Prepayment Meters

Edward Miliband Excerpts

Monday 23rd January 2023 Commons Chamber

[Edward Miliband (Doncaster North) (Lab)]

(Urgent Question): To ask the Secretary of State for Business, Energy and Industrial Strategy if he will make a statement on families having prepayment meters forcibly installed in their homes by energy companies.

[The Minister for Energy and Climate (Graham Stuart)]

The Government recognise the importance of protecting customers, including those on a prepayment meter. That is why this weekend, the Secretary of State set out a five-point plan on prepayment meters. He wrote to energy suppliers to call on them to take every step to support consumers in difficulty. The Government want much greater effort from suppliers to help consumers in payment difficulty, including offers of additional credit, debt forgiveness and tools such as debt advice. Suppliers have been asked to commit to stop moving households to a prepayment meter wherever possible, and to reveal the number of warrants they have applied for in recent months, as part of a drive to increase transparency around prepayment meter installations.

There are reports that the courts are handling batches of applications for warrants, so the Department for Business, Energy and Industrial Strategy is working with Ofgem and the Ministry of Justice—I am pleased to have beside me the courts Minister, the Under-Secretary of State for Justice, my hon. Friend the Member for Finchley and Golders Green (Mike Freer)—to ensure that the process by which suppliers bring such cases to court is fair and transparent and supports vulnerable customers.

The Government have urged suppliers to take action to increase the number of vouchers being redeemed under the Government’s energy bills support scheme. We have published a list of supplier redemption rates, showing who is best meeting their responsibilities and those who need to do more.

The Secretary of State has written to Ofgem, asking it to do more to ensure that suppliers protect vulnerable consumers, including by revisiting its approach to the enforcement of supplier compliance and through the urgent publication of the outcomes of recent investigations into vulnerable customers. I will meet energy suppliers, Ofgem, Energy UK and Citizens Advice later this week to discuss these matters further. Those actions come on top of the Government’s unprecedented cost of living support, including the £400 discount under the energy bills support scheme and the energy price guarantee, which will save a typical household—on top of that £400—£900 this winter, with equivalent support in Northern Ireland.

Finally, we are considering a new approach to consumer protection. The Government will work with consumer groups and industry to consider the best approach, including options such as social tariffs, as part of wider retail market reforms.

[Edward Miliband]

I am glad that the Government have in the last few days finally woken up to the fact that we have a national scandal around prepayment meters. The question is whether their actions will stop the scandal; I fear the answer is no.

The Secretary of State could only say in his letter published yesterday that he

“would expect that the volume of…pre-payment meter installations and disconnecting households will start to subside over the coming months”.

The words “start to subside” are no comfort for the thousands more people who are facing bailiffs and being disconnected. Labour called for a ban on the forced installation of PPMs for at least the course of this winter to ensure that the Government, the companies and the regulator reform a broken system. Let us be clear that this is a broken system, with no proper criteria for what forced installation as a last resort means; no clear definition of the vulnerable; no proper clarity about the credit that should be offered to people on PPMs; no proper rules on debt repayment; and people on PPMs—the most vulnerable in our society—paying the most for their energy: a prepayment penalty.

Will the Minister answer three questions? First, would not the best thing he could do to prevent hardship this winter be to impose a temporary ban on the forced installation of prepayment meters? That is the way to protect thousands more who may fall into misery. Secondly, does he agree that, particularly in this cost of living crisis, it is quite wrong that those on prepayment meters are paying more for their energy, and will he take action to end that penalty? Thirdly, will he pledge to look at the system in other countries whereby nobody can forcibly be cut off—as we do with water in the UK—with a minimum amount of power supplied to all households?

Energy companies are forcing their way into people’s homes and millions are being disconnected by the back door. It is not enough for the Government to express regret, write letters and have meetings; only a ban will do.

[Graham Stuart]

We have today already seen a response from suppliers to the Government’s calls. We must look to be as effective as possible in effecting change now, and we believe that the Government’s calls on and engagement with suppliers, alongside that of Ofgem, is the right approach. Suppliers must exhaust—as they are required to do—all other alternatives before forcing the installation of a prepayment meter.

We, too, were once in opposition, so I understand the desire to come up with superficially popular policies, but we do not want to create a system where, in fact, more people are forced into debt, end up with bailiffs and are drawn into the court system. That is exactly what we wish to avoid. For many consumers, prepayment meters are a useful tool to allow them to manage their credit and ensure they do not get drawn into the court system in that way. [Interruption.]

If the right hon. Member for Ashton-under-Lyne (Angela Rayner) were to stop chuntering even for a moment, she would hear my response to the right hon. Member for Doncaster North (Edward Miliband), who asked me about the penalty, as he put it, of higher costs. The standing charge is a fixed charge that covers the cost of live supply, and it is controlled by Ofgem. The system, which I think was in place when the right hon. Gentleman was a Minister, is that the cost should reflect the actual cost of providing the service. Ofgem manages that, but I agree with him that this is something we should look at. That is why we are going to look at social tariffs and why we want to look at whether those costs should be socialised. This is a long-standing situation that we are seeking to address. The whole energy supply system is under stress right now because of the energy crisis, and it is right that we make moves sensibly, without perverse outcomes, to ensure that we protect the most vulnerable.

On the question of not forcibly cutting people off, I am always open to looking at these issues, but of course a lot of people will manage the way they use heat and electricity, and it is somewhat different from water. We want to ensure that we get the balance right by protecting the most vulnerable and making sure that we have a system that builds on the unprecedented protection for consumers that we brought in this winter.