§ 11 am
§ Mr. David Chaytor (Bury, North)
I am very pleased to be able to open this debate today. It is particularly appropriate that it is taking place this morning, as this afternoon my hon. Friend the Member for Plymouth, Sutton (Mrs. Gilroy) will present her Warm Homes and Energy Conservation (Fifteen Year Programme) Bill—an important Bill—which sets a national strategy to deal with fuel poverty.
It is particularly important that the debate is taking place this week, in the middle of January, as it is the peak period for the annual winter cull of elderly people in this country. The excess winter mortality rate—the additional number of elderly people who die each year, and will continue to die each year—is a scandal that has to be addressed. It is a mark of a civilised society that we do something about it.
I remind hon. Members of the figures. In the past five years, there has been an increase of almost 100 per cent. in the number of people dying unnecessarily in the winter months. In 1992–93, an additional 26,300 people died. In 1996–97, an additional 48,600 people died. Most of these deaths could be avoided. Ninety two per cent. of excess winter deaths are among pensioners. To those who say that this is to be expected, that it is quite normal, that it happens in other countries, I should point out that Britain, has one of the worst records of winter deaths caused by fuel poverty. In Britain, the excess mortality rate is 31 per cent. In countries whose climates are more severe than ours—Sweden, Norway, the Scandinavian countries—the figures range from 10 to 14 per cent. In Britain, we lose more than twice as many of our elderly people in the winter months as countries with climates that are harsher and more severe.
I should also point out that in Britain the figures for different districts in the country show that the greatest excess winter mortality rates occur in the midlands. The figures for last year show that the districts with the worst record—the top 20 districts for excess winter mortality—include places such as Northamptonshire, Derbyshire, Shropshire, Rutland, Cannock Chase, north Dorset, north Kesteven and Staffordshire Moorlands. We have excess winter mortality rates of up to 58 per cent., and these are places that do not have particularly severe climates. The excess winter deaths are due entirely to fuel poverty.
Fuel poverty is the inability to afford adequate warmth in the home because of the energy inefficiency of that home. We know that elderly people need more warmth, that they take less exercise and tend to spend more time sitting, that they tend to have poorer housing, more energy inefficient housing, and that they tend to be on low incomes. We now know that almost one in three homes in Britain suffers from energy inefficiency—almost 8 million homes. Fuel poverty affects about 15 million people. Of the 8 million homes, almost two thirds—just over 60 per cent.—are in the public sector, so there are enormous savings to be made by having a national programme to address fuel poverty. In my constituency, every year more than 100 people die in the winter months because of this problem.
I shall now talk about the very welcome initiatives that the new Government have taken to tackle the issue. I think that every hon. Member will welcome the announcement, 286 made in the pre-Budget statement in the autumn, of the additional £20 per household to assist with the cost of fuel in the winter, or £50 for households on income support. Hon. Members will welcome the reduction in fuel bills as a result of the cut in VAT, the abolition of the gas levy, and the release of capital receipts so that local authorities can once again start to invest in social housing, the renewal of housing and the construction of new housing.
Hon. Members will also welcome the reduction in VAT on energy-saving equipment, which has put an end to one of the strangest anomalies in our taxation system. We welcome the establishment, as part of the new deal, of the environmental task force. I am sure that all hon. Members hope that many local authorities and others will take the opportunity to get young people off welfare and into work by launching imaginative environmental task force projects based on energy efficiency schemes. We welcome the continuation of the basic system of cold weather payments.
The previous Government made some achievements in this field. We welcome the fact that they established the Energy Saving Trust in 1993, and passed the Home Energy Conservation Act 1995. An enormous amount of good work is done across the country by local authorities, which have been submitting imaginative schemes under the bidding process of the Home Energy Conservation Act. Good work has been done through the home energy efficiency scheme for low-income households, grant aided by the Department of Environment, Transport and the Regions. A multiplicity of schemes are promoted by the Energy Saving Trust, including the replacement of old fridges; incentives for condensing boilers; the pensioners' energy plan, and many other schemes. An enormous amount of campaigning and promotional work has been done by a wide range of voluntary agencies.
However, it is increasingly obvious that we need greater co-ordination of that work and a more comprehensive, less fragmented approach. We need a national strategy and national targets. We have seen the fragmentation of the current approach and reductions in the budgets of organisations charged with improving energy efficiency. The Energy Saving Trust's budget has reduced from £25 million to £19 million, and will be cut further next year to £14 million. Local authorities have also had continuous budget cuts over the past few years, and, with the adherence of the new Government to the previous Government's spending limits, will face further cuts next year. Energy efficiency schemes are not always high profile, and are sometimes seen as soft options by local authorities, which think that they can make reductions in their budget without too much public reaction.
In the competitive bidding process for so much of this money, success very much depends on the enthusiasm of individuals or on the fairly arbitrary process of competitive bidding. The current system does not guarantee that resources are allocated where they are most needed. That is why we need a national strategy. That is why I commend to the House the Warm Homes and Energy Conservation (Fifteen Year Programme) Bill to be presented this afternoon. It calls for a programme designed to install a comprehensive package of energy efficiency measures in 500,000 homes for each of the next 15 years. Fuel poverty can be defeated if the political will exists, and an attack on fuel poverty will bring enormous savings to the public purse in the long run. It will require investment, but it will produce benefits in the long term.
287 This is not only a question of social justice and environmental sustainability; it is a question of common sense and sound economics. That is because it is bad economics to allow so much of our housing stock to be so energy-inefficient. The important Energy Efficiency Bill, promoted by my hon. Friend the Member for South Swindon (Ms Drown), seeks to ensure that all homes are given an energy efficiency rating, and that that rating is clearly publicised in all transactions relating to them.
Fuel poverty is bad economics, because we cannot afford the cost to the national health service of so many people becoming ill each winter when that can be avoided. I am thinking particularly of respiratory illnesses such as bronchitis and asthma, and of heart problems. The latest reliable estimates put the cost of fuel poverty to the NHS at £1 billion.
Fuel poverty is bad economics, because we cannot afford to keep so many people unemployed when so many jobs can be created through energy efficiency programmes. The national programme called for in the Warm Homes and Energy Conservation (Fifteen Year Programme) Bill would create more than 25,000 jobs, which would save the Treasury £245 million a year over those 15 years. I can think of no more valuable way of getting people off welfare and into work.
Fuel poverty is bad economics, because we cannot afford the enormous costs of wasting so much energy, or the excessive costs of maintaining homes that are energy-inefficient. There is a saving of £90 million a year to be made from ensuring that homes are energy-efficient. As 60 per cent. of the homes targeted are in public ownership, that will bring a direct saving to the Exchequer. The Energy Saving Trust has estimated that the average household fuel bill could fall by £250 a year with appropriate energy-saving measures.
Fuel poverty is bad for the environment, because the waste of energy works against our objective of a 20 per cent. cut in carbon dioxide emissions. The 15-year programme outlined in the warm homes Bill, targeting 500,000 homes a year, could contribute between 3 and 4 per cent. of the total reductions that must be made if we are to meet our target under the Kyoto agreement.
I commend the study produced in October by the Energy Saving Trust, which argues in favour of a 13-year programme leading to the year 2010. The trust says:This paper shows that domestic energy efficiency, if funding is available to build the market, could achieve savings of 4 per cent. against 1990 emission levels … In turn this would mean an 18 per cent. reduction in domestic energy use and a 14 per cent. reduction in domestic carbon dioxide emissions … We also estimate that over 20,000 jobs could be created by increasing the energy efficiency market to this extent. This increase will not happen on its own and will require an increase of public funding to pump prime and market energy efficiency. Our initial estimates are that such programme costs would be around £600 million above existing programme costs, spread over the next thirteen years. This would mean an increase in public funding for these measures from around £100 million today to around £170 million … Therefore we conclude that the public funding required, whether from a levy on energy use or directly from the Government, would be equivalent to less than 2 per cent. of that currently spent by the domestic sector on fuel".Given that we have had a 10 per cent. levy to support the nuclear power industry in recent years, surely a 2 per cent. levy is not outrageous.
Finally, fuel poverty is simply bad for human beings. It is entirely wrong that we should sit back and allow so many elderly people to dread the winter, wondering 288 whether it will be their last. It is entirely wrong that so many people of all ages who are in low-income families should shiver and suffer throughout the winter when that can be avoided. The real point is that—no matter how generous Governments are in providing extra financial assistance to help with fuel bills—if heat is escaping through the roof, windows or doors, the money is being poured down the drain.
It is important to remember the facts about household spending on fuel among different socio-economic groups. The latest figures from the House of Commons Library tell us that the average spend on domestic fuel in all households is 4.2 per cent. of income. In the poorest 20 per cent. of households, it is 12 per cent.—a staggering 300 per cent. increase. In the richest 20 per cent. of households, it is 2.5 per cent. That means that the very poorest families spend proportionately nearly five times more on domestic fuel than the very wealthiest.
Financial assistance from the Government is most welcome, but it is not tackling the root cause of the problem. I cannot be the only Member of Parliament to question whether the £485 million spent on cutting VAT on fuel from 8.5 to 5 per cent. would not have been better invested in targeting energy efficiency measures on the homes of the poorest people. That tax cut was enormously popular, but in time it may come to be seen as a triumph of political symbolism over sensible social and environmental policy.
I want to raise a related issue concerning the pricing structure for domestic fuel. Sadly, that is no longer within the Government's direct control, but it is a matter for the regulators. The system of standing charges for fuel impacts greatly on pensioners and other low-income households. It is one of the most iniquitous and regressive forms of taxation. In a typical pensioners' electricity bill, the standing charge can be more than 30 per cent. of the cost of the fuel consumed; in a typical gas bill, it can be more than 15 per cent. of the cost of the fuel. Consequently, pensioners and other low-income households whose consumption of fuel is low are paying more per unit of fuel than more affluent higher-volume consumers.
A fair system would operate in exactly the opposite way, with low-volume consumers paying less per unit and with higher charges being introduced at higher levels of consumption to encourage conservation. I hope that my hon. Friend the Minister will discuss the issue with our hon. Friend the Minister for Science, Energy and Industry. There is an urgent need for it to be raised with the regulators.
I hope that my hon. Friend will comment on some of the matters that I have raised, especially the fragmentation of existing programmes and policies for energy conservation, and will tell us what proposals she has to introduce greater co-ordination. I hope that she will comment on next year's proposed budget cuts for the Energy Saving Trust and how they will impact on the Government's objectives, and on the planned reductions in local authority expenditure for 1998–99 and how they will impact on local authority energy conservation measures. I hope that she will tell us whether she has had, or intends to have, discussions with the Minister for Science, Energy and Industry about the pricing structure for domestic fuel. Will she also comment on the relative 289 merits—in policy terms—of cash benefits to compensate for high heating bills, and investment in long-term energy efficiency programmes?
I do not expect my hon. Friend to say whether the Government intend to introduce an affluence test for middle-class families who benefit from the cut in VAT, but I should be grateful if she would comment on the whole question of the long-term comprehensive national programme that we need so desperately to end fuel poverty and improve energy efficiency—along the lines of the Bill to be presented this afternoon, or the suggestions in the Energy Saving Trust's October 1997 study.
We can end fuel poverty if we choose. To do so would save money for the national health service by improving people's health, and it would save lives. It would save money in benefit payments by moving people from welfare to work, and by cutting the costs of housing maintenance. It would make a significant contribution to our national targets for greenhouse gas reductions. A 15-year programme, as outlined in the Bill, will produce a net saving to the Treasury. There will be initial costs in the early years of the programme; but, if we can find—without enormous difficulty—several hundred million pounds for a plastic tent to celebrate the millennium, can we not find a few hundred million pounds to celebrate the end of fuel poverty by the year 2000?
If we can find, without difficulty, £1 billion to maintain our weapons of mass destruction, can we not also find additional money to end fuel poverty in Britain? It is not unreasonable for us to seek the small amount of pump-priming money needed to abolish fuel poverty for good, so as dramatically to transform the qualify of life for several million people.
§ Mr. Matthew Taylor (Truro and St. Austell)
I congratulate the hon. Member for Bury, North (Mr. Chaytor) on securing this debate and, more important on his excellent comments. I shall follow his comments rather more closely than I had expected during the early part of his speech, because I share his concern about the Government's attempt to deal with this problem by helping people to pay to waste fuel, rather than by helping them to save fuel, keep their home warm and thus cut their bills, cut pollution and solve fuel poverty in the long term.
Fuel poverty is not like general poverty: being fuel poor means being unable to afford to keep warm at home not because people are short of money, but because the fuel they buy is largely wasted. Warmth leaks out through doors, windows and the roof when it need not do so.
Fuel poverty is the result of a vicious circle that traps low-income families in cold homes. Despite being poor enough to be living in a home without proper insulation and with a decrepit heating system, vulnerable families and pensioners have to shell out on large heating bills just to stay warm enough to remain healthy. They often fail to keep warm enough, despite paying large bills, because so much fuel energy is wasted. The more their money is eaten up by that waste, the more difficult it becomes to pay their fuel, food and other bills, let alone to pay for their homes to be insulated.
290 As the fuel poor try to put up with the cold and damp, even more CO2 emissions are pumped out of power stations that fuel homes where energy is wasted, so everyone suffers increased pollution. That position is worsened by several of the policies that have been designed to help people to pay excessive bills rather than insulate to cut waste, to cut bills and to keep the home warm. Meanwhile, the taxpayer shells out on a national health service that treats hundreds of thousands of people who would not be ill but for the lack of a few simple measures to improve the energy efficiency of their homes.
The energy report of the 1991 English house condition survey is a testament to years of ad hoc Government action to tackle fuel poverty. Almost 6 million homes are completely inefficient in the way they consume energy. Vast numbers of people live in inadequately insulated and heated homes. Unsurprisingly, those having to live in such conditions are more often than not the most vulnerable in society: the very old and the very young. The state that the housing stock has been allowed to get into is inexcusable.
The energy report included a comparative study of fuel poverty in Europe. It found that fuel poverty is virtually non-existent in much of western Europe, where the quality of the housing stock is much higher. Indeed, the figures are better in many of the former eastern bloc countries. In an advanced industrial society such as ours, it cannot be right that so many people lack the basic necessity of a warm home to live in, whereas other countries do not allow that problem to arise.
Evidence shows the effect that cold, damp homes have on occupants' health. Once again, Britain is put to shame when we compare the numbers of those suffering from cold-related illnesses in this country with those in other countries. Every year, Britain experiences a phenomenon known as "excess" winter deaths. Thousands of people are bereaved every winter because of a massive seasonal increase in deaths. Official Government statistics show an extra 60,000 deaths on average each winter, and many more people spend time in hospital.
"Excess" is a rather odd, bureaucratic word: it really describes unnecessary winter deaths. Such a phenomenon is not experienced, certainly not on the same scale, in other countries that have similar or even colder climates. In Britain, for every 1 deg Centigrade drop in temperature, an extra 8,000 deaths occur. In countries such as Sweden and Norway, which can have terrible winters, no extra deaths occur.
Our elderly relatives are not our only worry. The extra pollution caused by this wasted burning of energy contributes to global warming, which is gradually making the world uninhabitable for our grandchildren.
The reality of the impact of cold homes on the elderly and vulnerable is best illustrated, not by those grand, national figures, but by local figures from the Office for National Statistics. In my county of Cornwall last winter, 414 people died unnecessarily—excess deaths, as the Government statistics put it. In Devon, the figure was 984 last year. We must remember that each and every unnecessary death causes unnecessary grief to friends and relatives. The complex causes of fuel poverty do not lend themselves to ad hoc or half-hearted solutions. What is missing from action to improve the energy efficiency of Britain's homes is an integrated, national approach on anything like a sufficient scale. Although many welcome 291 small steps are being taken—by local authorities and at national level through home energy efficiency schemes and the Energy Saving Trust—they do not add up to enough. Some statistics suggest that the quality of the housing stock is falling rather than improving, because of inadequate investment in many homes, not least in the public sector where local authority spending has been badly cut.
The work of the Energy Saving Trust is an excellent example of the positive action that must be taken, but on a much larger scale. When the trust was established, the previous Government expected that it would have hundreds of millions of pounds to work with, generated by the levy on power companies. That was approved by the Treasury and by Conservative Ministers, but blocked by the gas regulator, Clare Spottiswoode. The Energy Saving Trust ended up with little more than the Government's grant: an utterly inadequate £25 million. The Conservative Government betrayed those whom they had promised to help by doing nothing to overturn the regulator's action.
Despite the lack of funds, the Energy Saving Trust has managed to introduce many innovative schemes. It has built on the Home Energy Conservation Act 1995, which was secured by my colleague and friend, Baroness Maddock, the former, excellent Member of Parliament for Christchurch. It has helped local authorities to improve the quality of their housing stock. Ordinary people are also receiving help: they get free advice on how to reduce their fuel bills from the energy efficiency advice centres set up by the trust.
The sad fact is that such projects are no substitute for a whole-hearted, properly funded, Government-backed energy efficiency programme on a sufficient scale to deal with the millions of fuel-poor homes, not just a few thousand.
Labour promised such a national home energy efficiency programme when in opposition, but the idea has now been blocked, apparently by the Treasury. However, that has become even more necessary as the Energy Saving Trust's funding has fallen rapidly: it is £19 million this year, and if Tory spending plans are adhered to as proposed, under the new Labour Government funding will fall to a mere £14 million. I understand that a final decision on this matter is expected next week. The trust is not certain what the final figure will be, so I hope that the Minister will have some good news for us today.
The new deal for young unemployed is not the answer either. We are told that they will have the option of work on environmental schemes, with energy insulation being the top priority. I welcome that. However, there are no new funds for the materials required, which suggests that existing funds will be diverted. If so, few, if any, extra homes will be insulated, and existing jobs in the young companies that have been established to undertake work under the home energy efficiency schemes will be lost. The Minister must explain how the materials will be funded on a scale large enough to make a real impact.
Money is always hard for Ministers to find, but the financial position should be put in context. Right now, the vast majority of pensioner couples and lone parents live in dangerously cold homes—cold enough to make them and their children ill—because they cannot afford enough heat. Families must daily choose between food and 292 warmth, while money leaks out of their poorly insulated homes. They waste the little money that they have, while the NHS spends an estimated £1 billion every year treating people who get ill in their cold, damp homes.
It is not just a question of the Government giving more money: that is the least of it. The scale of the problem goes beyond what any Government could provide. The average home in England is only half as energy efficient as the Government think is satisfactory, so there is a huge backlog of work if we are to achieve the standards of other countries. One in 10 low-income homes has no loft insulation, a third are still without adequate hot-water tank insulation and nearly 70 per cent. have no draught proofing. I could go on, but the point is made.
A vast amount remains to be done to give less-well-off people warm homes and a chance to use less power to better effect. The majority of homes in Britain could do with extra work, and a sensible way must be found to meet the large cost of that. The previous Conservative Administration found a solution—a levy on the energy companies—which was cleared by the Treasury. However, it was never put into practice. The regulator's block on such a levy must be overturned, by legislation if necessary. There would be overwhelming support in the House for such action.
The companies that make large profits from heating our homes and, incidentally, polluting our environment must be required to put far more of their profits back into the community through the funding of energy efficiency schemes. At a time of falling energy prices and high profits, there is no reason for that to lead to higher bills next year for anybody. Through insulation, the fuel poor would gain lower bills and warmer homes.
In addition to the levy, the free market should be harnessed to encourage energy conservation, not energy sales. A commitment to invest in energy efficiency should be secured before any energy supply company receives a trading licence under the new competition rules. The companies should be able to set up longer-term contracts with customers only if they have installed energy-saving equipment in customers' homes. The power company would get the profit from supplying a customer for a fixed period, which is not guaranteed in the new free market, and the consumer would get lower bills and a warmer home. The Government would not have to pay for that: it is harnessing the power of the free market, and the incentive would be the supply of energy saving to gain customers and not just selling ever more energy to people who cannot afford it in homes that waste it.
There must be a reversal of the absurdity under which there is less tax on using energy than on conserving it. If the Government want to attack fuel poverty, they should reduce VAT on all energy-saving materials to 5 per cent. which is the same rate as on energy so that it is not more, expensive to save energy than to waste it. The Chancellor took a welcome, but, as was evident from the figures, rather tiny step in the right direction in his Budget by doing that for energy-saving materials that are used in Government projects. The same incentive must be given to every householder and business. Labour Members, including the Chancellor, voted with us two years ago to achieve that policy.
I hope that the Government will support the Energy Efficiency Bill that was presented by my hon. Friend the Member for Torridge and West Devon (Mr. Burnett).
293 It will place a duty on all building societies and banks to provide, as part of their standard surveys, information on the energy efficiency of the home. That will help buyers to choose a new home in which energy is not wasted, or alert them to ways to improve their new home to cut heating bills and, I hope, press for a cut in the price of the home to enable them to make that investment. It will be a direct encouragement to sellers and builders to improve the energy efficiency of every home so that they are not selling homes that will be expensive to heat in the long term. I understand that the Council of Mortgage Lenders does not oppose the Bill. I hope that the Minister will say that she supports it.
As the hon. Member for Bury, North said, Ministers have to look beyond the next election. Energy efficiency requires investment now for a great but perhaps not immediate financial gain for the Government. Year after year, money is wasted on cold weather payments which are not even adequate because they do not take account of the wind chill factor. That money leaks out of homes which become more and more dilapidated every year. Funding now for proper insulation could remove the need for hefty Government payments for years to come and would include savings on the NHS bill through a reduction in thousands of extra winter patients every year. It would make many of the poorest in our society better off and warmer every winter. Greater energy efficiency will not only leave our grandchildren with a stock of warmer homes for their future, but avoid the legacy of global warming that is caused by COemissions and the catastrophic climate change that that will bring.
§ Mr. David Drew (Stroud)
I congratulate my hon. Friend the Member for Bury, North (Mr. Chaytor) on obtaining the debate. I shall concentrate on fuel poverty as it affects pensioners and I shall do that mainly because for the past decade I have been a committee member of Care and Repair England in Stroud. I declare that as an interest which has given me an insight into the problems affecting pensioners in particular.
We all know why pensioners are especially vulnerable to fuel poverty. They are among the poorest in our community and there is a great disparity between the incomes of rich and poor pensioners. In addition, many pensioners spend hours at home while other people are at work or engaged in other activities, and they tend to live in the oldest properties, which are most deficient in energy efficiency. Last but not least, pensioners tend to suffer more from illness and mortality. According to Department of Health statistics, hypothermia deaths alone account for almost 500 people a year. Of course that is directly related to energy efficiency.
According to the last census in 1991, more than 2,500 pensioner households in my constituency did not have central heating, and that is a microcosm of the country. Many pensioners are on low incomes and experience fuel poverty. Some 1.7 million pensioner households depend on income support and even on the lower measurement of the Neighbourhood Energy Action's affordable wealth campaign, about 1.3 million pensioners are in need of energy efficiency support.
I welcome the Chancellor's proposal in his green Budget for extra help with the cost of heating all pensioner households and to target additional help on 294 pensioners on income support. However, many pensioners choose not to take up income support; that is a problem in its own right. My hon. Friend the Member for Bury, North graphically explained many other measures that the Government have presented. I suggest a small change to income support regulations that would help to reduce fuel poverty for pensioners.
The previous Government amended the income support regulations in October 1995. Before that, regulations entitled people who were eligible for income support to receive assistance with the interest on a bank or building society loan that had been taken out, among other things, to install central heating. That enabled many older people to purchase modern energy-efficient heating systems. Many of them installed central heating for the first time or replaced antiquated or inefficient systems. The benefits included lower running costs for the householder, a reduction in condensation, which is damaging to the condition of a house, a reduction in cold-related illnesses and, of course, a reduction in CO2emissions, which damage the environment.
From October 1995, the Conservative Government restricted income support assistance for interest on loans; only those for repairs to existing heating systems are now eligible. That means that many older people must continue to rely on older heating systems that are inefficient and expensive to run. I ask the Minister to consider, in liaison with the Treasury, reinstating the installation of new energy efficient heating systems as an eligible item under income support regulations.
The economic and health-related benefits of energy efficient heating systems are well documented. For those who live in fuel poverty, the initial capital investment that is required can be prohibitive. Because their existing heating systems are inefficient and costly to run, they cannot afford to save or to borrow sufficient money to meet the cost of installing a new efficient heating system. The Conservative Government's Department of the Environment energy efficiency best practice programme guide No. 171 suggests that the cost of moving to an energy-efficient heating system can be recouped within five years. The call on the public purse to enable older people who live in fuel poverty to improve their heating systems would be relatively small—in some cases not much greater than the £50 a year payment to pensioners on income support. The great advantage of that Government subsidy is that it would reduce older people's future fuel bills rather than assist with the high running costs of old, inefficient heating systems. The estimated cost of running an old central heating system with poor controls is about £1,000 a year. Installing a condensing boiler and good heating controls would lead to a saving of 20 per cent., or £200, a year. The cost of installing a new central heating system in a traditional mid-terraced house would be about £1,600.
If the interest on a loan for that amount was eligible for income support housing costs, at the current standard rate of interest used in income support, the cost to the public purse would be about £2.30 per week for about four years, a total Government subsidy of less than £500. That would be a prudent use of a relatively small amount of Government expenditure, which would have substantial long-term benefits for the fuel poor and for the environment.
295 Those changes could be linked to a reinvigoration of the home energy efficiency schemes—HEES—which were mentioned by previous speakers. Unfortunately, the previous Government restricted HEES work to pensioners on benefit and to larger-scale operations, which has had a deleterious effect in my constituency. As the hon. Member for Truro and St. Austell (Mr. Taylor) said, it is important to integrate energy efficiency with other measures.
I want to deal with a second area, in which I have some expertise—the work of home improvement agencies. As I said at the beginning of my speech, I have a long association with Care and Repair England. The Department of the Environment, Transport and the Regions already supports a growing network of home improvement agencies, such as Stroud Care and Repair in my constituency. Those not-for-profit agencies have developed great expertise in assisting, in particular, older people living in poor quality housing to improve their living environment. They are also able to offer considerable advice on the best way to insulate and carry out repairs to their housing.
Home improvement agencies—usually called Care and Repair or Staying Put—are now recognised by all major political parties as having developed a sound track record in providing personal support and practical assistance to older people and, within that group, disabled people who live in poor or unsuitable housing. Their work incorporates a wide range of repairs and adaptations, ranging from a handrail to extensive renovations. Obviously, I want to concentrate on fuel poverty, where the clear aim of Care and Repair's strategy is to keep people in their own homes for as long as possible, and heating those homes to keep people warm is a major part of that strategy.
Inevitably, these matters link with community care—and housing is the missing limb of community care. My right hon. Friend the Secretary of State for Health frequently refers to a Berlin wall between health and social services. We must not forget housing as part of the community care programme, as people go back to their homes.
Not only have home improvement agencies developed the necessary technical knowledge and skills, they have developed the financial expertise to bring in funds from a wide range of sources, including charitable funds, insurance, the national lottery, the utility companies and equity released from the home. Many agencies are also working actively with local authorities on the implementation of the Home Energy Conservation Act 1995.
The national body for home improvement agencies, Care and Repair England, is working with other parties on maximising the use of equity release, in particular for older people in energy-inefficient housing. That will involve partnership working between home improvement agencies, local authorities and building societies and will bring in private finance to complement the use of public funds available through local authority housing grants and home energy efficiency scheme grants. Care and Repair England has also developed a particular expertise—again, in partnership with commercial and voluntary sector bodies, as well as with the Government—in addressing the problems of energy inefficiency in poor housing. It is currently planning research to improve and refine work in that area.
296 I suggest to my hon. Friend the Minister not only that a change to the income support regulations be considered, but that thought be given to strengthening the mechanisms for delivering help to older people through home improvement agencies. My hon. Friend the Minister for Local Government and Housing recently gave a strong endorsement to home improvement agencies through the allocation of an additional £750,000. She also announced a review of the funding mechanism.
In the context of this debate about fuel poverty, I draw my hon. Friend the Minister's attention to the capacity of home improvement agencies to make a useful contribution, both technically and financially, to combating fuel poverty and energy inefficiency and to express the hope that any changes to the funding system will preserve and, indeed, strengthen their ability to bring to this area of work a strong voluntary sector contribution and an expertise in accessing non-Government finance.
In the context of a home improvement agency service that can deliver the service and maximise the use of equity release, the proposed change to the income support regulations will assist such organisations to improve the living conditions of thousands of older people who are living in fuel poverty at the threshold of the 21st century.
The task is surely to link such vital organisations to a truly comprehensive programme of energy efficiency to reduce fuel poverty, pulling in the voluntary sector to work with landlords, local and central government, fuel industry regulators and, indeed, individual householders, to show that we have the political will, as well as the economic, social and environmental understanding, to grasp this important nettle.
§ Mr. Andrew Robathan (Blaby)
I shall be relatively brief and I shall concentrate on energy efficiency. I suspect that there is little disagreement about the substance of this important debate, initiated by the hon. Member for Bury, North (Mr. Chaytor); indeed, I found little to disagree with in his remarks.
I want to explore the part that the Government can play in encouraging good practice, especially through building regulations and by encouraging good design. This applies to new building as well as to refurbishment, on which the debate has concentrated up to now. As the hon. Member for Stroud (Mr. Drew) will know only too well—he initiated a debate on the issue—there are plans to build 4.4 million new housing units by 2025. That presents an enormous opportunity, although many of us are greatly concerned about where they will be built. By using the building regulations that will be applied to the new houses, tremendous progress could be made towards ensuring that there is no fuel poverty among future generations.
I understand that carbon emissions from domestic energy usage account for about one quarter of the total carbon emissions into the atmosphere. That is of concern to all hon. Members and no one doubts that emissions must be reduced. The question is how to do it. I live in a lovely part of Leicestershire where builders, such as the excellent David Wilson Homes, construct marvellous new, detached houses throughout the countryside. That is one of the problems. Why have we all been conditioned to want to live in detached houses, when terraced houses—as anyone who lives in one knows—are much warmer 297 because they have only two outside walls rather than four? This is a serious point. There is nothing wrong with living in a terraced house. After all, extremely rich people want to live in terraced houses in Belgravia—[Laughter.]Hon. Members are grinning, but it is an important point. We are encouraged to live in detached houses, when, for reasons of crime as well as fuel efficiency, living in terraces is much more efficient. We should consider that.
It is difficult for Governments to order builders to build terraced houses, but it is ludicrous for estate agents to say that everybody wants to live in detached houses. We are told we want to live in detached houses. I am not keen on regulation in the matter, but I want the argument to move on so that people want to live in fuel-efficient terraced houses. That is easily said, but more difficult to achieve—but the Government could play a constructive role through building regulations.
The building regulations were last altered in 1993 or 1994. The complaint at the time was that all that was being initiated was a requirement that they be in line with good current practice. We should be looking beyond that—the hon. Member for Bury, North alluded to this—towards, for example, every window in any new building, although not in refurbishments, having to be double glazed. Every house should produce the minimum emissions possible, as is the case in Scandinavia. That could be achieved in new buildings at relatively low cost. We should examine that matter very carefully.
If the building regulations are improved, we shall be able to do an enormous amount to old housing units by properly insulating them, rather than simply bringing them up to a mediocre standard. I have just refurbished a house in London and I insisted to the architect that every hot water pipe should be lagged. Unfortunately, that was not done—and it still has not been done—because the cost of ripping out and relagging all the pipes is enormous. The house is thin and not particularly big, but an enormous amount of hot water is wasted every time the hot water tap on the top floor is used. Taking measures to reduce such waste could bring great savings to many people—to poor people and to rich people, and I do not count myself as being rich. People from all social strata could save a lot of money by not having to run the tap for five minutes before they get hot water. They could realise substantial savings not only for themselves but for the environment.
Much has been said today about fuel poverty. We should never underestimate the type of fuel poverty described by the hon. Member for Bury, North. When I lived in Fulham, my next door neighbour was in her late 80s. Although she lied about her age, one could surmise it by the fact that she had worked in a munitions factory in the first world war. One December, she died from the after-effects of a pneumonia that she contracted in the grotty little flat that she rented. Next door to my house, she sat huddled around a gas stove, always worried about the cost of running it. If my house next door could be warm, why could not hers? I am sure that the House appreciates the horror of fuel poverty.
Another aspect of the matter is the fact that many people—although not the elderly living in rotten accommodation—expect houses to be too warm. Far too often we wander round in our shirtsleeves, although it is the middle of winter; instead of putting on a jersey on 298 cold days, we turn up the heating. Last year, an article in the Leicester Mercury described a man who complained that the council had not repaired his boiler during last winter's cold snap. He was photographed in his house, however, sitting in a vest. Although that is only an anecdote, it demonstrates that we should, to help the environment, perhaps consider turning down our heating a bit more. Such action will not affect fuel poverty, but it should be considered.
Paradoxically, reducing energy costs is not good for energy conservation or for the environment. The hon. Member for Bury, North mentioned VAT on fuel. It was disingenuous of those who campaigned for reducing VAT on fuel not to mention the fact that that VAT discouraged fuel consumption. Moreover, increased efficiency in fuel production and in the privatised utilities has resulted in falling prices for gas and electricity.
The Government have a part to play in developing building regulations, and in moving well beyond best practice to the very best practice possible at reasonable cost. I hope that Ministers will consider doing so. I hope also that the House will play its part in encouraging builders and house buyers—which we are all likely to be—to favour efficient terraced houses over the "des res" detached houses that are being built across the country.
§ Mr. Malcolm Chisholm (Edinburgh, North and Leith)
I congratulate my hon. Friend the Member for Bury, North (Mr. Chaytor) on securing this debate on a subject that is clearly of enormous social and environmental importance. As several other hon. Members wish to speak, I shall be very brief and simply put a Scottish slant on the issue.
Home energy efficiency is very topical in Scotland. The latest house condition survey was issued only a couple of months ago and it showed that the mean national home energy rating of homes in Scotland was 4.1, whereas the rating for new properties must be 7, so 93 per cent. of Scottish homes are wasting energy. Moreover, 25 per cent. of all dwellings in Scotland were judged by surveyors to suffer from problems of dampness or condensation; residents judged that the percentage was even higher.
Houses should be energy efficient for three very important reasons. First, energy inefficiency means that houses are expensive to heat. Secondly, energy inefficiency means that houses can become damp, with an effect on health. Thirdly, it means wasting fuel, with increased CO2emissions. If all Scotland's homes were brought up to today's energy efficiency standards, CO2emissions would be reduced annually by 47 per cent., which is crucial in achieving the Government's objective of reducing CO2, emissions by 20 per cent. by 2010.
As my hon. Friend the Member for Bury, North mentioned, energy inefficiency causes excess winter deaths. There is another way of considering those deaths. In the United Kingdom, the gap between winter and summer deaths is 31 per cent., whereas it is 14 per cent. in Sweden and 10 per cent. in Norway. It goes without saying that those countries are much colder.
A recent study in Glasgow found that asthmatics are three times as likely to have dampness in their homes as the control group and that people who suffer from severe 299 asthma are in the dampest homes. I was therefore very interested to learn that the Cornwall and Isles of Scilly health authority recently gave money to district councils to provide insulation in damp homes. That was a very interesting precedent in public health policy and I hope that it will be built upon.
Energy inefficiency affects costs. Currently, average householders in Scotland spend a third more than necessary on fuel bills and, of course, the poorest suffer the most. As my hon. Friend the Member for Bury, North again mentioned, the poorest households spend proportionately three times as much on fuel as the average household. A recent study in Granton Medway, in my constituency, indicated that householders there were spending between 10 and 15 per cent. of their income on fuel. However, I am glad to say that, since that work was done, the campaign they waged brought improvements to their homes.
Lone parent families are mentioned in the Scottish house condition survey in the context of a substantially higher incidence of dampness and or condensation. Those families will have even less to spend on heating if lone parents take up work in April and then lose their job. I do not make apologies for repeating that point, because it breaks my heart to see my Government simultaneously damaging their own credibility and lone parents. I shall go on challenging the Government unceasingly until, like an errant teenager, they see the error of their ways.
That appalling policy of my Government is particularly sad, because it overshadows the many exceptional achievements of their first eight months, some of which were mentioned by my hon. Friend the Member for Bury, North. VAT on fuel has been reduced to 5 per cent. VAT on the installation of energy-saving materials under current grant schemes has been reduced to 5 per cent. More than 10 million payments will soon be made to more than 7 million pensioner households. There has been action to ensure that all pensioners receive the income support to which they are entitled. There has been action, too, of course, on the minimum wage and on welfare into work.
In the Scottish context specifically, we have ensured that the welfare-to-work initiative will have as one of its priorities environmental task force work on home insulation. In Scotland, for next year, we have put £5 million of housing money into the environmental task force, so that there will be additional money for materials. It is important to make the point that comparatively small sums can make a big difference in work on energy efficiency.
I should like to say more about what is happening in Scotland but, because my hon. Friend the Member for Plymouth, Sutton (Mrs. Gilroy)—who will be presenting her Warm Homes and Energy Conservation (Fifteen Year Programme) Bill later today—wishes to speak, I shall draw my remarks to a close now.
§ Mr. Cynog Dafis (Ceredigion)
Thank you, Mr. Deputy Speaker, for calling me to speak for the second time today. I congratulate the hon. Member for Bury, North (Mr. Chaytor) on raising this matter and on making a first-rate speech. Energy efficiency—with development of renewable resources and efficient production of energy from conventional sources, such as combined heat and power—is an essential component in a wider sustainable energy policy.
300 As chairman of the parliamentary group on renewable and sustainable energy, I am aware both of the tremendous developing consensus in favour of putting sustainable energy policy at the heart of Government consideration and of the compelling case for doing so. That case is well understood by the Minister, who I understand is sympathetic to that view.
Energy efficiency has been debated repeatedly since I first entered the House in 1992 and the overwhelming case for taking it seriously has been well established. It offers gains in respect of the environment, health and quality of life. There are environmental gains in manufacturing and installation and economic gains as a result of reduced costs. Real, sustainable development of energy efficiency is clearly at the heart of Government policy, but the cuts to the budget of the Energy Saving Trust tend to belie that. The Government will have to reverse those cuts if they are to be taken seriously.
Much has been achieved in recent years, but it has been by dint of constant and intense pressure from various lobby organisations and through the work of voluntary organisations such as Neighbourhood Energy Action and the Association for the Conservation of Energy. It was no small task to get the Home Energy Conservation Act 1995 on to the statute book. It took at least three years after I introduced a similar Bill that was blocked by the previous Government. Progress has been made through constant pressure and attrition, and it is still far too piecemeal and insufficient. It is not commensurate with the scale of the challenge or the opportunity to take the matter seriously.
Energy conservation needs to be built into economic and employment policy and social and environmental policy in a structured way over a set period of time. We need a coherent process and a substantial programme and that is what the Warm Homes and Energy Conservation (Fifteen Year Programme) Bill is all about. I am certain that it is the right way ahead. The Bill would contribute to Government policy, it is eminently compatible with the themes that the Government have established and I strongly support it.
§ 12.1 pm
§ Mr. Harry Barnes (North-East Derbyshire)
In introducing the debate, my hon. Friend the Member for Bury, North (Mr. Chaytor) said that Derbyshire is one area that suffers particularly from fuel poverty. Although I accept what my hon. Friend said about national programmes and the need for co-ordination, I should like to refer to local initiatives in Derbyshire and Nottinghamshire that are attempting to tackle fuel poverty.
In 1996, the Nottinghamshire and Derbyshire local authorities formed an energy partnership to offer local residents advice on energy saving. North East Derbyshire district council obtained a grant for those arrangements and now runs a mobile service. Local authorities also employ advice officers. It is an important initiative, but it is limited by the fact that it is an advice service.
More funding is required to deploy energy-saving methods in order to tackle fuel poverty among many needy people. The local authorities in Nottinghamshire and Derbyshire attempted to do that under a programme known as the home energy conservation action bid. They sought to set up an energy service company, supplying 301 energy-saving goods such as low-cost cavity wall insulation, that would work with the electricity and gas companies to provide cheaper fuel. It was planned that the company's profits, with additional money to be raised from the private finance initiative, the national lottery or European funding, would help to tackle many of the problems that need to be addressed.
Although most local authorities in Nottinghamshire and Derbyshire have been working together on the project for a considerable time, they now realise that they have entered a legal minefield and have had to withdraw the service. I should like my hon. Friend the Minister to examine the information that the local authorities have sent to her office. A change in the law is required to make it easier for such initiatives to be established; they would fit in with the wider concerns that my hon. Friend the Member for Bury, North raised.
§ 12.5 pm
§ Mrs. Linda Gilroy (Plymouth, Sutton)
I congratulate my hon. Friend the Member for Bury, North (Mr. Chaytor) on initiating the debate.
The Warm Homes and Energy Conservation (Fifteen Year Programme) Bill, which I shall present this afternoon, has been mentioned. It would require the Secretary of State to draw up and facilitate the carrying out over a period of 15 years a programme of action to provide at least 500,000 households each year with a comprehensive package of home insulation and other energy efficiency improvements. More than 200 hon. Members have expressed their support for the Bill and eight national organisations are working with me and support it. They are Friends of the Earth, the Association for the Conservation of Energy, the Child Poverty Action Group, Church Action on Poverty, Help the Aged, the National Housing Federation and Neighbourhood Energy Action. I pay tribute to all those organisations which have long track records in arguing for and taking practical steps to end fuel poverty.
Much has been achieved. Neighbourhood Energy Action is working to insulate 400,000 homes this year. Estimates suggest that as many as 8 million homes are still in need of energy-saving measures, which could reduce their heating bills and allow their occupants to afford the warmth that they need.
As we know, the home energy efficiency scheme is currently under review. One of its present limitations is that it does not reach to the private rented sector. By giving the Secretary of State responsibility for a programme of measures and ensuring that funding is available, we can ensure that the Government take an effective long-term view of this and other problems. By dealing with at least 500,000 homes over 15 years, we should eliminate fuel poverty in 8 million homes and end the misery of cold winters for as many as 15 million people and thereby dramatically reduce the United Kingdom's shameful winter death record.
The cost of the programme has been estimated as £1.25 billion. We believe that the Government already pick up a bill of about £1 billion through funding energy efficiency programmes or financial payment programmes such as VAT compensation and cold weather payments.
By introducing a requirement for a long-term approach, my Bill would ensure that maximum value for money is obtained from such expenditure in lowering fuel bills in a 302 way that is permanent and sustainable. I hope that my Bill will focus discussion with the Government on finding new ways of funding that work more effectively. My hon. Friend the Member for Stroud (Mr. Drew) mentioned the home improvement agencies and equity release. Exploring the possibility of ethical bonds is another possible source to add to the funding that is currently available.
I hope, too, that the forthcoming consultative paper on utility regulation will include some proposals to help engage fuel companies to address the challenge of funding such measures. The hon. Member for Ceredigion (Mr. Dafis) mentioned the cut to the Energy Saving Trust; I hope that its budget will be restored.
I congratulate my hon. Friend the Member for Bury, North on initiating the debate and appreciate his support and that of other hon. Members for my Bill.
§ 12.9 pm
§ Mr. Colin Breed (South-East Cornwall)
I should like to concentrate on the regulation aspect of the issue. Although a number of issues need to be considered in tackling fuel poverty, the way in which regulation operates is clearly important. Regulation needs to be focused much more on being consumer friendly than on protecting the financial security of the privatised utilities.
The eradication of fuel poverty requires the measures that have already been discussed this morning, but regulation must be part of the process. Consumer choice is often more like supplier choice. Suppliers choose which are the best customers to supply with the best schemes. The advances in technology that allow companies to identify the customers that they really want have marginalised other customers and promoted the very fuel poverty that we are trying to eradicate.
The unit cost differentials between those able to pay their bill by direct debit and those who must use prepayment meters must be eradicated if we are to move against fuel poverty.
Regulation tends to increase the cost of fuel in more remote and rural areas, where wages are often lower, by imposing almost mandatory transmission costs which operate against the best interests of those in remote and rural areas. They have to pay more for the transmission of the very fuel and energy that they require. Regulation is part of the solution. I hope that the Minister will consider it in conjunction with those matters that have already been mentioned this morning.
§ Mr. Christopher Chope (Christchurch)
I shall remember this excellent debate for the description by the hon. Member for Bury, North (Mr. Chaytor) of his Government's £485 million Exchequer grant to reduce VAT on fuel from 8 to 5 per cent: a triumph of political symbolism over sensible environmental policy.
§ Mr. Chope
I am glad that I gave the hon. Gentleman the opportunity to clarify matters for his Whips. I shall also recall this debate for another brave and sincere speech from the hon. Member for Edinburgh, North and 303 Leith (Mr. Chisholm) and for an incisive and thought-provoking speech from my hon. Friend the Member for Blaby (Mr. Robathan).
We have had a host of statistics about increases in so-called excess winter mortality. We need to be a little wary of some of the statistics. How is it that fuel poverty is worse when there has been a 26 per cent. fall in the price of gas in real terms since 1987? There have been five consecutive years of reductions in electricity prices. There has been a dramatic reduction in the number of disconnections due to debt. In 1987, some 60,000 gas disconnections took place. In 1996, the figure was down to fewer than 9,000. In 1987, there were 100,000 electricity disconnections. There were fewer than 1,000 in 1996. Those are dramatic falls.
The improvements have been accompanied by the impact of the previous Government's home energy efficiency scheme grant which, since 1991, has helped 2.3 million vulnerable households. There have been undoubted and substantial improvements, yet it is said that fuel poverty is getting worse. I question whether we are exaggerating the problem. In saying that, I recognise that it is a serious problem and that more needs to be done. Indeed, that was the policy of the previous Government.
An article in today's The Timesgives an example of how we can all improve the energy efficiency of our homes. It is about the advantages of condensing boilers. It says that the Energy Efficiency Trust estimates thathouseholders waste some £278 a year by not taking energy-saving measures, of which the boiler is the largest factor. It reckons that if everyone installed condensing boilers the nation would prevent £750 million (11 per cent.) of energy wastage.The condensing boiler uses less fuel, and due to its technically advanced burners it produces fewer gases that contribute to global warming than a standard boiler … A condensing boiler costs only £250–£300 more than a standard model and the Energy Efficiency Trust offers a £200 cashback to anyone who installs one before the end of February 1998.In so far as we can use the House to try to educate people about the opportunities that are available, I hope that an increasing number of people will take advantage of condensing boilers. At present, only 2 per cent. of all boilers are condensing boilers. If we got that number up significantly, it would help energy efficiency and deal with the problem of global warming.
Much of the debate has been about costs. What are the Government doing about applying risk assessment criteria in deciding their investment priorities? In the previous debate, the Government claimed credit for spending an extra £85 million of taxpayers' money to compensate beef farmers for the consequences of the Government's crazy decision to ban beef on the bone, which destroyed the market by curtailing consumer choice. That is costing an unnecessary £85 million. The beef farmers are saying that the costs to them are far in excess of that sum and that £85 million compensation is not enough.
On any objective risk assessment, which the Government should apply to decide whether investment should be made in order to save lives, more lives can be saved by investing in fuel efficiency measures than can be saved by banning beef on the bone and compensating farmers for the consequences of it. To take a small example, the Energy Saving Trust's grant is to be cut next year from £19 million to £13.5 million—a cut of £4.5 million. The Government are hiding behind inherited spending plans. There are no inherited spending 304 plans in relation to beef compensation. The Government seem ready to spend an extra £85 million on beef compensation at the same time as approving a cut of £4.5 million to the trust. I submit that the Government have got their political priorities wrong.
The principle that should apply to householders is waste not, want not. If householders do not waste energy, they will be able to save money. Similarly, if the Government did not waste so much money on unnecessary measures such as banning beef on the bone, they would have more money to invest in improving energy efficiency in our homes.
§ The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Angela Eagle)
I shall pass on to my right hon. Friend the Minister of Agriculture, Fisheries and Food the fact that the Opposition do not agree with compensating farmers. I might also tip off the National Farmers Union and see what it has to say.
§ Mr. Chope
The Minister traduces what I said. The cut in the Energy Saving Trust budget is a direct consequence of the crazy decision of the Government to ban beef on the bone, against the wishes of consumers. Now they are having to pick up the financial consequences. If they had not banned beef on the bone, they would not have had to compensate beef farmers.
§ Angela Eagle
I am sure that we could have a long and interesting debate on BSE, Mr. Deputy Speaker, but I am not sure that you would rule me in order, given the title of this debate.
I want to talk about the extremely important subject that has been raised by my hon. Friend the Member for Bury, North (Mr. Chaytor). I have enjoyed the thought-provoking and wide-ranging debate on the important subject of fuel poverty and energy efficiency and the way in which they fit together. The quality of the debate has demonstrated the complexity of the subject. There are things that we can do by making focused small policies involving small amounts of money that make a difference, but at the back of our mind is the enormous backlog of problems with the housing stock. We have to integrate policies across government in order to tackle the problem coherently both at overall level and at the level of individual schemes. The debate has drawn attention to that.
I am grateful for all of the speeches that have made, which have been thought provoking, thoughtful and worth while, even down to that from the hon. Member for Blaby (Mr. Robathan), who attempted to impose terraced houses on the entire population. A terraced house in Bloomsbury or wherever he mentioned may be slightly different from one in Bury, North: perhaps my hon. Friend will tell me whether that is so.
§ Mr. Robathan
I used to live in a terraced house in Fulham, which I suspect mirrored those found in Bury, North and elsewhere.
§ Angela Eagle
I would be amazed if that were the case.
This has been a wide-ranging debate and there is not much time to deal with all the important issues that have been raised. I hope that I can at least inform the House about how the Government are beginning to deal with them.
Fuel poverty means the inability to heat a home adequately without spending a disproportionate amount of household income on it. Despite the scepticism of the hon. Member for Christchurch (Mr. Chope), we know that fuel poverty is widespread. We might argue about the figures, but the English house condition survey clearly confirms the extremely low standards of energy efficiency in the housing stock and the very slow rate of improvement. That provides evidence of the ineffectiveness of the previous Administration's energy efficiency policies. They had no overall strategy and I agree with those hon. Members who have described it as fragmented.
We know that 38 per cent. of the housing stock has less than satisfactory heating provision. Nearly 3 million dwellings are particularly inefficient, having energy ratings below 20 points. More than quarter of a million homes in the private rented sector, which are occupied by single pensioners, are appallingly expensive to heat, with an average energy rating of only 11 points.
It is deeply worrying that a high proportion of the poorest quality homes are occupied by people who are likely to be especially vulnerable to the effects of cold. Almost two fifths of all pensioners, who are particularly at risk from cold, need to spend more than 15 per cent. of their net income to achieve a basic standard of heating. More than three times as many single pensioners living in privately rented stock need to spend 15 per cent. or more of income on heating than do single pensioners living in the social rented sector. We must take the differences between housing sectors into account when dealing with fuel poverty.
As my hon. Friend the Member for Bury, North said, there is considerable evidence to link cold homes and poor health. The Government, at least, explicitly recognise that. It is significant that national health service expenditure rises by 2 per cent. in the coldest months of the year. I am not suggesting that that is all due to poorly heated housing, but we must acknowledge its effect on making people more vulnerable to other illnesses. It may increase people's chance of falling victim to illness and having to go to hospital.
Although very few people die from hypothermia, the death rate rises in winter, resulting in many thousands of"excess"winter deaths—a phrase already criticised by hon. Members—each year. As hon. Members have also said, the scale of that seasonal increase is not experienced in other countries. We must examine why this country more than any other—even those with colder climates—suffers that increase.
Vulnerable households need support if they are not to be left with impossibly difficult decisions that have a direct impact on health. The previous Administration had no coherent strategy to address the problems of cold, damp homes and ill health. We will do much better, because we recognise the links between poverty, housing quality, energy efficiency standards and health—and we take them seriously.
Health concerns us all and we have placed it at the heart of Government policies. Our manifesto promised to set goals to improve the overall health of the nation and 306 recognised the possible effects of poor housing, poverty, unemployment and a polluted environment. Our Green Paper "Our Healthier Nation" will be published soon. We recognise that the problem of fuel poverty can be tackled only as a result of a cross-departmental strategy.
We will take an integrated approach across government to tackle fuel poverty and energy efficiency. We have to produce coherent policies that go to the heart of the problem. We are starting from first principles and I have set up an inter-departmental working group to investigate the extent of fuel poverty. Perhaps its findings will overcome some of the scepticism felt by the hon. Member for Christchurch. It will examine all existing programmes to see whether we can achieve better value and greater integration. There must be an informed national debate on the cross-cutting policy themes that have emerged in the debate and which I am convinced will also emerge from the review.
My hon. Friend the Member for Stroud (Mr. Drew) made a thoughtful speech. I assure him that I shall ask the working group to consider the policy provisions that he suggested on home improvement agencies and changes to income support as a means of dealing with some of existing problems. He will appreciate that I shall pass on his acute observations without prejudice to the result of that group's findings.
As many of my hon. Friends have said, we have not been idle since May. We have not waited for the results of reviews before giving initial help to those least able to help themselves. We have reduced the rate of VAT on fuel to 5 per cent. That was an important step because we know that poorer households spend a greater proportion of their income on heating their homes than do others. Let it not be forgotten that it was the Conservative party that introduced that levy on warmth, which most affected people on low incomes living in poor housing.
The Chancellor's statement on 25 November produced more good news for the fuel poor: this winter and the next, all pensioner households will receive a £20 payment to help with winter heating costs. The worst off—the almost one in four who receive income support—will get £50.
§ Angela Eagle
My Department is not directly responsible for administering that payment, but it is the Chancellor's intention that that money should be provided and I am sure that the Government will do their best to do so.
As many hon. Members have already suggested, the utilities and regulators have a key role to play. Part of the legacy of the previous Government is that those companies and individuals essentially act alone as a result of statutory independence. That makes it very difficult for us to integrate policy across different sectors. My hon. Friend the Member for Bury, North asked about gas and electricity supply standing charges paid by people on low incomes. We are in the middle of a review of utility regulation that is considering whether such regulation 307 should have an explicit dimension based on fairness and social considerations. We plan to publish its findings in a Green Paper in the spring.
§ Mr. Matthew Taylor
The block on the levy for the Energy Saving Trust is key to undermining financial investment in energy saving. Will the Minister consider that problem?
§ Angela Eagle
It is being studied carefully, but a legacy of the system of regulation that we inherited from the previous Government is the gas regulator's power simply to say no. That is what she did and no amount of ministerial urging can make her change her mind.
The home energy efficiency scheme is the largest specific energy efficiency programme in the current portfolio designed to tackle fuel poverty. The scheme aims to help the most vulnerable by paying for energy efficiency measures in their homes. In that way, we will achieve two objectives: we will improve their home environment and contribute to our need to reduce CO2emissions to meet our international obligations. This year and next, the annual allocation is more than £75 million, and I have set a target for this year of 400,000 grants, each achieving, on average, an improvement of five points in the energy rating of the claimant's home.
The reduction in the cost of the materials for that work, which the Chancellor announced in the Budget in November, is welcome because it will enable us to help an extra 40,000 homes. Given that that scheme is targeted at the poorest households, that opportunity is especially pleasing.
My hon. Friend the Member for Plymouth, Sutton (Mrs. Gilroy) was wrong when she said that the home energy efficiency scheme does not reach to the private rented sector. It does, but, unfortunately, a review of the scheme that I initiated on my appointment has made it clear that the scheme as it currently operates does not reach the private rented sector as often as we would like it to. I do not want to pre-empt the outcome of that review, but there are indications that the scheme is not as well targeted on the fuel poor as it might be: it essentially offers a first aid service to a potentially large customer group and sometimes misses its targets.
I welcome today's debate. We need a continuing debate about these serious subjects and the House has made an extremely good start. I assume that we shall continue to make progress through private Members' Bills and Adjournment debates and I look forward to the debate continuing in a constructive way.