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Energy Prices

Since 2004, gas and electricity bills have increased more than six times faster than household incomes, meaning that a quarter of all households in England and Wales are now in fuel poverty. Increasing energy bills and stagnating incomes also mean that an additional 25% of people now face energy debts and more than 850,000 electricity consumers and more than 700,000 gas customers are now in debt to their energy supplier. I would dearly love to give the hon. Member for Ipswich (Ben Gummer) a lesson in the history he so eloquently went into earlier, but I shall defer that to another occasion. I would point out, however, that although he accused the previous Government of not having tackled structural reform in the energy market, they did so on two occasions with the new electricity trading arrangements, or NETA, and the British electricity trading and transmission arrangements, or BETTA. We will save the rest of that debate for another day. The point that I most wish to make is that the costs of environmental and social measures, such as CERT and the renewables obligation, now account for about 4% and 10% of gas and electricity bills respectively. This is an unpopular thing to say—and certainly unfashionable, coming from me—but it is the truth and we have to face up to it: developing a low-carbon energy infrastructure will require long-term planning and significant investment. Whereas 84% of recent energy price rises were unrelated to low-carbon measures, the remaining 16% were and the Committee on Climate Change estimates that policies to achieve a low-carbon economy will add about £110 to bills over the next decade. That is because it expects electricity consumption to drop by 50%, meaning that per unit costs of electricity will skyrocket. The most important thing we can do, therefore, is achieve energy efficiency. On that point, I want to challenge the Secretary of State on ECO. He will know that the Fuel Poverty Advisory Group and National Energy Action have said that ECO spends only 25% of its funds on the fuel poor and 75% of its funds on trying to reduce carbon emissions, which could be better directed at targeting solid-wall insulation for the fuel poor in the private rented sector. I ask him please to consider that, as it can achieve his energy emissions objectives and increase the benefits to the fuel poor.