Energy Prices and Profits

Debate between Ed Davey and Tom Clarke

Wednesday 4th September 2013 Commons Chamber

[The Secretary of State for Energy and Climate Change (Mr Edward Davey)]

I am grateful to the Opposition for providing this opportunity for me to set out the action that the Government are taking to help people and businesses keep their buildings as warm as possible and their bills as low as possible. We need to help hard-pressed people and businesses as much as possible. I will spend some time setting out how the Government are doing far more than the previous Government in helping consumers with the cost of living, especially energy bills. The debate has already been very instructive. We have begun to explore Labour’s energy policy in more depth, and it has been found wanting. The right hon. Member for Don Valley (Caroline Flint) offered up her policy proposals and thinks that we may wish to take them. Let me tell the House that we shall not be doing so.

I asked the right hon. Lady whether she believes that we need more investment in the UK’s energy sector, and she said that she does. I asked whether she accepts that investors might wish to see a return on that investment—some profit—and she was commendably clear that she believes that profit is needed. But when I asked her what she thought excessive profit—unfair profit—was, there was no answer. Yet given her motion, her speech and her press release, one would be forgiven for thinking that she had a view on what prices were fair and what profit levels were right. The problem is that it is not clear whether she wants any more competition or regulation. At times, she seemed to be advocating a wholesale re-regulation of Britain’s energy markets, with price controls—perhaps profit controls. Is she advocating price and profit controls? We need to know. What exactly is Labour proposing? If she is not proposing those, as she sometimes appears to do, we need to know how she is planning to deal with the problems she raises. [Interruption.] I am coming to the issues in the motion. The problem is that they are so weak that we do not believe they are really what she is proposing.

[Mr Tom Clarke]

The right hon. Gentleman briefly mentioned regulation. Given Ofgem’s record, is that really the sort of regulation he wants? We have seen reductions in wholesale prices withheld from consumers for a very long time and yet increases passed on to them, and a failure to ensure effective competition within the market.

[Mr Davey]

I will discuss Ofgem in detail later, so I ask the right hon. Gentleman to be patient. I do not accept his party’s position on Ofgem and I will say why not in some detail later.

Energy Policy

Debate between Ed Davey and Tom Clarke

Thursday 29th November 2012 Commons Chamber

[Mr Davey]

As my hon. Friend knows, there are eight sites in the national plan, which is quite a lot to be getting on with, but any developers of a new nuclear proposition are free to propose sites not currently listed. I know that my hon. Friend has vigorously campaigned for Dungeness to be added to the list. I think there is a letter in the post to him about that, and I will be very happy to talk to him in detail about it.

[Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)]

Despite the Secretary of State’s responses to two questions about customers, the fact of the matter is that when he referred to regulatory matters in his statement, he mentioned only industry and investors. Who will represent consumers worried about fuel poverty growing and instances of hypothermia increasing, especially as Ofgem seems to be both tepid and toothless?

[Mr Davey]

First, I worry about consumers; I made them one of my top priorities on day one in office. Ofgem has a duty to consumers, and it is working on their behalf. The Labour party wants to get rid of Ofgem, even though it is currently doing a very good job with its retail market review. The last Government were asked to simplify tariffs in order to help consumers; they failed to do so, but Ofgem has brought forward proposals on that.

Energy Market Reform

Debate between Ed Davey and Tom Clarke

Wednesday 24th October 2012 Commons Chamber

[Mr Davey]

I will come to that point, but I remind the right hon. Lady of what I said earlier. Under her party’s watch, the number of companies went down from 14 to six, so we will not listen to her too much.

Let me finish my point about switching and say why it is so important. Collective switching got going in Belgium just a few years ago, and we have now seen live, successful switches in the UK. The Consumers Association, Which?, led the way with its big switch earlier this year. It helped around 37,000 people to switch and get an average saving of £223. We have also seen smaller collective switches. Last month, South Lakeland district council was the first local authority to run a switch. Nearly 1,700 residents signed up, and early indications suggest savings that range between £60 and more than £200.

Yesterday, Oldham borough council launched its collective switch, which I attended. I did not see the right hon. Lady; perhaps she was there at a different time. That collective switch is called “Power to the people”—Citizen Smith would be proud. A wide variety of schemes are coming forward. I am already aware of eight, perhaps the most ambitious of which is Cornwall Together, in which the council, the NHS, the trade union Unison, the third sector, and St Austell brewery have come together to organise a collective switch.

Collective switching is not a silver bullet or panacea, but people are seeing how it can be part of the answer and reform the way switching works. Switching does not just force existing firms to compete more vigorously to keep customers, it enables smaller suppliers to grow their customer base faster. We know that customer inertia can be a barrier to competition, preventing new companies from getting market share, and collective switching reduces that barrier for small companies. Co-operative Energy won the big switch organised by Which?, and doubled its customer base overnight. Collective switching has the potential to be part of the way that we reshape the market.

[Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)]

I welcome the Secretary of State’s comments on community involvement and the role of local councils. Many years ago, I wrote to all six energy companies to seek their support. Some were aggressive in their replies, not least Scottish Power. Only one—Scottish and Southern—wished to participate in such a scheme. What is the Secretary of State’s experience of energy companies’ reactions to the important role he mentioned?

[Mr Davey]

I am disappointed that the companies did not respond more positively when the right hon. Gentleman wrote to them. I do not know whether he wrote to them under the Labour Government. The voluntary agreement that we managed to secure after two months in office included a commitment from the energy companies to take part in collective switching proposals. A number of the big six took part in the Which? big switch, so we have moved them and we are changing things.

A key barrier to collective switching and ordinary switching is individual bill payers getting their details to the third party organising the switch, the switching website or the new supplier. In principle, that should not be too difficult, but the evidence we have found is that it is. We have therefore started to tackle the problem. In the voluntary agreement I negotiated, the companies agreed to put quick response codes on their bills. “What,” hon. Members may ask, “is a QR code?” It is a bit like a bar code, but smarter. The QR code should make it much easier for people to provide the energy bill details needed for switching, reducing the effort people must make. I can announce to the House that we will be consulting on that and a number of other measures when we introduce our consultation on consumer bills.

The Government have gone further to reduce the hassle of switching. In another consumer project I worked on at the Department for Business, Innovation and Skills—it was called midata—we looked at other ways in which an energy company could provide the customer with the customer’s data, for example, in easy-to-use or easy-to-pass-on electronic formats. BIS is now consulting on making the midata ideas a statutory requirement. Coupled with the work of Ofgem on simpler bills, that could be a huge catalyst for helping many more people to switch.