Energy Company Charges

Baroness Primarolo Excerpts

Tuesday 4th February 2014 Commons Chamber

[Kate Hoey]

I congratulate the hon. Gentleman on his articulate outlining of the case. He mentions BT. His ten-minute rule Bill next week covers a much wider area, because it is clearly not just the energy companies that do this. Does he not agree with me that a basic principle should be that if someone has a bill and they want to pay it in cash, they should not be charged a penny extra for doing so?

[Madam Deputy Speaker (Dawn Primarolo)]

Order. Before the hon. Gentleman replies to that intervention, may I remind him that the Backbench Business Committee recommends 10 to 15 minutes for opening speeches? He is not making an opening speech, but he is being allowed that time. That 10 to 15 minutes does not allow extra time for interventions. He has been very generous, but a lot of Members wish to speak. I would be grateful if he could now draw his remarks to a conclusion.

[Robert Halfon]

Thank you, Madam Deputy Speaker. I will do my best.

The third claim is that the cost differential—coming on to the point made by my hon. Friend the Member for Shipley (Philip Davies)—is due to the discount that companies offer customers who pay by direct debit. Indeed, many energy companies I spoke to told me that what they actually offered was a discount to encourage customers to use direct debit. However, if companies are using discounts to attract customers, it seems possible that they are using non-direct debit paying customers to subsidise these accounts—the point I made earlier. Differences in price should therefore be called a premium, rather than a discount, which can be misleading. Calling a difference of £390 a discount is like calling a mortuary a negative patients output. Any price savings must be proportional and must be communicated transparently to the customer.

The fourth claim is that the cost is reflective of the fact that those who do not pay by direct debit are more of a risk for non-payment. I have seen the cost breakdown of some companies that shows how much this adds on to the extra charge. Roughly, it makes up about half. Returning to some of the people I quoted at the beginning of this speech, all of them said that they pay on time without fail. Why should they pay more because of other people’s mistakes?

The fifth claim—I am nearing the end of my remarks—is that introducing a cap on what companies can charge consumers would result in everyone’s prices going up. That should not be the case, and the suggestion that it would push up prices is symptomatic of an energy market that is not as competitive as it should be. Energy companies should be fighting to keep these charges as low as possible to hold on to as many customers as they can. It tends to be the smaller companies that charge the least or do not differentiate between payment types. I am pleased that the Government are encouraging new entrants to the market, but in the short term I believe that a moderate cap on fees charged is the answer.

In conclusion, I am not against energy companies. I believe in business, but I believe in fair business, not the juggernaut of the big corporation. That is why I urge the Government, first, properly to investigate these charges and reassure customers that their bills are proportionate and that they are not being hoodwinked. Any companies whose charges are not found to be proportionate should be subject to a fine or windfall tax, with all the money being passed back to the consumer. Secondly, there should be fundamental reform of the system. As I have suggested, late fees should be for those who pay late—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. It is now three minutes since I asked the hon. Gentleman to conclude his remarks. There is going to be a tight time limit. When I say “conclude”, I normally mean a couple of sentences. I realise he has a lot to say, but to say it within the time is always the challenge in the House. Will he please give us his last two short sentences, otherwise I will just sit him down?

[Robert Halfon]

Yes, Madam Deputy Speaker.

Finally, a cap should be introduced on the amount a customer can be charged. We need transparency, a cap on charges and fundamental reform.

[Several hon. Members]

rose—

[Madam Deputy Speaker]

Order. I must inform Members that there will be an eight-minute time limit on Back-Bench contributions. It might be necessary to shorten it, but let us see how we go.