Energy Debt
The final item of business today is a members' business debate on motion S2M-5525, in the name of Scott Barrie, on switching off energy debt. The debate will be concluded without any question being put.
Motion debated,
That the Parliament expresses concern at the high level of energy debt in Scotland; notes from the most recent figures published by Ofgem that 343,617 customers in Dunfermline and elsewhere owe their energy supplier an average of £181; further notes that energy prices remain high, with Scottish consumers typically paying more than £1,000 per year for their gas and electricity; is concerned that, according to Ofgem, the number of disconnections from energy supply has risen by 285% between September 2005 and September 2006, and believes that all energy suppliers should take urgent action to address the burden of debt on Scotland's most vulnerable households.
I thank all the members who supported my motion, and I thank energywatch Scotland, which provided all MSPs with a comprehensive briefing for tonight's debate.
In 1942, a seminal report on poverty identified five great social ills: want, squalor, idleness, ignorance and disease. The wartime Beveridge report formed the blueprint for the creation of Britain's welfare state after our victory in the 1945 general election. Our welfare state is a lasting tribute to the Atlee Labour Government, but as great as that legacy is, it did not eradicate fuel poverty or fuel debt, which is the subject of tonight's debate.
The rough and ready definition of someone who is in fuel poverty is someone who has to spend more than 10 per cent of their income on keeping themselves warm. Fuel poverty and fuel debt are modern social ills. They are not just about low incomes but are part of a complex social and financial picture. They are linked to multiple deprivation, unaffordable fuel prices and poor housing stock that is characterised by insufficient insulation and inadequate heating systems.
The Scottish Executive not only recognised that complex picture, but acted. The warm deal and central heating programmes have made an invaluable contribution to combating fuel poverty. Some £300 million has been spent, free central heating has been provided to more than 74,000 homes, more than 250,000 homes have been improved under the warm deal and a commitment has been made to eradicate fuel poverty by 2016. However, rising fuel prices over the past three years have begun to put fulfilling that commitment at risk.
Some 37.5 per cent of our electricity supply is generated by gas and 70 per cent of our homes are heated by gas. Gas is therefore fundamental in providing electricity and direct heating. Our gas originates almost entirely from the North sea, although some of it comes through the interconnector from Belgium. The extraction rate from the North sea peaked in 2000 and has fallen ever since. The dash for gas that was initiated under Thatcher has left us short of our own supply and increasingly dependent on foreign sources.
Our appetite for gas is immense. The United Kingdom uses approximately 100 billion cubic metres of gas a year, which is 10 billion cubic metres more than Germany uses, 30 billion cubic metres more than Italy uses and double what France uses. As the wholesale price of gas increased in Europe in 2003, 2004 and 2005, prices for gas and electricity rocketed throughout the United Kingdom. Domestic fuel prices had been falling, but they suddenly shot up and energy debt became an ever-increasing concern for large numbers of consumers in Scotland.
Figures that were published by the Office of Gas and Electricity Markets at the beginning of this year show that in September 2006, nearly 350,000 customers were in debt to their energy supplier and that they owed on average £181. Since 2003, energy consumers have seen huge rises in their energy bills, with average gas bills increasing by 94 per cent and average electricity bills increasing by 60 per cent. Since I lodged my motion four weeks ago, three energy suppliers have announced that they will reduce their prices. If only I had lodged the motion sooner.
However, the price reductions that have been announced have been significantly less than the price increases since 2003. Wholesale prices have dropped 50 per cent in the past nine months, but fuel price reductions have averaged only 33 per cent. Customers are not seeing wholesale price drops reflected in their bills, and it is questionable whether low-income consumers—particularly those who pay for their fuel through prepayment meters—will benefit from those price drops.
Many prepayment meter customers use meters to help them manage their household budgets. Companies also use them to recover arrears. In Scotland, a fifth of all electricity consumers use them. They are useful, but they come at a price: the cost per unit for gas or electricity is higher than for customers who use other payment methods, particularly direct debit. Those of us who are in the fortunate position of being able to pay by direct debit will get our gas and electricity at reduced rates compared with those that other consumers must pay. The people who are on the lowest incomes and who do not have bank accounts therefore pay more for their gas and electricity.
Having a prepayment meter does not mean that a person will not fall further into debt. Following a price rise, further debt will accrue to consumers with meters that must be reset manually if the meter is not reset immediately. Constituents of mine have thought that they had paid for their fuel as they had used it only to find that they had massive arrears when the meter was subsequently recalibrated. That is not fair and no company should take such an approach. Customers end up in debt or further in debt by using a payment method that they thought would avoid such an outcome. There is truly a double whammy.
If power companies do not reduce the price of fuel to their prepayment customers—and there is little evidence that they will—the gap between the costs of gas and electricity via prepayment meters and the costs for those who pay for their gas and electricity by direct debit will increase. I draw members' attention to energywatch Scotland's briefing, which shows that 29 per cent of prepayment meter users have long-term illnesses or disabilities, 33 per cent are lone parents who have dependent children and 36 per cent are unemployed and claiming benefits. Often, the people who are least able to pay are those who pay the highest tariff. Increasing fuel costs affect us all, but they disproportionately affect those who are least well-off.
It is essential that fuel companies operate on a level playing field and that, as a start, tariffs are equalised. If we do not have a level playing field, the debt will continue to make people unable, or afraid, to heat their homes. Our message to the energy companies should be that, as a first step, they must set a level playing field and that their second step must be to give discounted energy packages to low-income and vulnerable customers.
I congratulate Scott Barrie on bringing this debate to Parliament.
Energy debt and fuel poverty continue to be important, and recent statistics reveal that an alarming number of Scots are struggling with such issues. It is now estimated that more than 100,000 children are living in fuel poverty in Scotland. Recent energywatch statistics have shown that electricity and gas prices increased by 61 per cent and 97 per cent respectively between 2003 and 2006. Low-income families have been hit hard because of that.
According to Energy Action Scotland, a low disposable household income and a high price for domestic fuel are two of the main contributors to fuel poverty in Scotland. Furthermore, low-income families continue to pay an average 10 per cent more for gas and 8 per cent more for electricity than energy customers who pay by direct debit. The majority of low-income households use prepayment meters to pay for their energy. They also do not generally have access to information technology so that they can check the competition.
Rising energy costs, coupled with low incomes, have led many families to make increasingly tough decisions about how to spend their money. In many cases, those decisions have caused sharp increases in debt. The detrimental effects of fuel poverty cannot be stressed enough. Heating a home is often done at the expense of other needs, such as healthy and plentiful food.
Despite the recent introduction of social tariffs by energy companies to help low-income families with their energy debt, serious problems still exist. We support financial initiatives to promote energy efficiency in Scotland, including grants for home-improvement endeavours that will make more homes more cost and energy effective. We also support the installation in homes and businesses of microrenewables generation such as solar panels and wind and tidal power, all of which will help to alleviate fuel poverty, supply shortages and the lack of materials.
We also look to schools to encourage the positive effects of energy efficiency and renewables in the home. The only way to influence the community widely is to start early and to educate our children on how to promote environmentally sound ways of heating our homes and running our businesses.
We need to run public-awareness campaigns—many people are not aware of their options. We support initiatives for community education on energy efficiency. In 2005, Ofgem research found that 75 per cent of vulnerable customers were not aware of the help that was available to them to assist in easing fuel poverty. The Energy Retail Association's home heat helpline was designed to address that problem; in the first year alone, it received an incredible 38,000 calls, almost all of which were from people who were seeking help with energy debt and fuel poverty.
Although such progress is certainly a step in the right direction, more must be done. We look towards a review of the renewables obligation certificate, which would encourage entrepreneurs to develop new forms of renewable energy such as biomass and fuel cell technology, which would boost the energy efficiency market. We also support the Royal Society's emphasis on energy efficiency as a way to combat Scotland's climate-change problems.
This plague on our society must be tackled with the utmost urgency, and we in the Conservative party will do everything we can to help.
Scott Barrie began by mentioning the recent slight reduction in prices. I am not sure whether he is influential, timely or prescient, but it is a welcome debate and Scott Barrie is to be thanked for bringing it to Parliament.
In addition to the energywatch briefing that Scott Barrie mentioned, I was pleased to see that we received briefings from a number of other organisations, including Barnardo's and Capability Scotland, which want Parliament to understand the impact that energy debt has on a range of different people in diverse family situations.
Energy debt needs to be considered in the context of other debt issues in our society. I think that we are seeing an unhealthy trend towards social acceptability of large amounts of debt, whether it be the immense mortgages that some people are taking on or other forms of debt such as credit cards and student debt. There are also issues with illegal lending—which we will debate tomorrow—and, indeed, legal lending, which is often quite predatory. That trend is bad for our society and our economy as well as for the individuals concerned, who are often among the most vulnerable individuals in our society.
Energy suppliers will always have a problem with billing systems for the most vulnerable people, but some of their practices, as Scott Barrie mentioned, hit the poorest households and families hardest. For example, the fact that prepayment meters have a different tariff is an issue and some providers have been unwilling to write off the debt that has accrued when there has been a delay in resetting meters. As Scott Barrie rightly pointed out, people accept a prepayment meter partly because of the expectation that they will pay their bills as they go along and will not be hit with a bill for a single lump sum. It is entirely right that a cross-party group of MSPs joined Jackie Baillie in a delegation to Scottish Power on that issue—I am sure that Jackie Baillie will mention that.
In the case of Scottish Power's practices, what has shocked me most is that, although the company's representatives spoke with us civilly and were quite willing to meet us to discuss the issue, they had not even calculated what it would cost Scottish Power to change the policy by writing off such debt. I suspect that the cost would be a drop in the ocean for Scottish Power, but it would be very significant for many families. I urge Scottish Power to reconsider the matter.
Energy debt will continue to be a problem because it is a consequence not only of fuel poverty but of price fluctuations. Price fluctuations will not go away. All suppliers must ensure that the most vulnerable people are not placed in the situation of having an ever-greater debt burden. The role of politicians is not just to engage with suppliers on the issue but to look at public policy. Scott Barrie explained the historical situation in terms of the welfare state but, as we move further into the 21st century, the job for politicians is to prepare all citizens and households in Scotland for the period after cheap energy. Cheap energy belongs to a period in human history that is over. Whether we use fossil fuels—which are fast dwindling—or the mineral fuels such as uranium that will fuel any new nuclear power plants that might be built, those fuels will dwindle and run out, so energy prices will continue to fluctuate and energy debt will continue to be a problem.
It falls on all suppliers, including Scottish Power, to adjust their systems to ensure that the most vulnerable people are not placed in further debt.
I congratulate my colleague Scott Barrie on securing tonight's debate.
Fuel poverty is an important issue that, unless it is properly addressed, will serve only to undermine all the other efforts that are being made to eradicate poverty and social exclusion in Scotland. Much has been done by the Scottish Executive to tackle fuel poverty and energy inefficiency, so Scott Barrie is right to highlight the need for the utility companies to play their part in the effort to eradicate fuel poverty in Scotland.
The Scottish Executive introduced a range of measures to tackle fuel poverty. Those measures are complemented by United Kingdom policies such as the winter fuel allowance. The Executive has a clear policy objective of eliminating fuel poverty by 2016. Towards that end, it has introduced a range of measures that include the central heating programme and the warm deal initiative. Since its inception in September 2001, more than 65,000 central heating systems have been installed across all sectors. The warm deal has also ensured that more than 230,000 homes in Scotland have been insulated. The programme is the biggest investment that has ever been made in home energy efficiency in Scotland. It is important that it is aimed at Scotland's most vulnerable households—those whose health or general well-being may be at risk from the cold or dampness.
I am pleased that, late last year following a parliamentary question, the Executive announced that it would allocate an additional £5 million to help an additional 5,000 households that were waiting for central heating installations and warm deal measures. From visits to my constituents in council, housing association, private sector and owner-occupied housing, I have seen the very real difference that the two programmes have made to the quality of their lives.
It is worth noting that the measures that the Executive has taken to tackle fuel poverty are good news not only for my constituents and the people of Scotland as a whole, but for the environment. The combination of modern, efficient heating systems and good insulation means that less energy is burned in heating our homes.
However, it is now becoming apparent that those measures are helping to alleviate only some of the misery that is caused by fuel price increases. There is no doubt that that situation has to be addressed. The statistics on fuel price increases in recent years are staggering. From January 2003 to January 2007, we saw an average rise in the price of gas across the United Kingdom of 94 per cent. Over the same period, we saw a rise of 60 per cent in electricity costs. Some energy suppliers have done very well out of the situation. That is demonstrated by the relatively large variances in cost increases between suppliers. Whereas customers of Scottish and Southern Energy have seen a rise of 86 per cent in the cost of gas during that period, Powergen has passed on an increase of 107 per cent to its customers. Of course, even though wholesale fuel prices have fallen, we have seen no commensurate decrease in consumer prices. The energywatch briefing points out that, although in recent weeks some suppliers
"have dropped their prices … the reductions have been significantly less than the increases since 2003. Indeed wholesale prices have dropped 50% over the last nine months. The two reductions so far represent only about one third of this year's wholesale reduction. Customers won't see these savings being reflected in their bills and it is questionable whether low income consumers will benefit, particularly those paying for their gas and electricity by prepayment meter."
Clearly, the level of price increase to which I have referred must impact on fuel poverty.
Although I do not have time to speak about the specific problems that are associated with prepayment meters, I want to make two specific points. First, it is time that the fuel companies recognise that the poor people in our communities who are trying to make ends meet are our most vulnerable citizens. Those people do not want to run up huge fuel bills. They are trying to manage their money wisely by choosing to pay for their electricity and gas by means of a prepayment meter and they should not have to pay excessively for their supply. Those people should be on the lowest tariffs, which are often reserved for those who choose to pay by direct debit. Secondly, it is right that the companies should recalibrate their meters and write off any debt that has accrued.
I urge the major energy companies to take those steps to support those who are most in need in Scotland. They need to ensure that people are not faced with the stark and brutal choice between paying for food and paying for heat.
I thank Scott Barrie for bringing the debate to the chamber.
I remember the time way back, when, under the Thatcher Government, we were debating the privatisation of the gas and electricity companies. At the time, the mantra was, "The market is more efficient. The market will make things cheaper. The market will bring cheap prices for everybody." The system, which has been in place now for decades, has simply created huge private monopolies that make astronomical profits very much at the expense of the less well-off in our society.
The big problem for the Parliament as a result of that policy decision is how it can get any control over these multinational companies. Despite Scott Barrie's valiant attempts and the attempts that Jackie Baillie and her delegation have made with Scottish Power, political pressure has simply not been heavy enough. Karen Whitefield says that we should apply political pressure to persuade and urge these companies to lower prices; however, the only tool that has been left to us after privatisation is regulation.
Why has the recent 50 per cent fall in wholesale gas prices not been passed on to customers? What on earth is Ofgem waiting for? When wholesale prices go up, the companies go on television either overnight or within days to announce, "Your electric bills are going up by 17 per cent and your gas bills are going up by 15 per cent". They are not shy; they immediately raise prices. However, they always get the benefit of the doubt when prices come down. Why does no one put them under pressure with regulation and tell them, "You have 10 days to change your pricing policy and to ensure that these reductions are passed on to consumers"? Ofgem needs to get off its backside and represent people. After all, that is why it was set up in the first place; it is the only regulatory framework that we have.
It is simply not good enough. If the Government—including the Scottish Executive—is happy to accept privatisation with regulation, it should be making all these noises. In fact, it should be having urgent meetings with the companies and writing to them to urge them to lower prices. I know that Ofgem is an independent body, but we have an opinion about how the gas and electricity sector should be regulated.
Furthermore, why has Ofgem not ruled on prepayment meters? As for the claim that the market is efficient and that companies know exactly how much they are owed by those who have such meters, we have anecdotal evidence that—as we told Scottish Power at our meeting—the companies have all the systems in place, are sitting with all the facts and figures and know immediately when they recalibrate a meter how much the debt will be. Indeed, we asked for those figures—and I wonder why we have not yet received them. It would not cost the companies that much to supply them.
If someone with a prepayment meter wants to mount a legal challenge against, for example, Scottish Power when they see that other companies are not clawing back the debt, how can they do so when their meter gets recalibrated? Can they just say that the company cannot reclaim the debt? Because I get a monthly bill, I can go into dispute with the company; however, people on pre-payment meters simply have to pay up. Politicians should be applying pressure on Ofgem to regulate in this area.
As I said, it is not good enough. We need regulation, and we need Ofgem to impose the same timescales on companies to reduce prices that they impose on customers when they raise them.
I congratulate Scott Barrie on securing this debate and want to narrow the focus to highlight the injustice of the direct debit system. Frances Curran will be pleased to know that I, too, will have a go at Ofgem.
Energy companies are making a financial killing on the back of the less well-off. Figures that I have obtained show that some companies are charging customers who will not pay by direct debit almost £300 a year more. That said, I know that when prices go up, the amount that people pay by direct debit also goes up. Indeed, my own direct debit went up, despite the fact that, in December, I was £300 in credit. Not only are the companies overcharging people who are not on direct debit, but they must be making tens of thousands of pounds from the interest on the thousands of people who are in credit to them. When I asked Ofgem for those figures, it said that it did not have them. The companies have a banking system, so they are making a double killing.
With regard to the overcharging of non-direct debit customers for gas and electricity combined, the worst offenders—I will name and shame them—were npower, Powergen and Scottish Power. The companies who penalised customers who took only gas the most for not paying by direct debit were Scottish Gas/British Gas, npower and Atlantic Electric and Gas. The worst companies for customers who required only electricity and who chose not to pay by direct debit were npower, Powergen and Scottish Power.
I thought that I would find out what Ofgem does about that. According to its website,
"Protecting consumers is Ofgem's first priority.
We do this by:
promoting effective competition, wherever appropriate, and
regulating effectively the monopoly companies which run the gas pipes and the electricity wires".
Ofgem also says that it takes account
"of the needs of vulnerable customers, particularly older people, those with disabilities and on low incomes".
Frankly, I do not think that it is doing that.
I was interested to find out that
"Ofgem is funded by the energy companies who are licensed to run the gas and electricity infrastructure."
That immediately suggested to me that there might very well be a conflict of interest, so I wrote to Ofgem. In the reply that I received just this week, it said:
"You ask what Ofgem is doing to ensure that customers who pay by cash or cheque, as opposed to those who pay by other methods, i.e. direct debit, are not penalised and for details of the amount of credit held by energy suppliers in relation to consumers who pay by direct debit."
I got the usual spiel:
"Ofgem's principal duty is to protect the interests of consumers by promoting competition."
That is fine for people who are on the internet and who can go to uSwitch, but most vulnerable people are not doing that. The letter went on to say:
"We do not think it unreasonable that energy suppliers offer better deals on price to consumers who are able to pay by direct debit, as this reflects the lower costs they have incurred in dealing with this payment consequent savings are therefore passed on to the consumer."
Ofgem is saying that people who are rich and who can pay by direct debit will get the benefits. I do not see how that is protecting vulnerable customers, which is supposed to be one of the organisation's principles.
Ofgem also told me:
"We would encourage consumers who pay by cash or cheque to consider switching to a supplier who offers a prompt payment discount",
but not many vulnerable people are able to make prompt payments. It said:
"Ofgem does not collect information about the total amount of money held by utility companies belonging to customers or the amount owed by customers to those companies."
I think that it should find out. I would like to know how much of people's credit the utility companies have in their accounts.
Let me tell members what it costs to run what I think is a pretty useless organisation. In 2005-06, Ofgem's income was £52.4 million—that could do a lot for people who cannot pay their bills. It received £46.7 million in licence fees from the suppliers and £13 million from the Department of Trade and Industry. I pose the question: what is Ofgem doing to protect the vulnerable consumers who so badly need its protection? I do not think that it is protecting them.
I join other members in congratulating Scott Barrie on securing the debate, not least because politics is all about timing and fuel bills have been dropping through people's doors over the past few weeks. I am sure that members will agree that nothing concentrates the mind more than the realisation that one's income may be insufficient to cover one's debts.
I want to focus almost entirely on prepayment meters. I will consider who opts for such meters and why the cross-party group in the Scottish Parliament on tackling debt, along with members of all parties, is so agitated about back-charging. Finally, I will turn to tariffs.
I do not want to overgeneralise, but the majority of prepayment meter users are on low incomes. Indeed, some of them could be considered to be vulnerable because they happen to be pensioners, disabled or unemployed. They opt for prepayment meters for the sensible reason that doing so allows them to budget. By paying for their fuel in advance, they are able to manage their money and their fuel consumption at the same time.
That is precisely why back-charging leaves such a bad taste in my mouth. People are ending up in debt through no fault of their own. We know that there have been something like 13 price rises in as many months, but the practical problem that arises with prepayment meters is that engineers are unable to recalibrate them quickly enough. When they do, potentially vulnerable households on low incomes find themselves in debt. Through energywatch, I have heard that someone in Edinburgh owes £200 as a result of that. They do not know how they got into that debt because the money is unaccounted for and they are unable to pay. I welcome the fact that not all energy companies operate in the same way. Scottish and Southern Energy and EDF Energy do not apply price rises until meters have been reset.
Following political pressure at Westminster and in the Scottish Parliament, Scottish Gas also ended the practice of back-charging in December. Members might therefore ask: who is left? Who is out of step? One of the major suppliers in Scotland is Scottish Power. So far, it has not agreed to end the practice. I acknowledge that it has the most meters and that it is moving as quickly as it can to smart meters, which do not require to be reset manually, but it will be approximately two years before that programme is complete. Come on, Scottish Power—stop back-charging customers and stop back-charging the people who are potentially the most vulnerable customers.
If people are in any doubt about the scale of the problem, higher prices have led to many more disconnections. In 2005, there were 65 disconnections for debt, but in 2006 there were 250—four times more. I shudder to think what the current figures are as bills are dropping through people's doors.
Scott Barrie was right to say that people who use PPMs face a double whammy. They pay more for the privilege of paying for their fuel in advance. He is right to challenge the energy companies to equalise their tariffs.
Let us take a closer look at some of the recent price reductions. Scottish Gas prices are down by 17 per cent for gas, but it is not the same for their prepayment meter customers—the price is down by only 10 per cent for them. Another example is Scottish and Southern Energy. Prices are down by 13.5 per cent for their direct debit customers, but—this is to be welcomed—they are down by 13.8 per cent for their prepayment meter customers. I look forward with bated breath to the other companies, including Scottish Power, announcing reductions. I note, as did Karen Whitefield, that the cost to the energy companies of purchasing fuel has dropped by 50 per cent, which is considerably more than the percentage that has been passed on so far.
I echo the call for Scottish Power to end immediately its practice of backdating and to acknowledge that prepayment meter tariffs are a mess. Like other members, I think that Ofgem has a remit to protect vulnerable customers, so I call on it to take on board the need for a wholesale review of the use of prepayment meters and their impact. I call on all suppliers that are installing prepayment meters for debt to offer a full package of measures, which should include energy efficiency and money advice as well as offering the user a tariff that is discounted, based on their circumstances.
I congratulate Scott Barrie. I hope that the energy companies and Ofgem are listening—I know that if they are not, we will be back.
Like all members who have spoken, I sincerely congratulate Scott Barrie on securing the debate. Some excellent speeches have been made by members around the chamber.
Everyone has expressed their deep concern about the high level of fuel debt. I agree with Patrick Harvie that we should not forget that another aspect of the issue is the high level of unmanaged debt, from a variety of sources, that some households face.
To tackle the problem of debt in general, the Executive has put in place a number of measures to help prevent people from falling into debt and to help those who do. One example of that is our support for the development of credit unions through the capacity fund and the assistance fund. Another is our £10.6 million financial inclusion fund, which is helping to extend money advice, increase the availability of financial products and services and develop financial education. The new debt arrangement scheme helps people to repay multiple debts and protects them from bankruptcy and court enforcement while they do so. Those are all valuable and useful initiatives.
However, fuel debt is a particularly pernicious sort of debt. Keeping our homes warm and having fuel for cooking and lighting are among the basic requirements of a society that, as Scott Barrie said, has since 1945 claimed to be a modern welfare state. We should not need a rescue package for people in fuel debt. Safeguards should be in place to prevent people from getting into debt in the first place so that they have those basic essentials.
That is one of the reasons why Executive officials have been in constant dialogue with energy companies and why Malcolm Chisholm, when he was the Minister for Communities, met fuel company chief executives on a number of occasions. Rhona Brankin and I will keep up that dialogue.
Fuel prices are a matter for the companies and for the markets. However, as responsible politicians, we must all bring our influence to bear on companies, to protect vulnerable people and to ensure that everything possible is done to prevent them from falling into debt. As Scott Barrie pointed out, such work might already have had a positive impact, because there have been some price reductions. However, we should not discontinue the pressure that Jackie Baillie and others have been very active in applying, which is beginning to produce a response. Scottish Power has just said that it will be the first company in the United Kingdom to align prepayment meter charges for electricity with tariffs for customers who settle bills in cash quarterly—I understand that the company is about to announce the same approach to charges for gas. That is a positive step from Scottish Power.
It is indeed, but does the minister acknowledge that it probably amounts to a difference of only £10 to £15, which is not significant for a person who faces a debt of £200 because of the companies' practice of back-charging?
I accept that point, but I am sure that the member accepts that her efforts and those of others have delivered the beginnings of change. However, we should not be satisfied with the current situation; we must keep pressurising Scottish Power and other companies to do more.
Many suppliers offer a variety of special tariffs and rebate schemes to assist low-income customers, which is good. Some suppliers have set up trust funds to help pay off debts or provide measures to reduce debt, such as assistance with the purchase of energy-efficient appliances.
The recent announcement of a reduction in retail prices in response to the fall in wholesale prices is welcome. However, as members said, price rises have been passed on to customers much more quickly than price reductions. We must put pressure on companies to treat customers fairly.
Does the minister share my concern that Ofgem supports discounts for direct debit customers, while saying that its duty is to protect vulnerable customers? Can it do both?
We must engage in dialogue with Ofgem on a number of matters. Prepayment meters are probably the most significant issue.
Licence conditions now include a ban on disconnecting elderly people in winter and there is a voluntary ban by the six big suppliers on disconnecting a home in which a child or someone who is disabled or chronically sick lives. However, as Jackie Baillie said, disconnections have increased from 65 in the first three quarters of 2005 to 250 in the first three quarters of 2006. Companies tell us that they are not disconnecting vulnerable customers, but I want to be convinced that that is the case. I want to be sure that companies are working to ensure that disconnections do not creep up to the levels that they reached a few years ago. I want to be sure that companies are disconnecting only as a last resort and that they never disconnect a vulnerable household.
I turn to the direct actions of the Executive to assist the fuel poor. While we have been exhorting companies to do everything in their power to assist families on low incomes, we have taken significant steps with our own schemes to alleviate fuel poverty. Bills can be reduced and debt prevented if we ensure that houses are as energy efficient as possible. So far, we have invested £300 million in our central heating programme and warm deal scheme, which have saved customers money. We have put in some 78,000 central heating systems and insulated more than 315,000 homes. Almost 9,000 of the systems installed have been upgrades to partial or inefficient systems for the over-80s. In January, we extended eligibility for upgrading of partial or inefficient systems, to include people on the guarantee element of pension credit, giving initial priority to the over-75s.
We have also improved our programmes in other ways. We are working in partnership with the Pension Service in Scotland to provide benefits health checks to all pensioners who apply for either programme up front, at the point of application.
We know that income maximisation is an important part of reducing fuel poverty and helping to prevent people from falling into fuel debt or other kinds of debt. We have extended the warm deal to families with disabled children.
What of the future? We all know about the potential that renewable technologies have to reduce fuel poverty as well as to reduce carbon emissions. We have therefore set up a pilot to install renewable technologies in approximately 170 households throughout Scotland. We have dedicated £1 million to that scheme for the period from 2006 to 2008. We want to assess the impact of the technologies on fuel poverty and find out how people respond to using them in their homes.
It is unlikely that the problem of rising fuel prices will ever be eliminated entirely. However, we need to meet the challenge head on. We must improve the energy efficiency of properties, as that has been shown to benefit the inhabitants significantly. Homes that are more energy efficient, which our programmes are helping to deliver, are more affordable to heat. The energy efficiency of new homes must be improved through building standards. The local authorities' work on the Scottish quality housing standard will help to improve the quality of people's homes, particularly in relation to their energy efficiency.
We have made it clear that we are determined to do what we can to end fuel poverty by 2016. The substantial investment that has been put into that in Scotland is probably significantly greater than the investment in the issue down south. We acknowledge that there are issues and we are taking the appropriate steps to deal with them.
We will continue to put pressure on the fuel companies with the aim of ensuring that people, particularly those who are vulnerable, do not suffer.
Meeting closed at 18:21.