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Fuel Poverty

Volume 478: debated on Thursday 3 July 2008

The Government have a range of measures to help with fuel bills, including grants to improve energy efficiency and the winter fuel payment scheme. The Government are also exploring the role that alternative technologies can play in alleviating fuel poverty—I think that that will be directly relevant to the hon. Gentleman’s constituency—and we are looking to provide connections to deprived communities off the gas network, as gas remains the cheapest form of heating.

I am grateful to the Minister for that answer. He will know that in constituencies such as mine, fuel heating oil is the principal source of heating in most communities. It is also used in older houses in remote areas, which are more expensive to make energy-efficient. Huge oil price rises and an already expensive source of heating have conspired to put fuel oil users even more into fuel poverty than they were before. Will the Minister ensure that in his fuel poverty strategy heating oil users have top priority? Will he ensure that energy companies are encouraged to take the fuel poverty measures that they are being asked to take by the Government, with specific reference to fuel heating oil users—although, of course, they will not be customers of gas companies, in particular?

I understand the difficulties faced by those who are heavily reliant on oil for their heating, for example in rural and island communities. Of course, the price of a barrel of oil worldwide has doubled in just one year. I think that some of the work that we can do to connect people to the gas system, where appropriate, is helpful. The development of our microgeneration strategy is very relevant, because technologies such as ground source heat pumps can offer some relief in future. That is why we have earmarked £3 million from the low-carbon building programme as a pilot to see how microgeneration can help to tackle fuel poverty.

As a former heating oil user in a rural area, I am aware of some of its advantages. At the moment, a typical 1,000-litre tank, when full, can contain oil that is valued at well over £600 and is quite attractive to would-be thieves. The loss of such oil, of course, would push rural people even further into poverty. What discussions might the Minister have with his fellow Ministers to alert people, and the police in particular, in such areas to the risks that are being run?

I certainly do understand the risk and, sadly, there have been well-reported cases in recent days, as the price of fuel has increased. Obviously, the police will take whatever action they can. If I feel it helpful to discuss the matter with Home Office colleagues, I will certainly do so.

I do not for a second dismiss the issue of poverty, but is not the problem the price of fuel oil? Will the Minister tell the Organisation of Petroleum Exporting Countries producers that they are killing the goose that lays the golden egg, and will he tell the House what research the Government are conducting and encouraging on alternative fuel sources, such as hydrogen, to replace oil?

I am happy to say to my MP—the ballot is always secret—that the Prime Minister is leading from the front on the issue. He attended the Jeddah meeting called by the King of Saudi Arabia, and a process is under way that will lead to a high-level London summit later this year. I assure the hon. Gentleman that we are active on many fronts on this difficult issue, but things are not easy. The Saudis have announced a significant increase in supply, but other countries do not have the capacity easily to do the same. I assure the hon. Gentleman that we are looking into the issue. Given that we published our renewable energy strategy consultation document last week, and given the announcement about nuclear, he knows that we are active on the issue of finding alternative energy sources to play a part in the diverse energy strategy that Britain requires.

It is not only heating oil but liquefied petroleum gas that poses a significant financial problem for households in rural areas, although I accept that LPG is a much lesser cost. I applaud everything that my hon. Friend has said so far this morning, but there is deep concern in many households in remote rural areas. In particular, there are pensioner households that do not qualify for any support through, say, pension credit, but have to spend between 18 and 22 per cent. of their income on heating oil. That is not acceptable in 2008.

I do understand that concern, and of course all of us are concerned about the most vulnerable, elderly households. All pensioner households receive the winter fuel payment, which for the over-80s will be £400 this year. For the over-60s it will be £250—a significant increase. Insulating the homes of Britain’s elderly, and improving the energy efficiency of those homes, is crucial. We are spending record amounts of money, through Warm Front and the carbon emissions reduction target, on energy efficiency programmes. That could be of particular relevance to my hon. Friend’s constituency.

How many households does the Minister think will be helped by the £1 million grant recently given to the east of England under the low-carbon buildings programme, given that 1 million people in the region are thought to be in fuel poverty, and more than 50 per cent. of households in my constituency of South-West Norfolk have no access to mains gas?

I said that the programme is a pilot study. It is a new initiative from our low-carbon buildings programme. The number of households affected will be in the hundreds; I will give the hon. Gentleman the exact figure in writing. I would have thought that he might welcome the fact that we are trying to use new technologies to tackle the old social evils of fuel poverty, an issue that we are determined to pursue. We are spending record amounts of money on CERT and Warm Front; there is some misunderstanding about that. In the current spending period, the figures will increase by £680 million, compared with the previous spending period, and will reach about £2.3 billion. There is a lot of scope for improving the thermal efficiency of our housing, and as we move forward we need to, and will, complement our energy strategy with a strong energy efficiency programme. Our colleagues in the Department for Environment, Food and Rural Affairs are working on that.

What role does my hon. Friend think that speculators are playing in talking up the price of oil, and has he given any consideration to the paper that Dr. Richard Pike, chief executive of the Royal Society of Chemistry, published in Petroleum Review? It puts the proposition that oil companies have double the reserves that they claim to have.

I promise my hon. Friend that I will read the article. My copy has not yet arrived—it has obviously been delayed at Petroleum News—but I will read it. The important point is that a great debate is going on about what lies behind the rise in the price of a barrel of oil, which has doubled. We would emphasise the fundamentals: China, India and other countries are fuelling their growing economies with energy, and there is a mismatch between supply and demand, hence the earlier dialogue about the need to increase supply, which the Saudis are doing. Many OPEC nations emphasise speculation, and we would not entirely dismiss the speculative element. We are working with OPEC and the international energy bodies to try to produce a shared analysis of what lies behind that very grave problem, and I do promise to look at the article.

The Minister mentioned connecting households to the gas mains, but he will know that in many areas the capital cost of doing so is enormous. Are the Government planning any assistance schemes to help fuel-poor households that do not have gas connections simply to get connected?

Yes. In the Department earlier this week we were discussing with the relevant bodies plans to increase the numbers of households that are connected to the gas grid. There is significant scope for it, but I do not want to exaggerate the situation, because many such households will never be connected to the mainstream gas grid. We need to work hard at providing other options for those people, so that they have some of the choices that many of us in urban areas take for granted, hence my emphasis, in reply to the earlier question from the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander), on using microgeneration imaginatively to try to provide choices for some households in isolated communities.

Every 1 per cent. rise in fuel prices pushes another 40,000 people into fuel poverty and if, as forecast, the cost of heating our homes rises by 40 per cent. this winter, that will mean another 1.6 million such people. What specifically will the Government do to help those people? Will the Minister confirm that the Government are still absolutely committed to their own target of eradicating fuel poverty which is now within less than two years?

We are going to do our utmost to tackle the problems of fuel poverty, but the hon. Gentleman is aware of the fundamentals. We are faced with extraordinary increases in prices—global prices. I have mentioned oil, but the wholesale prices of gas and of coal are going up to astronomical levels, and it is very difficult territory for business and for all our constituents. So since 2000, we have spent £20 billion on fuel poverty benefits and programmes—I know that the hon. Gentleman will not dismiss that figure; I have said already that the Chancellor has agreed to increase winter fuel payments quite significantly; we are increasing the amounts of money spent on energy efficiency payments through CERT and through Warm Front; and the Secretary of State has brokered an agreement with the six major supply companies to increase their social tariffs from £50 million now to £150 million in a year or two’s time. That is a significant programme, but we are not complacent. We are worried about the situation’s impact on vulnerable people, and we will do everything possible to protect those decent citizens of ours.