Colin Challen: A fuel poverty policy that has run out of steam

So far as keeping prices down was concerned, Labour's fuel poverty policy structure for many years looked impressive. Liberalisation had brought a long but temporary reduction in prices, allowing the

regulator Ofgem to take a sedentary approach to its primary duty to ensure value for money through competition.

The Warm Front programme to make homes more energy efficient was making slow but steady progress. Less well-off people were getting assistance to reduce their energy bills. It hasn't taken very much to undo this good work.

A windfall tax could be an option to address this problem, and has to be held in any government's pack of cards in their negotiations with an industry that seems scandalised by any claim that it has profiteered from recent price rises.

But last resorts rarely make good deals, and the use of a windfall tax could merely compound the existing problem with the market, rather than solve it – and it is our excessively liberalised market that is the root of the problem.

Is it not ironic that while we have in the UK the most liberalised

energy market in Europe, we also have the most recalcitrant largely foreign-owned energy industry and the only response of the Left has been to demand a windfall tax on their profits?

What is needed is a root and branch review of the operation and ownership of the industry.

A windfall tax to address fuel poverty would implicitly accept the current ownership structure of the UK industry, and would suggest that all that is needed are occasional corrections.

Such a tax could bring short-term relief to those on low incomes, but what they need is long-term protection coupled with environmental sustainability. Where is the new thinking here?

Perhaps we could begin by asking whether our ageing fuel poverty target, which defines anyone spending more then 10 per cent of their income as being fuel poor, is still relevant. The target is only accidentally related to any environmental objective, even though it is often quoted as an environmental policy, too.

We should have a new target which assesses the energy needs of families along with an assessment of the optimum energy performance of their home.

Since energy efficiency measures often do not reduce energy

consumption, but merely encourage the use of more energy-consuming devices, we cannot simply assume that the level of energy usage reflects any form of poverty if it rises above a certain arbitrary point.

The householder who has received several thousands of pounds worth of insulation, central heating and double glazing work should not then feel justified to expect to be state-assisted to watch a 60-inch plasma TV – or have I missed something?

The definition of fuel poverty has to reflect what energy we need for our basic needs, such as heating and cooking, and not include every

gadget that comes along which prevents us getting our growth in energy consumption under control.

To this end, the statutory duties energy providers are placed under

need a radical overhaul. The long discussed but little developed

concept of turning energy suppliers into energy service companies

should be moved forward, obligating them to do a lot more than they are now to reduce their customers' demand – and pay for the measures necessary.

But as we have seen with the non-introduction of smart metering, we have seen the electricity suppliers successfully arguing for delays to additional legal duties. Of course, the fact that the Government has separate departments dealing with energy efficiency and energy supply does not help. That dichotomy needs to end.

The coalition Government's welcome decision to allow local authorities to make money from selling energy from renewable sources also presents a new opportunity to develop local synergies in tackling fuel poverty,

and leads to the development of community energy businesses, part and perhaps wholly owned by local residents to invest in holistic solutions to the twin problems of fuel poverty and climate change.

Labour's response to all this should be to embrace new thinking and where necessary ditch old policies which have served their time if not their purpose.

Colin Challen was the Labour MP for Morley and Rothwell from 2001 to 2010. His book Too Little Too Late: the politics of climate change was published last year.