I beg to move,
That this House has considered fuel poverty.
I am delighted to open the first annual debate on the important issue of fuel poverty. The fact remains that far too many of our fellow citizens and constituents struggle to afford to keep their homes at reasonable, comfortable temperatures. As I will argue, we are making progress, with some 780,000 fewer fuel-poor homes in 2014 than in 2010, but there is a lot more to do to meet the demanding targets we have rightly set ourselves, as a country, for 2030. It is quite right that the Government of the day are regularly held to account for what they are doing, and encouraging others to do, in the face of this stubborn and complex social challenge.
The debate is important because it is an opportunity for Government and Parliament to hear directly from MPs from across the nation about their experience and insights. In our day-to-day work, we, as MPs, come across the consequences of fuel poverty, not least its impact on the wellbeing and health of our constituents.
Before we get into the discussion, I want to set out the context. Over the past five years, Government have taken action to overhaul the framework for tackling fuel poverty in England. At long last, we have a long-term strategic framework for action on fuel poverty, which is rooted in the 2015 fuel poverty strategy and the long-term statutory target. The journey began in 2012 with the independent review of fuel poverty led by Professor Sir John Hills. The review found that fuel poverty is a distinct issue, separate from income poverty.
However, the debate clearly links to other areas of policy, such as the action the Government are taking to improve living standards by means of the national living wage and by increasing tax thresholds for the lowest-paid. Likewise, we could not have made clearer our determination to make sure that the energy market works for all. Ofgem’s introduction of a prepayment meter tariff cap is a welcome first step. As the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Hereford and South Herefordshire (Jesse Norman), indicated last week, a consumer Green Paper will be out shortly.
Today, I want to focus on the policy framework that is specific to fuel poverty. The journey to this point started with Professor Hills’s review, which reflected on previous activity and measures to tackle fuel poverty. The review highlighted the fact that although the 10% indicator that had, until that point, been used to measure fuel poverty was well-meaning, it was fundamentally flawed. In 2013, the Government confirmed that the findings of the Hills review of fuel poverty would be adopted, including the low income, high costs indicator. That measure finds a household to be living in fuel poverty if its income is below the poverty line and it has higher-than-typical energy costs.
In 2014 the Government introduced the fuel poverty target for England. The target is to ensure that, so far as is reasonably practicable, fuel-poor households are improved to a band C energy efficiency rating by 2030. In 2015 we saw the publication of “Cutting the cost of keeping warm: a fuel poverty strategy for England”, which set out the principles that the Government would apply and the approaches to be taken when making progress towards the fuel poverty target. The strategy set out the importance of effective levels of public accountability and the role that the Committee on Fuel Poverty, a non-departmental public body formerly known as the Fuel Poverty Advisory Group, will play in that. I welcome the insight and challenge that the committee brings as we look to tackle the serious and long-term societal issue of fuel poverty.
Recognising that 2030 is some way off, the strategy includes interim milestones to guide activity in the shorter term, helping to focus our attention on making progress as we move forward. The milestones are to ensure, so far as is reasonably practicable, that fuel-poor households are improved to a band E rating by 2020 and to a band D rating by 2025. That is the framework.
The fuel poverty target is certainly ambitious, and I have not heard anyone argue to the contrary. The band C target is set at a level that only 7% of fuel-poor households currently enjoy. We are aiming high, and it is right for us to do so. As the Committee on Climate Change reiterated in its report last week, the target is extremely challenging. However, we must be clear that meeting that challenge may provide huge benefits for households that need support. Improving those E, F or G-rated homes to band D can reduce energy costs by an average of £400. I am pleased to be able to say that although the challenge is significant, progress is being made.
Looking to our 2020 milestone, the percentage of fuel-poor households living in homes rated band E or higher has already improved from 79% in 2010 to 88% in 2014—the latest year for which statistics are available. Looking at the 2025 milestone, we see that the percentage of homes rated band D or higher has improved from 29% in 2010 to 59% in 2014.
There is a competition going on here over who will intervene. It is kind of the Minister to give way. I am sure he is aware that fuel poverty is particularly acute in Northern Ireland. Many households are still dependent on heating oil, the cost of which is increasing. Will the Minister pledge that if, as I optimistically forecast, a devolved Administration is restored in Northern Ireland next week, he will liaise very closely indeed with his counterpart in Northern Ireland to develop a strategy that benefits all households across the United Kingdom—not just those in England—rather than leaving Northern Ireland to fend for itself? That is an optimistic forecast, but we have to live in hope.
We do indeed. The hon. Lady is entirely right; the fuel poverty statistics for Northern Ireland are particularly striking and stubbornly high. As she indicates, she hopes for better times. Although this is, as she well knows, a devolved matter, the Government are ready and happy to co-operate with the Administration when it is formed.
What consideration have the Government given to developments in currency levels? We live in an age in which sterling is devaluing. The harder the Brexit, the more sterling will have to devalue. The US dollar, on the other hand, is likely to strengthen as a result of Trump’s expansionary fiscal policy, and the Fed has increased interest rates. Oil is traded in dollars, and the gas price is pegged to oil, so those two developments inevitably mean that energy prices in the UK will increase significantly. What are the Government going to do to mitigate that?
As I said earlier, I do not think that anyone can be under any illusions; the Government are very serious in their intention to make the energy market work more effectively for all. We are all clear that it does not work effectively for all, and the steps that the Government will take will be set out in a consumer Green Paper very shortly.
I was talking about the Government’s performance against the 2025 milestone that we have set, and I stated that the percentage of homes rated band D or higher has improved from 29% in 2010 to 59% in 2014. That represents approximately 780,000 fewer fuel-poor homes rated E, F or G in 2014 compared with the position in 2010. I hope that the House will welcome that. In terms of the trajectory of improvement, there were 174,000 fewer E, F or G-rated homes in 2014 than there were in 2013, which shows that existing policies are making a difference. As an example, since the scheme started in 2013, approximately 700,000 measures have been installed in 500,000 low-income households as a result of the energy company obligation. That is part of a total of 1.6 million homes that have been improved under ECO.
My constituents in South Leicestershire want to know that the Government are doing everything they can to ensure that the energy market works for all of us, whether we are in South Leicestershire or across the United Kingdom. Does my hon. Friend share my view that energy companies should be expected to treat all their customers fairly, not just those who decide to switch?
I agree with my hon. Friend. We all know from our constituents about the stress that is caused by anxiety about fuel. I represent a relatively affluent constituency in London, but the statistics show that 8% of my constituents qualify as fuel-poor. This issue affects constituencies across the country. I certainly give my hon. Friend that assurance, and I hope that he will be very satisfied by the material in the consumer Green Paper that will be published imminently.
Recognising that improving household energy efficiency is the most sustainable long-term solution to tackling fuel poverty, we are not complacent, and we are going further to take action. Today, the Electricity and Gas (Energy Company Obligation) (Amendment) Order is being debated in the House of Lords. It will extend the scheme from 1 April 2017 to 30 September 2018. Should the scheme proceed as planned, we expect more than 500,000 homes to be improved over the coming 18 months. The order will also reform the energy company obligation so that 70% of the support available under it will be directed at low-income homes. That represents a real-terms increase from £310 million to £450 million per year, which will be invested in improving the energy efficiency of homes that most need support.
I have no doubt about the Minister’s personal commitment to this agenda, but I wonder why the Government will not make energy efficiency into a national infrastructure priority. Why is energy efficiency not part of the national infrastructure assessment? That would be the way to scale up and meet the ambition he claims the Government have.
It is not a claim about ambition; the ambition is set out in long-term statutory targets. The figures I have given show that these are substantial investments. As I will come on to clarify, there is some £770 million of support for low-income and vulnerable consumers in the financial year 2017-18, so there is no shortage of ambition or of investment. The hon. Lady and I share a strong belief in the importance of energy efficiency. I am trying to stress that what we are doing will increasingly focus on the most vulnerable, and, with public finances constrained, that must be the right priority.
May I welcome the efforts that the Government have made and their clear success in improving energy efficiency? My hon. Friend is so right to highlight the fact that making the obvious saving of getting people to spend less on energy through using less is much more important than the amount we give people to subsidise their energy costs or any intervention we make in the market to cap energy costs.
I could not agree more with my hon. Friend. As I have said, previously, he is one of the most thoughtful Members of the House on this subject. He will know that we are on the cusp of something very interesting in our relationship with energy and our ability to manage it more intelligently. Such an opportunity must be just as much available to well-to-do people as it is to those struggling with their bills, and that must be a priority for us. That is partly why I stressed the point that the reforms we are making to the existing policy instruments will increasingly focus on the most vulnerable and the poorest in our communities.
However important it is to improve the energy efficiency of people’s homes, it will inevitably take time, and Government recognise that people also need immediate support with energy bills. We therefore have in place the second pillar of the strategy, the warm home discount. This scheme now provides over 2 million low-income and vulnerable households with a £140 rebate off their energy bill each winter, when temperatures are lowest and bills are highest.
Together the schemes mean that, as I have said, there will be at least £770 million of support for low-income and vulnerable consumers during the financial year 2017-18. This is a significant level of support for households across the country. Other policies will also make a contribution, such as the prepayment safeguard tariff, which I hope the House welcomes, and the roll-out of smart meters. Smart meters are regularly debated in this place, and the evidence is already showing the consumer popularity of this technology and its ability to help people save money and manage their energy use in a smarter way.
Making progress cannot be just about subsidy; regulation will play an important role as we take action to ensure that tenants can live in a home that keeps them comfortably warm. The private rented sector regulations will target the least efficient F and G-rated properties from 2018 by requiring landlords to improve those properties to at least a band E, unless a valid exemption applies. The Department is currently considering options for the implementation of the regulations, with a view to ensuring that they can be implemented effectively by April 2018.
Of course, there is more work to be done. One key area will be to improve targeting on the households most in need. The Digital Economy Bill, which is currently going through Parliament, will be important in that regard, as it will make available better data on householders and properties. We believe that that will in turn reduce the costs that energy suppliers face in identifying the households most in need, and allow more measures to be installed for the same cost.
The actions I have described are all led by the Government. However, fuel poverty is a problem for all of society, and the Government cannot tackle it alone. That is why partnership is a key theme of the fuel poverty strategy. It is important for the Government to play a leadership role, but also to work in partnership with local government, businesses and the charitable sector. Only by making the most of the varied skills and resources of each of those partners will we, collaboratively, be able to tackle fuel poverty.
According to the Government’s own statistics, the EU ecodesign directive has helped households, small businesses and industry to save thousands on the cost of energy. Indeed, the average annual saving from ecodesign policies for homes is expected to be £153 by 2020, which is 20% of the average annual energy bill. Will the Minister assure us that such rules on energy efficiency will continue to be implemented and updated both during and after our renegotiation with the EU?
I certainly agree with the hon. Lady about the importance of good design. In fact, some of the most important progress we have made as a country on energy efficiency has been through building regulations and standards for the quality of our homes and offices. The Government remain ambitious in that respect, and she will know how important that is. She will know that I obviously cannot at this stage clarify our intentions post-Brexit, because that is tied up in a series of wider issues, but I hope I can reassure her that we understand completely the importance of continued ambition in this area. We are very clear that there remains considerable scope for harnessing creativity and innovation in using design to improve standards, which will in turn reduce costs.
The Minister is commenting on the need to work in partnership, and I absolutely agree. May I just point out that the warm home discount scheme does not apply in Northern Ireland, which makes fuel poverty there even worse? In partnership with the incoming Administration in Northern Ireland, will the Minister pledge to prioritise the need to introduce the warm home discount scheme in Northern Ireland, even if that means that the Government in Westminster have to provide additional funding to the Northern Ireland Executive?
I listened very carefully to the hon. Lady, but the bottom line is that this is a devolved matter. I am more than happy to discuss the fuel poverty strategy with counterparts in Northern Ireland, but it is categorically a devolved matter.
I was talking about partnerships, and I am glad that the House has filled up a little—when we started it was a little bare—because I am looking forward to hearing from hon. Members about their experience of what is happening with partnerships in their constituencies, including what is and is not working, and more widely about what is going on in their constituencies to help bring about change to support households that need support.
The Minister is talking about partnership at the local level. A huge variety of organisations in Greenwich and Woolwich are working on this very issue, not least South East London Community Energy. Is the Department giving any thought to how such organisations can link up with local authorities to avoid the fragmentation that can exist at the local level, and ensure they work in partnership to target people who need their help the most?
I am very sincere in what I say about partnerships—when I was the Minister for Civil Society, it was absolutely core to our approach—so we are very keen to get good information about what is working and what is not working with partnerships, because they are easy to talk about, but they are actually quite hard to implement in practice. We are doing some work with local authorities, but the hon. Gentleman has made an important point about the sharing of knowledge and information so that we can get a better understanding of what works. Some of this stuff is quite complex in relation to breaking down the social barriers to people accepting help when it is offered.
The hon. Member for Brighton, Pavilion (Caroline Lucas) quite rightly said that we must be ambitious in the way we design buildings, and I could not agree more, although I am not sure that this is really connected to Brexit. The fact is that it is not merely the affordability of purchasing or renting a building that is so important, but the affordability of the operation of that building thereafter. By having good design principles for energy efficiency and insulation in its design process, we can make a building more affordable to live or work in, rather than simply making it more affordable to buy in the first place.
On co-operation and partnerships, what are the Minister’s plans for using the data owned by the Data Communications Company from smart meters not only to nudge people to switch tariffs, but to make the data available to other organisations that could advise people on emerging technologies, such as demand management, so that they can load shift to minimise their bills in that way?
My hon. Friend makes important points not only about the importance of good design and the opportunities attached to it, but about the potential for data to make us more efficient in targeting support and to help us develop the smarter system that he talks about so eloquently. He will know that there are tremendous sensitivities around the sharing of data, towards which the Government have to take an extremely responsible attitude, but he is right about the opportunities. What he talks about is under active consideration, as he knows.
I ought to bring my remarks to a close so that colleagues can contribute to the debate, but I want to bring us back to why we are here today. Fuel poverty affects households in all our constituencies and it is a problem that we should work together to solve collectively. The fuel poverty strategy made it clear that the Government are committed to ensuring that there is sufficient parliamentary scrutiny of fuel poverty through the means of this annual debate, so I welcome the views of the hon. Members who are in the Chamber.
As I have suggested in my opening remarks, it is clear that we have made progress, not least in setting up, after too long, the much-needed strategic framework and statutory targets that will drive progress and ambition through successive Governments. The numbers show that since 2010 this Government and the previous Government have made progress, but the social challenge we face is very stubborn indeed. I reassure the House that the Government remain extremely committed not just to delivering on our manifesto commitment, but to keeping the country on track to meeting the 2030 target, however challenging.
I am delighted to be debating such an important issue with the Minister in this, our first debate together in this Chamber. I welcome the comments he has made thus far.
As Members are aware, this debate is a statutory requirement. As such, it is a prime opportunity to examine the efficacy of the Government’s actions to date in tackling fuel poverty. As the Minister has said, it is an opportunity for Members to share experiences from their own constituencies on this matter.
My local authority has been championing its own fuel poverty strategy. “A Fair Energy Deal for Salford” is one campaign that it is working on with partners such as National Energy Action, energy companies, registered social landlords and landlords in the private rented sector to obtain a pledge to reduce the number of prepayment meters and replace them with standard meters. A shocking 22% of households in Salford have prepayment meters, whereas the national average is 15.1%, as the Minister knows.
In addition, the ability of my local authority to assist vulnerable households has been extended. It launched the “Warm Salford” campaign in 2015, which provides additional grants to give vulnerable households better access to energy company obligation products or to assist those who are vulnerable, but who do not meet the criteria of the national schemes.
We also launched the Warm Salford Referral Network in October 2014, which brings together a partnership of local authorities, the NHS and third-sector partners. It aims to reach those who are most vulnerable to fuel poverty. The good news is that from 2015 to December 2016, more than 310 vulnerable households were referred to it, given advice and referred on for the help they needed to access local, regional and national schemes.
Despite that positive news, 11,333 homes—that is 10.8% of Salford’s households—are still living in fuel poverty. Nationally, despite similar action by other local authorities, more than 4 million families and households are living in fuel poverty in the UK. That is 15 homes in every 100. Members from all parts of the House will no doubt have been contacted by their constituents about fuel poverty. If not, I suggest that they watch the film “I, Daniel Blake”, which shows in painful detail the desperation of one family trying to warm themselves on tea lights in a plant pot because they cannot afford to top up the prepayment meter.
I met one such constituent in Salford—a mother who was living in poorly maintained private sector accommodation, with small children sleeping beside walls covered in black mould. There was not enough money for that mother to pay the bills or even turn the heating on to alleviate the damp conditions. The desperation in that mother’s eyes when she told me she just could not cope any more, as I tried to find help out there, will haunt me forever.
Sadly, that is not a stand-alone case. A cold, poorly insulated home does not just mean that lots of heat is wasted, resulting in a high bill; it means people getting ill, repeated visits to the doctor, a much longer recovery time and, ultimately, greater pressure on the NHS.
If I heard the hon. Lady correctly, she said that 15% of households in the UK live in fuel poverty. In Wales, the figure is considerably worse at well over a third. The Welsh Government have failed to make any inroads into that over the past 20 years or so, despite Wales being an energy-rich nation and a substantial exporter of electricity. Does she agree that for the people of Wales, at least part of the answer should be Welsh communities getting control over their own energy resources?
The hon. Gentleman makes a very interesting point. There is scope for communities to regain control of their energy supplies in the longer term. That is certainly something the Government should look at. There are a number of other important points that I would like the Minister to address today, so I will continue with my submission.
The health impacts of fuel poverty are worst for those who are most vulnerable—for example, disabled people who find it difficult to move around and do not get the chance to warm up; young people, who run twice the risk of developing a respiratory condition such as asthma; and adolescents, who face a fivefold increase in the likelihood of mental illness. Evidence also highlights that infants living in cold conditions have a 30% greater risk of admission to hospital or primary care facilities. Older people also face a significantly high risk, as the Marmot review team highlighted, stating that they are almost three times more likely to suffer from coughing, wheezing and respiratory illness.
Sir John Hills, professor of social policy at the London School of Economics, states that there is a body of persuasive evidence that links low temperatures with a number of health impacts, ranging from minor infections to serious medical conditions that can ultimately prove fatal. Sadly, that has proven to be the case, with the NEA finding that an average of over 8,000 people in England and Wales die each winter because they cannot keep their homes warm at a reasonable cost. That estimate includes eight attributable deaths in my constituency of Salford and Eccles—eight deaths.
The shadow Secretary of State makes an important and compelling point on the importance of heat to providing a healthy home. Does she agree that one solution is to give more encouragement to heat networks, particularly those that take waste heat from industry or business and use it to heat homes in the immediate vicinity, as I believe happens at MediaCity in Salford in her own constituency?
They need to give greater consideration to it and provide greater investment. I will move on.
Fuel poverty has a greater social impact. Children who live in cold homes see an impact on their ability to achieve, whether because of illness or simply because of a poor quality home environment. The financial and emotional stress it can place on families can damage relationships and lead to long-term stress-related mental health issues.
I am concerned that, although some work has been done in this area, the fact remains that the number of homes in fuel poverty has slowly been creeping up. The fuel poverty gap, which is a measure of the difference between a household’s energy bill and what it can afford to pay, increased from £235 in 2003 to £371 in 2014. At the same time, we have seen stagnating wages, or a lost decade in earnings as the Bank of England has termed it. What is more worrying is that after the recent Budget, the Institute for Fiscal Studies stated that, on the Government’s current economic trajectory, average wages in 2022 will be worse in real terms than before the financial crash. The Minister will appreciate that as inflation pushes up, the differential between price increases and wage growth will continue to close. Even if energy prices are capped, which I know is an option being considered by the Government, the amount that families have to spend on bills will still get smaller and smaller.
It is not enough, therefore, simply to tackle fuel poverty as a stand-alone issue. The Government must tackle the causes of fuel poverty. Without investing in the tools that businesses need to drive up wages and productivity, wages will continue to stagnate in the long term. Sadly, in the Budget we did not see the investment required from the Government that would in any way go towards bringing us in line with other industrial countries. It is therefore no shock that Britain is the only large developed country where wages fell even as economic growth returned after the crash. I digress slightly, Madam Deputy Speaker.
I will gently move the hon. Lady back to energy efficiency. She is making a very compelling public health case for the need to tackle energy efficiency and fuel poverty. Does she share my frustration that the national infrastructure assessment is a golden opportunity with respect to putting energy efficiency front and centre in the Government’s low carbon green strategy and industrial strategy? They should do that, because it could help to sort out not only the health crisis, but the climate crisis.
I completely agree with the hon. Lady. I share her frustrations and I will come on to that point shortly.
Looking at the efficacy of the Government’s fuel poverty initiatives thus far, they made a manifesto commitment to install one low-cost insulation measure in 1 million homes over the five years of the parliamentary term. That is welcome, but I suggest the Government need to be far more ambitious. Labour, for example, delivered 2.5 million insulation measures installed in homes in just one single year.
Turning to the funding through the warm home discount, whereby money is given as relief to bill payers, this is commendable and it should certainly continue, but it is physically insulating homes themselves that will provide the long-term solution. On the energy company obligation, the main mechanism by which the Government take action on fuel poverty, it has a clear pathway only to next year. There is currently no clear indication of what will happen to the obligation after 2018 and the Government’s consultation on its future has not been forthcoming. I would be grateful if the Minister provided in this debate an update on progress on that area.
The Minister will be absolutely distraught to hear that the UK ranked 14 out of 16 western European countries for fuel poverty, and ranked bottom for the proportion of people who cannot afford to adequately heat their home. I think he would probably agree that this is not a brilliant record for the country with the fifth-largest economy in the world. A helpful comparison to draw is Sweden, where incomes are similar to the UK’s but winters are much colder and gas is more expensive. One might think that Sweden would have a significant fuel poverty problem that far outstripped that of the UK, which by comparison has mild winters, but levels of fuel poverty in Sweden are approximately half those found in the UK. The major difference is that Swedish homes are properly insulated. A typical Swedish wall is three times more energy efficient. A commitment to that kind of innovation, along with providing the necessary funding, will truly tackle fuel poverty.
The Labour party is keen to make that commitment as part of its industrial strategy to end social injustice and to build a world-leading UK-based renewables and energy efficiency sector with UK-based supply chains. Labour agrees with the NEA, and the hon. Member for Brighton, Pavilion (Caroline Lucas), which states that the National Infrastructure Commission and the UK Government must act on the strong case for domestic energy efficiency to be regarded as a hugely important infrastructure priority. The Minister might wish to outline the Government’s position on that and whether he agrees with Labour.
Economic analysis by the well-regarded Frontier Economics suggests that the net present value of investing in insulating homes could be as valuable as the HS2 project. Cambridge Econometrics found that for each pound spent on insulating homes £1.12 is generated for the Treasury and £3 for the economy in GDP, and 42 pence is saved by the NHS. It is clear that investing in insulation has a positive effect not just for those in fuel poverty or for climate change, but for the wider economy. Unfortunately, however, the fact is that if we compare major insulation measures being installed today to 10 years ago under the previous Labour Government, there has been a huge 88% fall. Put another way, the long-term solution to fuel poverty gets 12% of the support that it originally received.
The fuel poor, by definition, are not in a place to insulate their own homes. It is therefore incumbent on the Government to step in. It is also important for the Government to recognise the wider benefits a real fuel efficiency infrastructure plan would have for all income groups, industry and the wider economy. A little more support from the Government, both to those affected by fuel poverty and to industries waiting to blossom in the renewables sector, could unleash untold economic and social benefits.
To conclude, the Government’s intentions, and those of Ministers, might be good, but there is still a mountain of work to be done. The Labour party is open to working across the House to end fuel poverty for all our constituents. I do hope the Minster has listened to my concerns and will respond accordingly.
I welcome this debate. I hope the Minister, in summing up, will reflect on the impact of high energy costs and high energy demand on the highlands and islands of Scotland in particular. As a highlands MP, I know that fuel poverty is a massive issue.
We need the Government to listen to our story, appreciate our particular situation and work with all of us to deliver fairness in energy charging that can offer hope that, working together, we can drive consumers out of fuel poverty. According to Scottish Government statistics, 34% of Scottish households are in fuel poverty, while for the highlands the figure is 56%; for the western isles, it is 59% and for Orkney it is 65%. Those are shocking statistics. More than half of households in much of the highlands and about two thirds of households in Orkney are in fuel poverty. Can we in this House accept those statistics?
I have to say that there have been times in the past when the House listened to the legitimate grievances of highlanders and islanders, and took action to improve our situation. Just over 100 years ago, in 1886, the House passed an Act that for the first time gave security of tenure to crofters. The clearances and the removal of people, often in a brutal way, was stopped by the crofting Act’s coming into force. In 1965, the Government established the Highlands and Islands development board, now known as Highlands and Islands Enterprise—a venture instrumental in reversing decades of economic decline in the highlands and islands.
I ask the House today to recognise the unfairness in the market for electricity costs that penalise highlanders and islanders. I am asking for the same consideration that was shown when the highlands required Government intervention in the past. We need it now to create fairness in electricity pricing. I accept that those of us from these areas live in some of the most beautiful parts of not just Scotland and the UK, but the world. But we cannot heat our homes with the breath-taking scenery. It is perhaps an enchanting landscape, but often there are biting winds, driving rain and long dark cold winter nights. The aesthetic beauty of the highlands can gladden the heart, but it will not deliver warmth to a pensioner at an affordable cost over a long winter.
We hear repeatedly that the Government want to help those who are just about managing. In many cases in the highlands, the cost of heating means that too many of our people are having to make the choice between putting food on the table and heating their homes. I mentioned that 56% of highland households are in fuel poverty, but 74% of our elderly population are in fuel poverty, of whom 34% are in extreme fuel poverty. I ask the House to dwell on these statistics and then consider what we can do to challenge this situation.
On the island of Skye, electricity came with the construction of the Storr Lochs hydro scheme in the early 1950s. The facility, apart from a small upgrade over the last few years, will now be virtually fully depreciated. It will be producing very cheap, almost free electricity on to the grid: cheap electricity that islanders then have to pay a premium to get back. It is simply an injustice that in an area of the highest levels of fuel poverty, where we produce cheap electricity, we are being overcharged. That is the reality.
There is the broader point that Scotland is an energy-rich country, whether from fossil fuels or our ability to deliver renewable energy today and in the future. Our unique characteristics as an energy producer should not be trapping our people in fuel poverty. Let us not forget that Westminster has extracted a bounty of £360 billion in taxation receipts from North sea oil since the 1970s. Where is the long-run benefit of this dividend? Why is it that the citizens of an energy-rich country such as Scotland, which has produced a bonanza for the Government, suffer fuel poverty to such an extent? We need to take into account the human cost of this failure to tackle head on the root cause of fuel poverty—high and unfair pricing through the lack of a universal market as one issue.
The charity Turn2us has found that one in two low-income households are struggling to afford their energy costs, despite being in work. Among the hardest hit are people with disabilities, with more than two in three of them, 67%, reporting their struggles. Families are also hard hit: almost two thirds of working parents, 65%, are unable to meet these costs. Worryingly, of the households that are struggling with energy costs, nearly half have done so for more than a year.
The knock-on effect is severe, with a third forced to skip meals and over a fifth experiencing stress and other mental health problems. Some of the comments made to Turn2us included these:
“The bills are killing me, sometimes I have to contemplate paying all the rent or heating my home…There are many pensioners like myself that don’t qualify for any help but still have to decide whether to heat or eat…Starve or freeze? Either way you get ill, can’t work, eat or pay any bills… No lights only candles, only hoover once a week, only use washing machine once a week, no heating, meals that cook quickly.”
This is not an abstract discussion. These are comments from real people who are struggling on a daily basis. I remind Members that 70% of elderly highlanders are in fuel poverty. That is why people get angry when they see a lack of action. When we hear hon. Members questioning the retention of the triple lock on future rises for the state pension, many of us proclaim that this will not happen in our name. I became an MP to stand up for my constituents and I cannot accept that so many highlanders are in fuel poverty. There is a debate on Scotland’s constitutional future, and we will have a vote on our independence. Let me say that in an independent Scotland, we would recognise our responsibilities to those in fuel poverty and would take action to eradicate it.
The UK has a universal market for postal delivery, as for many other services. People pay the same price whether they live in Skye or Somerset, in Ardnamurchan or Avon, in Gairloch or Gloucester. Why is that not the case for electricity distribution charges? Why are highlanders and islanders facing a premium in electricity distribution charges just because of where they live?
The right hon. Member for South Northamptonshire (Andrea Leadsom) said in her capacity as energy Minister in 2015:
“It is not right that people face higher electricity costs just because of where they live.”
I commend the right hon. Lady for those remarks, but if they are to mean anything they have to be matched by actions from this Government. The issue is not just about the highlands and islands; there are 14 regional markets throughout the UK with different levels of network charges. It is not about price competition either, but about a regulated charge varying from region to region through a price control framework. The reality is that if people live in the highlands and islands, they will pay for the privilege—courtesy of the UK Government.
Electricity distribution charges for the north of Scotland are 84% higher than they are for London. Fuel poverty is exacerbated by the lack of a universal market. Westminster calls the tune; highlanders and islanders pay the price. We pay a high price for transmission charges, but we also have a high rate of energy consumption. The highlands and islands are noted for windy and wet conditions. It is not unusual for people in the highlands to have their heating on all year round. Ofgem noted in a study on the matter that households in the north of Scotland would benefit from a cost reduction of about £60 a year if there was a universal network charge. Sixty pounds would make a significant impact on someone on a low income or a pensioner.
In the highlands and islands, not only are people faced with high transmission charges, but many consumers suffer from a lack of choice in energy provision. Most households cannot benefit from a gas grid connection; the choice is often between electricity and domestic heating oil. The hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), who is no longer in his place, noted that prices will go up substantially because of currency movements in the recent past. With such limitations, the last thing we need is price discrimination—for that is what it is—being foisted on us.
Where people live should not result in their being penalised by having to pay higher network charges. Where is the “one nation” that the UK Government speak of so fondly? [Interruption.] I notice that the Under-Secretary of State is laughing. I will happily give way to him if he wants to explain why he thinks this is a laughing matter; it is no laughing matter to people in the highlands and islands.
I am delighted to intervene on the hon. Gentleman to ask how he can seriously invoke the principle of “one nation”, to which my party has been an adherent for 100 years, when he is a Scottish National party Member who is campaigning to remove his country from this nation.
I am glad that the hon. Gentleman has risen to explain that, but he cannot get away from the fact that he sat there and smugly laughed when I made my point about the one nation. The point I am making is that it is your Government—I apologise for using the word “your”, Madam Deputy Speaker. It is the Government who are responsible for over-charging highlanders, because they will not recognise that we should have a universal market. It is the Government of the United Kingdom who should address that. Laughing, which is what the hon. Gentleman did, at highlanders and islanders is not acceptable. I hope people in Scotland were watching what happened on the Government Front Bench just now.
As ever, the hon. Gentleman is standing up to make an impassioned, eloquent and compassionate speech, but may I pick him up on one point? He mentioned “one nation”, and my hon. Friend the Under-Secretary intervened. Earlier in the hon. Gentleman’s speech, he mentioned the triple lock. Is that not something for which to thank the Government, rather than castigate them? Will he acknowledge when the Government get things right, as well as challenge them when he perceives there are errors?
I will happily do so, and I have spoken about the triple lock on many occasions, but we have had debates here in the recent past in which many Members have questioned continuing with the triple lock. I am asking the Government to commit to retaining that triple lock in order to drive pensioners out of poverty. I commend the Government because they did the right thing in that particular case, but I hope that their commitment to the triple lock will be sustained so that it continues to drive pensioners out of poverty.
When they are right, I happily give credit to the Government, but I do not take kindly to Front-Bench Members laughing when I am standing up for my constituents in pointing out that the definition of “one nation” that the Government talk about is inappropriate when highlanders and islanders are not being treated fairly. There should be equity and fairness, but they do not exist in the UK today.
The highlands and islands of Scotland experience the harshest climatic conditions in the UK and record levels of fuel poverty. There is far greater, area-wide dependence on the use of electricity for heating as well as lighting, but the standard unit price charged is 2p per kilowatt-hour more than in most other parts of the UK, and 6p or more for the various “economy” tariffs on offer. Perhaps 2p per kilowatt-hour does not sound much, but it is a price premium of 15%. That is what this Government are doing to people in the highlands and islands. They are punishing people there on the basis of where they live, despite the fact that, in many cases, we produce the cheapest electricity, as we do in Skye. The Government are culpable over that, which is why I am asking the Minister to address the point when he sums up later this afternoon. That price for living in the highlands and islands is set by the Government, and it is not acceptable.
On top of all this, there is far greater reliance in off-gas areas on using domestic heating oil and solid fuel, which pushes up household heating costs further still. As a result, domestic energy bills in off-gas areas are, on average, £1,000 more per annum than the £1,369 dual fuel national average for 2014. Figures from the Lochalsh & Skye Energy Advice Service in my constituency suggest that the average total heating bills in Skye and Lochalsh amount to an eye-watering £2,218 per annum; for those whose primary heating is from oil, the average is as high as £2,519. To cap it all, electricity customers with prepayment meters, often the least well off, not only have to pay additional standing charges, but are discovering that their notional right to change to a cheaper supplier has become impracticable.
The Government must also accept that having 14 regional markets in the UK, with consumers in the highlands and islands paying a premium, is discriminatory. Many Members claim that responsibility for fuel poverty is devolved, which of course it is, but we have no control over the pricing or the regulatory environment; we can deal only with the consequences of fuel poverty that are symptoms of a market that is wholly under the jurisdiction of Westminster.
Our Government in Edinburgh have taken a range of actions to mitigate the effects of fuel poverty, but we need the tools that would come with having greater powers—notably through independence—to be able to deal fully with the circumstances that lead to fuel poverty. We are having to clear up the effects of the lack of a universal market and the pricing regime. Tackling fuel poverty has been a priority for the SNP Government, and by 2021 we will have committed over £1 billion to making Scottish homes warmer and cheaper to heat.
The financial support to tackle fuel poverty is increasing. The Scottish Government’s budget for fuel poverty and energy efficiency measures in 2017-18 will be £114 million, an increase of more than 11% on the previous year. An independent review of the way in which fuel poverty is defined has been undertaken by a panel of four academic experts in the light of concerns that current definitions may be impeding efforts to target those most in need. In the meantime, there is a new pilot programme in rural areas offering targeted support to cut energy bills.
Although fuel prices are beyond our control and fuel price moves can militate against our efforts to reduce fuel poverty, it is welcome that, owing to relatively stable market conditions, the number of people in fuel poverty in Scotland has fallen by 100,000. That reduction was heavily influenced by the measures that we have introduced. However, it is worth noting that fuel poverty in Scotland would be at only 8% if fuel prices had only risen in line with inflation between 2002 and 2015. High and rising pricing is our biggest enemy—and I use that word advisedly.
Scottish Government action has been commended by, among others, the Scottish Fuel Poverty Strategic Working Group in a recent report, but more needs to be done in a holistic manner to tackle the scourge of fuel poverty. New affordable homes are part of that mix, and this year the Scottish Government will invest £590 million to increase the supply of affordable homes in Scotland. Targeted financial support of £1,900 for low-income families through the Best Start grant also helps—support, incidentally, that is £1,400 higher than what is on offer from the UK Government.
We are taking our responsibilities seriously. Through those measures, through such initiatives as supporting a real living wage and through the recently published Child Poverty (Scotland) Bill, we will use our powers to improve the conditions of many of those who are suffering fuel poverty in Scotland.
Finally, I want to reflect on the recently announced 14.9% increase in electricity pricing by SSE and on the fact that a 5% increase in prices pushes an additional 46,000 people in Scotland into fuel poverty. In the past, I have commended SSE for its customer service and the astonishing way in which its staff respond when bad weather leads to power interruptions, as it sometimes does during the winter months in the highlands. The speed of the response of the company and its customer service have been exemplary. Notwithstanding that commendation, however, it should be recognised that being effectively a near-monopoly supplier in the highlands and islands also brings a duty to act in a spirit of social responsibility. After all, in many respects SSE is a public utility in all but name. A price rise of this magnitude is simply not justified; the company has let itself down.
We await SSE’s financial results for the year to March 2017, but its interim statement forecast a year of growth and dividend increases. In the year to March 2016, its dividends to shareholders increased by 18.3% to £708 million. I would caution the company to ensure that it behaves in a socially responsible manner at all times. Increasing rewards to shareholders so generously does not sit well with the reality of so many of its customers being in fuel poverty, and now being pushed further into fuel poverty by this price increase. I am not against the company’s making a reasonable return on its investments—it must generate sufficient cash to invest in future electricity generation—but it must also balance the needs of all its stakeholders. In particular, affordability and the ability to pay bills must be at the heart of its thinking when it is addressing executive pay and shareholder rewards.
I welcome today’s debate, but we need action from the UK Government, most notably on the creation of a universal market. People should not be penalised because of where they live. Equity and fairness must be introduced, and it is time for the Government to take appropriate action.
I want to approach today’s debate from the perspective of older people and those who are particularly vulnerable as a result of fuel poverty. I want to be a voice for the people in Scotland who are disproportionately affected by fuel poverty, as others are across the United Kingdom. I commend my hon. Friend the Member for Ross, Skye and Lochaber (Ian Blackford) for talking about the difficulties faced by those in his constituency and throughout the highlands.
In Scotland, 58% of single pensioner households are in fuel poverty, as are 44% of pensioner couples. The UK as a whole has one of the highest rates of fuel poverty and one of the most inefficient housing stocks in Europe. Fuel poverty rates are higher in Scotland. It is an indisputable fact that more often than not it is colder in Braemar than in Bournemouth, and that means that houses must be heated from a lower ambient temperature and for longer periods throughout the year.
Today in London the sun is shining, and although it is cold, older and vulnerable people could probably venture outside. This morning I received two picture messages showing snow lying on the ground outside my Wishaw home. Not many older or vulnerable people will be venturing outside there until it thaws. They will need to heat their homes in the meantime, and the cost of heating those homes is a burden that many of them simply cannot afford. That is shameful. When people are old, infirm or immobile, the cost of heating can be excessive, especially for those on low fixed incomes.
Many in fuel poverty will be using prepayment meters to pay for the cost of heating their homes. Consumers who are in arrears with gas or electricity bills can be switched to prepayment meters. According to Ofgem, more than 90% of those consumers are currently not repaying a debt, and are therefore unable to switch to different tariffs that could cut their fuel costs. Switching is absolutely impossible for them.
There are two main ways of tackling fuel poverty. One is to make homes more energy-efficient, and, as housing is a devolved competence, the Scottish Government have poured significant resources into making homes more affordable to heat.
Is the hon. Lady aware that electricity prices have risen by about 125% overall, and gas prices have risen by about 75%? More important from the point of view of older people, the Government have withdrawn their green deal. Houses could have been insulated against cold weather. I hope that the Minister will respond to that point when he winds up the debate.
I thank the hon. Gentleman for making that point. Thank goodness I live in Scotland, because the Scottish Government are pouring even more money into making homes more energy-efficient. I myself have benefited from a deal whereby my loft was insulated at no cost, because by that time both my husband and I were of pensionable age. In fact, I think that it was only my husband who was of pensionable age. May I make a plea for that?
The hon. Gentleman is cheering me on from the Benches behind me.
By 2021, the Scottish Government will have spent more than £1 billion to ensure that Scottish homes and other buildings are warmer. Since 2008, more than 1 million energy efficiency measures have been installed in nearly 1 million households across Scotland, and the proportion of homes with the three highest energy ratings has increased by 71 per cent since 2010.
Scottish local authorities have also had an additional £10 million this winter to ensure that homes are energy efficient. The Scottish Government do not do that because it is a nice thing to do; they do it because it is absolutely necessary and imperative, to protect the most vulnerable people living in Scotland. Also, rather than simply throwing money at the problem, the Scottish Government have taken a consultative approach, working with many independent stakeholders and acting on their recommendations. My hon. Friend the Member for Ross, Skye and Lochaber mentioned the independent Scottish Fuel Poverty Strategic Working Group, and it has commended the Scottish Government; I will come back to that later.
Progress has been made. In 2015 almost 100,000 fewer households were in fuel poverty than in 2014. Energy to heat our home is a basic human right that no one should go without. That is especially true for older and vulnerable people in our society. Action has been, and will continue to be, taken in Scotland during the course of this Parliament, and a warm homes Bill will be introduced to set a new target for tackling fuel poverty so that it may be challenged head on.
I received an email from Age Scotland this morning. It welcomes the fact that the Scottish Government have designated energy efficiency as a national infrastructure priority. They have also given a commitment to invest half a billion pounds over the lifetime of this Parliament to tackle fuel poverty and promote energy efficiency. That is crucial, and it is what the UK Government need to do for homes in England and Wales, and to help in Northern Ireland. I know this does not come under the competency, but the Westminster Government is the largest Government in the UK and they must set an example.
As has been said, rural communities have particular issues with fuel poverty. In Scotland, the fuel poverty rate is 50% in rural areas compared with 32% in towns and cities, and a staggering 71% of homes in the Western Isles are in fuel poverty. Due to the demographics of these islands, pensioners are largely affected. Only this month, on 8 March, the Scottish Government announced a pilot scheme that will see 220 rural households offered support specific to the needs of older people in these islands to cut their energy bills. The pilot and its review will be used to develop the Scottish Government’s new fuel poverty strategy, due to be published later this year.
The Scottish Government have made huge efforts to minimise the number of older people affected by fuel poverty but are hampered by realities such as many rural homes being off the mains or off-grid, which means they cannot access gas supplies as the majority of us do—something most of us in this Chamber take for granted.
New powers to the Scottish Parliament will maintain winter fuel payments for pensioners in Scotland. Furthermore, early payments to almost 80,000 pensioners who live off-grid will also be made available so that they can take advantage of lower energy prices available during the summer months. That is a common sense idea that will help improve the lives of many older people. In addition, the winter fuel payment will be extended to families with children in receipt of the highest care component of disability living allowance.
As I have shown, the Scottish Government are already taking great steps to address fuel poverty. However, only so many powers to do so are located north of the border; the rest lie here at Westminster, and it is therefore here that the responsibility must lie. As has been mentioned, the fuel poverty rate for 2015 would have been 8.4% instead of 31% if fuel prices had only risen with inflation. Instead, the UK Government have allowed corporations to hike up energy prices, to the detriment of vulnerable groups who are in greater need of a warm home—a basic necessity which, let us be honest, can make the difference between life and death. The current cost of fuel poverty to NHS Scotland is calculated at £80 million per annum, and that must be much higher in the rest of the UK.
Increases in prices can outweigh everything that the Scottish Government are trying to do on fuel efficiency. No matter how much the Scottish Government spend, they can still have little impact on fuel prices across the UK. However, a Scottish Government Minister chaired a summit on 14 December last year urging energy companies to make a difference to low-income households living in fuel poverty and facing a poverty premium tax.
No, I cannot, because I am not here representing the Scottish Government. The electrification of heat is a joke in some of the far-flung places in the highlands and islands. If we electrify heat, we are then causing more carbon emissions in many regards, depending on what fuel we use. We in Scotland already have huge power resources run by water power, and the Scottish Government only recently opened a new dam that would produce—[Interruption.] The hon. Member for Wells (James Heappey) is chuntering from a sedentary position; I beg his pardon, but I can only answer what I have been asked. Recently the Scottish Government opened a new dam, producing power, but we have the real difficulties of getting power from Scotland on to the grid at a reasonable cost.
No, I am sorry, but I will continue my speech.
There are of course other ways that the UK Government can take action. They can increase household incomes, but instead they have allowed wages to stagnate, adopted a false living wage for select age groups, and pushed people further into poverty through their welfare cuts. The truth is that this Government do not do enough to help our most vulnerable people.
The Scottish Government have now taken over control of some of the new welfare powers. They have hit the ground running by doing what they can to support vulnerable groups, and please be assured that the new Scottish Government welfare powers will be built on a foundation of respect and dignity—things that are severely lacking in the UK welfare regime. For older people, the Scottish Government have launched a campaign to ensure that all groups are able to access the public funds they are entitled to; for example, one third of pensioners are entitled to pension credit but do not claim it. The new best start grant has already been referred to, and the Scottish Government have spent almost £58 million mitigating the impact of Tory austerity cuts to welfare on homes across Scotland. A £7.7 million increase in funding for discretionary housing payments will be made as the Scottish Parliament takes over more welfare powers. Between April 2013 and March 2016, local authorities will have made 321,000 discretionary housing payment awards totalling £129 million.
I can tell the House from personal experience how important these discretionary housing payments and the Scottish welfare fund set up by the Scottish Government to mitigate these cuts were to people when I was a local councillor. Since becoming an MP, I can also tell of the numbers of people attending my surgeries in real poverty, and that impacts especially on their ability to keep their houses warm; they are in real fuel poverty as a direct result of some of the actions taken by this Government.
The Scottish Government have also taken steps to mitigate the impact of the bedroom tax. All of this has helped the most vulnerable groups in Scotland. However—this will come as no surprise to the House—I agree with the First Minister that the Scottish Parliament’s finances and powers should be used to tackle poverty at its core, rather than being a plaster over Tory neglect. Given the powers that they currently have, the Scottish Government are doing what they can to alleviate fuel poverty in Scotland. Much of what they have done has helped with energy efficiency, thus reducing bills. The World Health Organisation attributes 30% of preventable deaths to cold and poorly insulated housing. Inroads have been made in Scotland to improve housing. In fact, some new houses were built and allocated recently in my constituency and they have been built to the highest specifications. This will enable the people living in them to spend far less on fuel than is currently the case in most houses across Scotland.
It is imperative that the UK Government urgently address the cost of energy across the UK. The large energy firms must be made to fulfil their social responsibilities. It is shameful that so many folk across the UK have to juggle heating and eating. Rolling out smart meters is not enough when people have no means of keeping warm. The fact that the Minister refers to an annual debate on fuel poverty should give us all pause for thought.
I had not intended to speak today because I thought this was going to be a packed debate; that was my misjudgment. This is a crucial debate, however, and I want to add a few words. One of the frustrations that many of us feel is that tackling fuel poverty by investing in energy efficiency can really be a win-win situation in getting people’s fuel bills down, tackling climate change and creating jobs. The creation of those jobs has led to the conclusion that by investing in tackling energy efficiency problems we can actually raise more money than we need to invest. That was rightly mentioned by the hon. Member for Salford and Eccles (Rebecca Long Bailey).
Evidence shows that £3 can be returned to the economy for every £1 invested by central Government, so when the Government say that they cannot afford to invest more in this agenda, it is only right for us to point out that, if the agenda were tackled properly, it could save them money as well as having very real impacts such as reducing the serious harm being done to so many in our communities and preventing premature deaths. So, given that there are so few win-wins in politics, it seems particularly perverse that the Government are turning their back on this one. Taking action in this way would help to ensure that the 2.3 million families living in fuel poverty across the UK had some kind of hope for the future.
We have heard from several hon. Members that fuel poverty is not just an inconvenience; it is nothing less than a national crisis. Forgive me for referencing this for, I think, a third time, but this is so frustrating because we know that we need to scale up investment in energy efficiency, and the national infrastructure process would have been an obvious way to do that. It would be a way to channel funding into this incredibly important area, which otherwise risks being overlooked in many ways.
I want to mention the Committee on Climate Change, whose report last week made it clear that improving energy efficiency through better insulating our homes is key to meeting our climate targets. In that respect, will the Minister give us an indication of when the severely delayed clean growth plan will be published and whether it will include a comprehensive energy efficiency plan, including a statutory commitment to ensuring that all fuel-poor homes have an energy performance rating of at least C by 2030 at the latest?
With one in 10 households living in fuel poverty, it is also a matter of concern that the Government have no scheme for comprehensively insulating fuel-poor homes in England. Meanwhile, the changes being made to the energy company obligation are likely to decrease the support available to fuel-poor households, with those on low incomes unable to replace inefficient gas boilers, for example. We know that 9,000 excess deaths were linked to fuel poverty last winter, and if we are to take seriously the claims being made about the Government’s commitment to this issue, we need to know when they will put in place the kind of actions that are needed.
Finally, I want to say a little bit about how people can, to coin a phrase, take back control. That phrase has been used a lot in recent months, and if there is one area of our lives where we should be taking back control, it is in relation to energy. Right now, our energy system is in the hands of the big six, and for ordinary consumers, it can feel very hard to have any kind of leverage. We are always told that we simply have to switch our power supplier, but again, that puts responsibility on the consumer and we are still at the mercy of whatever the different energy companies come up with.
Instead of having the big six, we should have 60,000. We should do what Germany is doing and have real community energy, not just as a nice-to-have extra bit of luxury but as the bread and butter of our energy system. If we were to do that, we could really give people more control over energy. We could ensure that the huge energy companies were not siphoning off big profits and that investment was going back into the community. We would need to ensure priority access to the grid for community renewables, and a community right of first use—at wholesale, not retail, prices—of the energy generated. We would also need a planning framework that was able to determine locally the degree of community ownership required as a precondition of permitted development, and a right to acquire or own the local distribution network and to sell long consumption—in other words, demand reduction—alongside demand management and renewable energy. I can also imagine a role for the Green Investment Bank, if it was still properly in our hands rather than being flogged off to Macquarie, as seems likely to happen.
We have heard a lot today about the importance of tackling fuel poverty, and that is exactly right. We have also heard a lot about the impact of fuel poverty on our constituents. If we were to take a slightly bolder view, we could solve fuel poverty at the same time as bringing energy properly back into community hands—into the hands of us all—and that is a vision worth fighting for.
We are in a cold homes crisis, with more than 4 million households in fuel poverty across the UK. Across the UK in 2014-2015, there were 43,900 excess winter deaths. According to the World Health Organisation, a minimum of 30% of those deaths resulted from cold homes. In my constituency, there are 7,241 households struggling in fuel poverty. Life in fuel poverty is miserable. No one should be choosing between heating their home and eating. Children should not be growing up in cold, damp rooms. Old people should not have to stay in bed or live in just one room because they cannot warm their house.
This debate is happening because the last Administration’s fuel poverty strategy, published in 2015, mandated it to happen. The current statutory target is to lift as many fuel-poor households up to band C energy efficiency standard “as is reasonably practicable” by 2030. This Government’s record on fuel poverty and their performance against that target are abysmal and going nowhere fast. The charity National Energy Action estimates that at this rate we will miss the target by 80 years. Yes, 80 years. A baby born today will not see the end of fuel poverty in the UK in her lifetime. That is a scandal. That is approximately calculated by noting that around 30,000 fuel-poor houses per year are being brought up to band C. That is so far from what is needed that I do not know how the Government can defend it.
What response to this striking lack of progress have we had from the Government? They say that they will spend less on energy efficiency measures—measures that are recognised in their own fuel poverty strategy as the most sustainable way to make permanent progress on fuel poverty. Under a Labour Government in 2007, we saw 2.5 million energy efficiency measures implemented in a single year. That number has now fallen off a cliff. Under this Government’s policies, we will see 12% of that. Total investment fell by 53% between 2010 and 2015, and England is now the only UK nation without a Government-funded energy efficiency programme. That has not been the case for 30 years.
The Government lack the necessary political will and determination to address this injustice. It is so frustrating, not just because it condemns thousands of households to continued misery, indignity and ill health, and not just because the youngest, the oldest and the poorest in our society are hit hardest by fuel poverty, but because the solutions are so clearly and obviously sensible.
Properly addressing fuel poverty would ease the burden on the NHS. National Energy Action estimates that £1.6 billion is spent each year on treating the impacts of cold homes. Labour’s commitment to insulate 4 million homes would create over 100,000 jobs and apprenticeships, as well as training programmes across every region of the country. Those homes would have reduced energy bills, which is another key driver of fuel poverty. A report by Cambridge Econometrics and Verco found that every £1 invested in an ambitious energy efficiency programme such as Labour’s would return £3. The plan would reduce natural gas imports by 26% by 2030 due to reduced demand, save £8 billion a year on energy bills, increase relative GDP by 0.6% by 2030 and reduce carbon emissions.
One of the ways to bring energy efficiency measures to fuel-poor households is through the energy company obligation or ECO. The newly costed ECO will cost £640 million a year—a 42% reduction compared with the previous phase of the programme. While the Government may say that that is more tightly focused on fuel poverty, the reality is a massive funding cut. This Government are betraying those in fuel poverty and snubbing their own legal targets.
A key risk factor for those in fuel poverty is living in a household that is off the gas grid. Non-gas households rely on more expensive fuels, such as electricity and oil, to heat their homes and often live in harder-to-treat, energy-inefficient properties with no central heating or solid walls. Some 20% of fuel-poor households are off the gas grid, yet they have received only 1.4% of the measures under the affordable warmth element of ECO since 2013.
That ties in with the earlier point made by the hon. Member for Motherwell and Wishaw (Marion Fellows). We could encourage the electrification of heat as a solution for those who are off the gas grid. Heat pumps can operate efficiently and reduce heating costs for those who would otherwise be at the mercy of the oil market. Does the shadow Minister agree that that should be a priority for such customers?
The hon. Gentleman makes a good point. We must be bold in these areas and consider everything that we possibly can. I thank him for that intervention.
Gas distribution networks, which manage the network infrastructure that transports gas to homes and businesses across GB, should deliver 14,864 new connections to fuel-poor households, but funding for new central heating systems available through the ECO is limited to 4,000 systems, so funding is lacking for over 10,000 households. In the spring Budget, the Chancellor completely failed to act on that and provided no extra funding to ensure that the most affected fuel-poor households are given the support to stay warm. Regrettably, that seems to be a running theme in the Government’s approach to tackling fuel poverty. Given the shortage of funds, I hope the Minister can explain how exactly the Government intend to tackle the off-gas homes that are most at risk of severe fuel poverty.
The warm homes discount is an annual payment of £140 to around 2.1 million households to relieve pressure on their energy bills, but it was revealed last year that only 15% of those in receipt of the discount were actually in fuel poverty. The Treasury, then under the new editor of the Evening Standard, said that the system was working, but the scheme’s targeting is a total failure. The Minister for Climate Change and Industry said in a Delegated Legislation Committee last year that the Government would address that through better data-sharing in the Digital Economy Bill, but the Government are yet to explain how they will improve targeting.
A co-ordinated, comprehensive approach to fuel poverty at a local level can be key to tackling the cold homes crisis. In its 2015 cold weather plan, Public Health England made it clear that fuel poverty and reducing excess winter illness and death should be deemed core business by health and wellbeing boards and should be included in their strategy plans. However, research has found that 40% of the 152 health and wellbeing boards in England failed to address fuel poverty in their strategies. I have written to my local health and wellbeing board to ask them about its progress on implementing the National Institute for Health and Care Excellence guidelines. It replied that the savage cuts to local funding and the lack of Government funding to address fuel poverty directly have made it difficult to implement the NICE guidelines fully. This Government have been standing still on fuel poverty and going backwards on energy efficiency measures to address it.
We debated this matter in the previous Parliament, but we never seem to resolve it. The Prime Minister has hinted that she may put a cap on prices, but if she is going to do that, she should really tackle the big six cabal, which was raised in the House last week. It is not good enough to tell people that they should shop around and get a different supplier—that does not work. It is about time that this Government put their money where their mouth is and tackled the big cartel.
My hon. Friend made an important point about the contribution made by local authorities in drawing together the work that happens at a local level. Does she agree that, to reduce the number of excess winter deaths, it is important at a national level that the Government co-ordinate across Whitehall and that meaningful conversations happen between Departments?
That is absolutely the way forward. We should be looking at new build homes that contain all the necessary measures, and many Departments have a part to play in that. Sheffield Heat and Power is good example of how to take waste and turn it into energy. That is what I mean when I said that we must be bold. We have to take every opportunity and learn lessons from other countries.
No, I must move on.
The Government’s flagship green deal policy is universally recognised as a failure. It was well intentioned, but we warned at the time that implementation was going very badly. By the end, the green deal improved only 15,000 homes at a cost of £17,000 per home. No replacement policy is in sight so far as I am aware.
The Government have cancelled the zero-carbon homes initiative. By contrast, Labour would build 1 million new carbon-neutral homes and insulate 4 million more. Labour would roll out a £90 million “homes for heroes” programme that offers free home insulation to disabled veterans. The Labour party has committed to making energy efficiency a key infrastructure priority. That makes economic sense and is the right thing for the future of the UK.
Mr Deputy Speaker, I had until recently hoped to be greeting your female colleague—Madam Deputy Speaker—as you and I have spent so much time in the Chamber over the past few days. In her absence, it is a delight to welcome you to the Chair.
I thank colleagues on both sides of the House for their contributions to this debate. I will respond to some of their many points but, first, I will recap the situation. The most recent statistics, as highlighted by my hon. Friend the Minister for Climate Change and Industry in his opening remarks, show that there were approximately 780,000 fewer homes in the lowest energy efficiency rating bands—E, F and G—in 2014 compared with 2010, which demonstrates real, sustainable progress towards the 2020 and 2025 milestones. It is clear from the statistics that the fuel poverty milestones and target are backloaded and that the scale of improvements required to reach each of the target dates increases over time.
Today, the energy company obligation regulations are being debated in the House of Lords. They seek to increase the proportion of support directed at low-income homes. Although the ECO policy has reduced in size compared with the scale of recent years, support for low-income households has been protected. In fact, the regulations for the new scheme to launch on 1 April 2017 represent an increase from £310 million to £450 million a year.
Combined with immediate support on the cost of energy bills provided via the warm home discount, there will be at least £770 million of support for low-income and vulnerable consumers over 2017-18. That is a significant commitment towards some of the households that are faced with the challenge of keeping their home warm. It is therefore far from true that, as the hon. Member for Brighton, Pavilion (Caroline Lucas) said, the Government are turning their back on the situation. Quite the opposite.
The shadow Minister, the hon. Member for Sheffield, Brightside and Hillsborough (Gill Furniss), criticised what she described as the Government’s “quite abysmal” record. I can do no better than to point out that, in the years from 2003 to 2010, the last Labour Government succeeded in increasing the number of fuel-poor households from 2.41 million to 2.49 million. The result of what she regards as an effective energy policy was to increase the number of people in fuel poverty.
Regulation, particularly for landlords, will also play an important role in making progress towards the milestones, as will other actions such as the safeguard tariff for pre-payment meters and the roll out of smart meters. In the longer term, the Government will be assessing the resources and policy mix required to meet the 2030 fuel poverty target. However, flexibility is important given the long-term, structural nature of fuel poverty. We should not, in 2017, seek to say precisely how best we can meet the target or commit future Governments to 13 years of spending in a particular way given that so much could change in the energy sector and in applicable technologies.
On the Government’s commitment to this agenda, can the Minister answer the fact that the notional annual spend on the overall ECO programme has reduced from an original £1.3 billion to £640 million? The new cap on heating measures with the ECO leaves a big gap in provision for low-income or vulnerable consumers who cannot now afford to repair or replace existing gas boilers. What is his answer to that?
If the hon. Lady had attended closely to my opening remarks, she would have heard me acknowledge that the scheme has been reduced in size but that funding for more vulnerable groups has been increased. If we combine that with the wider support through the warm home discount, let alone the national living wage and other applicable measures, we see that the Government are doing a great deal in that area.
I have just covered that. I am embarrassed that my remarks should be so ill-attended. The regulations for the new scheme, which launches on 1 April 2017, represent an increase from £310 million to £450 million a year. Combined with the warm home discount, that gives £770 million of support for low-income and vulnerable customers in 2017-18.
We have also taken steps to improve targeting. The eligibility criteria for the ECO scheme, which is proposed to run from April 2017 to the end of September 2018, will improve the targeting rate to 34%. We do not believe that is enough. The targeting rate can go higher, and the Digital Economy Bill, which the hon. Member for Sheffield, Brightside and Hillsborough mentioned, is currently going through Parliament and will enable greater data sharing and give the Government the opportunity to improve the targeting of the next generation of fuel poverty schemes, including the warm home discount.
When the regulations were made last summer, the Government stated that there is more to be done to target the schemes at those who most need them. That is still true, with the current targeting rate of fuel poor households at around 15%. However, Members should note that increasing that proportion in the current scheme, which is committed to 2021, would be at a cost to other low-income households. We will be mindful of that factor when making decisions on the future direction of the scheme.
The hon. Member for Motherwell and Wishaw (Marion Fellows) criticised the Government, whom she regarded as presiding over stagnant real incomes. All I can do is direct her to the fact that, last year, full-time pay grew by 0.7% in Scotland, whereas it grew by 1.9% in the UK as a whole. According to Scottish Parliament numbers, it fell for the three years following 2012.
I yield to no one in my admiration for the hon. Member for Ross, Skye and Lochaber (Ian Blackford), and I was grateful for his support in being elected Chair of the Culture, Media and Sport Committee. He also comes from a nation I deeply revere and whose history I greatly respect, but I am afraid that he has embarrassed himself in this debate with an unworthy attempt to personalise a very serious set of issues. Mine was a response to the gap, which the stricture on unparliamentary language prevents me from describing as anything more than disingenuous, between his words and his deeds. The fact of the matter is that these matters are devolved. Even so, the Government have offered support, as I described, through the ECO, the warm home discount and a hydro benefit replacement scheme of £58 million to reduce energy distribution charges. Were network charges made universal across the country, as he desired, 1.8 million people in Scotland would face higher bills, and only 0.7% would see reductions. Does he really wish to add to the bills of 1.1 million Scotsmen and women?
It was the predecessor Minister who made the point that people should not be penalised because of where they live—nobody should pay more. It is a matter of fairness that there should be a universal market, as exists in many other European countries. We have such things in other areas in the UK. Why do we not have a universal market for electricity distribution?
I am grateful for the respectful nature of the hon. Gentleman’s question. The answer is simple: it would increase charges to an additional 1.1 million people in his country, and no responsible Government should look on that with favour.
Finally, the hon. Member for Sheffield, Brightside and Hillsborough referred rightly to the health effects of fuel poverty, and we, correctly, recognise that issue. She suggested that fuel poverty in homes had risen; I have explained how, in fact, it has fallen broadly since 2010—from roughly 2.49 million to 2.38 million homes. She invites the Government to tackle the root causes of fuel poverty, but that is exactly what we are doing.
Further to my comments about the last Labour Government, it should never be forgotten that the real wages of the bottom third of the population of this country stopped growing in 2003, not in 2008—it was a function not of the financial crash but of a whole series of factors and of bad government, and we should recognise that.
The hon. Lady said the Government need to be more ambitious, and we are being extremely ambitious. We have a transitional arrangement that runs through until September 2018. We then expect a further supplier obligation, on which we will consult later this year, to take us through to 2022.
We know that households living on low incomes are all too often left to live in the coldest and least efficient homes. We know that living in a cold home can have negative implications, to say the least, for health and wellbeing. The official 2016 fuel poverty statistics showed that, despite progress towards the 2020 milestone, with 88% of homes rated E or above in 2014, there remains a significant challenge if we are to make progress to the 2030 fuel poverty target.
The statistics show that only 7% of fuel-poor households were rated B, C or higher in 2014, which clearly shows that the fuel poverty target we have adopted, which was set in 2014, is ambitious, and rightly so. That legal target makes it clear that the Government do not accept the situation. [Interruption.] If I may respond to the hon. Member for Southampton, Test (Dr Whitehead), who is chuntering from a sedentary position, it also shows that we are committed to providing support to those households that need it most. Undeniably, that means there is a lot of work to do to ensure that the energy-efficiency of low-income homes is improved. We cannot now, in 2017, prescribe exactly which policies, regulations and innovation will be required to meet the 2030 target—we will consult next year on work to a target until 2022—but we can ensure that we continue as a nation, as a country, together to move forward and take action.
Parliament will, of course, continue to play an invaluable role in holding Government to account against this objective over the next decade, and I thank the hon. Members who have spoken today for their contributions to this worthwhile and useful debate.
Question put and agreed to.
That this House has considered fuel poverty.