Clean Growth Strategy

Ed Davey Excerpts

Thursday 12th October 2017 Commons Chamber

[Claire Perry]

This is not an end point, but a stock take. Over the next few months, we will be bringing forward many of the detailed proposals that we need to deliver on these ambitions and policies. I would warmly welcome input from knowledgeable colleagues on both sides and the many stakeholders and campaigning organisations out there. We want to shape these policies for the future.

[Sir Edward Davey (Kingston and Surbiton) (LD)]

The greenest energy is fast becoming the cheapest energy. I thank the Minister for her kind words about my role and in that spirit take an approach unusual in this House: reserving my judgment on the strategy until I have actually read it.

I want to push the Minister on the importance of energy efficiency regulations. Will she confirm that the regulation on private landlords in respect of minimum energy efficiency standards is going ahead next April and will be fully enforced? Will she revisit and overturn the bad decision by the former Chancellor to scrap the zero-carbon homes standard on new build homes?

[Claire Perry]

The right hon. Gentleman and I are both really pleased at what has happened in the renewables sector. He is right to focus on energy efficiency because of course that drives down people’s bills—there is a huge win there. Yes, I can confirm that we are going forward with the legislation. He and I were both heavily involved in the design of the green deal, one of the facilitating mechanisms. Clearly, it did not work out as we would have liked.

We want to consider new ways of financing that transition, which is why we are asking our green finance taskforce to focus particularly on green mortgages and see whether we can bring forward other financing mechanisms. I understand the right hon. Gentleman’s point about zero-carbon homes, but I want to make sure that our regulations are absolutely fit for purpose, both for new homes and any additional works done. He would agree that we cannot do that work unilaterally without full reference to the Hackett review of the Grenfell fire safety issue. We intend to consider those regulations to see what more can be done, but it is right to sequence it in that matter.

Retail Energy

Ed Davey Excerpts

Thursday 12th October 2017 Commons Chamber

[Greg Clark]

My hon. Friend makes an excellent point. He is absolutely right that a fully competitive market is what we want and what we will achieve. The essence of the problem for people on standard variable tariffs is that the energy companies have more information about the habits and behaviour of consumers than is available to their competitors. They therefore know which consumers will never respond, no matter how swingeing a price increase is, but other competitors do not have access to that information to address the imbalance. That is why smart meters are being rolled out. They are moving forward from the first generation, so that they are fully rich in the information available, and that is part of the roll-out that is taking place now.

[Sir Edward Davey (Kingston and Surbiton) (LD)]

Did the Secretary of State receive any of the advice that I did in his position that an energy price cap such as that which he is proposing could mean higher bills for the most vulnerable consumers, as seven of the eight members of the Competition and Markets Authority also feared? Will he confirm that without a cap we have seen a dramatic expansion of competition, switching numbers soaring and a sustained reduction in the number of consumers on variable tariffs? Is not the real reason he has gone for this temporary and timid price cap that he does not really believe in it?

[Greg Clark]

No. I have been determined from the outset to eradicate the abuse that the CMA has identified. It seems to me that if £1.4 billion of abuse has been identified, it is essential that that is eradicated. This problem is specific to modern markets—without the smart meters that will provide some relief from that—which is why it is important to provide interim measures, as the minority report of the CMA said. It is right to act on that. Everyone agrees—no one thinks that the market is fully competitive. The CMA in its majority report identified that the market was not functioning in a fully competitive way, and Ofgem said as much yesterday. As far as switching goes, in the last year only 16% of consumers switched, so 84% of the population did not. Until competition is fully established, it seems to me that people in that category deserve the Government to be on their side to ensure that they cannot be ripped off.

Energy Price Cap

Ed Davey Excerpts

Monday 3rd July 2017 Commons Chamber

[Greg Clark]

I agree with my hon. Friend. One feature of the energy market is that the poorer someone is, the larger the proportion of their income that they spend on energy. That is why it is imperative that vulnerable consumers should not be required go on the internet every few months to check that their tariff has not defaulted to a much higher one. That was the reason for my letter to Ofgem, and it is why I want its response to be vigorous. My hon. Friend is absolutely right that an aspect of the wider set of policies is to make it easier for consumers to know the price of energy and how much they consume, and smart meters are being introduced to help more people to do that.

[Sir Edward Davey (Kingston and Surbiton) (LD)]

Has the Secretary of State seen the analysis and evidence of former independent energy regulators who say that the consumer detriment pointed to by the CMA in this market was based on seriously flawed methodology? If he has not, will he look at that and report back to the House?

[Greg Clark]

I have seen that. This two-year inquiry conducted by the CMA identified £1.4 billion of detriment, which is a huge amount of money. When our constituents see the difference—it can be up to £100 a year—that they pay for a dual fuel bill by being on a dual fuel tariff, they know that that is significant amount.

The CMA said that suppliers have “unilateral market power” over their inactive customer base and could exploit their position by pricing their SVTs above a level that could be justified. That cannot go on.