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Fuel Poverty

I congratulate my hon. Friend the Member for Edinburgh, North and Leith (Mark Lazarowicz) on obtaining this debate. It is not only important, but topical given the recent announcements on fuel price increases, which are, to say the least, swingeing. It is extremely likely that the announcements by npower will be followed by rises from all the other utilities and that they will herald long-term high energy costs. Against such a background, this Government's very good progress on reducing fuel poverty has effectively been reversed, at least in terms of the number of people who are in fuel poverty, using the definition of 10 per cent. of household income spent on fuel. Some 6.5 million people suffered fuel poverty in 1996. That figure was reduced to 2 million by 2004, partly because of lower fuel costs over that period. However, since 2004, that trend has been reversed by rising fuel prices. Even before the most recent announcements, the number of people in fuel poverty had risen in England by about 1.6 million, in addition to those who were in fuel poverty in 2004, simply because of the rise in fuel prices. That figure has fallen following changes to Government policy on benefits and entitlements, which have led to income improvements, and 300,000 people have been taken out of fuel poverty. However, only 100,000 people have been taken out of fuel poverty as a result of energy efficiency improvements, and the recent substantial fuel price increases will stretch the figures much further. The current estimate is that about 40,000 more people will fall into fuel poverty for each 1 per cent. increase in the price of fuel. Heroic though our efforts have been, we will, in many instances, almost inevitably be fighting a losing battle if we attempt to combat fuel poverty largely by giving those in fuel poverty additional resources to pay the bills that the energy companies put through their letter boxes; this is a sort of caucus race, in which everyone goes round and round, and some get small prizes, but there are no winners in the end. As hon. Members have said, it is important that benefits and winter fuel payments rise in line with additional fuel costs, but it is almost impossible for the Government to align increases in benefits and other arrangements in that way, given the variability of proposed fuel increases. Therefore, as hon. Members have suggested, other methods will be necessary in the next phase of the battle on fuel poverty to ensure that we take people out of fuel poverty and meet the ambitious targets that have been set. That raises the issue of what happens with winter fuel payments, as well as the central question of how we can give people the wherewithal to fight fuel poverty by making their houses energy efficient, which will make their bills lower and ensure that their houses are proofed against future price increases. The recently announced carbon emissions reduction target programme, which will oblige energy suppliers to make provision for carbon reduction in households, will perhaps be worth £1.5 billion over the next three years, and the recently announced uprating in pension credit will also make a considerable difference. However, the programme that can and will make the most significant difference is the specifically targeted warm front programme, under which grants to undertake energy efficiency measures are made available to households that are overwhelmingly in, or are likely to be in, fuel poverty. However, the problem is that, although the overall amount that will go into energy efficiency over the next few years is increasing, 25 per cent. less will be spent on the warm front programme over that period under the comprehensive spending review. That raises the question of whether we have got the right mix of measures to deal with fuel poverty over the next few years. Mention has been made of people with prepayment meters paying vastly over the odds, and I had the good fortune to obtain an Adjournment debate on that issue, to which the Minister gave a very positive rejoinder. In that respect, it is important for us to consider the issue of how we give people the wherewithal to avoid paying an additional penalty, over and above any other increase in their energy costs, as a result of the choices that they make—or, in some instances, have to make—when choosing their energy supplier. Another important issue, about which we have perhaps heard less than we should have, is the suggestion that energy companies should be increasingly regulated differently and enjoined to change from providing as much energy as possible—by and large, they make money by supplying households with as much energy as possible and charging for it—to co-operating with households, in particular, to provide as little energy as possible under longer term contracts, which hon. Members have mentioned. Under such contracts, investments could be made in household energy efficiency and in methods of producing energy, such as microgeneration, which companies could provide as part of the contract, and the savings would be shared between the householder and the energy companies, which would take them in the form of profits. I hope that changing utility companies to energy service companies in that way will feature prominently in the forthcoming energy Bill. In conjunction with other measures, such an initiative could make a great difference to the way in which we target the energy efficiency of buildings and people's ability to become players in the market and to pay the energy bills that companies lay on them. On the warm front programme, it would be possible to make up the shortfall in financing over the next few years simply be considering whether the winter fuel payment should be paid universally or whether it might be targeted, for example, away from the highest level of taxpayers, who, as a general rule, are less in need of the winter fuel payment than many others across the spectrum. The issue, therefore, is not necessarily whether the resources are available, but whether we have struck the right balance between paying people to compete in the market and ensuring that homes are genuinely warmly insulated and that people are genuinely able to resist price increases because of the circumstances in their homes.