Energy Price Freeze

Lord Barker of Battle Excerpts

Wednesday 6th November 2013 Commons Chamber

[Albert Owen]

I am not going to give way, as the hon. Gentleman has had a good number of interventions on that. VAT is one reason for the situation he describes.

For other things the hon. Gentleman has to look not to Europe but to his own Front-Bench team, because the ECO—energy company obligation—was introduced this January by the Government. The Prime Minister boasted that it was one of his flagships of the greenest Government ever and about how the green levies were going up, yet only last week he said he was going to change all that. The Prime Minister is making policy on the hoof—I will never accuse him of being consistent on anything and he is certainly not consistent on energy policy.

[The Minister of State, Department of Energy and Climate Change (Gregory Barker)]

Will the hon. Gentleman give way?

[Albert Owen]

Yes, I will. I hope that the Minister will give way when he is winding up, too.

[Gregory Barker]

Of course I will. Can the hon. Gentleman give me one example of when any Government Member boasted about levies going up? We may have boasted about policies, but when did we boast about levies going up?

[Albert Owen]

The Prime Minister has said numerous times on the record—I will find this and send it to the Minister—that his Government are the greenest ever and are putting on extra green levies; when he compares our schemes with the Government’s schemes he boasts that these levies are actually increasing to help on that. That is exactly what the Prime Minister has done, and I am sorry that the Minister does not understand his own Prime Minister—it is complicated at times.

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[Albert Owen]

There we are. I am sure that the Minister agrees with the Prime Minister on that, and I thank my hon. Friend. Another levy that this Government have introduced unilaterally and which has pushed prices up is the carbon floor price. It is an Osborne levy if ever there was one. Again, the Government boasted in the Budget about how they were using these levies to control companies and push up costs on business. Those who blame Europe should remember that this is in addition to the European emissions trading scheme, and that companies in Britain are paying more because of what this Government have done this year—the levy came into being in April. It is no use their blaming Europe, or previous Governments. They must take responsibility, because all our constituents are paying the price of this Government's energy policy. That is why we are having the debate today.

I want to mention small businesses, because they are suffering more than the domestic customer. Average rises for small businesses, which do not have the luxury of comparison sites on which they can switch easily, have been up to 20%. I hope that the Government—and, indeed, my right hon. Friend the Member for Don Valley (Caroline Flint)—will consider helping those businesses. They cannot absorb the cost, so they pass it on to the customers. That means that we pay for those rises.

I am a member of the Select Committee on Energy and Climate Change and we had a robust discussion with the energy companies last week. Let us be honest. We hear the Government talking about Labour’s big six, and the Prime Minister leads on that. They forget that in 1993, Sir John Major—that Marxist, who has been accused of being a red by many people for wanting to intervene in the market—set up the integrated system we have now and allowed the then big three to dominate the energy market. Let us not take any lessons about how the big six were set up. Flawed privatisation policies and the former Prime Minister’s interventions allowed the companies to be both generators and retailers. That is the situation. I know that it does not sit comfortably with the Conservative party, but it is a fact and I challenge the Minister to say otherwise.

We have talked about green levies and wholesale prices.

[Gregory Barker]

I promise the House that I will not make a habit of jumping up and down to intervene before I get the chance to wind up. Will the hon. Gentleman give a little of his speech to the 13 years in which the Labour party had the opportunity to shape energy policy? Will he defend what went on in those 13 years?

[Albert Owen]

I am certainly happy to do that. I sat on the Committee that considered the Energy Bill in 2008, which helped many places. It even helped to set up the Hinkley Point agreement that we just reached. The Liberal Democrats voted against the Bill. The Energy Act 2010 gave more powers and responsibilities to the regulator to deal with prices. I remind the Minister that we did not get into office in 2010 and I wish that he would use those powers, which he and his party supported at the time. I am happy. We enacted the Climate Change Act 2008 and we set up the Nuclear Decommissioning Authority to deal with legacy waste in our country. We have a record of which we can be very proud.

We are in the Chamber today after three years of a Government under whom we have seen rocketing prices, and all they want to do is blame somebody else. It is time the Government stood up and were accountable for their actions. The Liberal Democrats are helping them—I am not just having a go at the Tories. We need to get consumer rights, which is why I was happy to hear my right hon. Friend the shadow Secretary of State say in response to an intervention I made earlier that under a Labour Government, a new regulator would look after customers who were not on the gas mains. Switching and the reduction for those on dual fuel do not apply to lots of constituents in this country, and we need to extend the reach. I am very pleased by that commitment, because I have been asking this Government to introduce such a provision—I have asked each Minister, and there have been quite a few—and they have refused to do so.

In this country, we need a party and a Parliament that stand up for the customer—for small businesses and individuals who, year after year, not as a spike but as a trend, are being ripped off by the energy companies. It is time for Parliament to act and today is an opportunity for us to do so. I am proud to support the motion tabled in the name of my right hon. Friend the shadow Secretary of State and my right hon. Friend the Leader of the Opposition. When we are in government, we will make the changes that the people of this country deserve.

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[Toby Perkins (Chesterfield) (Lab)]

I am delighted to have the opportunity to speak in such an important debate, because I believe that today we are discussing an issue that goes to the heart of the cost-of-living crisis that my constituents are living through day in, day out. We need urgent action to address the problem and I am pleased that that is exactly what Labour proposes today.

Since the Prime Minister took office, energy bills have risen by almost £300 per family. Of course, we all know that when my right hon. Friend the Member for Doncaster North (Edward Miliband) was Energy Secretary, prices came down. During the debate, I have been saddened but also a little heartened. I am saddened because we have heard from a Government who are making it absolutely clear that they will take no action on one of the key issues facing my constituents. At a time when members of the public are calling so desperately for something to happen and we are hearing a Government who are so very much out of touch defending the status quo, I must admit that I was a little heartened to think that when we go to the next election they will have to look the electorate in the eye on the doorsteps, saying, “We were given the chance to do something, but we turned our backs on you and stood up for the big energy companies.” That heartens me very much in electoral terms, despite my disappointment about the impact on my constituents.

Opposition Members have raised an army of straw men to explain why they cannot take serious action. It is not possible for anyone who is worried about energy prices to hear the speech of the Secretary of State and believe that things would be any different under him in future than they are today or than they were yesterday. He raised the green deal. The number of people assessed for the green deal would fill Old Trafford, but the people who have taken up the green deal would not even fill the Chamber. That is the scale of the failure.

[Gregory Barker]

The hon. Gentleman is absolutely wrong. He confuses the number of people who have taken up green deal finance with the number of people who have had an assessment and installed green deal measures. Once they sit down at their kitchen table, a surprisingly large number of people—thousands and thousands—elect to take all the savings immediately and install the measures.

[Chris Ruane]

How many?

[Gregory Barker]

British Gas alone has installed more than 10,000 green deal measures for customers who have elected to install them. Some 80% of people who have had a green assessment say that they have already installed measures, are currently installing measures, or are likely to do so.

[Madam Deputy Speaker (Dawn Primarolo)]

Order. Interventions are brief. I allowed the point to be made, but that really was too long.

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[Luciana Berger]

I thank my hon. Friend for that contribution. Back in 2008, 16 areas were identified where Ofgem was not doing a proper job. The other year it was found that it had improved in only four of those 16 areas which, over that time, is frankly not good enough. When millions of our constituents and businesses up and down the country are suffering, we need a proper regulator with teeth, as well as the responsibility and ability to ensure that when there are reductions in wholesale costs, those reductions are passed on to consumers in way that is not done at the moment.

The Secretary of State was keen to talk about the green deal and the energy company obligation, which the Government have presented as a sort of quick-fix. Of course we need to do everything to ensure that we help millions of households across the country that do not have proper insulation in their homes, as that is one of the best ways to reduce bills. What the Government have proposed, however, and what they are doing on the green deal—well, the figures speak for themselves and we wait to see what will happen by the end of the year. The Minister said he would not be sleeping at night if 10,000 homes had not had a green deal package, but we wait to see the figures.

[Gregory Barker]

Well over 10,000 homes have already installed green deal measures.

[Luciana Berger]

I am referring to figures of those that have actually completed. I return to my point that we have the green deal in hand with the ECO, and thousands of people in the insulation industry have lost their jobs.

Let me mention an actual individual. Mr Sturdy in my constituency is 85 years old. He has previously had a stroke, suffered from angina, and undergone a quadruple heart bypass. He has been visited in his home three times by three separate companies purporting to help him with the energy company obligation. Separately, his energy company, SSE, said “Go to Carillion as it will help you with the energy company obligation.” He has paid hundreds of pounds to get his loft cleared and his thin insulation removed, yet all those companies cannot provide him with the insulation he needs. He has spent hundreds of pounds and his home is now less well insulated than it was before. He is facing a very cold winter and I hope the Government will address that in their remarks.

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[Tom Greatrex]

I can tell the right hon. Gentleman—[Interruption.] Sorry, I can tell the hon. Gentleman—I am promoting him; that is the regard in which I hold him—that in the period immediately after the conference speech by the Leader of the Opposition and since I have had a number of discussions with energy companies, with big suppliers, with small suppliers, with people in the supply chain, and with a whole range of people across the sector, and they have made it clear that they want a situation in which they can be trusted. They want transparency in the market. Indeed, some of the small suppliers that have been prayed in aid in speeches by Government Members have said that the most important thing is to have an open and transparent system in the energy market, which is what our reform is about. Then we will be in a position where we can have a fair debate about these issues and ensure that investment can flow, because people can understand and trust the system that will be in place.

[Gregory Barker]

Will the hon. Gentleman give way?

[Tom Greatrex]

I will not, because I am short of time, and I need to be able to respond to comments from other hon. Members.

My hon. Friend the Member for Glasgow Central (Anas Sarwar) highlighted a reluctance to address these issues and to challenge the fact that they exist in Edinburgh as much as in Whitehall. The hon. Member for Wealden referred to the rather ridiculous claims about blackouts, which were made immediately after the proposals were first outlined, and he will be interested to know that every single energy company that I have since spoken to has dissociated itself from those comments made by the trade body and, indeed, from the comments of the Secretary of State and the Minister on Twitter immediately afterwards. I am sure that he will heed the warning on Twitter that the Prime Minister issued some months ago.

The problem also exists in Edinburgh, where the only person sticking with those comments and repeating the ridiculous comparison with California in 2000 is the Scottish National party energy spokesman in the Scottish Parliament. We will stand up to those issues, because we want a market that works. My hon. Friend and constituency neighbour, the Member for Lanark and Hamilton East (Mr Hood), made an important point about the duties of government and discussed the legacy of the former Prime Minister, Margaret Thatcher. Another aspect of her legacy, Sir John Major, said a couple of weeks ago that if markets did not work and companies behaved badly, Governments stepped in. That is precisely what we are outlining in the policies that we are debating.

Another legacy of John Major was the system where the companies could integrate. Government Members referred to Labour’s big six. The Minister, the right hon. Member for Sevenoaks—I know that he was on a career break at the time, but was a Minister in John Major’s Government and has been around for a considerable time—will know that the first of those acquisitions was Scottish Power acquiring Manweb in 1995. The hon. Member for Warrington South (David Mowat), who is unable to be in his place, could not describe, when challenged, why prices have gone up. My hon. Friend the Member for Blaydon (Mr Anderson) made a related point. That is precisely why we need transparency in the market.

When SSE put up its prices recently, it tried to quantify the cause of the increase. It attributed 4% to wholesale costs, 10% to network costs, 13% to Government policy costs, 8% to VAT, which adds up to 80%, leaving 20%. That additional 20%, which was not in SSE’s press statement but was in the small print and in conversations with the markets afterwards, was to increase its profit margin. That is what is happening in the market, and not just in the case of SSE—npower did something similar. I recommend that Members who want to see just how complicated and opaque the market is read the most recent edition of Private Eye, in the City column, about the structures around Centrica and particularly the trading arm of Centrica and the way in which profits are moved around different parts of what is essentially the same company.

My hon. Friend the Member for Ynys Môn (Albert Owen), a distinguished member of the Select Committee, made the important point about ensuring that off-grid customers are protected. The hon. Member for Wells (Tessa Munt) repeated the comment from First Utility, but she neglected to mention that when interviewed on “You and Yours” a couple of weeks ago, Ian McCaig, the chief executive of First Utility, said that the most important reform needed was openness and transparency in the market. That is exactly the reform that we propose in the motion before the House.

My right hon. Friend the Member for Coatbridge, Chryston and Bellshill (Mr Clarke) has a distinguished record in the House of campaigning for the fuel poor, and indicated how long he has been campaigning. My hon. Friend the Member for Rochdale (Simon Danczuk), as well as mentioning some of the issues that he has encountered in dealing with energy companies, made the important point that the proposed measure would save small businesses £5,500 and medium-sized businesses £32,900 based on their previous bills.

The hon. Member for Angus (Mr Weir) talked about the reviews. He will know that the one announced by the Government is the 18th review since 2001. He spoke about the measures announced at the Scottish National party conference for a separate Scotland to reduce bills by £70 by moving ECO from consumer bills on to the tax bill. He neglected to mention that the pooled support for renewable energy for Scotland, which is paid across the whole of Britain, would not exist in the same form. Scotland has 8% of the population and more than a third of that support, which is spread across all the bill payers in Britain, as he well knows.

The hon. Member for Chippenham (Duncan Hames) asked me a number of questions, first about how the measures would be introduced and whether emergency legislation would be used. I am not sure whether he was present for the speech from my right hon. Friend the Member for Don Valley at the start of the debate. She made it clear that we would introduce specific legislation quickly—he might call it rapid or emergency legislation—to do one simple thing: to enable the Secretary of State for a fixed period to amend the licence conditions to allow the freeze to take place while we make the wider reforms.

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[The Minister of State, Department of Energy and Climate Change (Gregory Barker)]

We have indeed had a good and lengthy debate. We on the Government Benches relish the opportunity to debate with the Opposition our wide-ranging actions to help with the cost of living and our ambitious plans to get a better deal for energy consumers and to secure our energy future.

We heard contributions from the hon. Member for Glasgow Central (Anas Sarwar), my hon. Friend the Member for Wealden (Charles Hendry), the right hon. Member for Coatbridge, Chryston and Bellshill (Mr Clarke), my hon. Friend the Member for Stroud (Neil Carmichael), the hon. Members for Oldham East and Saddleworth (Debbie Abrahams), for Chesterfield (Toby Perkins) and for Angus (Mr Weir), my hon. Friend the Member for Chippenham (Duncan Hames), the hon. Member for Rochdale (Simon Danczuk), my hon. Friend the Member for Morecambe and Lunesdale (David Morris), the hon. Member for Ynys Môn (Albert Owen), my hon. Friend the Member for Wells (Tessa Munt), the hon. Member for Lanark and Hamilton East (Mr Hood), my hon. Friend the Member for Warrington South (David Mowat) and the hon. Members for Brighton, Pavilion (Caroline Lucas), for Wansbeck (Ian Lavery), for Edinburgh North and Leith (Mark Lazarowicz), for Washington and Sunderland West (Mrs Hodgson) and for Liverpool, Wavertree (Luciana Berger), the right hon. Member for Oldham West and Royton (Mr Meacher) and the hon. Member for Blaydon (Mr Anderson). We heard excellent interventions from my hon. Friends the Members for Ipswich (Ben Gummer), for Gillingham and Rainham (Rehman Chishti) and for Selby and Ainsty (Nigel Adams). I apologise if I do not have time to mention all the contributions.

We can sum up our mission: cheaper energy and cheaper bills. The coalition is fairly and squarely on the side of the consumer. Unlike the Labour party, we are not trying to kid the public that there is a simple, silver-bullet solution. Unlike the inertia and complacency that were that hallmark of 13 wasted years, our approach to energy is ambitious, radical, urgent, practical and, most of all, honest. We are delivering. There has been £35 billion of new investment in power generation in the past three years. The coalition is building for the future. [Interruption.] We know that the greatest help of all for consumers is to roll out ambitious energy efficiency retrofits. That is the long-term solution—something that was completely missing from the Opposition’s motion. [Interruption.] It is really interesting that they did not mention that at all. [Hon. Members: “Give way!”] We know that Labour wants to knock the green deal, run down the energy company obligation and go back to old-style—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. That is enough. Members will listen to the Minister just as they listened to every other speaker. He will decide when he wants to give way.

[Gregory Barker]

Thank you, Madam Deputy Speaker. The fact is that Opposition Members make a lot of noise because they abhor the market, consumer choice and the fantastic SMEs that are rising to the challenge. Labour wants to go back to expensive state monopolies, close the door on innovation and close the door on SMEs, and hand it all to the big six on a plate.

Sadly, as has been demonstrated in spades in the Chamber today, Labour Members, while tapping into the genuine public concern about the cost of living—a concern we all share right across this House—have responded to that concern with political trickery, cheap soundbites, and policy that, sadly, is just a con: a price freeze con. It was very telling that despite repeated questioning neither the shadow Secretary of State nor the shadow Minister could name a single independent energy supplier that supported their price freeze con—not a single one. As Member after Member has pointed out, not only do Labour Members know they cannot guarantee to deliver such a freeze, but the long-term net impact of trying to rig the market with clumsy, 1970s-style state intervention would be to hurt—

[Huw Irranca-Davies (Ogmore) (Lab)]

rose—

[Gregory Barker]

The hon. Gentleman did not actually speak in the debate.

The net impact would be to hurt the fuel-poor, to hit hard-working people, and to clobber families and pensioners on tight budgets. We are not in this for 20 months; we are in it for the long term. For the first time in 13 years, we have a Government who are planning and taking decisions in the long-term interests of British consumers.

[Duncan Hames]

rose—

[Gregory Barker]

I give way to my hon. Friend, who made an excellent speech.

[Duncan Hames]

We have heard from the Opposition that they believe that legislation would be necessary to introduce this price freeze. Even if this Government were to table such legislation tomorrow, what would stop energy companies hiking their prices before it became law?

[Gregory Barker]

They have hiked them before and they could hike them afterwards.

The long-term impact of the freeze would be to decimate investment and to drive away consumers. The very-long-term secure energy supply we are trying to build would vanish at a stroke, and the poorest and the most vulnerable would pick up the price tag. We know that Labour Members cannot freeze prices—it is a con to suggest that they can—but, as we heard again and again today, they would succeed in freezing out competition, choice and investment.

[Huw Irranca-Davies]

Will the Minister give way?

[Gregory Barker]

No, I will not.

For 13 years, Labour Members presided over the energy sector. For 13 years, they dithered and delayed over crucial investment. In the previous Parliament, fuel poverty rose every single year—something we did not hear from the Opposition Benches. For 13 years, they presided over unprecedented corporate consolidation, creating the real lasting Labour legacy—the big six. It is a cheek for Labour Members to say that we are the friends of the big six when in fact they picked their ministerial team from the big six. Is it not a fact that the leader of the Labour Front-Bench team in the House of Lords is the former head of government affairs at SSE—its top lobbyist? Labour Members are not just friends of the big six and they did not just create the big six—they recruited their team from the big six, so we will hear no more from them on that.

For 13 years, Labour Members let real competition wither while consumers were bombarded with a blizzard of tariffs that, under their watch, grew to over 400. For 13 years, they failed to simplify bills and increase transparency. For 13 years, they failed to build the foundations of a safe, clean energy future. For 13 years, they failed to build a single nuclear power station or get an agreement to do so. For 13 years, they saw Britain languish at the bottom of the European league table for deployed renewable energy. Labour Members stood by and watched British energy go bust. Now they want another go, but we have not finished undoing the damage they did last time.

[Albert Owen]

The Minister mentioned tariffs. The Prime Minister has promised this House and the country that people will be put on the lowest tariff. Will the Minister now tell the House, at this late stage, how much less they will pay for their bills under that policy—or will they go up? Which one will it be?

[Gregory Barker]

It will be different for different people, but from December people will get a much better deal out of this Government, putting them on to the cheapest tariff—something the Labour party did not do in its 13 years in government.

We continue to undo the damage that Labour did to consumers’ bills. We have taken Labour’s renewable heat incentive off energy bills, saving consumers £179. The right hon. Member for Don Valley (Caroline Flint) said in our last debate or at questions that £100 was not very much. I have to tell her that Government Members know that, for a lot of families, £100 is a great deal: that £179 on people’s bills was not welcome.

[Caroline Flint]

Did I not make the point that the way in which the Government have used green levies misses the point? The point is that wholesale prices have been flat, but the energy companies have marked up their prices and charged us more in our bills. That is what the Government should be addressing, rather than playing around and blaming green levies.

[Gregory Barker]

If that is the point that the right hon. Lady was trying to make, I accept that, but what Government Members heard was her dismissing £100 as not a great deal of money. We know that for hard-working people it is a great deal of money.

That is why we acted quickly to slash the over-generous subsidies that we inherited from the Labour party for solar and other technologies. The Labour party opposed those cuts. While we have been standing up for consumers, Labour has been sitting down with vested interests.

This debate has been dominated by the systematic demolition of Labour’s price freeze con. However, the most effective critique comes not from MPs, but from the smaller, independent generators that are keen to break into the market dominated by the big six and created by Labour. It is those new entrants that can provide real consumer choice again. They are entrepreneurs who want to compete for the business of our constituents with better prices, better offers and better service.

[Ian Swales (Redcar) (LD)]

Does the Minister think that the Opposition’s policy will make it more or less likely that the three independent power producers who want to build power stations in my constituency will invest?

[Gregory Barker]

The political risk and regulatory uncertainty that the Labour party is introducing into the energy sector is already raising the cost of capital. God forbid it was to form a Government—that would be a hammer blow to investment in the energy sector, a hammer blow to jobs and a hammer blow to consumer prices. It would spell long-term decline for the energy sector.

Labour’s lurch back to the 1970s would entrench the big six. Our vision for the UK energy market is one of fierce competition, dynamic new entrants and a far more decentralised, innovation-rich economy. Thanks to exciting new technologies, commercial, industrial, public sector, community and home generation are taking off all over the country. Although I disagree with many of the points made by the hon. Member for Brighton, Pavilion, I share her enthusiasm for community energy, which is really growing legs under this Government.

[Mr Hood]

The Secretary of State has 7,727 constituents who are over 75. The Minister has 14,080 constituents who are over 75. Can he tell us how many of them have switched?

[Gregory Barker]

No, I cannot off the top of my head. Can the hon. Gentleman name a single independent generator that supports Labour’s big freeze? Perhaps he will write to me with that information. I will write to him with the information that he has requested.

I pay tribute to my hon. Friend the Member for Wealden, who made a heavy hitting and thoughtful speech. He pointed out that Labour’s plans are already undermining investment, forcing up costs and increasing the political risks. He has estimated that the cost of Labour’s price freeze to consumers’ bills will be £1 billion.

[Christopher Pincher]

We have just heard an exchange about tariffs. Is the Minister aware that under Labour there were more than 4,000 tariffs on offer? Is it any wonder that people did not switch when they had no idea which tariff to switch to?

[Gregory Barker]

There was no real consumer choice under Labour, but we are getting it right and delivering for British consumers.

[Ms Rosie Winterton (Doncaster Central) (Lab)]

claimed to move the closure (Standing Order No. 36).

Question put forthwith, That the Question be now put.

Question agreed to.

Main Question accordingly put.