HC Deb 16 June 2003 vol 407 cc185-90

Motion made, and Question proposed, That this House do now adjourn.—[Derek Twigg]

1.26 am
John Mann (Bassetlaw)

I rise to raise an issue that has shocked and surprised me more than any other in the two years for which I have represented the constituency of Bassetlaw—that is, access to gas services. I wish first to set the scene in relation to the problem. A 90-year-old pensioner opens the door of her bungalow—the same door that she has opened for many decades. As a widow, she must face the freezing cold this winter, but worse is the risk of falling on the ice. It is black ice. It is always black ice, because of the spillage from the coal that she shovels up. A coal bunker is situated in her garden, as it always has been. Hot ashes are emptied three times a day. A fire is lit in the early morning and maintained through each winter's day. It is a traditional way of life, but there is no romanticism when she slips and falls; no glory when she is too ill to get out of bed; no thermostat to set; and, sadly, no longer a husband to assist in the carrying of the coal. There is no oil piped into the new boiler and there are no solar panels. There is the door and the coal bunker, and between them the four seasons.

That is the situation for several of the 92 pensioner bungalows on the Bracebridge estate in my constituency. They were all built around the time of the second world war, and none of them has access to gas. They are not remote homesteads in the back of beyond that have been forgotten, or where the price of taking the mains has been regarded as prohibitive—they are in the industrial centre of town. The estate is surrounded on all sides by new build from the 1950s, the 1960s, the 1970s and the 1980s, all with gas; Properties that were built 100 years ago stand on the opposite side of the street. All have gas.

I want the Government to consider two key issues. The first is the difficulty and cost of getting connected to gas, and the second is whether competition for gas supply is working. The Gas Act 1986 places a duty on the director general of gas supply to exercise his functions in such a way as to ensure that all reasonable demands for gas are met, provided that that can be done economically. The Act, as amended, is the statutory basis for arrangements that cover connection to the gas main. Section 10 stipulates that a public gas supplier shall, upon being required to do so by the owner or occupier, give and continue to give a supply of gas to any premises which … are situated within 25 yards from a … main". There is no right to a connection for properties beyond that limit.

Public gas suppliers are allowed to charge people who require a gas supply for the expenses of laying the main. Ofgem recognised the difficulties of some communities in obtaining a connection to the gas network. It recently extended the time for recovery of charges from five years to 20 years so that those benefiting from the gas supply at a later date will contribute to the cost of the connection.

However, the changes do not solve the problems in Bassetlaw. In a debate on 5 December 2001, the then Minister said: Communities and individuals are no longer forced to use Transco, but may access one of the dozen independent gas transporters … As a result of competition, 70 to 75 per cent. of connections to new housing developments are now carried out by companies other than Transco That refers to new housing developments. However, in my constituency, the problem is old housing. Of the 13 gas transporters that are licensed under section 7 of the Gas Act 1986 to convey gas through pipelines to premises, only one—ES Pipelines Ltd.—expressed to Energywatch any desire to connect the areas in Bassetlaw that are not connected. That followed an Energywatch intervention to ask whether transporters were prepared to do that.

A range of legislation—most recently, the Utilities Act 2000—means that providing connections is fully competitive. Again, I quote the former Minister, who said: My hon. Friend espouses the values of competition. As I am, among other things, the Minister for competition, I must encourage him to get behind the notion that competition benefits consumers and has done so tremendously. I am sure that competition is the way forward."—[Official Report, Westminster Hall, 5 December 2001; Vol. 376, c. 119–20WH.] Of course, competition is a good thing in energy if it drives down prices and provides a better deal for the customer. However, if it is not economically viable for one company to extend the pipeline to cater for excluded communities, it will not be economically viable for any of them. What plans does the Department have to deal with that anomaly?

Gas companies are required to respond only when it is economical for them to do so. Let me cite prices for Bassetlaw that Transco recently gave me. In Blyth, the cost is £4,012 per household for approximately 50 households. In Shireoaks, the cost is £2,413 per household, and in Bracebridge, the initial price that was quoted to Mr. Needle, who was the first of the 92 to ask for gas, was approximately £10,500. I believe that Transco is charging over the odds, citing the regulatory restrictions. Its competitors, with one exception, are not interested in quoting. Yet Ofgem says that it envisaged that prices would continue to fall.

Mr. Barry Gardiner (Brent, North)

I have listened carefully to the way in which my hon. Friend represents his constituents. Does he know that Transco has a long history of overcharging in what was supposed to be a new competitive environment? Indeed, a couple of years ago, Ofgem had to devise an order to the Gas Act 1986, forcing Transco to comply, be fully competitive and not use anti-competitive practices. My hon. Friend's description of the overcharging of his constituents is a good example of the general way in which Transco treats its customers.

John Mann

My hon. Friend is very knowledgeable in these matters; I know that he has pursued them with vigour in this Parliament and the previous one. The point that he makes is pertinent to this debate.

Ofgem has advised me that there are independent engineering companies that are also able to install pipes. On 22 May, it advised me that information about independent contractors engaged in laying gas infrastructure was in Yellow Pages and the Thomson directories. That does not seem to be an appropriate way for pensioners such as those in the three areas in my constituency that I have outlined to access the gas supply that the vast majority of people already have.

It gets worse. The 10-m rule was put out to consultation in April 2003 in a document entitled "Competition in one-off gas connections", which suggested price increase options or the abolition of the 10-m rule and of section 10(2)(a) of the Gas Act, as amended. In other words, this would affect the ability of some properties within 10 m of the main to be connected, supposedly for free, but in fact not for free at all. According to Ofgem, the 10-m rule principally affects lower-value domestic connections, yet Ofgem simultaneously states that disadvantaged households will not lose out disproportionately from its abolition. It strikes me that George Orwell must have inspired the writing of that document.

On investigation, it was discovered that 16 Bracebridge properties—out of a total of 92—could be connected under the 10-m rule, but not for free. The charge would be £312, which is a standard Transco charge. It is an arbitrary charge, because it is the same connection price as that charged for the infill, for which Mr. Needle was quoted £10,500. To summarise: one house could be connected "for free"—or, rather, for £312—while the semi-detached house next door would have to pay double or treble that amount for an identical service to an identical house. If those properties had been connected 20 years ago, it would have been cheap; now, it is expensive. Companies fight to work on new developments paid for by developers—that is where we see the competition—but there is no competition for doing the infills. I repeat that only two companies will even consider these three areas, and one of them—Transco—has no choice but to do so.

Who are the losers? They are the pensioners in mining communities who have never shifted to gas. The reason that they have not done so is partly an empathy with the industry in which they worked, and partly the concessionary coal that was available. So, when the rest of the country was shifting to gas 20 or 30 years ago, these isolated pockets of pensioners remained. What would the impact be if they did shift to gas? There would be a saving of 2.4 tonnes of CO2 emissions per household. Electric storage heater costs averaging £993 would be reduced to an average of £671 with gas.

Mr. Roger Williams (Brecon and Radnorshire)

I sympathise with the hon. Gentleman's views on old coal mining communities, but there are other people who do not have access to mains gas and the economies associated with it, who often have to get their energy from liquefied petroleum gas. The cost per unit of LPG is much higher than that of mains gas. Such people also suffer from not being able to get an economic connection to the mains gas supply.

John Mann

I take the hon. Gentleman's point; he makes a useful contribution to the debate.

The scale of the problem is illustrated by the fact that 600,000 households would be taken out of fuel poverty if they had proper access to gas. Almost every one of those is a pensioner household. There are particular problems in coal mining areas because of the historic legacy that I have described, and because of their weddedness—which was quite right at the time—to the financial incentive of concessionary coal. These pensioners are the oldest people in my constituency. The 90-year-old whom I mentioned is an actual example, but there are plenty of those aged between 80 and 90 years—and some who are over 90—in these bungalows. The vast majority now wish to have the choice, and the right to gas.

I would like six matters to be looked at by the Department. The first is the situation of mining community pensioners who are disproportionately denied the right to choose gas if they wish to do so because of the mess of regulation. Secondly, I would like the extension of the warm zones initiative to Bassetlaw to be seen as a potential way forward. Thirdly, I would like more local authority pilots to be considered to tackle historic infill problems, because, to take one of the three examples, the vast majority of the relevant properties on the Bracebridge estate are council owned, so a potential solution is the council front-loading the cost of connection and allowing the pensioners, through their rents, to pay back over a much longer period.

Fourthly, I would like consideration to be given to a fuel poverty policy that links to the new energy policy—put forward by the Government and agreed by Parliament—which prioritises gas as the key energy source for the future. Fifthly, there should be an end to the regulator's pretence that competition is working and clarification of the fact that competition should be in gas supply, not in the building and creation of the infrastructure. Sixthly, I would like to see agreement that the policy of expanding the historic infill gas infrastructure is clearly failing and needs reviewing by the Department.

1.41 am
The Parliamentary Under-Secretary of State for Trade and Industry (Nigel Griffiths)

I congratulate my hon. Friend the Member for Bassetlaw (John Mann) on securing this debate on an important subject. At his invitation, I have visited his constituency twice in the fairly recent past, and I well know the high regard in which his constituents hold him. He is clearly a Member with his finger on the pulse. I also welcome the brief but thoughtful comments by my hon. Friend the Member for Brent, North (Mr. Gardiner) and the hon. Member for Brecon and Radnorshire (Mr. Williams). Clearly, this matter affects a wider area than Bassetlaw.

My hon. Friend the Member for Bassetlaw specifically highlighted the problem that residents of the Bracebridge area of his constituency have with the network. As he pointed out, Bracebridge has no gas supply, although communities in the surrounding area and close to it—I have visited the area—have a supply. That, of course, can be galling for people. I understand that earlier this year Transco was approached to provide an estimate for connecting the 92 properties in his community; I think that he has visited each one. The company quoted more than £900 per property, if I am not mistaken. That is triple the sum that my hon. Friend said that others in his constituency would have to pay. This is a matter of considerable concern to those without access to a gas supply at the lower price.

My hon. Friend and other Members will be pleased that the design and demonstration unit intends to issue shortly a list of the top 100 communities without gas that are in most need and could be connected at the least cost. That is a refinement of earlier research by Transco's affordable warmth programme, which ranked communities outside the mains gas network on the basis of the index of multiple deprivation. The research indicated that almost 9,000 clusters of communities of more than 50 households had no access to a gas supply, and 4,600 of those were within 2 km of the gas main. I understand that Bracebridge was on that list.

Clearly, there has to be a sensible way to decide which communities should have the work carried out, to ensure that priority is given to the competing demands from communities across the country. I will certainly ensure that my hon. Friend's concerns are brought to the attention of the new unit so that they can be taken into account.

My hon. Friend made a strong bid for the establishment of a warm zone in Bassetlaw. I believe that warm zones can have a significant impact on the reduction of fuel poverty in large areas by focusing closely on communities in those areas, and can address a range of needs by a range of methods. As my hon. Friend will know, my hon. Friend the Minister for Energy and Construction has supported the first five zones set up in the pilot round that began in 2001. The results of the pilots are currently being evaluated. During that process my hon. Friend the Member for Bassetlaw will have entered into discussions with his local authority, which may want to consider what contribution it could make to the establishment of a warm zone and to discuss its interests with the industry or the warm zone company. I hope that when the results of the pilots are known he will facilitate that discussion, and inform the Minister for Energy of the outcome.

My hon. Friend mentioned a number of other issues that had caused his constituents understandable concern. Transco is statutorily required to provide a quotation for a connection, but the regulator has determined that the quotation must reflect the actual cost. If Transco did not quote on that basis, it would lay itself open to legal challenges both from competitors and from Ofgem, on the basis of anti-competitive behaviour.

John Mann

Earlier the Minister quoted a Transco price of approximately £900. That, of course, would require a significant proportion of households to agree to be part of the infill. I could approach the 16 properties that are within 10 m of the gas main, and Transco would be obliged to pay for all 16 to be connected at a price of £312. That, however, would mean the building of eight or nine tunnels beneath main roads, at considerable expense. Is there not a lack of logic in the current system? I could be encouraging people to cause far more money to be spent by adopting the piecemeal option, rather than using the money effectively. It would cost more to have those 16 properties connected if they were connected one at a time—although they would be charged £312—than it would to get all the properties connected.

Nigel Griffiths

I understand that my hon. Friend had an extensive discussion about that with Transco representatives when he met them last Friday to put his points forcefully. As he says, a far higher price has been determined by the mechanism that Ofgem, the regulator, applies to properties that are further away. I will ensure that my hon. Friend's views, and those of Transco, are transmitted to the regulator, who must justify that approach.

My hon. Friend has drawn attention again to the problem of tackling the larger number of local connections, which can cause a great deal of disturbance as well as a great deal of cost. He mentioned fuel poverty earlier, and we take that issue seriously. It is wrong that senior citizens, especially those who are most vulnerable because of their advanced age, have no access to the cheapest and most practical form of fuel.

Mr. Roger Williams

This is an important debate for my constituency, which has some rural park home estates. Many of the people living on them are pensioners on limited incomes, but they are forced to access some of the most expensive forms of energy, including electricity and liquid petroleum gas. They have little real hope of gaining access to mains gas, which would be the cheapest form of energy and the best way to eliminate their fuel poverty.

Nigel Griffiths

Clearly, the discrepancies in the price that people pay for energy go to the heart of this Adjournment debate. I made it clear that the problem is not confined to Bassetlaw, although my hon. Friend the Member for Bassetlaw deserves the credit for securing the debate to highlight the issues. He has made several pertinent points, and I know that both the Minister for Energy and the regulator will want to be made aware of them. I can give an undertaking to my hon. Friend and to the House that we will make the Minister for Energy and the regulator aware of my hon. Friend's concerns, which are shared throughout the House. We want to find the best way of ensuring that discrepancies in access to, and choice of, energy are minimised. Whenever practical, people should have a real and genuine choice. As my hon. Friend has made clear, that does not apply to 90 or so households in his constituency—nor, I am sure, to others.

I thank my hon. Friend once again for the concise way in which he expressed his pertinent points. I assure him that his concerns will be listened to carefully.

Question put and agreed to.

Adjourned accordingly at eight minutes to Two o'clock.