Net Zero Emissions Target

Debate between Ed Davey and Greg Clark

Wednesday 12th June 2019 Commons Chamber

[Greg Clark]

I agree with my hon. Friend and recognise his long-standing campaigning and his contribution to creating a clean environment. In the quest to pursue the possibilities of new technologies and their research and development, I agree that marine and tidal technologies have an important role to play. Since 2010, we have made available over £90 million in grant funding, and we will continue not only to do that but, working with our universities and businesses, to accelerate the research and development that is taking place in all parts of the United Kingdom.

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

In wholeheartedly welcoming this statement, may I ask the Secretary of State to do two things? First, will he reverse the Government’s decisions to abolish the zero-carbon homes regulations, to ban onshore wind and to proceed with a third runway at Heathrow? Secondly, will he agree to meet me to discuss how we can decarbonise capitalism, particularly in the City of London? Given that the City funds 15% of global fossil fuel investment, if we can decarbonise the City, that can have a massive impact on the whole world.

[Greg Clark]

I acknowledge the right hon. Gentleman’s experience and contribution to the cross-party efforts that have been made in this area. When it comes to wind, we sometimes have to make some strategic calls, and the decision we took to provide funding and incentives for the development of the offshore wind industry has allowed it to develop to the extent that we are now the world leader, creating jobs right across the country, so it was right to champion offshore wind. He also mentions the City, and it is important to recognise the contribution and the leadership that the green finance expertise in the City of London offers to the world. The City will be extremely important in financing many of the investments that will be needed in the years ahead.

Nuclear Update

Debate between Ed Davey and Greg Clark

Thursday 17th January 2019 Commons Chamber

[Greg Clark]

That is demonstrated in my statement today. We were talking about a strike price substantially less than that of Hinkley, and I said when I made my statement to the House on Hinkley that we would do that. I say gently to my hon. Friend, who is a lifelong environmentalist, that exactly the same arguments were advanced against the initial contracts for offshore wind—namely, that they would be burdensome and that we should not enter into them. We have now seen substantial capacity becoming available at prices that will shortly be free of subsidy entirely. That is an excellent development for consumers, for the reasons that he has given, but it is also the case that the manufacturers in the supply chain are located right across the UK, which is a further industrial benefit of the strategic policy.

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

I agree with the Secretary of State that Britain has had huge success in renewables, especially with cheaper offshore wind, thanks to the Liberal Democrat policy that he has kept in place. However, I also want to express astonishment at the generosity of the offer to Hitachi. With the equity stake and the debt finance, it appears to be even greater than that offered to Hinkley Point C, yet Hitachi—like Toshiba at Moorside—is still unwilling to build new nuclear in Britain. What does the Secretary of State blame most for this setback to his nuclear strategy? Is it the fact that renewables are becoming much cheaper than nuclear, is it Japan’s fears about Brexit, or is it something else?

[Greg Clark]

I am disappointed in the right hon. Gentleman who, as a former Secretary of State, I would have thought knows the changing economics of the energy market, which I set out pretty clearly. I gently remind him that, as Secretary of State, he was responsible in his time for the negotiation of the terms of the Hinkley Point C agreement, so it is surprising to hear him being so critical of it.

The right hon. Gentleman wants to take credit for one of the policies for which he was responsible but not the other, which I might uncharitably say is characteristic of his party. As with Hinkley Point, there was a recognition that financing such significant projects—£16 billion from a private company—is hard to do through the conventional channels of private investment. It is desirable to have nuclear as part of a diverse energy mix. If I might put it this way, having a substantial mix of technologies has an insurance quality. We should recognise that, but there is a limit to what we can pay for the benefit, which is reflected in my statement.

European Union (Withdrawal) Act

Debate between Ed Davey and Greg Clark

Thursday 10th January 2019 Commons Chamber

[The Secretary of State for Business, Energy and Industrial Strategy (Greg Clark)]

I pay tribute to colleagues for an excellent debate. We have had some important contributions, and that justifies the time given to Members to state their views clearly. It is incumbent on all of us, and particularly the Government, to reflect carefully on the contributions made.

As my hon. Friend the Member for Mid Norfolk (George Freeman) said, Parliament is sovereign and

“to be elected to this House is one of the great privileges and responsibilities that our citizens can bestow.”

All of us who were elected in 2017 had a particular responsibility, knowing that we would vote on probably the most important decision that this House will take during our time in it, which is the terms of our departure from the European Union and our future relationship with it.

In that respect, this is not simply a matter for the Government, important though that is. It is for every Member to be able to shape and participate in our deliberations. That has been reflected in the contributions of many Members. My hon. Friend the Member for Mid Norfolk talked about reaching out across the House. He expressed the view that there is no majority for a disorderly no-deal Brexit, but of course avoiding that requires an agreement that the House can enter into. I say to the hon. Member for Salford and Eccles (Rebecca Long Bailey) that to take the prospect of no deal off the table is in the hands of this House: it comes through agreeing a deal.

[Sir Edward Davey]

Will the Secretary of State say how he thinks the House could best be involved in reaching a decision for the country if the Prime Minister’s deal is voted down next Tuesday?

[Greg Clark]

I will come on to describe and respond to some of the contributions that have been made. It is very important to consider the constructive contributions that many Members have made, which can, in the days ahead before the vote, be reflected in the decision that is taken on Tuesday.

In that regard, let me start by mentioning the contribution of the right hon. Member for Don Valley (Caroline Flint). She was right to say that we should be proud of the record of this House over many centuries in establishing a defence of and a commitment to the rights of workers. That gives us cause to be proud around the world, certainly in Europe. We should be determined to continue that tradition. It is fair to reflect that this has involved Governments led by her party and Governments led by my party. The Labour party introduced the minimum wage and the Conservative party introduced the national living wage. Going back to previous generations in Parliament in different centuries, this House has always taken an active view in these matters. The amendment that she and her hon. Friends have tabled is entirely in accordance with that. Far from, as my right hon. Friend the Member for Newbury (Richard Benyon) put it, involving a ceding of those decisions to the European Union, what is attractive about the contribution that has been made is that it firmly gives to this House the opportunity to make a sovereign decision on how we want to act on the opportunities that might exist to constantly upgrade and strengthen workers’ rights. That should be something that is open to us.

The hon. Member for Bassetlaw (John Mann) made a powerful speech and a notable contribution. He said that the time for rhetoric had gone and that the time for negotiation had come. I think that that is a way in which we can proceed and his contribution was consistent with that. He was determined to avoid no deal by accident, which a majority do not want. Again, he reflected on the fact that the Trade Bill, as well as the motion before the House, will give very significant power to this Parliament to shape the ongoing relationships we have with other countries. He made references to the importance of exercising the authority of this House to ensure that all parts of the country, including those whose communities have not felt advantaged by our membership of the European Union and the conduct of the economy over decades past, are heard and recognised as they deserve to be. I will come on to say something more about his amendment in a second.

In the same spirit, my right hon. Friend the Member for Newbury very powerfully made the point that compromise is a virtue and something to be prized in this House. He also made the point that the mandate for compromise reflected in the narrowness of the result—even though it clearly indicated the preference of the population to leave—should be reflected in our deliberations.

The right hon. Member for Knowsley (Mr Howarth) emphasised the important point about our proximity to our trading partners in Europe and reflected on the fact that if we want to engage in good and close trading the relationships, as all Members do, it makes sense to think very clearly about how we can do that with those who are geographically closest to us.

My right hon. Friend the Member for Wokingham (John Redwood), who has over many years given much thought to these matters, nevertheless set out a case that I could not agree with. I hope that I do not mischaracterise his contribution, but he asserted that we should be aiming for greater national self-sufficiency in certain of our trading relationships. He mentioned foodstuffs. I am a proud Kent MP—some of the produce of Kent, as my hon. Friend the Member for Rochester and Strood (Kelly Tolhurst) will attest, is among the best in the world—but to aim for a model of national self-sufficiency while failing to recognise, as David Ricardo did all those centuries ago, the benefits to all if we concentrate and specialise is not something that we should embrace.

My hon. Friend the Member for Cheltenham (Alex Chalk) reflected on the economic benefits of the deal and how they would benefit his constituency. The hon. Member for Salford and Eccles talked about business having a gun to its head. Not at all! Many businesses and business organisations campaigned for remain during the referendum and yet have recognised that what the Prime Minister has negotiated is a settlement that would allow them, and therefore our constituents, to continue to prosper.

[Greg Clark]

My preference is to be part of the arrangements that we benefit from now in terms of our manufacturing industry, but as a general proposition I believe that we should be engaged in reducing tariffs. Part of our contribution to the EU has been that we have been probably the foremost advocate in Europe for the reduction of tariffs. That would be a good thing.

[Sir Edward Davey]

Could the Secretary of State tell the House what David Ricardo had to say about non-tariff barriers, which are the main issue in trade agreements today?

[Greg Clark]

The right hon. Gentleman reflects the reality of trade today and in the time of Ricardo, which is that it is not simply about the tariffs, but about the arrangements and impediments we put in place. Again, that is one of the important parts of the agreement we have entered into.

I wanted to mention the right hon. Gentleman’s speech and from the Dispatch Box associate the whole House with his reflections on a previous Member, Paddy Ashdown, who I understand was buried in Somerset today. He would no doubt have made a fine speech in this debate, and the right hon. Gentleman was right to make reference to him.

My right hon. Friend the Member for Ludlow (Mr Dunne) made the point again—this was a theme of the debate—about the need for compromise and support in securing an orderly withdrawal, and he reflected on the fact that our debates and their conclusions are watched by businesses and boardrooms around the world. It is important that we live up to the reputation we have long enjoyed in this country as a dependable place in which to do business—a country where we come together and take pragmatic decisions and offer that confidence to the world.

My hon. Friend the Member for Rugby (Mark Pawsey) emphasised the point that when businesses do well, workers do well and pensioners do well. Workers’ rights are a theme of the debate, and we need that prosperity in order to advance our constituents’ circumstances. That is something that Mrs Thatcher was particularly alive to. My hon. Friend referred to her pitch to Japanese investors in the early 1980s, and on the day on which the Prime Minister of Japan is visiting Downing Street, it is appropriate to recall that Mrs Thatcher made the case to Nissan, Toyota and Honda that this country was skilled, innovative, flexible and able to command markets across Europe. That is as true today as it was then.

My hon. Friend the Member for Bromley and Chislehurst (Robert Neill) reflected on taking a pragmatic view. He campaigned very vigorously to leave the European Union—

Nuclear Power: Toshiba

Debate between Ed Davey and Greg Clark

Monday 12th November 2018 Commons Chamber

[Greg Clark]

We have a substantial pipeline of new energy projects, as a number of hon. Members have made clear. When it comes to the Moorside site in Cumbria, it was always available to developers to leave it. It will now revert to the Nuclear Decommissioning Authority. It will be open to developers to come forward to make proposals. However, whether with nuclear or other sources of clean power, we have a substantial pipeline of new projects coming forward to add to our energy supplies.

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

When I was doing the Secretary of State’s job, there were plenty of such setbacks and delays to new nuclear, and they really worried me. I was worried about how we would keep the lights on in the 2020s and 2030s, given that the forecasts were reliant on so much new nuclear, so I looked at contingencies, particularly tidal lagoon power. Will he now reverse his views on tidal lagoon power and look at it quickly, because it can provide the firm reliable power that new nuclear offers and be built much more quickly than a new nuclear power station?

[Greg Clark]

The right hon. Gentleman is correct in noting that the scale of such projects means the companies proposing them need to have a plan that is financeable and, in this case, a source of technology that is available. I repeat what I said at the beginning, which is that the Westinghouse subsidiary of Toshiba went into chapter 11 bankruptcy. On the tidal lagoon project, I am in favour of diverse sources of energy—that is clear—but we have to recognise value for money for taxpayers and consumers. The Swansea tidal lagoon proposal was so far off being able to be financed that it was not value for money for either the taxpayer or bill payers.

Oral Answers to Questions

Debate between Ed Davey and Greg Clark

Tuesday 16th October 2018 Commons Chamber

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

8. What recent assessment he has made of the effect of business rates on the viability of small businesses.

[The Secretary of State for Business, Energy and Industrial Strategy (Greg Clark)]

The small business sector is thriving. We have 5.7 million small and medium-sized enterprises, and we are ranked in the top 10 in the world for ease of doing business. As the right hon. Gentleman knows, the Government have taken significant action on business rates in each of the last three Budgets, including £9 billion of support announced in 2016, making sure that nearly two thirds of a million small businesses pay no rates at all.

[Sir Edward Davey]

Small retailers across Kingston and Surbiton have been hit by a combination of high rises in business rates and unfair competition from online retailers, who too often escape taxation. Will the Secretary of State talk to the Chancellor before the Budget, and to European colleagues before Brexit, to agree a new tax for internet retail, using the proceeds to slash business rates and save our high streets before it is too late?

[Greg Clark]

When the right hon. Gentleman was a Minister in the Business Department, he took part in a decision to defer revaluation, for reasons that he understands. I accept the point—it has been made strongly by the Retail Sector Council—that reflecting the contribution that high street businesses make to their communities is a significant need. As business rates are reviewed, that is one of the council’s recommendations that we will take forward.

Energy Policy

Debate between Ed Davey and Greg Clark

Monday 25th June 2018 Commons Chamber

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

I was Secretary of State for Energy when the tidal lagoon story began, so may I tell the current Secretary of State with responsibility for energy that his statement is wrong, wrong, wrong? The evidence that the price of future tidal lagoons would fall dramatically after the first lagoon at Swansea is overwhelming. That was exactly what happened with other renewable technologies, including offshore wind, as he has admitted. Will he promise the House today that he will publish every scrap of evidence and analysis that he has used to take this decision, and hold a debate in Government time on that analysis and evidence?

[Greg Clark]

The right hon. Gentleman will see from the analysis, and indeed from the conclusions that Charles Hendry and others have pointed to, that the technology inherent in the construction of the lagoon programme—whether building sea walls or the turbines—is not subject to the same degree of cost reduction as other energy technologies. We will be very open about this and publish whatever is not covered by a non-disclosure agreement with the companies concerned. He is, of course, welcome to scrutinise that.

Nuclear Power

Debate between Ed Davey and Greg Clark

Monday 4th June 2018 Commons Chamber

[Greg Clark]

Of course, the opportunities for Wales follow from exactly the point that my right hon. Friend the Member for Sevenoaks (Sir Michael Fallon) made. The knowledge of the investment that will be made there provides great opportunities for people in north Wales and beyond to develop the skills that will be in high demand and to ensure that the engineering companies and other suppliers can gear up for this important work. Before I came to the House today I discussed the matter with the First Minister, and my right hon. Friend the Secretary of State for Wales spoke to Ken Skates, the Cabinet Secretary for Economy and Transport. We will work closely together to ensure that across Wales and, indeed, the United Kingdom, these opportunities result in real jobs and prosperity for the people of Wales and the UK.

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

The Secretary of State knows that there have been two major revolutions in electricity since Hinkley Point C was initially agreed to: a dramatic cost reduction for large-scale renewable power and huge advances in storage technology. Given that renewables and battery storage will soon offer cheaper and more flexible security of supply than nuclear, where are those two historic shifts in electricity technology in his decision today?

[Greg Clark]

The right hon. Gentleman makes the very important point that we have seen progress in renewables and that we are seeing progress in storage. Today, nuclear provides just over 20% of the electricity we consume and wind provides 5.5%. My view is that we should have diversity in our energy supply—the wind will not supply all our needs every day. His point about storage technology is correct and he knows from the industrial strategy that we are investing in its development, but it is not at the stage where it can offer the reliable baseload power that nuclear, which supplies 20% of the UK’s electricity, offers now. That is a very important part of the mix.

Oral Answers to Questions

Debate between Ed Davey and Greg Clark

Tuesday 12th December 2017 Commons Chamber

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

It is good news that the Prime Minister is attending President Macron’s summit on climate change in Paris today, but may I warn the Secretary of State that President Macron is positioning Paris as the world’s leader in green finance? To tackle that threat and to protect London, Ministers must back the Bank of England’s taskforce on climate-related financial disclosures and bring in new mandatory corporate requirements on fossil fuel assets.

[Greg Clark]

Britain leads the world in climate finance, and one of the major contributions the Prime Minister and the Minister for Climate Change and Industry are making is in promoting the availability of green finance in the UK—that includes Edinburgh as well as London. That is getting a very good reception.

Budget Resolutions

Debate between Ed Davey and Greg Clark

1st reading: House of Commons
Tuesday 28th November 2017 Commons Chamber

[Greg Clark]

I am happy to talk to the hon. Gentleman. He will know that we work closely with the life sciences sector. The industrial strategy published yesterday included an important life sciences sector deal in which all the companies are working closely with each other, local institutions, local leaders and the Government. I am happy in that context to meet him and have those discussions.

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

The Secretary of State talks about giving certainty to businesses and investors. Does he agree that the contracts for difference regime can be used to bring in zero-subsidy CfDs to give real certainty to people wanting to invest in our renewable energy? Will he commit to considering the case for zero-subsidy CfDs?

[Greg Clark]

Contracts for difference have brought down the price of renewable energy substantially. We have commissioned a review from Professor Dieter Helm—I know that the right hon. Gentleman knows him well—which has reported, and we will make our response to it. It would be wrong to pre-empt our consideration of that, but I hope that the right hon. Gentleman and others will give their thoughts on the Helm review. We have launched a consultation on that, as he knows.

Smart Meters Bill

Debate between Ed Davey and Greg Clark

2nd reading: House of Commons & Money resolution: House of Commons & Programme motion: House of Commons & Ways and Means resolution: House of Commons
Tuesday 24th October 2017 Commons Chamber

[Greg Clark]

I am grateful to my hon. Friend for that, and he is absolutely right in what he says. If we want to have a fully smart grid, the more people that avail themselves of that the better. When members of the public share his enthusiasm, it is very important that they should be given the chance to have a smart meter.

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

Will the Secretary of State explain why the roll-out of the second set of smart metering equipment technical specifications—SMETS 2—has been so delayed? I understand, probably better than most Members, the frustration he will feel about the delays to the smart meter programme. Is not the concern that suppliers are going to fit lots of SMETS 1 meters, which will be a barrier to competition and reduce the benefits of the smart meter programme to consumers?

[Greg Clark]

I am grateful to the right hon. Gentleman for raising that concern. He is absolutely right that in moving towards a fully smart system we want full interoperability, which is what SMETS 2 achieves. It has been tested and will be rolled out from July next year. The key point is that those who have a SMETS 1 smart meter will be able to access the software upgrades that will provide that interoperability. That is an important aspect of the roll-out and I am pleased to confirm it to him.

[Sir Edward Davey]

I am grateful for that clarification, because it may put some minds to rest if they know that the software upgrades will be available. There is a danger that many suppliers, be they one of the big six or others, see the roll-out of as many SMETS 1 meters as possible as a way to stop competition and lock in their consumers. That should really worry everyone in the House. Has the Secretary of State weighed up the benefits of ensuring we have more competition through the roll-out of SMETS 2 meters against the obvious downside of delaying the 2020 deadline?

[Greg Clark]

Yes, I have. Again, I am grateful to the right hon. Gentleman for asking that question. It is essential that the upgrade is available so that the smart meters that are installed under the SMETS 1 standard will be operable under the SMETS 2 standard. That has been a key part of the development and testing for exactly the reason he mentioned.

Smart metering upgrades the interactivity of the energy system in general. One big advantage of it is that if the system is fully interactive, less unneeded generating capacity needs to be invested in, with consequent savings to consumers. Even in the initial operation, it is estimated that by 2020 consumers can make net savings on their household bills to the tune of £300 million. In addition to the bill savings, smart metering will deliver benefits to the energy industry and to the economy more widely. It seems to me to be essential that if we want to plan a prosperous future, building on our strengths, this country should be the place in the world that can best integrate renewable energy and battery storage—not least in electric vehicles—with the consumer. Smart metering is an important element of that.

[Greg Clark]

Yes, and it is important that all consumer groups should be able to access the benefits, including lower bills. That has been an important requirement, and the Bill addresses it by extending the necessary powers to ensure that we have the regulatory ability to insist that the roll-out goes to all consumers and is not restricted to the more affluent.

[Sir Edward Davey]

I am grateful for the Secretary of State’s answer to the hon. Member for Coventry South (Mr Cunningham). Is he trying to ensure that suppliers roll out smart meters to prepayment customers as soon as possible? The benefit of smart meters to those on low incomes who use prepayment is that some of the extra costs associated with prepayment go.

[Greg Clark]

The right hon. Gentleman is right: we especially want to extend smart meters to those on prepayment meters and those who might struggle to afford their energy bills, because the benefits of the savings are disproportionately better for them.

--- Later in debate ---

[Greg Clark]

My hon. Friend again makes an excellent point. Companies are under an obligation to offer households a smart meter by the end of 2020, and these powers allow the Government and the regulator to hold them to their licence conditions in so doing. If he gives me the details of the particular supplier to which he refers, I would be happy to take up that case.

The powers are due to expire on 1 November 2018, so the Bill extends them for five years. An extension of the powers is necessary in order to ensure the successful roll-out by the end of 2020, and to maximise the benefits accruing to consumers during and after the end of the roll-out.

Clauses 2 to 10 introduce a special administration regime to ensure continuity of the smart meter continuation service currently provided by the DCC. Special administration regimes are common—in fact, typical—in network companies. They are primarily designed to guard against the DCC going insolvent due, for example, to cash-flow problems if one or more of its energy supplier customers were unable to pay its charges.

The DCC licensee is deliberately designed to have limited financial assets of its own to avoid the cost of holding large capital reserves, so it relies on timely and full payments from energy suppliers to meet its own contracted obligations to its subcontractors, which provide the communications network. If, for some reason—we regard this as being very unlikely—one or more of its larger customers did not make payments, there are provisions in the smart energy code to allow it to make emergency charges on other suppliers. If these emergency charges also went unpaid for some reason, there would be a theoretical risk that it could go into administration and cease service, so the special administration regime allows the Secretary of State—or Ofgem, with the Secretary of State’s approval—to apply for an administration order to be made in relation to the smart meter communication licensee. Such an order would direct that, while it is in force, the affairs, business and property of the company are to be managed by an administrator appointed by the court.

The aim of the special administration regime is to ensure that the functions of the smart meter communications licensee, under its relevant licences, are performed efficiently and economically, pending the company being rescued or its business being transferred to another company. In the unlikely event of the DCC’s insolvency, fundamental services may be disrupted. Therefore, it is prudent to have safeguards in place, as with other network operators, such that its continued operation is protected. This special administration regime is standard practice in the energy sector, and these powers are based on similar regimes that have been introduced—for example, for networks and suppliers.

The Bill allows the Government to continue to progress with the important goal for the national economy of delivering an energy system across the country that is smarter and more flexible.

[Sir Edward Davey]

I am grateful to the Secretary of State for giving way, and I know that he is on his peroration. One big policy issue is the interrelationship between the smart meter roll-out, with the 2020 deadline, and the energy price cap he has proposed. How does he see those linking together? Does he see the price cap going once all smart meters have been deployed?

[Greg Clark]

The draft Bill the Select Committee is going to scrutinise means that there would be a temporary price cap while the current uncompetitive conditions in the market continue. As we have discussed, one of the major advantages of the smart meter programme is that it corrects the imbalance of information between consumers and suppliers, and that is something Ofgem will want to take into account in deciding when to lift that price cap. So the connection with smart meters is very important.

The Bill is an important step in making sure we have one of the smartest, most flexible energy systems in the world, enabling us to take advantage of new technologies while at the same time delivering benefits for households and small businesses. I commend the Bill to the House.

Retail Energy

Debate between Ed Davey and Greg Clark

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

Debate between Ed Davey and Greg Clark

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.