§ Motion made, and Question proposed. That this House do now adjourn.—[Mr. Thomas Cox.]
§ 4.9 p.m.
§ Mr. John Cartwright (Woolwich, East)
I am glad to have this chance of drawing attention to the impact of rising fuel prices on the less-well-off. After the most severe winter for at least 16 years, the joys of spring will be tempered for many householders throughout the country by the arrival of shockingly high fuel bills. Indeed, my inquiries of citizens' advice bureaux and neighbourhood centres in London have shown that this process has already started.
My right hon. Friend the Secretary of State for Energy repeatedly tells us that the problem of fuel poverty—that is, people who are unable to afford adequate heat and light in their homes—is new. That may be so, but it will be horribly real to many thousands of families after this winter.
The explosion in fuel bills caused by the oil price increases since 1974 coincided with the Government's decision that fuel boards should in future charge full economic prices to their consumers. The result has been a disaster for many poorer families. For example, electricity prices more than doubled between December 1973 and June 1976. Although subsequent rises have been less dramatic, they have continued inexorably. The problem will certainly not get any easier. Indeed, it is now widely accepted that fuel costs will again double in real terms by the end of the century.
The impact is obviously hardest on the least-well-off, who spend a higher proportion of their income on fuel. Electricity prices are a particular burden on the poor. Thousands of council tenants, often pensioners and low-income families, are locked in to expensive and 861 often exceedingly inefficient electric heating systems. They have no possibility of switching to gas or to solid fuel. From my constituency experience, I know that many pensioners, scared stiff by the thought of massive bills, simply disconnect their underfloor electric heating and try to manage with Calor gas or paraffin, with all the problems and risks that such heating can involve. I know, too, of pensioners living, eating and sleeping in just one room because that is all they can afford to keep warm.
In my constituency, I have seen far too many parents with young children who are quite unable to afford proper heating throughout their council flats. Bedrooms are left cold, with the inevitable spread of condensation. I have seen young children condemned to sleep in bedrooms thick with black fungus and mould growth and dripping with water. The official council response is always the same—the solution is to plug in electric fires and open the windows. That is, no doubt, technically correct, but to a poor family it is quite impossible. One might just as well tell them to keep warm by burning pound notes.
The Government's response to this real and pressing problem of fuel poverty has, I am afraid, been piecemeal and as yet inadequate. The size and scope of the hardship being suffered is not yet fully understood in the well-heated corridors of Whitehall. For example, the electricity discount scheme is welcome, but it goes nothing like far enough. I am glad to see that its extension to those on rent and rate rebates has increased the number claiming discount, but it gives no real help to those dependent on solid fuel—and that includes many pensioners—or to those dependent on gas for their heating systems. We also know that gas prices are likely to increase by another 10 per cent. this year.
I echo the judgment of the chairman of the Supplementary Benefits Commission, Professor Donnison, who in December said of the electricity discount scheme:Receipt of housing benefits is a rough guide to income and hence need, and as an ad hoc scheme it cannot be regarded as any basis for continuing help with fuel bills ".There is also the code of practice on disconnection, which has just been reissued 862 in a revamped form. It is certainly a step in the right direction, but for many consumers it merely puts off the evil day when their supplies are cut off. At the end of the day, those who cannot pay their bills, or who do not qualify for assistance, are still disconnected, even if they have young children to care for. After 1 April even pensioners can be cut off. The code of practice does not, therefore, give the sort of universal protection that is often claimed for it.
Once people are cut off, far too little information is available about what happens to them. It is all very well for fuel boards to say comfortingly that most consumers are reconnected quickly. The available evidence shows that many are not. For example, the chairman of the Electricity Council tells me that 17,500 domestic consumers were without electricity, having been cut off, for periods of more than a month in 1977–78.
The chairman of British Gas reveals that 18,500 gas consumers were cut off for periods of more than two weeks during the seven months to 31 October 1978. The South-Eastern Electricity Board figures show that in March 1978 a total of 20 per cent. of domestic consumers who had been disconnected remained without supplies for a month or more. By September 1978, that figure had grown to 35 per cent. To deprive anyone of electricity for such a period is surely to deny him one of the essentials of civilised life as most of us know it.
I wish to refer to the help available to supplementary benefit recipients. The size of the problem of fuel poverty can be seen from the fact that in November 1977 more than 1.4 million exceptional circumstances additions were being paid to supplementary benefit claimants for heating at a cost of about £17 million. That compares with an estimated 1.25 million additions a year earlier.
It is surely ridiculous that extra payments for circumstances that are supposed to be exceptional should be given to about half of all supplementary benefit claimants. The number involved surely shows that we should stop relying on discretionary additions and move towards payments as of right to help people pay for the heat and light that they need.
Even with the heating additions, many families on supplementary benefit simply 863 cannot pay their bills. In March 1978, 120,000 supplementary benefit claimants were being saved from disconnection only because part of their weekly payment was being deducted and paid directly to electricity or gas boards to cover current bills and something off their arrears. The average payment was £3.53 a week for electricity consumers and £2.83 a week for gas consumers. However, 21 per cent. of all those involved in direct deductions were suffering weekly deductions of £7 or more.
There have also been cases in which the sums required by the fuel boards have been considered too high even by the Supplementary Benefits Commission. In those cases, nothing can be done to prevent disconnection or to enable families to be reconnected.
The concentration on supplementary benefit cases is unfair to low-income families who do not receive supplementary benefits. About 64 per cent. of households in the lowest one-fifth of household incomes do not get supplementary benefits but may need help with their heating costs. For example, in 1976, about 300,000 households had a breadwinner with earnings below the supplementary benefit level and 900,000 people who are estimated to qualify for supplementary benefits do not claim them. Those are the people who are not getting the help that they may need with their heating bills.
Even within the supplementary benefit sector, the present arrangements work against young families. Two-thirds of supplementary benefit pensioners were receiving heating additions in 1977 and they received between them 80 per cent. of all the additions that were paid. Obviously pensioners are at risk when they cannot afford adequate heating, but so too are young children, and, indeed, the long-term effects on health may be even more serious for them.
The Government have introduced an insulation programme and have made available £80 million for this year and next year for the payment of grants in the public and private sectors, but the householder still has to meet a proportion of the cost. That means, in practice, that the poor, the handicapped and the elderly, often living in the draughtiest homes, are the least likely to benefit.
A number of other steps must be taken to reduce these problems. Fuel boards could do more by making "pay as you burn" schemes more widely available. Some poorer consumers would much prefer the compulsory budgeting of a prepaid meter to the sudden shock of a quarterly bill. Too many boards are much too negative in their attitude towards the installation of such meters.
Most of the other easy payment systems operated by fuel boards for consumers involve regular visits to showrooms. That is not always easy for the elderly and the disabled. Even for the young, it can involve travelling costs to showrooms, most of which are now based in major town centres.
Why cannot we introduce a national fuel savings stamp, which could be on sale through post offices, as a simple and easy way of encouraging consumers to save for their fuel bills? Why on earth has it taken so long for the electricity industry to carry out its tests on a system of self-cancelling token meters?
Whatever we do about easier payment schemes or codes of practice on disconnection, we must still face the central fact that too many people just cannot afford a proper standard of heat and power in their homes.
Professor Donnison suggested a scheme for fuel rebates to concentrate cash help on low-income households in the same way as for rent and rate rebates. That certainly has attractions, but it also has drawbacks. It would be yet another means-tested benefit with all the problems that we know so well of bureaucratic administration and form-filling which make our existing benefits such a jungle for those they are meant to help. Moreover, it would add yet another element to the poverty trap, which makes it almost impossible for poorer families to improve their position.
Something must be done. The problem will not go away. Indeed, all the signs are that it will become worse. One of the difficulties of finding an overall solution is the multiplicity of Government Departments involved—the Department of 865 Energy, the Department of Social Services, the Department of Prices and Consumer Protection and the Department of the Environment—all of which have their own legitimate interests. These differences have helped to create our existing fragmented approach when what we need is an overall strategy to solve the problem of fuel poverty.
I should have thought that this was an excellent subject for study by the Central Policy Review Staff—the Government's Think Tank. I am particularly sorry to hear today that the Secretary of State for Energy has rejected that idea on the ground that there is already adequate co-ordination between the Government Departments involved. That is certainly open to argument. But even if it were true, it is depressingly clear that the present policies of the Government are inadequate to solve the problem.
In his foreword to the energy policy review produced in 1977, my right hon. Friend the Secretary of State for Energy said that one of his objectives was to ensure that everyone could afford adequate heat and lighting. From all the evidence I have in my constituency, and from contacts all over the country, it is absolutely clear that that objective is not being achieved at present. If we are to achieve it, the whole problem of fuel policy must be given a much higher priority in Whitehall than it is currently given. I very much hope that in his reply my hon. Friend will be able to give some evidence that the Government now recognise the seriousness of this problem.
§ 4.22 p.m.
§ The Under-Secretary of State for Health and Social Security (Mr. Eric Deakins)
I congratulate my hon. Friend the Member for Woolwich, East (Mr. Cartwright) on his excellent presentation and on the cogency of the facts which he has provided to the House. He has drawn attention to a very serious problem, and I hope that I can show him that the Government are very well aware of the nature of the problem and are taking action to deal with it, although I accept that at the end of the day the action that we are taking may still fall short of the very high standards which my hon. Friend wishes us to adopt.
866 If the House awarded prizes for difficult questions, my hon. Friend would certainly walk away with the jackpot. I doubt whether there is any area of Government where the conflicting demands of economic and social policy pose more difficult problems. I cannot bring forward a simple and straightforward solution to cope with the problems he has raised and, indeed, I do not think anyone could. What I think I can undertake to prove is that the Government have shown by their record that they are deeply concerned about the problems and have done their best to meet them.
The Government's policy on nationalised industry pricing was set out last year in the White Paper on the nationalised industries, and it naturally took account of economic forces. We live in a world where energy is scarce and expensive and we cannot isolate ourselves from that world. The Government believe that the prices charged by nationalised energy industries should reflect, for each fuel, the cost of supplying that fuel. This does not mean failing to recognise other factors, but it does involve taking into account limitations on the growth of public expenditure, the unfairness of indiscriminate subsidies favouring the rich as well as the poor consumer, and the importance of conserving energy. I do not believe that there is any alternative to this policy so long as we have a mixed economy, and it must certainly be the case that large-scale and continued price intervention in present circumstances would result in a misallocation of resources.
While I am on this pessimistic tack I ought not to leave out the prognosis. The Green Paper on energy policy published last year made it clear that the average level of energy prices must be expected to rise, perhaps doubling in real terms by the year 2000. On a more contemporary note, the National Coal Board has just announced its intention to increase domestic solid fuel prices by an average of 9 per cent. in November, while stressing that the outlook at present is particularly uncertain. As my hon. Friend indicated, British Gas issued a statement yesterday announcing its intention to submit an early application to the Price Commission for increases in gas prices to meet the financial target set by the Government—though the statement makes it clear 867 that the increases will be designed to maintain the level of gas prices in real terms as had been recommended by the Government. The electricity industry's proposals have yet to be placed before the Price Commission, and the position on domestic heating oils is uncertain.
My hon. Friend may well feel that so far I have merely underlined his case and stressed its urgency. I want to deal directly with his point, but first I hope my hon. Friend will acknowledge that, in general, consumers' ability to meet their fuel bills has not declined over the past 10 years or so. Indeed, the cost of energy grew more slowly over that period than incomes, including pensions and suppltmentary benefits. The sharp price rises of the mid-1970s, which were necessitated by the previous Administration's arbitrary policies of price restraint, have not been repeated. More recently, fuel price rises have been broadly in line with the general level of inflation. The increase announced for 1979 should also do no more than maintain real price levels. Furthermore, over the longer term the effect on consumers will of course be offset by the growth of real incomes and by the more efficient use of energy.
What is, however, certainly the case is that the Government recognise the special problems of fuel and recognise the way in which the difficulties of the less-well-off, which my hon. Friend has highlighted, conflict with fuel pricing policy. Fuel, or rather the heating, cooking, and lighting it provides, is as essential as food but more difficult to budget for; not easy to control, particularly where there is illness or unsatisfactory housing; and may come in particularly expensive forms on account of the vagaries of supply or heating installation.
There is of course a world of difference between recognition of a problem and doing something about it. I say flatly that the Government can claim that they have done something about it under the headings of energy conservation, special help with energy costs, and social policy help.
I deal first with energy conservation. In the past 14 months two schemes have been introduced to assist with the thermal insulation of dwellings. Their primary objective is energy conservation, but they will benefit the less-well-off by reducing 868 the amount of fuel needed to provide a given level of comfort.
The 10-year programme for insulating public sector housing which my right hon. Friend the Secretary of State for Energy announced in December 1977 is well under way. Under the programme, over 2 million public sector dwellings will be brought up to a basic standard of thermal insulation, and this will have major social benefits. A total of £28.5 million was allocated for the scheme in the current year, and loan sanction of over £100 million is available to local authorities in the first four years.
In private sector housing, the homes insulation scheme was introduced in September 1978. It provides for payment of grants of two-thirds of the cost—subject to a maximum payment of £50—for providing basic insulation in houses with no existing roof insulation. Either the occupier or the landlord may apply for the grant. The initial response to the scheme has been very good, and barely two months after its launch it was necessary to make additional funds available to meet demand in the current year.
The scheme is operated on a first come, first served basis, but the local authorities that administer it have been requested to make every effort to bring the scheme to the attention of the elderly and the disadvantaged, and to assist them in applying for a grant. As for the public sector housing scheme, it is for the local authorities to decide on priorities, but they have been asked, within this general discretion, to give priority to the special needs of the elderly and the disabled.
§ Mr. Cartwright
The Homes Insulation Act includes a section enabling the Government to introduce a special scheme of help for the elderly, the handicapped, the disabled and those unable to afford their share under the original basic scheme. When will the Government produce a scheme using the powers in that section?
§ Mr. Deakins
I cannot give my hon. Friend an answer now, but I shall draw the attention of my right hon. Friend the Secretary of State for Energy to his question, which is not directly for my Department.
I turn to the high running costs associated with some electric heating systems. 869 Two years ago the Government set up a joint working party with the local authority associations, where problems of this sort could be considered. The working party has now issued two advice notes for housing authorities on electric heating, which my hon. Friend and I know is the most expensive form and the one which causes the most problems.
The first advice note explains the factors that should be taken account of when installing electric heating in new dwellings. Among other things, it stresses the need for high levels of insulation and suitable design and layout. The second gives advice on what action housing authorities can give to help reduce running costs to tenants in electrically heated dwellings and lists the main insulation and heating measures which can be applied.
Secondly, I come to special help with energy costs. The electricity discount scheme has been running for three years. It consists of a discount—25 per cent.—on electricity bills over £20 for those on supplementary benefit and family income supplement and, from this year, those receiving rent and rate rebates. The last two years' schemes have also included a flat-rate minimum payment of £5 for all those receiving supplementary benefit or family income supplement. We expect to spend £45 million on this.
Turning now to social policy help, the supplementary benefit scale rates, though not divided up into separate amounts for different commodities, cover all day-to-day living expenses, including heating. Last November, the long-term rate of supplementary benefit payable to pensioners and those under pension age, excluding the unemployed, in receipt of benefit for two years or more was up-rated in line with the rise in earnings, that being greater than the rise in prices, whilst the ordinary rate was increased by reference to the rise in prices. To the extent, therefore, that fuel prices are reflected in the retail price index, beneficiaries are being protected.
Additional heating may be needed, however, because the recipient or dependant suffers from poor health or restricted mobility or because the accommodation is damp or difficult to keep warm, and, in such circumstances, heating additions—which can provide up to £2.55 870 extra a week and more in very exceptional cases—are payable to supplementary beneficiaries. Taking into account last November's increase, the heating additions will have risen by well over 40 per cent. in two years. This increase allows for rises in fuel costs and leaves a margin for future price rises. The number of these additions has more than doubled in three years so that about 1½ million are now in payment, and all that can be done is being done to ensure that everyone who is eligible receives one.
Although the scale rates are regarded as covering fuel costs, the Supplementary Benefits Commission makes lump-sum payments towards fuel bills in exceptional circumstances, for instance, where prolonged severe weather or serious illness has led to greater consumption than normal, or where money set aside for fuel has been used for some other purpose which the Commission would have met, or where a new form of heating has been installed and the claimant has not learnt to use it economically. There will be a number of people throughout the country covered by those three categories.
Since February 1976, measures have been introduced to help people facing disconnection of their fuel supply. The Supplementary Benefits Commission and the fuel authorities agreed arrangements under which people likely to suffer hardship—the sick, the old, families with young children—would not be disconnected if part of their weekly benefit was paid direct to the fuel boards to cover current consumption and a small amount towards the arrears. Fuel supplies are being protected in this way in more than 100,000 cases.
My hon. Friend mentioned the code of practice and a possible review. A recent short-term review of the code led to the publication by the industries in January of a revised plain language version. This is recognised as a great improvement. It is being publicised and distributed widely by the industries. Extension of the code to families with children under the age of 11—previously it was under five—is helpful. I know that suggestions have been made for wider extensions of the code, for example, to the sick and disabled, but the review is not yet over. A longer-term study now being started is sponsored by the industries together with the Electricity and Gas Consumers 871 Councils. It is being carried out by the Policy Studies Institute and will examine in depth this and other issues which could not be covered fully in the short-term review.
The main aim of the code is to help people avoid the hardship of disconnection. There has been some success in this, especially through the moratorium on disconnections to pensioners in the winter months. As my hon. Friend emphasised, disconnections still take place. But I have to emphasise in turn that they are not in themselves a measure of hardship. Some people who can pay leave it too late. I do not know how many, but there are a number. The latest figures show that electricity disconnections are maintaining the lower level of about 80,000 a year to which they fell in 1977 following the introduction of the code and the DHSS arrangement with the fuel industries for payment of fuel bills by direct deductions from supplementary benefit. The latest figures from British Gas for 1978–79 show disconnections reduced by more than 15 per cent. on the equivalent period in the preceding two years.
My hon. Friend asked for information about people disconnected over longer periods. The reasons for such long-term disconnections may vary, but I can assure my hon. Friend that the issue will be among those specifically examined in the longer-term study of the code of practice.
I turn now to the future and the role of the Supplementary Benefits Commission. The Commission is also conscious of the difficulty of those whose income is only marginally above supplementary benefit level—a point made by my hon. Friend—and whom it cannot therefore help, particularly the low paid in full-time work. The team of officials reviewing the supplementary benefits scheme have also looked at the question of heating and have drawn attention to the wider problem of fuel costs for all people with lower incomes.
The Commission has drawn attention to these problems in its annual reports and put forward the idea of a comprehensive scheme to assist those on low incomes with their fuel costs. This involves some serious problems, particularly of resources and priorities, which it is impossible for any Government to ignore. It would be wrong to encourage the House to believe 872 that they are problems capable of an easy solution.
My hon. Friend specifically mentioned meters. This is something on which I am keen. I believe that if the availability of prepayment metres could be more widespread, it would help to resolve a large number, but not all, of the problems about which we are talking. The industries undertake to provide these for people having payment difficulties where it is safe and practicable to do so. Judgment of these criteria must be for them. But the revised code draws particular attention to this option.
In addition, the Electricity Council has undertaken research into consumer reaction to the idea of token prepayment meters on which results are awaited. This idea has both advantages and some drawbacks for consumers. My hon. Friend talked about other means of paying for energy. Examples like the sale of energy stamps at post offices have been examined by the gas and electricity industries with the Post Office. Some problems have yet to be resolved, but the idea is still under consideration. All this is surely not a discreditable story. Nor is it fair to say that further and more radical ideas have gone unconsidered.
My hon. Friend referred to liaison between Government Departments. The problem of helping poorer consumers to meet their fuel needs has a number of different elements and the interests of many Government Departments are involved. The problem cannot be seen in isolation from the Government's other policies and activities, and any course of action taken or proposed must be considered in that context.
However, I can assure my hon. Friend that adequate machinery exists to ensure that the problem will be examined as a whole and close contact takes place between Departments at all levels both on an ad hoc and on a continuing basis. My own Department has close contact with the Department of Energy on this matter since we are two of the lead Departments.
There is no simple solution to the problems my hon. Friend has raised. I hope that I have persuaded him and the House that the Government have not been short on action and that there is no warrant for believing that the Government will fail 873 to cope in future with the growth of the problem my hon. Friend has raised and fairly emphasised in his remarks.
§ Question put and agreed to.
§ Adjourned accordingly at twenty-two minutes to Five o'clock till Monday 5 March, pursuant to the Resolution of the House of 12 December.