Cost of Living
Debate between John Penrose and Ed Davey
Mr Davey
The House will not be surprised to learn that I am not aware of that particular planning application. Of course I will go away, look at it and write to the hon. Gentleman.
All our policies, whether on energy efficiency, renewables, new nuclear, CCS or oil and gas, add up to the proposition that my Department is about growth. We are seeing a lot of jobs created and we will see more in the future. However, I am also concerned about the bills and the cost of energy, and how those affect our constituents and industry. We have seen global gas prices increase dramatically. UK wholesale gas prices were 50% higher in the five years to 2011 than in the previous five, and they have continued to rise since then. That is the global context. People talk about the reduced price of gas in north America, but they forget to look at the price of gas in other markets, which has gone up significantly.
We need to provide a cushion or wedge between the prices going up in global markets and the bills that our constituents have to pay, and we have several policies to help. We have direct payments, including the winter fuel payment, the cold weather payment and the warm home discount. This last goes to 2 million of the lowest income households in the UK, taking £130 directly off their bills and helping 1 million of the poorest pensioners. We are trying to promote greater competition in the retail markets through our proposals on tariff reform and the work we are doing on collective switching. We are driving competition in the retail market, which is already having an effect for those who have benefited from the collective switching.
Through the Energy Bill, we are trying to ensure that we achieve wholesale market reform, and this will no doubt be debated on Report and in the other place. We welcome the fact that Ofgem is consulting on proposals to improve liquidity in the wholesale market. We look forward to its conclusions, and they will play a part in ensuring that competition can drive lower prices. When we talk about the cushion and the wedge between the global prices and the bills that people actually pay, energy efficiency is at the heart of the solution, whether in product standards, the green deal or energy company obligation. I am pleased that we are already seeing real interest in the green deal, and a huge number of assessments have already taken place.
John Penrose (Weston-super-Mare) (Con)
I am pleased to hear that my right hon. Friend is interested in promoting competition, particularly in the retail and wholesale markets. Does he agree that there may also be significant opportunities, not just in the energy sector, but more broadly across the other utility sectors too, in reducing the infrastructure costs of the transmission network—be they wires or pipes for water, energy or whatever—using investment more effectively and efficiently and trying to regulate down those costs in a much more determined fashion?
Mr Davey
I am sure my hon. Friend is right. In a previous incarnation, I was Minister with responsibility for competition and was extremely keen to make sure that the UK had the most robust and rigorous competition regime in the world. The changes going through this House have delivered on that. I am not an expert on every single utility sector, so I will be careful about making any particular points about the water industry, or any other industry, but I am sure he is right that competition has an important role to play.
The impact of our climate change and energy policies has been to reduce household bills by 5%. By 2020, bills will be 11% less than they otherwise would have been. We know, of course, that energy prices are going up globally, but we have the policies to try to cushion people. As a result, people will pay lower bills than they otherwise would have done.