Caroline Flint
Main Page: Caroline Flint (Labour - Don Valley)(12 years, 6 months ago)
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Caroline Flint (Don Valley) (Lab)
I beg to move,
That this House believes that the energy market does not serve the public interest and is in need of urgent reform; notes with concern research by OFGEM showing that average household energy bills have risen, while energy companies’ profit margins have soared; recognises that, with a cold winter forecast and Government support cut, millions of families will struggle to heat their homes; believes that energy tariffs are confusing and unfair, meaning that 80 per cent. of people currently pay more for their energy than they need to, and that consumers who try to switch are often given inaccurate information; further believes that to tackle climate change, build a new low carbon economy and make the UK a world leader in green energy, which will bring new industry and jobs to the UK, people need to know that the energy market is fair; and calls on the Government to investigate mis-selling and ensure consumers are compensated, introduce a simple format to be applied across all tariffs, so that people can compare the full range of energy deals at a glance, increase transparency by requiring energy companies to publish their trading data, reform the energy market to break the dominance of the Big Six by requiring them to sell power into a pool, allowing new businesses to enter the market, increasing competition and driving down energy bills for families and businesses, and demand that energy companies use their profits to help reduce energy bills this winter.
I am pleased to move this Opposition day motion, and it is good to see the Secretary of State in his place this afternoon; we were all concerned for his well-being after his no-show on “Newsnight” on Monday. It was the day of that amazing energy summit, yet he was nowhere to be seen. That tells us just how well the summit went. As today’s report on fuel poverty highlights, the stakes could not have been higher: according to the National Grid Company’s forecast last week, this winter could be as bitter as last year, which saw the coldest December on record. Moreover, energy bills have risen by more than 20% this year alone, driving inflation to the second highest level in Europe, and have risen by more than 50% in the past four years, which means that the average family is now paying £1,345 a year just to keep the lights on and the house warm.
That matters. People do not have a choice about whether to consume energy. At the same time as more than one quarter of families are struggling to afford their energy bills, more price rises are on the horizon and more families are worried about how they will make ends meet, yet energy companies are enjoying soaring profits. On Monday the Secretary of State got the big six energy firms, which between them control 99% of the market, into the same room. With them were consumer groups such as Which? and Consumer Focus. It was the ideal opportunity to get a grip on spiralling energy bills, but what was the big idea? What was the bold plan? What was the new policy?
We were given two words that will strike terror into the hearts of the big six energy firms, two words that will give reassurance to millions of families worried about how they are going to heat their homes this winter: “Go compare”. I honestly thought that the Prime Minister was going to come dressed as the opera singer Gio Compario and force the summit’s reluctant audience to endure a chorus. He might as well have done, for all the good that came out of it. Meanwhile, the Secretary of State could only look on—as the Prime Minister spoke and the public relations shots were taken—reduced to the role of the Prime Minister’s meerkat.
Mr Charles Walker (Broxbourne) (Con)
Does the hon. Lady agree that we should have been increasing generating capacity and building more nuclear power stations over the past 15 years?
Caroline Flint
That is why, as we left office, we set in train the opportunity to put in place a more balanced energy generation selection for everyone, and that is why many of those policies are now being carried forward by the present Government.
But let us talk about this winter, this week, as the cold snap hits, and about the prices that families up and down the country are facing. Let us talk about the outcome of that energy stunt. There will be no overhaul of the energy market to break the stranglehold of the big six, there will be no radical simplification of the tariffs available, and there will not even be a pause for thought about whether cutting winter fuel payments for pensioners is the right thing to do, even though the Prime Minister accused Labour of lying when we warned, before the general election, that the Tories would cut them. The only message was: go compare. However, people can only go and compare if they have easy, accurate, transparent information on pricing, which we do not have. The number of tariffs on offer has risen from 180 three years ago to more than 400 today: there were more than 70 new tariffs just this year. That does not help consumer choice; it hinders it.
Robert Flello (Stoke-on-Trent South) (Lab)
My constituents, when they look at this vast array of different tariffs, step back and think, “Well, what’s the point? These six firms are effectively in cahoots anyway. They are almost operating a cartel.” They think, “Why bother wading through all this treacle and looking at the different tariffs, because we know that we’ll switch to one company and then, two minutes later, it will up its prices too.”
Caroline Flint
My hon. Friend makes the point that many of our constituents are making about mis-selling, and the barrage of information that does not allow them to make a clear choice. If there are too many tariffs that are complicated to understand and difficult to compare, people cannot make informed decisions about which deal would be best for them.
Sajid Javid (Bromsgrove) (Con)
The right hon. Lady will be aware that energy prices soared in Britain between 1997 and 2010. Heating oil prices increased in real terms by 130%, gas prices by 71% and coal prices by 61%. Does she think that that inspires confidence in her approach?
Caroline Flint
That is one of the reasons why in 2007 we started discussions across Europe, as part of the new third energy package, to ensure that national regulators had more powers and to introduce more competition and transparency. That is what my right hon. Friend the Member for Doncaster North (Edward Miliband) has been calling for ever since he was Energy Secretary, including now, as leader of the Labour party. It is interesting that we are only now beginning to see signs that the Government are getting behind the Miliband deal. [Laughter.] It is absolutely true.
The Secretary of State likes to lecture us about the need to check and switch, but what does his own Energy Minister say? Earlier this year he poured his heart out to the Select Committee on Energy and Climate Change about his struggle to find a cheaper deal. He said:
“I went on line to compare my tariffs and I was so confused by the options that I decided to stick where I was”.
That is what is happening to our constituents up and down the country. If the Minister himself cannot work out how to get a better deal, what hope is there for the rest of us? No wonder 80% of people are paying more for their energy than they need to.
Caroline Dinenage (Gosport) (Con)
I recognise the passion with which the right hon. Lady speaks. I share her passion, because many people in my constituency, particularly pensioners, have been struck with fuel poverty. However, I am beginning to ask myself whether she has been asleep for the last 13 years as prices have gone up. This has not suddenly happened overnight; the problem has got increasingly worse over the last 13 years. What does she say about that?
Caroline Flint
I am afraid that the problem has got even worse in the last year. Prices have been going up, even though wholesale prices have been going down. In its recent reports Ofgem has quite rightly complained about the way the energy big six blame wholesale prices when they put their prices up, but when wholesale prices go down they are not as quick to send them down the other way. It is just not good enough.
Sandra Osborne (Ayr, Carrick and Cumnock) (Lab)
Does my right hon. Friend agree that shopping around, as people are being told to do, is a totally hopeless choice when they are suffering so badly, in many different ways, from rising prices, and not just fuel prices? Given the profits that the energy companies are making, does she think that they should make a contribution by cutting prices?
Caroline Flint
Absolutely, and that is in our motion today. Every Member of this House has a chance to vote to urge the energy companies to share some of their profits with the people who are their customers and to get prices down. As my hon. Friends have said, the problem is that even when people try to find a better package they do not get the right information.
Mr Mike Weir (Angus) (SNP)
Are things not, in fact, even worse than that? People can reduce the amount that they pay by switching only if they pay by direct debit, which acts against those on the lowest incomes who do not have bank accounts, and those of our constituents who do not wish to set up direct debits as they want the ability to decide which bills they pay when, in these difficult times.
Caroline Flint
Absolutely. There is no point in the companies having a system that does not recognise the situation of ordinary families. The National Pensioners Convention talks about the fact that fewer than six in 10 pensioners have access to a computer to go online. It is not fair or right. The onus should be on the companies, not the public. However, all the Secretary of State could do this week was blame the public: “It’s your fault you’re not getting out there and getting a better deal. It’s your fault you’re not saving yourselves £200 a time.” He has got a lot to answer for, because he has just sat back and let people suffer.
Andrew George (St Ives) (LD)
The right hon. Lady bemoans the unfairness in the direct debit discounts and the way in which those suffering from fuel poverty are treated by the system—there is also an issue with rising block tariffs—but all those things happened in the 13 years of the Labour Government. She is absolutely right to raise those important issues, but what did her Government do in that time to address them?
Caroline Flint
For a start, we had the most ambitious programme to help people in fuel poverty deal with their bills—the Government are cutting those measures—but we also started discussions across Europe about having Europe-wide legislation to tackle some of those issues by not only giving greater powers to regulators but ensuring more openness and transparency. I will talk about this more later, but I am sad to say that we are seven months overdue in implementing that legislation and putting into statute powers that we can use to control parts of the market. Perhaps the Secretary of State will say something more about why the package that my right hon. Friend the Leader of the Opposition was negotiating when he was Climate Change Secretary has not been implemented.
Research published by the consumer group Which? showed that when people contacted the big six energy firms to ask how they could save money—that is, when they made the effort that the Secretary of State lectures us about—a third of them were given misleading advice. Either those customers were deliberately misled or the tariffs were so complicated that not even the staff selling them understood them. Can we imagine any other product or service where we would accept four out of five customers being overcharged—not just once, but time and time again—and nothing being done about it? When four out of five families are paying over the odds for their electricity and gas it shows how out of touch this Government are to lecture people about shopping around.
People do not want a Government who blame them for the fact that their energy bills have gone up. Families and businesses that do the right thing, work hard and play by the rules cannot understand why this Government are not only allowing electricity and gas companies to increase bills by so much, but seem to be apologising on their behalf. On Monday the Energy Secretary told the “Today” programme:
“Energy companies are not the Salvation Army”,
and said that he expected them to
“earn respectable returns for their shareholders”.
We know that the energy companies are not the Salvation Army, but it should not be Government policy to drive people into the arms of the Salvation Army either.
Stephen Barclay (North East Cambridgeshire) (Con)
Can the right hon. Lady explain why, in 2000, the Labour Government set a 10-year target of securing 10% of electricity from renewables, with a starting point of 2.7%, yet failed to achieve it, adding only 6% in 10 years? In 2009 the current Leader of the Opposition set a legally binding target of 31%—in other words, signing us up to deliver 21% extra when we had already failed to achieve the 10% target in the preceding 10 years. Could she please explain that?
Caroline Flint
I am happy to support the Labour Government’s ambitious plans to be at the forefront of supporting renewable energy—and also, I should add, cracking the whip to make the energy companies play their part. Part of the problem is that the energy companies seemed to be on a mission to make us use more energy and pay more, rather than helping us to reduce our energy consumption and therefore pay less. We have nothing to apologise for on that front. What we are talking about today is what is happening this week, as the frost hits, and this winter, when people will face not only high energy bills but higher food prices, and wage freezes in the public and private sectors, in a country where unemployment is going up and people are feeling the squeeze on all fronts.
The question is: what can this Government do about that now? The answer, from Monday’s energy summit, seems to be: precious little. We do not think that this Government are doing enough. On Monday the Secretary of State could not bring himself to question whether it is right, at a time when millions of families and businesses are struggling with energy bills, that energy companies should be enjoying soaring profit margins, which are up more than eightfold since June. We do not think that it is, which is why we welcome The Sun’s “Keep it Down” campaign, and why we said that the Government should have used Monday’s summit to tell the energy giants to give up some of their profits and cut bills this winter. Was it any surprise that the BBC correspondent reported that the energy companies were “delighted” with the outcome of the summit? Well, they would be, because they were not asked to do anything.
Jim Shannon (Strangford) (DUP)
Does the right hon. Lady agree that the energy companies need to be regulated, and that, along with regulation, we need initiatives to reduce the supply of energy that they get, over a 12-month or even a 24-month period? Does she also agree that such arrangements would need to be regulated and guaranteed under legislation? Regulation of the companies and a reduction in the supplies that they give out, guaranteed by legislation, will be the way forward.
Caroline Flint
We are clearly on record as saying that we need to reform this distorted market. We need openness and transparency, and we need simpler tariffs. It is not enough just to tell people to navigate themselves around the increasing number of available tariffs that are no good. This is also about breaking up the big six and opening up the energy market to new suppliers. We are clear about that, and today we are forcing the Government to tell the House whether they, too, are clear about it.
John Robertson (Glasgow North West) (Lab)
Has my right hon. Friend had a chance to look at John Hills’s report on fuel poverty? He talks about the thousands of people who will die from hypothermia this winter. Does not that make any arguments about who is at fault completely superfluous? The fact is that we have to prevent those people from dying. What are the Government going to do about this? Are they going to put profit before people’s lives?
Caroline Flint
I was pleased to be able to have a meeting with John Hills this morning to discuss his report. I would not want to make a direct comparison in this regard, but it is telling that more people die of cold in the winter than die on our roads. This is about recognising that, while certain actions will take time, we need to determine what can be done here and now. The sad thing is that Ministers are lecturing families and firms about insulating and saving, even though they have cut Warm Front by 70% and will not give anyone any information about their green deal for homes, which will not be ready for another year anyway. Labour invested more than £300 million in Warm Front during our last year in office, helping families to keep warm and save energy. We helped home owners on modest incomes to modernise their heating systems, but today that scheme has a budget of just £110 million, and it is due to end in April 2013. The Government could take action right now: they could also stand up to the energy companies and tell them to help people to help themselves. In doing that, they could perhaps save some lives.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
I agree with my right hon. Friend that we should be challenging the big six over their excessive profits. She is also right to point out, in relation to the Government’s responsibilities, what Warm Front did to reduce fuel poverty. What does she think about the Government’s cutting of winter fuel payments and replacing social tariffs with a poorly designed system? We must press the Government about those changes.
Caroline Flint
My hon. Friend brings to the House the expertise of a public health expert, and she makes an excellent point. How people live, and the homes and communities that they live in, are important to their physical well-being. For example, 80-year-old widows will lose £100 this winter that would have helped to heat their homes. And by the way, the Prime Minister had the brass neck to tell the public to check out free insulation, but he forgot to say that the insulation schemes run by the energy companies exist only because Labour legislated to require them to spend £300 million every year on reducing fuel poverty.
Robert Flello
My right hon. Friend will recall, as will most Members when the Government take us back to the 1980s, that it was Edwina Currie who said that pensioners had to stay in one room with a flask beside them, knitting themselves scarves and hats to keep warm. We are going back to that same territory, are we not?
Caroline Flint
I am afraid that Edwina Currie was in the news again only last week, when she said that she was not aware of anyone who could not afford to eat. People up and down the country are, however, facing the choice between keeping warm and having a hot meal. The sad thing is that many older people often make such sacrifices and keep quiet about them; they suffer on their own. In the voluntary sector, we are also seeing cuts to the services that support those people and help them to get access to their rights and to the deals that they deserve. This is a sorry tale of a sorry Government.
Guy Opperman (Hexham) (Con)
May I draw the attention of my right hon. Friend to the report on fuel poverty by the Office of Fair Trading, which was published this week? She asks what is being done. The report described the stopping of practices by BoilerJuice—something that was set up on her watch—which allowed only one company to be in a position to market its products, namely DCC. Will she “go compare” that?
Caroline Flint
Whatever we do in public policy, the important thing is always to see whether it is hitting the mark and working as best it can. Does that mean that policies always stay the same? No, it does not.
I thank the hon. Gentleman for calling me his right hon. Friend, but I must challenge him and the Secretary of State over Labour’s record on supporting families coping with their energy needs. I challenge the Secretary of State to deny that the Decent Homes programme, which involved the modernisation of 1.5 million homes, reduced energy consumption. I defy him to say that the code for sustainable homes did not improve the energy efficiency of new properties. I defy him to say that Warm Front did not reduce energy bills for more than 2 million households. I also defy him to say that the car scrappage scheme did not remove hundreds of thousands of old cars from Britain’s roads and replace them with more fuel-efficient vehicles with lower emissions. I challenge him to own up to the House today to the fact that the regulations that his Government are introducing, seven months after they were required, arise from the third energy package agreed by my right hon. Friend the Member for Doncaster North when he was Secretary of State for Energy and Climate Change. Yes, it was Labour that agreed the legal agreement across the European Union to make the gas and electricity markets more competitive, to give new powers to the regulator, to reveal the financial records of the energy giants and to put in place a more competitive market that new suppliers could enter. The role of this Government, 18 months into office, is to delay the process of implementation.
Perhaps the Secretary of State is not just the Prime Minister’s meerkat; perhaps he is also the Chancellor’s poodle. Following the Osborne doctrine, which states, “We are going to cut our carbon emissions no slower, but no faster, than other countries in Europe”, perhaps he now believes that, as the Chancellor said,
“a decade of environmental laws and regulations are piling costs on the energy bills of households and companies.”
Perhaps that is why, this week, the Secretary of State failed to stand up to companies over pricing, why he failed to express the anger that the public feel towards the energy giants, and why he meekly agreed to let the energy giants pledge not to raise their prices over the winter only after they had already increased them.
People expect, and deserve, a Government with the courage to stand up to powerful vested interests. This Government cannot even stand up to their own Back Benchers. A survey last year showed that, in spite of the overwhelming scientific consensus, one third of Tory MPs are climate change deniers who doubt the existence of climate change and its link to human activity. As ever, we are particularly grateful to the hon. Member for Mid Bedfordshire (Nadine Dorries) for the expertise that she brings to all matters scientific. On Monday, she solved an issue that has evaded scientists for generations when she told Radio 5:
“You can’t put solar panels on children’s shoes.”
I am glad that that thorny issue has been resolved once and for all, but this is all part of the background to the comments of the Chancellor at the Tory party conference, when he openly attacked low-carbon businesses to get cheap applause from Tory delegates. The truth is that this Government are not only out of touch but wedded to an out-of-date orthodoxy which, for too long, has allowed the City and companies such as the privatised electricity suppliers to do what they want at the expense of everyone else.
Sammy Wilson (East Antrim) (DUP)
I note what the right hon. Lady has said about her support for the Climate Change Act 2008, but will she spell out for us what the cost of the renewables obligation has been for electricity consumers in the United Kingdom this year?
Caroline Flint
What will be the cost if we rely on fossil fuels for ever more? What difficulties would that create, in terms not only of fuel costs but of security of supply? I refer the hon. Gentleman to a report that I believe came from both Ofgem and the Department of Energy and Climate Change last year, which outlined that something less than 5% of the price of bills was connected to investment in renewables. Of course we have to look for a balance, but I am focusing on something that we should all be concerned about. Even the Government have admitted that people are paying too high a price for their bills because these tariffs are sold in a misleading way so that people do not get a decent deal. On top of that, we have only the six big energy giants in the market, which needs to be broken up and radically reformed. That is something we should focus our attention on, along with help to people and businesses to make their homes and businesses more energy-efficient so they can pull down the costs of energy over time. There is no going back, however, to an old system of energy supply; that will not help anyone.
John Robertson
What does my right hon. Friend say to people in the poorer parts of my constituency where energy efficiency will not work? People can do nothing with the housing they have got, but they have to live somewhere. The thing that makes the biggest impression on them is the price. If they are going to get screwed by the price from the energy companies, they are going to have to work out how they are to live. What do we do with people like that? We can talk all we like about efficiency, but it does nothing for these poor people.
Caroline Flint
We stand up for them. We stand up for them when they are not getting the best deal they can for their energy. We also stand up for them by ensuring that low-income homes are supported through Government schemes, whether that is Warm Front or the winter fuel allowance for older people, but those are being cut by the Government. That is what we do and what we look at. In the long term, we look at how we live our lives and where we live and, with Government leadership and support, we help business to do the right thing to help people not to be behind the curve on energy efficiency and lowering bills. We also look at what happens now, which is why our motion demands that energy companies use some of their profits to help people, particularly the most vulnerable in our communities.
The Government do not understand the reality for families who struggle to pay the bills at the end of the month or the reality for vulnerable people who must make choices about whether to heat their home or have a hot meal. The same applies to families who believe in greening their homes, do their recycling, have low-energy light bulbs and have insulated their homes, yet still find that under the complex, distorted tariffs they pay more for every unit of energy they use—not to mention the businesses trying to keep their head above water because of an austerity programme that is not working for Britain.
Robert Flello
On that specific point, families face a double whammy, as not only have their own gas and electricity bills gone up, but the businesses that supply them with food and other services have seen their bills go up.
Caroline Flint
Yes, and all this takes place in an environment in which unemployment is going up and growth is going down. This toxic cocktail of Government policies is not only not helping us get to a better place for our economy, but is actually making it far worse.
Anne Marie Morris (Newton Abbot) (Con)
Does the right hon. Lady share my particular concern for the south-west, given that if we add energy bills at an average of £1,300 to the water bills at £517, people are looking at spending 8% of their average income on utility bills?
Caroline Flint
The hon. Lady speaks up for the south-west and I know that she has raised questions a number of times about water in the south-west. Again, however, I would have to say that she should speak to her leader and to the Secretary of State about what they are doing to challenge these utility companies over how they supply, and she should recognise the difficulties faced across our country. She also needs to recognise particular difficulties within regions as well as within the country.
Stephen Barclay
A central theme of the right hon. Lady’s remarks seems to be gas prices and bills for consumers. Will she remind us how much gas bills went up in real terms between 1997 and 2010?
Caroline Flint
I understand that the wholesale price has gone down from its peak in 2008 by two thirds; in fact, wholesale prices have been going down in the last month. That poses the question: why do we hear from the energy companies when they say that prices are going up, but when the prices are going down we do not hear from them so loudly? Ofgem has said it is not good enough that when the energy companies claim that wholesale prices are going up, the price to consumers goes up like a rocket, but when they come down, the price comes down like feathers. The truth is that it is a complex market and it is difficult. We are not an island that can control everything, but we should control the way in which the energy companies are expected to satisfy us and the public about how they run their tariffs, and they should open their books to show transparency so we can see at what price they buy and at what price they sell, to ensure that we get a better deal.
Angela Smith (Penistone and Stocksbridge) (Lab)
Unemployment is at the highest level for 20 years, we have an austerity programme that makes the eyes water, inflation at over 5% and on top of that we face the biggest squeeze on living standards in a generation. Is it not imperative that the Government do something about rising energy prices, which do more than anything else to harm families’ budgets, making it hard for them to keep up a decent standard of living?
Caroline Flint
I agree with my hon. Friend. Given all the spin before the energy summit on Monday, it was disappointing that all that came out of it was that letters would be written to 8 million households telling them to check, switch, insulate and save. I am sorry, but that is not good enough. It is hard to check, switch, insulate and save when it is so incredibly difficult to navigate a way through the tariff system and people are never quite sure, even if they get what looks like a good deal, whether it is going to be a good deal down the road. That is why some of the tariffs that are fixed for 12 months have been so disappointing; many people have realised that they are not as good as they were claimed to be.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
Before I came to this place, I worked for Citizens Advice, so I know that energy poverty has led to one of the greatest increases in inquiries. At the time, I argued for the introduction of a mandatory social tariff on behalf of those in the fuel poverty group, removing them from the market that was clearly not working. Would the Labour Front-Bench team agree with such a radical proposal?
Caroline Flint
We had something like that, but I am afraid that the present Government have taken it away. If we want to get to the root of the problem, we have to think about radically reforming how the energy market works. We have to create a dynamic and more open energy market that deals with climate change and operates in the interests of the consumer, not the vested interests of the few.
At the Labour party conference, my right hon. Friend the Member for Doncaster North called for reform to the energy market to end the dominance of the big six and get a fairer deal for the people of Britain. While the Government have been failing to act to prevent sky-high energy price rises, Labour has been leading the debate and is coming up with radical ideas to reform our energy market and deliver significant reductions in gas and electricity prices for millions of consumers. Our plans would provide immediate help to millions of families now and reform the energy industry to provide a new bargain in the future.
Laura Sandys (South Thanet) (Con)
The right hon. Lady is making a critique of the current regulatory regime, which was the Labour Government’s regime. What we are doing is reforming the electricity market and there is also Ofgem’s retail market review. Those are the steps taken forward, and we will ensure that they deliver value for the consumer. The previous Government published 32 Green Papers and consultations and passed two pieces of legislation, so there was a lot of inactivity over the past 13 years.
Caroline Flint
I think I have already said that, back in 2007, we embarked on securing Europe-wide support for reform of the energy market. I am afraid to say that the negotiations on which the leader of the Labour party led have yet to be implemented. They are seven months overdue; they could have been implemented in this country seven months ago, but it has not happened yet. We are calling for further radical restructuring: we have argued for the energy giants to put all their power into a pool, but we have not heard that echoed by the Government. We have made many demands for transparent data to go to the regulator, but again we have not heard that echoed by the Government.
Caroline Flint
I will continue to expand on my theme a little, if I may, but I will be happy for the hon. Lady to intervene again if I have time.
If we want to get to the root of the problem, we must talk about reform, and our plans would provide immediate help for millions of families. First, we must deal with the sheer number and complexity of energy tariffs, which are extremely confusing and unfair. They hit loyal customers and penalise those who use less energy, and they really must be reformed. We propose a simple new tariff structure, which will be clearer and fairer and which will help all energy customers to get a better deal. It would work like a phone bill, with a daily standing charge and a cost per unit for the energy used.
Simplifying the pricing of energy would make it much easier for people to compare deals, work out which is the cheapest for them, and ditch the ones that are ripping them off. We need to get rid of expensive primary units and unregulated standing charges, so that people are no longer penalised for being low energy users, which is quite ridiculous. Instead of his “Check, switch, insulate” mantra, could the Secretary of State not try “Simple, honest, straightforward”? That might work better for customers.
What about redress? I understand that only two days ago, on breakfast TV, when asked about our proposal for a thorough investigation of past mis-selling and compensation for customers who have been ripped off, the Secretary of State suggested that that was not worth doing because it would delay other reforms. Labour Members will accept new protection measures as they are introduced, and we agreed that that should happen throughout Europe when we were in office. However—let me challenge the Secretary of State by repeating this—we are saying today that a full investigation into past mis-selling must be initiated, and that those who have been ripped off must be fully compensated.
The Secretary of State for Energy and Climate Change (Chris Huhne)
In fact, what I said was not worth doing was referring the matter to the Competition Commission, because of the delays that it would involve.
Caroline Flint
I am not sure whether that means that the Secretary of State now supports our demand for a full investigation and redress for consumers who have been ripped off.
Chris Huhne
I announced some weeks ago that we were considering redress for consumers. Moreover, we have said that it should not be just a question of a rap across the knuckles or indeed a fine, but that there should be a possibility of redress for consumers as well.
Caroline Flint
Obviously we will explore that in a little more detail, but I think it is clear that those who have mis-sold a package must pay back to people what they have lost through that, and must pay them compensation. It is clear that the fines are not working, because every time a consumer organisation conducts another survey, it finds more evidence of mis-selling. I think that this is quite straightforward, and I do not see why we need to go on talking about it. Let us just get on with it.
Albert Owen (Ynys Môn) (Lab)
Does my right hon. Friend agree that the Energy and Climate Change Committee, of which I am a member, should be praised for initiating the current inquiries? Already four of the big six have decided to stop doorstep selling, and we need to push that further. The Secretary of State knows that these companies are on the run; now he must put the boot into the big six, and ensure that our customers receive the compensation that they deserve. We need not measly words, but action.
Caroline Flint
My hon. Friend is entirely right, and I pay due respect to all the members of the Select Committee. They have done fantastic work on our behalf, highlighting some of the problems caused by the operation of the energy market and energy companies. It is about time that the Government stood up to the energy giants, because this is not good enough. I do not know how energy chief executives can go on television and brazen it out, talking about what their companies are doing for customers, when 80% of people are not on the best deal for them, and mis-selling appears to have reached the level that is being discussed in the Chamber and beyond. It is a disgrace, and the very least that those companies should do is fess up and pay back.
Ian Mearns (Gateshead) (Lab)
It is not just the mis-selling itself, but the fact that it has taken place within the confines of what is clearly a rigged market, that is such an utter disgrace. It is clear that the levels of profit per customer in all the companies in the market are rising very quickly and will fall very slowly, and that is of concern to every Member in the House.
Caroline Flint
My hon. Friend is right. People are not stupid, but sometimes I feel that the leaders in this country treat them as if they were. That certainly seemed to be the case on Monday, after the energy summit. People feel distrust, and they are right to feel distrust because of what has happened to them.
I am sure that we all have stories of our own experience. For instance, the Minister of State, Department of Energy and Climate Change, the hon. Member for Wealden (Charles Hendry), tried to work out what was the best tariff for him, and then gave up on it. Yet people are being blamed for sticking to the same supplier because they too have given up, although some of those whom we represent have more stresses to deal with in life than we have. Spending half the day sorting out an energy bill—if they can devote that much time to it—is just one item in a long list of things with which they are having to cope, and they are not being helped by the policies of this Government.
Pat Glass (North West Durham) (Lab)
It is all very well for the Prime Minister to tell people that they should insulate their homes. It is true that they should do that, but some of the poorest people in the country live in private rented accommodation. They turn up in my surgery all the time. There are some excellent private landlords, but there are also many who are simply not interested in insulating their houses, and do not care how high their bills are.
Caroline Flint
We have been campaigning for something to be done about that from 2016, but I understand that the Government do not intend to do anything until 2018, and that too is a disgrace. We must also look much more closely at what happens to housing benefit in the private rented sector, and ensure that that sector is not left behind. We should consider incentives, but we should also consider introducing a bit of stick where it is necessary.
Geraint Davies (Swansea West) (Lab/Co-op)
One in four children in Swansea currently live in absolute poverty, which means that every day a choice must be made between eating and heating. Should the Government not put at the top of their agenda the opportunities at their disposal to target support at those in greatest need, particularly households containing children in poverty?
Caroline Flint
I agree. There are measures that Government can take. However, they can also show leadership and exert moral pressure on the energy companies to be fairer and consider sharing some of their profits with those who are most in need, at the very least.
Huw Irranca-Davies (Ogmore) (Lab)
The Secretary of State has focused on the fact that switching suppliers might save people as much as £200. Is that not a bit rich, given that the energy companies’ profit per person is £125? Most people will never get around to switching, and meanwhile the big six are raking it in.
Caroline Flint
If it is true that every customer who followed the Energy Secretary’s advice could save £200, why do the companies not make it easier for customers by simply reducing their prices? The latest report does indeed show that their profit margins are £125 a head, up from £15 a head in June. If that does not set the alarm bells ringing in Government, I do not know what will.
As Members have pointed out—including, to some extent, Government Members—reforming the way in which energy is priced and sold will only ever work if there is genuine competition in the energy market. There is no such competition at present. The market is dominated by just six firms, which supply more than 99% of electricity and gas.
Caroline Flint
No. I will not take any more interventions, because I want to leave time for other Members on both sides of the House to contribute.
The problem is that when wholesale prices go up, so do people’s bills, but when wholesale prices come down, bills do not. That is because of the lack of transparency in the market. The companies that generate energy sell it to themselves, and then on to customers. If the few big dominant firms were forced to sell the power that they generate to any retailer, companies such as supermarkets and others could come into the market, there would be more competition. and the upward pressure on prices would be eased.
In the long term, however, the only way in which we will deal with rising energy prices is by investing in new renewable sources of energy. The challenge is clear. A quarter of our generation capacity will close in the next 10 years, and we need to attract some £200 billion of investment. If we do not do that, energy bills may rise further still, by hundreds of pounds a year.
As a result of the uncertainty this Government have created, the UK is falling behind with investment in new low-carbon generation. Investment that should be coming to the United Kingdom, supporting jobs, growth and industry in this country, is now going overseas. Last year, when we left office, the UK was ranked third in the world for investment in green growth. Today, because of the choices made by the present Government, we have slipped 10 places to 13th, falling behind countries such as Brazil, India and China. That is why the Chancellor was wrong when he said the UK should not try to get ahead of other countries in developing our green industries; we should do that. We should be ambitious for our country; we should be a world leader on the green economy. That is good for consumers because in the long run it will bring down prices. It is good for our environment because it gets our carbon emissions down. It is good for our energy security because it means we are less affected by events overseas. It is good for our economy too, because it creates jobs and supports growth at a time when we need that more than ever.
I am afraid that we have a Government who are out of touch and unable to stand up to powerful vested interests on energy prices on behalf of the people of this country. They are out of touch when they tell people that they are to blame for rising energy bills. They are out of touch when they cut help for pensioners at a time when prices are rising and a cold winter is on the way. They are also out of touch when they insult people by saying “Check, switch” and “insulate to save.”
The public will check; they will check how their family voted at the last election and they will switch to Labour—as Liberal Democrat voters did in their droves in May. They will try to insulate themselves from the hardships this Government are raining down on them, and in a few years they will save themselves and this country from this terrible coalition.
The public do not need lectures from Government. They want leadership, and today there is a very clear choice before the House: vote to stand up to the energy companies and take action; vote for simpler and fairer tariffs; vote for justice and redress for the victims of mis-selling; vote to open the books and shine a light on how energy is bought and sold; vote to break the stranglehold of the big six and create an open and competitive energy market; vote to tell the energy companies to use their profits to cut bills now. I commend the motion to the House.
Chris Huhne
I am going to make a bit of progress before giving way again. The hon. Member for Angus (Mr Weir) has already intervened once, so he will have to wait until I have taken interventions from some of the other hon. Members.
This winter, energy bills will show customers how to save money, encouraging them to call their supplier and check online for savings. They will also have access to advice.
Caroline Flint
The Secretary of State makes much of the fact that people will be able to save if they switch. What about the people who cannot use direct debit? What about the people who have not got access to the internet or those who, even if they did, would find it difficult to navigate their way through?
Chris Huhne
The sort of people the right hon. Lady is talking about are the sort of people we are particularly targeting with our warm homes discount. I heard some of the interventions from Labour Members with mounting surprise, because one of the things that this Government have done, of which I am very proud, is to concentrate help on those most in need—those most vulnerable to rising fuel prices. Through the warm homes discount we have altered the previously voluntary arrangement. I say to Labour Members that their Government operated a purely voluntary arrangement with the big six, so cosy was the relationship between the big six and the right hon. Lady’s boss. It was a voluntary, grace and favour arrangement, whereby support was provided for the most vulnerable. We did not have any truck with that. We decided that we were going to legislate on this, which is exactly what we did. As a result, we will have a two thirds increase in the support made available for these social discounts compared with what was available under the previous Labour Government. So on the matter of fuel poverty, we have been doing exactly the right thing, which is to concentrate support where it is most needed and to make sure that that support is available.
Chris Huhne
I certainly will congratulate the hon. Lady’s local council and every council, of all parties, on that work. I hope that we can maintain a cross-party and consensual view on this. Many councils, some Liberal Democrat-led, some Conservative-led and some Labour-led, have been pioneers in this area, and I want to see them do more. Leading on that is really important for our constituents, and it is something to which I pay great tribute.
People can save money on bills, but they can also save by using less energy in the first place. Far too many UK homes are not properly insulated. Loft and cavity wall insulation can save more than £100—we are talking about very simple changes. The big six energy suppliers, which supply 99% of UK households, all offer free or cut-price insulation, yet many householders still have not taken up the offer. So from December, 4 million of the most vulnerable energy customers will receive letters to tell them they are eligible for free or heavily discounted insulation to their loft or cavity walls. Many of these people will not necessarily save energy because they are currently too cold and keep their bills down. By having that insulation, they will be able to increase their comfort, and that is a very good thing to get through an extremely tough winter. The right hon. Lady is absolutely right to say that one of the scandals in this country, which underpinned the work of the Hills fuel poverty review, is that 25,000 people die each winter because of the cold. We have to deal with that. As has been pointed out, it is a multiple of the number of people killed on the roads and it is a scandal that across this House—I am not going to cast further aspersions on the record of the previous Government—we have not tackled this issue with more vigour until now.
These letters will direct people to a dedicated independent helpline, as part of our programme to ensure an extra 3.5 million homes are properly insulated by the end of 2012. Next year we will also be rolling out the green deal to help even more households save money through energy efficiency.
We must also make sure that help is getting to those who need it most—the most vulnerable households. As I pointed out, discounts have risen very sharply under the coalition, and the extra support will be available this winter. We are requiring energy companies to provide help to about 2 million low-income households through the warm home discount.That is a discount of £120 for 600,000 of the poorest pensioners—substantially more than they have been getting until now. We are spending £110 million on heating and insulation for low-income and vulnerable households through Warm Front.
Caroline Flint
Is it not the case that only about one in 20 pensioners will benefit from the warm homes discount, whereas our social tariffs went to all vulnerable households? In addition, there are cuts of £100 in the winter fuel allowance for those over 80 and cuts for older people of £50. This all adds up when one takes into account the VAT increases and everything else that people have to pay the price for under this Government.
Chris Huhne
The right hon. Lady again makes a point about winter fuel payments which I should have picked her up on previously. She may not be aware of this, as she was not in the Department previously, but we have adopted precisely the policy of the previous Labour Government on winter fuel payments. We have left it completely unchanged. They increased winter fuel payments on a temporary basis and then proposed to bring them down, and we have kept exactly in line with that policy, so I am in no position to accept lectures on this matter from the Opposition as we are implementing the policy that they agreed.
Of course, cold weather payments will also be paid to households in areas with extended periods of very cold weather. Part of the green deal scheme will be designed specifically to provide affordable warmth to low-income, vulnerable households through heating and insulation measures. Those policies will make a difference this winter, next winter and every winter thereafter. However, we also need to take the right long-term decisions so that energy does not become unaffordable in future. We need to keep the lights on in the cheapest, cleanest way and to make sure that households get the best deal in the long term as well.
Chris Huhne
We will be bringing forward the consultation document on the green deal and the ECO subsidy shortly, and all those issues will be addressed. Clearly, we have to make sure that we are getting value for money on both the carbon reduction side and in reducing fuel poverty because they are both very important.
I want to make some remarks on carbon capture and storage, which was raised in Prime Minister’s questions. Despite the fact that all the parties have worked extremely hard on the first carbon capture and storage demonstration project at Longannet, we have not been able to reach a satisfactory deal, as the Prime Minister pointed out. We will not, therefore, be proceeding with the project. That decision is purely about the viability of that particular project and is not a reflection on our commitment to the CCS programme; indeed, hon. Members will have heard me commit us to that very clearly a moment ago.
The long-term need for CCS remains as strong as ever. We will continue working across Government to start a more streamlined selection process as soon as possible and £1 billion will be available, as it was allocated in the comprehensive spending review, for that new process. Over the coming weeks, we will ensure that the lessons from that first process are fully learned and we now know that commercial-scale CCS projects are technically viable and are likely to be financially achievable. We also know more about the best way to procure these first-of-a-kind projects. Our findings will be published and made freely available on the Department of Energy and Climate Change website to help to speed up deployment of CCS both here and abroad. We will study those lessons closely as we develop the forthcoming CCS road map setting out our vision for CCS deployment.
Caroline Flint
I thank the Secretary of State for referring to the situation with carbon capture and storage projects around the country. Will he explain to the House how the Government will look to use the great deal of work and research that have been done at the plant in Scotland to make sure that the endeavours, hard work and ingenuity there are not lost but are supported?
Chris Huhne
I am grateful for that question. It is absolutely right; we have learned an enormous amount from that. A lot of work has gone into the negotiations and a lot of good engineering work has been done with the front-end engineering and design studies. They will all be published, if they have not been already, and will be made available to everyone. We are absolutely confident, as a result of this process, that we are able to go ahead with the CCS project within that budget. Unfortunately, at Longannet the difficulties were specific to that project, including the length of the pipeline between Longannet and the reservoirs, as well as other issues concerning the rest of the plant such as its upgrading to comply with the large combustion plant directive. As a result of the knowledge that we have acquired in that negotiation and as a result of those feed studies, we are confident that we will be able to take a project forward.
Chris Huhne
Let me say clearly that one of the things we will do is attempt to align our deadlines on this with the European Commission’s new entrant reserve competition. One of the conditions of that competition is that the CCS plants have to be up and running and ready by 2016. That is in answer to the earlier question about the deadline. We do not foresee a slippage in deadlines.
There is money available from the European budget to support those projects. Money will be available. That £1 billion from the UK Treasury is secure. In addition, there may be help for running costs from the electricity market reform contracts for difference. With all those things we ought to be able to make sure that we get commercial-scale carbon capture and storage up and running. The projects that have been proposed to the Commission are a mixture of coal and gas. We want to make sure that we are doing both.
I hope the House will come away knowing that we are fully committed to the programme and the technology. What happened at Longannet is a disappointment. We would have liked it to go ahead if we could have done it within the affordability envelope that we had and if we had not hit those specific project problems there, but we will now go ahead elsewhere and we are confident that we will be able to get the commercial-scale CCS.
Our proposals to reform the electricity market—I have already mentioned contracts for difference—will deliver the best deal for Britain and for consumers because they will keep prices down and ensure that consumers are protected. We are working on giving Ofgem powers to force companies to give money back to consumers if the companies break the rules. That is the point about redress that the right hon. Lady mentioned.
Caroline Flint
Will that include customers who have already been victims of mis-selling or is the policy only for those who might be misled in the future?
Chris Huhne
The right hon. Lady knows that unfortunately it is a strong principle right across the House, and I am sure she will agree, that we should not have retrospective legislation. Legislation is for matters going forward. I agree that it would have been good if we had had legislation allowing for redress some years ago, but we have been in government only since the last election. For 13 years that was not done by the Labour Government.
Caroline Flint
At Prime Minister’s Question Time today the Prime Minister suggested that he supported the opening up of the energy market to a pool. Does that mean that the Government agree with the Labour Front-Bench team that the pool should be opened up in such a way that the big six should put all their energy into a pool for everybody to compete for?
Chris Huhne
I certainly agree. We have been talking to Ofgem about this and we have been talking with the big six. I found it a very interesting proposal from Scottish and Southern that it was prepared to trade a substantial amount of its electricity in the wholesale market. Scottish and Southern said 100%—of course, that is 100% of the spot market; it does not mean that Scottish and Southern is prepared to trade 100% of its electricity. The devil is in the detail. We have to make sure that the forward market is also liquid.
I am absolutely committed. I am not in favour of the Opposition’s proposal that we should refer these matters to the Competition Commission, because for two to five years that would put a freeze on the whole market. None of the big six would need to do anything at all. They would be able to put their prices up with impunity, they would be able to cut their investment, they would be able to pay more dividends to shareholders, and we would have an awful long time to wait before we had any real reform. The reality is that we think that we understand enough about what is not right in the market, at the retail end and the wholesale end, and are working very hard with Ofgem to ensure that it is put right, which is exactly what we will do.
Charles Hendry
The hon. Gentleman popped in 10 minutes ago, while others have been here for five and a half hours, so I shall not give way to him.
The motion calls for the publication of trading data, but Ofgem, under this Government, have now engaged forensic accountants to untangle the accounts of the big six. It also refers to breaking the dominance of the big six, but it is this Government who have started to facilitate the process by which smaller companies can enter the market and by which power generation can be auctioned off by the major companies. The hon. Member for Liverpool, Wavertree (Luciana Berger) asked whether the Government were going to stand alongside the big six. I think that we have shown, through our actions, that we are prepared to tackle the abuses that were there when the leader of the Labour party was Energy Secretary, and we have decided to move things forward.
The right hon. Member for Don Valley (Caroline Flint) talked about the energy summit. I hope that, on reflection, people will realise that the messages from that summit are important to our constituents. No one is pretending that they are the full answer or the long-term answer, but all our constituents would be well-advised, in the run-up to this winter, to consider what they can do themselves to mitigate high prices. My right hon. Friend the Secretary of State has never said that consumers should be blamed for current high prices, but he has said that there are things that we can all do and which we should be doing. Ridiculing that, as she did, might be good politics, but it does not help her constituents. If the alternative that she is suggesting is that they should not check their bills—my right hon. Friend has said how valuable that has been—consider switching or insulate, under her suggestion, her constituents would suffer this winter.
Caroline Flint
The Opposition are certainly not suggesting that people should not try to get the best deal. The problem is, as has been amplified today, that they cannot find the best deal when they try. The Secretary of State said in his opening speech—if I heard correctly—that the letters that people receive will tell customers what is the cheapest deal for them. Will they get that specific information or will they just be asked to ring a number to check?
Charles Hendry
It will be a combination. That information will be on their bills if it is believed that they could be on a cheaper tariff. We advocated such a measure while in opposition, but it was rejected by the then Government. Also, letters specifically suggesting that someone would benefit from changing will be sent to them when the company believes that they could be on a lower tariff.
In addition, we need to focus on the economic realities. The hon. Member for Ynys Môn (Albert Owen), to whom I respond with the fondness with which he spoke himself, said that he was going to be political, but actually gave one of the most balanced and effective speeches of the debate. He talked about the role of the big six and the fact that we need them for the country’s future electricity and energy security. He and his constituents will know how important the two German companies, RWE and E.ON, are to the building of a new power station. He was right to say that this debate was not about whether we are pro-business and anti-consumer or anti-business and pro-consumer. We need those energy companies to invest in the future of energy generation in this country if prices are not to go through the roof because of insufficient supply.
My hon. Friends the Members for Suffolk Coastal (Dr Coffey) and for Warrington South (David Mowat) drew attention to the massive challenge and the £110 billion that has to be invested this decade in our future energy infrastructure if we are to keep the lights on. The existing energy companies are part of that process. There need to be others, but we cannot achieve that if we drive away the existing players.
The hon. Member for Glasgow North West (John Robertson), who spoke with his usual sincerity on a theme that is familiar to him, almost implied that we would be better off without those companies. However, if we drive them out, who will invest in the nuclear plants that he wants? It will be international companies that choose to make those investments, but if he says that they are not welcome here, the nuclear renaissance that he and I both want simply will not happen. If we reach a point where supply does not meet demand, the first thing that will happen is that prices will go up. His constituents in Scotland—as well as those of the hon. Members for Ynys Môn and for Islwyn (Chris Evans) in Wales—will be the worst affected by that, because they are the ones who use the most electricity, as they are often at home, owing to the conditions that he spoke about, in the coldest climates in our country. They are the people we must bear in mind for the longer term if we want to address the problem properly and effectively.
We have looked at the profits that the companies are making compared with their profits globally. Their profits in the United Kingdom are often a small part of their overall profitability. We need those investors to play a bigger role, just as we need more companies coming forward.