Submission to fuel poverty inquiry
14th March 2008
The Chairman
Overview and Scrutiny Panel
Southampton City Council
Civic Centre
Southampton
Dear Chairman
Thank you for inviting me to appear in front of the City Council Overview and Scrutiny panel inquiry into fuel poverty.
I am afraid that Parliamentary business prevents me from attending, but I hope this note will assist the committee in its deliberations.
As the committee will know, people are officially defined as being in ‘fuel poverty’ if they spend more than 10% of their income on fuel bills. Since this definition is based solely on income and fuel cost, it is inevitable that, as fuel prices rise, so will the number of people regarded as being in fuel poverty. National energy Action estimates that for every 1% rise in energy prices, another 40,000 people fall into fuel poverty. Rising fuel prices have acted strongly against drives to reduce fuel poverty. Thus, whilst numbers of people in fuel poverty have decreased substantially since the 1996 estimate of over four million, numbers are rising again.
The decrease in numbers nationally over the last ten years has been achieved by a combination of measures such as energy efficiency programmes (Warm Front, EEC and others) and the extension of the Winter Fuel Allowance, but has also been aided by an era of stable or falling fuel prices.
It is quite clear that the age of relatively cheap fuel is over, and is unlikely to return. Indeed, prices are not only much higher than they were two years ago (gas prices rose by almost 70% between 2004 and 2006, for example) but the wholesale gas, oil and electricity market is very volatile, with substantial ‘peaks’ in price within slower cost increase curves. The tendency of price changes to ‘lag’ and to reflect peaks ion price is well known, but overall we can conclude that gas and electricity prices will almost certainly continue to rise, overall for the foreseeable future.
This scenario of long term high energy prices makes the definition of who is in fuel poverty perhaps a little narrow. Many more than those who are within the definition now, or will be drawn into it as prices rise will suffer from difficulty with financing their fuel bills, and with heating their homes. The energy price market will provide serious challenges on fuel affordability for perhaps double the 9000 or so people who are estimated to be in fuel poverty in Southampton.
The right approach to tackling fuel poverty for the future, therefore has be to concentrate on measures to reduce energy use, or enable people to produce their own energy, rather than simply provide funds for them to buy ever more expensive energy.
It is important, of course, that action is taken to expand social tariffs and instigate measures that end disadvantageous access to fair energy prices among those least able to afford energy. Ending the unfair pricing structure for metered energy supply as against direct debit based supply is one example of this.
But longer term measures to improve home insulation, to provide heating means that use less fuel, and ideally, introduce heat and power sources into the home that are cheaper long term because they produce renewable heat and power, or efficient heat through district schemes must be the way forward. The recent ‘energy package’ from the government, including discounts for insulation, social tariffs, and an extension of the Warm Front programme points in this direction.
I believe Local Authorities can play a leading role in this development. I have recently moved an amendment to the Climate Change Bill in the House of Commons that provides Local Authorities with a lead function in introducing neighbourhood plans for improving home insulation and installing renewable energy devices, such as solar thermal heating. Even without such a new power, however, a local authority driven programme of energy efficiency can be very effective, and I hope Southampton will be taking further steps, such as advancing its district heating schemes, to this end.
Yours sincerely
Alan Whitehead MP
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More information
- Information on Alan's campaign about pre-pay meter energy charges
- Information on the government's Energy Package
- Information on the local heating schemes in Southampton
- Information about Warm Front
- Information about the Winter Fuel Allowance