Yesterday Labour called an Opposition Day Debate in the House of Commons, calling on the Government to
“freeze electricity and gas prices for 20 months whilst legislation is introduced to ring-fence the generation businesses of the vertically integrated energy companies from their supply businesses, to require all electricity generators and suppliers to trade their power via an open exchange, to establish a tough new regulator with the power to force energy suppliers to pass on price cuts when wholesale costs fall, and to put all over-75-year-olds on the cheapest tariff.”
Under David Cameron, Britain’s families are facing a cost of living crisis. Prices have risen faster than wages in 39 of the 40 months that David Cameron has been in Downing Street and energy bills have gone up by almost £300. David Cameron’s failure to tackle rip-off bills has meant that many people are struggling to pay their bills.
I know from my surgeries how people in Oldham East and Saddleworth are struggling with the rising cost of living. Many of my constituents have written to me worried about their energy bills, and having to make a choice between heating their homes or buying food. When the price of energy increases, energy companies pass this on, but when it drops consumers don’t see their bills fall.
I spoke during the debate yesterday on the impact of fuel poverty on the health and wellbeing of people in Oldham East and Saddleworth and the financial impact of fuel price increases at a time when wages are stagnant. I then voted to freeze energy bills now, but unfortunately the Tory-Lib Dem Coalition whipped their MPs and the vote was lost by 237 votes to 295.
The full text of my speech is below:
Debbie Abrahams (Oldham East and Saddleworth) (Lab): I wish to start by putting the energy bill crisis into the context of the cost of living crisis. As we know, since May 2010 prices have risen faster than pay every month apart from this April. Why was April different? It was different because people on high incomes wanted to take advantage of the tax break that this Government had given them. We also know that one in four children live in poverty—in some wards in my constituency the figure is one in two—with the level set to increase in the next few years. By 2020, because of this Government’s policies, 1.1 million more children will be living in poverty. These are the choices that this Government have made.
Escalating heating bills are a major factor affecting costs to households and to businesses. Last year those costs increased by between 6% and 11%, and since this Government came to power an extra £300 has been added to energy bills. So why is this happening? Until the last few months, this country had a flatlining economy—we have had three years of it. Although the growth over the past few months is welcome, if we had had just 1% growth since 2010 we would have generated £335 billion more in the economy, with all the associated jobs and personal income that that would have brought. If we had had 2% growth, we would have generated £551 billion, and many economists believe that that will just not be recoverable.
Related to that situation has been the fact that pay has either gone down or been frozen. Some 400,000 more people are living below the living wage, bringing the number of those doing so up to 5.2 million. In Oldham, the level of weekly pay has fallen from £432 in 2010 to £426 in 2012, which is well below the regional and national averages. But this is not just about the Government’s mismanagement of the economy; they seem incapable of showing leadership and standing up for ordinary people against powerful vested interests. Too many big businesses have for too long been behaving unethically, whether we are talking about tax evasion or aggressive tax avoidance, cheating the Exchequer of up to £35 billion a year; large companies choosing to pay small businesses in their supply chain late—an estimated £30 billion is owed to small businesses in late payments; or the big six energy suppliers acting as a cartel, claiming that wholesale energy costs have driven up energy bills by 10.4% on average a year, whereas this actually costs them only 1.6% on average.
I tried to intervene on the Secretary of State to make the point that this is happening at a time when these companies are publishing profits of £3.7 billion, which is an increase of 73% since 2010. According to Ofgem’s latest electricity and gas supply market indicators, the typical domestic dual fuel bill now stands at £1,420 a year compared with the £1,105 that it was in May 2010. But what have this Government done, apart from tell us to put jumpers on? Governments set the tone for the culture of a society. They do so not only explicitly through their policies, but by what they imply. It is clear from this Government’s policies and actions exactly where their priorities lie, and it is not with ordinary people and with addressing the inequalities and poverty that exist in this society.
The effect is, as one would expect, fuel poverty. Its level had fallen in recent years, following the various energy-efficiency measures introduced under the last Labour Government, such as the Warm Front programme. But with rising energy bills swamping all that, even under the Government’s new definition of fuel poverty there are now 2.4 million people who are fuel poor, with the average household fuel poverty gap standing at £494.
The Fuel Poverty Advisory Group warned in 2010 that instead of fuel poverty being eliminated by 2016, more than 7 million households could be fuel poor. In Oldham East and Saddleworth, 16% of households—8,000—are fuel poor. To help them, Oldham council launched a collective energy switching scheme that enrolled 22,000 households. The council admits, however, that that is not enough—and it is not enough.
There are wider effects. Sir John Major has said that the real choice people face is whether to heat or eat. I am particularly concerned about this winter and its effect on the most vulnerable in society—older people and those who are ill or disabled. We know that on average 24,000 people, predominantly older people, will lose their lives every winter. Last year, however there was a 75% increase in the number of expected deaths, partly because of the increase in flu but also, according to statistical analysis, because of the extreme cold. It is inconceivable that heating costs will not play a part in the number of excess winter deaths we face, and it is just not good enough to say “Put a jumper on”. If we consider the issue in the context of the crisis in accident and emergency, we can see that there will be absolute meltdown.
It is not only the elderly and the vulnerable who are affected. A constituent wrote to me who is a teacher with a young son of four and twin girls of 20 weeks. She lives in private rented accommodation with her husband, but the landlord cannot afford to update the boiler. She is not eligible for anything. She said, “Last winter was a nightmare. I have newborn babies; what am I going to do? What will support me? The heating costs are bad enough.” I have also had constituents, similar to those mentioned by my hon. Friend the Member for Rochdale (Simon Danczuk), who have written to me about their constant battles with the energy companies. It is just not good enough.
Mr Anderson: My hon. Friend is making a very serious speech. Is it not true that when we talk about professionals such as teachers struggling to find the extra money, they are the same people who have had their pay frozen for almost three years? The Government are now talking about freezing their increments, too. They are losing out twice over: costs are going up and their wages are stagnant. That is a direct result of the Government’s policies.
Debbie Abrahams: I could not agree more with my hon. Friend. It is a double whammy and the Government are doing nothing to address it.
When the Minister replies, perhaps he can respond to the questions that my constituent has raised. What is she to do? She is working, so she cannot claim support to renew her boiler. Thousands of families up and down the country face equivalent problems and he must give a response on the difficulties mentioned by other Opposition Members.
I wholeheartedly support the pledges made by my right hon. Friend the Leader of the Opposition and my right hon. Friend the Member for Don Valley (Caroline Flint). We must overhaul the energy market, abolishing Ofgem and creating a tough new energy watchdog. We must require the energy companies to pool the power that they generate and we must require those companies to put all over-75s on the cheapest tariff.