Last week should have been a big one for the government’s energy policy. But perhaps ministers were happy that the spotlight fell on Leveson rather than on the new Energy Bill.
Ed Davey and Greg Barker seem sincere in their efforts to promote rational policies towards energy and climate change but powerless to do anything serious because of Treasury opposition. They have been lumbered with a promise by Cameron to force energy suppliers to offer the lowest tariffs, but does anyone really believe this will cut prices? Meanwhile Fuel Poverty Action was protesting against the 24,000 excess winter deaths in England and Wales, of which one third are the result of cold homes.
Fuel poverty now officially affects 3.5m and this is forecast to grow to more than 8m by 2016, mainly because of rising fuel prices. The previous government aimed to end fuel poverty in vulnerable households by 2010, and singularly failed. The present government now wants to change the definition, which is controversial not least because it would reduce the numbers, but also because the new measure, though based on work by John Hills, appears to have significant disadvantages. Consultations ended this week and a new fuel poverty strategy is promised for next year, but as on so many issues the government shows little sign of grasping the nettle.
What can be done? Fuel poverty arises when three factors combine: rising fuel prices, static or falling household incomes and high energy consumption, often due to inefficient heating systems or poor insulation. The chart above (from a recent House of Commons library briefing) shows how typical fuel bills for gas (in particular) have shot up over the last few years. Yet the government wants to put even more emphasis on gas, over whose prices we have little control. We all know that household incomes are almost static for lower income groups, and of course that many benefit-dependent households will have their incomes cut, so there is little prospect of poorer people earning enough to get out of fuel poverty. Any help in this week’s Autumn Statement seems likely to be aimed at reducing car drivers’ rather than householders’ fuel costs.
Action on energy efficiency, which would also support the government’s legal targets to reduce carbon emissions, is now being promised in the Energy Bill. Some commentators read positive signs that this will happen, but the grounds for optimism are pretty thin. Although the government published an Energy Efficiency Strategy last month, it is long on research and ideas but short on practical action. Last week the Association for the Conservation of Energy said that by next year support for energy efficiency measures to help fuel-poor households will have fallen by 44% (compared to 2009). The reason is that the government is ending the very effective Warm Front programme, replacing it by the untried and unattractive Green Deal. The ACE report was jointly produced with campaign group Energy Bill Revolution, an alliance formed of more than 100 charities, consumer groups, businesses and unions, which wants the money raised from carbon taxes to be spent on making homes in fuel poverty highly energy-efficient.
These issues are complex and given that we have largely handed control over energy production and distribution to foreign companies whose main interest is in profits not investment (read the brilliant analysis of French company EDF by James Meek), the chances of getting an energy sector that acts in the interests of consumers and of the environment are pretty bleak. If Labour form the next government, they will inherit a situation where fuel poverty is rampant, we are more dependent on high-cost gas and insufficient investment will have been made in renewable alternatives.
Amidst the gloom, I noticed heartening news from Radian, one of the growing number of social landlords who are taking energy efficiency seriously. They have just shown that properties they built in Southampton cost as little as 41p per week to heat. Given that the carbon targets require us to retrofit no less than one house per minute to high standards for several decades, we shouldn’t be too excited by news of individual schemes, but even so of the three factors that affect fuel poverty it is energy efficiency that is the best bet for concerted action. By 2015, the Green Deal will probably be seen to have failed and a new, effective energy-efficiency programme will be needed in its place. If I were either shadow energy or shadow housing minister, I’d be talking to my colleague about how to finance this through new charges on energy companies and how to implement a massive, employment-generating programme through agencies that already have lots of expertise in delivery, including many social landlords.