be in, fuel poverty. However, the problem is that, although the overall amount that will go into energy efficiency over the next few years is increasing, 25 per cent. less will be spent on the Warm Front programme over that period under the comprehensive spending review. That raises the question of whether we have got the right mix of measures to deal with fuel poverty over the next few years.

Mention has been made of people with prepayment meters paying vastly over the odds, and I had the good fortune to obtain an Adjournment debate on that issue, to which the Minister gave a very positive rejoinder. In that respect, it is important for us to consider the issue of how we give people the wherewithal to avoid paying an additional penalty, over and above any other increase in their energy costs, as a result of the choices that they make—or, in some instances, have to make—when choosing their energy supplier.

Another important issue, about which we have perhaps heard less than we should have, is the suggestion that energy companies should be increasingly regulated differently and enjoined to change from providing as much energy as possible—by and large, they make money by supplying households with as much energy as possible and charging for it—to co-operating with households, in particular, to provide as little energy as possible under longer term contracts, which hon. Members have mentioned.

Under such contracts, investments could be made in household energy efficiency and in methods of producing energy, such as microgeneration, which companies could provide as part of the contract, and the savings would be shared between the householder and the energy companies, which would take them in the form of profits. I hope that changing utility companies to energy service companies in that way will feature prominently in the forthcoming energy Bill. In conjunction with other measures, such an initiative could make a great difference to the way in which we target the energy efficiency of buildings and people’s ability to become players in the market and to pay the energy bills that companies lay on them.

On the Warm Front programme, it would be possible to make up the shortfall in financing over the next few years simply be considering whether the winter fuel payment should be paid universally or whether it might be targeted, for example, away from the highest level of taxpayers, who, as a general rule, are less in need of the winter fuel payment than many others across the spectrum.

The issue, therefore, is not necessarily whether the resources are available, but whether we have struck the right balance between paying people to compete in the market and ensuring that homes are genuinely warmly insulated and that people are genuinely able to resist price increases because of the circumstances in their homes.

Before I call the last speaker before the winding-up speeches, may I ask the Opposition spokesmen to keep their remarks as brief as possible to allow the Minister a full 12 or 13 minutes to reply to the debate?

What better way to start the new year and blow away the cobwebs than to take part in an Adjournment debate under your chairmanship, Sir Nicholas. It is also a great pleasure to follow four such thoughtful and, at times, passionate contributions.

The Government have massively ambitious targets on fuel poverty. The former Prime Minister said that we are

“best when we are boldest”,

and we aim to abolish fuel poverty by 2016. Nothing is more miserable for an MP than meeting elderly people who cannot get out of bed because of the fear of getting cold during the day, and nothing is more depressing than meeting young people who cannot find a quiet, warm room in which to do their homework.

I am lucky enough to have half a degree in economics—I should stress that I have a full degree in total, but the other half is in history—and I can recognise an oligopoly when I see one. Some of my colleagues have, if anything, been too kind to Ofgem, because what we are talking about here is an oligopoly. Ofgem has considerable powers, but all the economic studies over the past year have clearly shown that prices have been very sticky indeed, with retail prices not following wholesale prices. However, Ofgem has not done its job. Thank God for Energywatch; it will meet its demise this year, and we will miss it, because it has kept the spotlight on fuel poverty and campaigned on social tariffs.

In the brief time available, I want to support my colleagues. We need cheering up on the Labour Back Benches as we go into the new year; I do not think that that is a secret. The Minister is the man to do that, by committing himself today to a minimum scheme for social tariffs in the energy Bill. That is, incidentally, also in the best traditions of one-nation Toryism, so I hope that it will receive Opposition support.

Let us name and shame, even if Ofgem will not. Let us praise British Gas and EDF Energy for their social tariff schemes, and let us shame npower. No one has said exactly how much it has increased gas prices—it has done so by 17.2 per cent. The increase in electricity prices is 12 per cent.

“How can Npower bosses sleep at night knowing poor people will die?”

said a letter in The Sun. The Sun got it right on that occasion. David Threlfall, the npower retail chief executive, should really take a look at himself. Surely he does not want to be the coming year’s Scrooge of the energy industry, as he was for the previous year. It is not good enough for npower to sponsor cricket and supply green energy to Wembley stadium and to say that it is exercising corporate social responsibility. It must follow the other responsible energy companies that have introduced social tariffs. I hope that the Minister can give us assurances about that.

I join other hon. Members in congratulating the hon. Member for Edinburgh, North and Leith (Mark Lazarowicz) not only on securing the debate and making a thoughtful contribution, but on his track record on the issues in question. We have heard some very well-informed and thoughtful contributions. I could not help thinking that, in the sequence of points made by the hon. Member for Edinburgh, North and Leith, he saved the most important until last, in that energy efficiency must, as the hon. Member for Southampton, Test (Dr. Whitehead) said, lie at the heart of the matter. I speak as the newly appointed Liberal Democrat spokesman on environment and energy. The interests of both the planet and individuals point in the same direction: we must tackle energy efficiency, rather than simply pay more money to people to pay more money to fuel companies, so that they can create hot air that will go through badly insulated lofts, walls, windows and doors. If we can make long-term changes to the housing stock, so that not just this winter, but every winter, people pay less because their houses are properly insulated, that will be the infamous win-win situation for the elderly, the vulnerable and the planet.

I was interested to hear the hon. Member for Southampton, Test say that only a tiny amount of the action on fuel poverty has been about energy efficiency, and I was disturbed to hear his figures about the Warm Front scheme, with lower amounts to be spent in real terms than are spent under the current programme. The Minister has been described as heroic—and I have great admiration and respect for him—but heroic Government efforts would mean that they would hit their target of abolishing fuel poverty by 2016 and abolish it for the vulnerable by 2010, rather than missing it by a million, with a doubling of fuel poverty in the past few years.

Labour Members are understandably cautious—there has been much coded criticism of the Government, but no explicit criticism. I think that they are struggling, because many of them would like a world in which the utility companies are publicly owned, and in which the objectives that we have discussed could be achieved directly by Government. We moved to a situation in which the utility companies were publicly regulated, and now we have, essentially, a free market. Many of the contributions to the debate reflect the frustrations that we all feel when something with a clear social cost and implications is left to the free market. The problem with fuel poverty is what happens when Governments do not do enough to intervene in the free market. Who sets the rules for Ofgem?

I have only a few minutes, so I hope that the hon. Gentleman will forgive me if I do not do so. Ofgem’s rules are set by the Government. If it is not doing enough, why do the Government not make it do more, as that is where the buck stops? How do we ensure that more effective help is given to vulnerable groups? The Minister’s experience goes back a long way, especially in matters of social policy, and he will remember that at the start of the 1980s there was something called certificated housing benefit. In other words, people on income support, or supplementary benefit, as it then was, received a certificate that entitled them to have their rent and rates paid in full. The problem in the fuel market is that the utility companies often do not know who are the right people to allow on to the social tariffs. British Gas, in its briefing to hon. Members, talked about

“the huge wasted effort...from searching for eligible customers”.

However, the Government know who those people are, so why do not they ensure that individuals whom they believe to be vulnerable to fuel poverty have a certificate or an equivalent document, whether they are vulnerable pensioners, severely disabled people, or, as mentioned by my hon. Friend the Member for Richmond Park (Susan Kramer), families with young children? Why do the Government not ensure that those people have a voucher or certificate to give them the power to choose the best provider of insulation, home efficiency or whatever is relevant, rather than expecting the private companies, which have been deregulated and sold, to go round Britain trying to find out which of their customers are eligible? It is nonsense. The Government have the information, and they should use it to the benefit of those individuals.

The root problem—and I think that the hon. Member for Southampton, Test hinted at this—is that the business of energy companies is to sell as much as they possibly can. We should oblige them to adopt a goal of selling less energy. Their goals and incentives, over time, should be the emission of less carbon, the selling of less energy and the wasting of less fuel. However, at the moment, if I buy a new flat screen multi-whatever digital high definition telly, and use lots more energy, that is great news for the electricity company, because my electricity bill shoots up. The incentives are all wrong. We will get action only when the incentives for the private companies that have rightly been criticised by the right hon. Members for Islwyn (Mr. Touhig) and for Coatbridge, Chryston and Bellshill (Mr. Clarke)—the wrong incentives of selling us more and more to make more and more money—become instead the incentives of delivering energy more and more efficiently. A cap is needed—there has been talk about capping emissions—and if there were a cap on the emissions that energy companies could generate, they would have a strong incentive when selling to customers to ensure that those customers used energy more and more efficiently. Until we turn things around, and adopt a new way of thinking about energy supply, we shall not get the right incentive structure.

We have heard that the npower increase averages 15 per cent. or so across gas and electricity, and if it is mirrored by other suppliers it will add 500,000 to the fuel poverty figures. We have heard that the number of households in fuel poverty go beyond the figure of 4 million a year or two ago. It is not just a question of our missing the target: we are going in completely the wrong direction, and the scale and scope of the Government response is wholly inadequate. The new energy Bill must include firm action on social tariffs, and it is worrying that the Government have gone rather quiet on that. Leaving the matter to the companies and expecting poor and vulnerable households to shop around and choose between all the different social tariffs is not good enough. As an ordinary hon. Member trying to deal with constituents, I am baffled by the range of tariffs, schemes, grants and initiatives run by the Government, let alone those run by the companies. National Energy Action has said that although some social tariffs are genuinely advantageous,

“this constitutes a form of ‘postcode lottery’”—

because of course different suppliers operate predominantly in different areas—

“that is restricted and inappropriate as a means of resolving a major social problem”.

I agree that that is the case.

The strength of feeling in the debate, particularly in the brief but excellent speech of the hon. Member for Selby (Mr. Grogan), is right. The situation is scandalous. Leaving things to the market is not good enough. Leaving things to different initiatives by individual companies is not good enough. The Government have the levers of power in the market, and they should use them.

I, too, want to begin by congratulating the hon. Member for Edinburgh, North and Leith (Mark Lazarowicz) on securing the debate, and by paying tribute to him for the huge amount of work that he has done in this context over many years. Linked to that, I add my tribute to those that Energywatch has received this morning for its work. I also congratulate the hon. Member for Northavon (Steve Webb) on securing his position and on the way in which he has mastered his brief.

We have had a very good debate, but it is clear that we are heading in the wrong direction, as the hon. Member for Northavon said. The problem is getting worse. There were 1 million households in fuel poverty in 2003 and now, according to Ofgem, there are about 4 million. The Government have been strangely quiet about that. When the figures were falling they trumpeted them, but the last Government figures that we had related to 2005. We cannot obtain from the Government, in spite of parliamentary questions, more up-to-date information about the number of households that are affected. We must go to other organisations, such as Ofgem, and we end up with an absurd situation of shifting targets, which become meaningless.

The Government’s original commitment was to eliminate fuel poverty in every vulnerable home by 2010, but now the policy is simply to ameliorate the situation. There is an absurd commitment in the recently published fifth annual report on the fuel poverty strategy to eliminate fuel poverty in England and Scotland by November 2016. It is absurd, because the report gives a date of 22 November 2016. That is almost nine years away; perhaps the Minister can tell us whether it will be in the morning or the afternoon. Why do not we shift away from meaningless targets towards more concrete action?

What we have seen—and this is the real reason for change—an increase in fuel prices. When fuel prices fall, more people are taken out of fuel poverty; when they rise, inevitably more people are drawn into fuel poverty. Labour Members cannot have it both ways. When the numbers fall, they claim that it is a massive credit and triumph for Government policies but then, when wholesale fuel prices rise, they say that it is the fault of the energy companies. The right hon. Member for Coatbridge, Chryston and Bellshill (Mr. Clarke) said that at the first hint of an increase in wholesale prices, the companies put consumer prices up. I wonder what newspapers he has been reading. He talked about the “first hint”, but oil prices have reached $100 a barrel as a result of a gradual increase over a long period. The price of coal has doubled in the past year from $60 to $120 a tonne, and gas prices have gone up by 60 per cent. Those are real increases and they are reflected elsewhere. The right hon. Gentleman asked us to look at what is happening in Europe, but if he did so, he would see that in Germany, Spain and France, there have been applications, some of which have been approved, for fuel price increases of 10 per cent. We are talking about a global phenomenon, and the right hon. Gentleman does not strengthen his argument by misinterpreting the facts.

Government policies have made the situation worse. We heard that the Warm Front budget has been cut from £350 million a year to £300 million. That was done deliberately to attract as little notice as possible in the run-up to Christmas. We heard that the overall budget over three years has been cut from a little more than £1 billion to £810 million. In addition, as we heard, the Warm Front scheme has failed many people because of the way in which it was set up. My hon. Friend the Member for Castle Point (Bob Spink) rightly highlighted the fact that a scheme in which only approved contractors can be used ends up with a grant being given, but because the approved contractor quotes much more than the grant is worth, the individual concerned must either must top it up or go without it, whereas a local contractor could do the job at a much lower price. Those are practical problems that I hope the Minister will address.

The Government have changed other policies and made the situation worse. Fuel companies used to visit vulnerable customers accompanied by an official from the Department for Work and Pensions. The company could tell people how they could improve their fuel efficiency and reduce their tariff. The DWP official could tell them which additional benefits they might be entitled to. The DWP stopped that scheme without explanation—indeed, it will not give an explanation—so will the Minister tell us why it did so? The change means that people who are entitled to additional benefits are missing out because that useful and valuable approach was dropped.

Will the Minister tell us, too, what is the total contribution to fuel price increases resulting from Government measures to tackle climate change and increase energy efficiency? Will he confirm that renewable obligation certificates, carbon emissions reduction targets, and the EU emissions trading scheme have added about £70 per £1,000 of fuel bills to customers? We are all keen to see efforts made in that direction, but is it not the case that some households have been pushed into fuel poverty as a direct result of those additional costs on their fuel bills?

In the course of the debate, we have focused a great deal on Ofgem’s role and the work it does to tackle fuel poverty. We should recognise, that in its current duties, tackling fuel poverty is a secondary duty, not a primary duty. I hope that the energy Bill will lead to a review of Ofgem’s duties so that we can decide whether tackling fuel poverty should be a primary duty. We should recognise, too, that Ofgem has taken important steps, in particular through its work with citizens advice bureaux, to help to tackle fuel poverty. It sends out 100,000 letters a year to vulnerable customers to tell them what are the cheapest tariffs offered by energy suppliers in their area. Ofgem has managed to secure the power companies’ agreement that they will not disconnect vulnerable customers. An enormous amount of work has been done, but I share the concerns expressed, in particular by the hon. Member for Southampton, Test (Dr. Whitehead), who speaks with expertise on these subjects, about prepayment meters. Much more needs to be done. Some companies have addressed the issue, but others, including companies such as npower, have failed to do so, and should be called to account.

Will the Minister tell us the outcome of the discussions between the Chancellor of the Exchequer and Alistair Buchanan of Ofgem following yesterday’s press announcement that he was to be summoned to a meeting? I imagine that that meeting has taken place, or at least that a date has been set. Perhaps it has not—I hope that it was not simply a media stunt that the Government could use to get themselves off the hook. What is the outcome and, specifically, what will the Chancellor ask Ofgem to do to address the problems?

The solution to the problems is clear. First, we need to make sure that more is done to encourage customers to swap providers. The price increases in the past couple of weeks are very concerning. However, they have been made by a few companies, not by the majority, so the reality is that changing supplier remains the best defence against increasing prices. Secondly—this point was made by the hon. Members for Northavon and for Southampton, Test—on energy efficiency, only 40 per cent. of houses in this country are properly insulated. Many of the worst insulated houses are occupied by people most trapped in fuel poverty. Unless we do more to address those issues, we will not address the whole problem. The Government have done some things, such as introduce winter fuel payments, but they have also introduced measures in the past year or so that have exacerbated the problems of fuel poverty. Hon. Members have highlighted those issues in the debate, and I hope that the Minister will assure us that the Government will take action to address those matters.

It is a pleasure to serve under your chairmanship, Sir Nicholas, and to have listened to the debate. The debate is not only important, but topical for our constituents. I congratulate my hon. Friend the Member for Edinburgh, North and Leith (Mark Lazarowicz) on the way in which he introduced it—not only for form’s sake, but sincerely. We heard important contributions from my right hon. Friends the Members for Islwyn (Mr. Touhig) and for Coatbridge, Chryston and Bellshill (Mr. Clarke)—the latter takes a strong interest in such social matters—and from my hon. Friends the Members for Southampton, Test (Dr. Whitehead) and for Selby (Mr. Grogan), who demonstrated a great deal of expertise.

I welcome the hon. Member for Northavon (Steve Webb) to his role of Liberal environment and energy spokesperson. He is a colleague who has a great deal of expertise. We worked together on pensions some two and a half years ago—I rather hoped that I had shaken him off but that turns out not to be the case. We also heard an interesting speech from the Conservative spokesman, the hon. Member for Wealden (Charles Hendry). It was interesting, of course, because of the history of the matter—I do not have half a degree in history, so I do not bring the 50 per cent. of expertise that my hon. Friend the Member for Selby brought. The Government inherited from the Conservative party a massive amount of fuel poverty, which the hon. Member for Wealden did not acknowledge. Of course, we inherited a social security system whereby, following those years of a Conservative Government, it was felt proper that elderly women living alone could live on as small an amount as £69 a week under the income support system. Given that record, I listened to the hon. Gentleman with interest but also, if I may say so, a certain amount of cynicism.

Tackling what we now call fuel poverty involves a range of issues. We are talking about the impact of poverty and low incomes, energy-inefficient housing, cold housing and, especially at the moment, rising energy costs. Tackling those problems is a significant priority of the Government. We have set challenging targets and we remain committed to maintaining and strengthening the framework to help us to reach our 2010 target in England and, beyond that, to reach our ultimate goal of eradicating fuel poverty altogether in the whole of the United Kingdom by 2016 to 2018.

I shall say something about what the Government have achieved, which was acknowledged by colleagues, how the issue stands at present, and what we need to do in future. Since 1996, more than 4 million households in the UK have been removed from fuel poverty. Some £20 billion has been spent on fuel poverty benefits and related programmes. The Government introduced the winter fuel payment, which has helped some 11.7 million people, the importance of which was acknowledged by hon. Members. I am always struck when I talk to older people by the comfort that that £200 or £300 brings just before Christmas to many who are worrying about fuel bills and costs at that time of year. If counted against fuel bills, the winter fuel payment is estimated to have removed a further 1 million households from fuel poverty in the UK.

In addition, we have assisted more than 2 million households in the UK through energy efficiency measures of different types. I certainly agree with colleagues when they stress the importance of energy efficiency measures in housing—in both new build and the existing stock. I think that that is the key to tackling this issue, and doing so in a way that is in full accord with our climate change objectives.

The hon. Member for Wealden is right. I have to say to him that even in opposition one cannot have it both ways. Of course programmes such as the renewables obligation increase costs. That is inevitable and it puts pressure on the fuel poverty issue, but we need some consistency here. Surely such climate change measures are important.

Let us recognise that millions of homes have been lifted out of fuel poverty, but now, because fuel bills are increasing—much of the debate has focused on that increase—the number of people in fuel poverty is also increasing. It is important to recognise the context, although, to be fair, the hon. Gentleman did so. Wholesale energy costs are rising across the world because of global demand. A great global grab for energy is going on, not least in emerging economies such as China and India. Since January 2007, crude oil prices have increased by some 80 per cent. Gas forward prices have increased by 50 per cent. and, in north-west Europe, coal prices have increased by 85 per cent. There can be no getting away from the fact that those increases are bound to have an impact on domestic prices. However, it is important that we ensure that the supply companies are playing fair by customers, particularly the most vulnerable ones.

It is therefore altogether appropriate that my right hon. Friend the Chancellor of the Exchequer has written to the regulator, Sir John Mogg, the chairman of Ofgem, to ask for his assessment of the association at present between wholesale and domestic prices. I think that that is an important initiative because I am aware of the allegations—I think that they remain only allegations—that supply companies are not playing fair. We need to assess that very carefully. Colleagues have made points today that are very important to our constituents.

The recent announcement on the next comprehensive spending review period of 2008 to 2011 showed the Government’s continued commitment in the area of fuel poverty. Warm Front is the Government’s main scheme to tackle fuel poverty in England—there are related schemes in the other nations of the UK—providing grants for energy efficiency and heating measures to some of our most vulnerable households, not just the elderly. Funding for Warm Front will be just over £800 million for the period between 2008 and 2011. That is significant further investment in addition to some £1.6 billion that the Government have committed to date. Warm Front now offers a benefit entitlement check to all eligible households, increasing income on average by £26 a week and £1,300 annually.

We have been examining very carefully what data we can share with supply companies to maximise take-up—that is a familiar theme for some of us. Because of data protection issues, we have decided that we cannot legislate in this area. We will discuss the issue when we consider the energy Bill, particularly in Committee, but the Department for Work and Pensions is keen to help us on this matter so that we can reach the most vulnerable. That will be a feature of the discussion on the energy Bill.

In addition, new proposals laid before Parliament at the end of last year in the form of a carbon emissions reduction target—the successor to the energy efficiency commitment—mean that the major energy suppliers will be obliged to meet carbon reduction targets that will lead to investment of about £1.5 billion over the next three years to install better insulation and improve heating systems. A wide range of other measures will improve efficiency and increase comfort for many of our constituents. The measures will have a particular focus on priority groups such as older people, people on low incomes and those with disabilities. That will double what energy suppliers currently have to do to improve the energy efficiency of their customers’ homes, and much of that effort will help people who are most at risk of fuel poverty. That means that the total help available for energy efficiency for the priority group will rise by £680 million, compared with the previous spending period, to about £2.3 billion.

I take on board—of course I do; it was our proposal—the need to move to the concept of the energy services company that helps all households, whether better-off or worse-off, to reduce their energy demand. That is the revolution that we need to bring about in the future and I am very committed to that.

I am grateful. The Minister acknowledges the importance of providing ways in which low-income households can reduce their energy commitment. Is not one way of doing that to accelerate the implementation of smart metering? That gives real-time information and is the subject of the look smart campaign, which is supported by the Energy Retail Association, Energywatch and Utility Week magazine. I know that he is aware of that.

I certainly recognise that my hon. Friend is, as usual, three or four pages ahead of me. I want to mention the issue to which he refers. The development of smart metering is very important, allied to other measures to put an emphasis on educating all of us, as householders, about the importance of these things.

Understandably, much has been made of payment differentials and the problem for prepayment customers. That is a more complex area than it appears at first sight, because when we examine the data and the empirical evidence, we see that most poor people—easily the most—are not on prepayment meters. My brief tells me that only 5 per cent. of elderly people are on prepayment meters, so let us not be simplistic about the issue, because if we exert pressure to help the prepayment meter customer, that will be, in part, at the expense of other customers, many of whom are on low incomes.

That said, I share the concern that the differential is now far too great. I have myself put pressure on the company chairmen to examine the issue—I have written to them. I am pleased that EDF and Scottish and Southern have equalised their standard credit and prepayment prices for electricity, while Scottish Power offers prepayment customers a lower price for both fuels than that paid by standard credit customers. We are seeing movement in what I judge to be the right direction, but this is a debate that I am very much engaged in now with the supply companies.

We will continue to work with Ofgem to make it easier for customers to switch suppliers. A great deal of switching is going on. If people are concerned that they are being charged too much, considering switching is very important, but I think that I know enough about this subject to recognise that switching is easier said than done for some of the most vulnerable people, particularly if there is a record of debt payments. I want to discuss that matter further.

I have met the chief executives of all the supply companies to talk about social tariffs. As a result of those discussions, energy suppliers have come forward with significant new investment of about £16 million, and I hope that that will be only the start of the story.

We have had an important debate about this matter of great concern. I am proud of our record in government, but I am very concerned now about the impact of price increases on some of the most vulnerable, and I am absolutely determined that we make progress as soon as possible on this important issue on our social policy and energy policy agenda.

The House thanks the Minister for his reply, and I congratulate hon. Members on the excellent debate that we have had on this important issue.