Energy Prices

Lord Watts Excerpts

Wednesday 19th October 2011 Commons Chamber

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

I am pleased to have the chance to close this afternoon’s Opposition day debate.

This year, millions of households across our country will face a cold, hard winter. In 12 months energy bills have risen by a fifth, whereas energy companies’ profits have increased by 700% in the past few months alone. Across the country, people are struggling to keep their homes warm and the lights on, as their spending power has been squeezed. As we have heard today from many Members on both sides of the House, people are having to choose whether to heat or eat.

After hours of debate today, it is clear that the Government are not taking the action we need to make bills simpler and prices fairer. The debate has shown that there is a real choice between a Government who would rather stand alongside the big energy companies than stand up for the hard-working majority, who cut support for our constituents when they need help most, who walk away when families are struggling with higher food prices and gas bills and worrying about their jobs and their children’s futures; and a Labour Opposition who are prepared to make the tough choices, stand up to the powerful vested interests of the closed energy industry, provide real help to people this winter, and take action to reform how our energy market works for the long term.

We heard in the contributions of my hon. Friends the Members for Ynys Môn (Albert Owen), for Kingston upon Hull East (Karl Turner), for North West Durham (Pat Glass), for Stockton North (Alex Cunningham) and for Islwyn (Chris Evans) how families and small businesses in their constituencies are finding it very difficult to make ends meet. My hon. Friend the Member for Scunthorpe (Nic Dakin) highlighted in his intervention the challenge of energy-intensive industries.

Businesses and households have been hit hard by the highest level of inflation ever, crippled by the Government’s rise in VAT and squeezed by energy bill increases. It cannot be right that almost a quarter of all British households now spend 10% or more of their disposable income just to keep warm. Many Members, including the hon. Members for Hexham (Guy Opperman) and for Suffolk Coastal (Dr Coffey), also identified the additional cost challenges faced by customers who live off the grid.

My right hon. Friend the Member for Wentworth and Dearne (John Healey) and my hon. Friend the Member for Glasgow North West (John Robertson) highlighted the real problem of the withdrawal of Government support. The Government are replacing the social tariffs, which provided support for vulnerable consumers, with the warm home discount, from which just one in 20 pensioners will benefit. They are leaving a gaping hole by reducing the Warm Front scheme to a third of its size but putting nothing in its place to support vulnerable people this winter, and they are reducing the winter fuel allowance by up to £100, despite promising before the election not to do so.

My hon. Friends the Members for Kingston upon Hull East and for Glasgow North West made the point that according to the interim Hills fuel poverty review, which was released earlier today, there will be 2,700 winter deaths this year as a result of fuel price increases, which is a staggering four people for each of our constituencies. This is a life-or-death issue that transcends political divides.

The hon. Member for St Ives (Andrew George) talked about the wave hub and the need to encourage renewable generation, and he is hoping for a positive outcome from the ROC review. We are, too. We share the view that if we reform the market and invest now in low-carbon energy generation, we can secure our future energy supply while creating thousands of new jobs. We know that 80% of people currently pay too much for their energy, but who does the Secretary of State blame for that? The energy companies? The bewildering array of more than 400 complex tariffs? No, he blames us, the consumers, for not switching supplier.

[Mr Dave Watts (St Helens North) (Lab)]

Is my hon. Friend aware that even when people switch, many of them find they are paying more for their tariff than they did before?

[Luciana Berger]

I thank my hon. Friend for his intervention and I shall cover that point in just a few moments.

There has been an issue with doorstep selling, which four out of the six energy companies have had to stop because it has been proven that people were mis-sold packages and were paying more than double what they were before. We know from last week’s Which? report that a third of people are not offered the best advice from their energy suppliers when they call them for advice about which tariff to switch to.

On Monday, we heard and saw all the news about the energy summit and thought that that was a great opportunity. The Government could have done something tangible to help, but all we got was more of the same. We were told to shop around, ring this number and look at that website. I looked at the DECC website to see what the exact outcome of the summit was, and it tells us:

“This winter suppliers will place a cheaper tariff signpost message on the front page of bills, encouraging customers to call their supplier or visit a website to find out if they could be saving money on their energy bills.”

We already know that many people do not have access to the internet or to websites and cannot benefit from cheaper tariffs because they do not have access to a bank account or because they are unable to secure direct debits, an issue that specifically affects pensioners. We already know that that approach does not work, but the energy summit had no outcome on simpler tariffs, improving trust, reforming the market or increasing competition. It showed an out-of-touch Government wedded to an out-of-date orthodoxy at the expense of everyone else.

In her opening speech, my right hon. Friend the Member for Don Valley (Caroline Flint) set out a very clear plan to limit energy cost increases and to support struggling households.

--- Later in debate ---

[The Minister of State, Department of Energy and Climate Change (Charles Hendry)]

I am delighted to have the chance to respond to what has been, broadly, an excellent, high-quality and wide-ranging debate. Some contributions were perhaps overly political, but for the most part they were thoughtful. That reflects the genuine concern on both sides of the House, and the fact that in every single part of the country, people are worried about fuel prices this Christmas and this winter. They want the Government and the Opposition to work together as effectively as possible to try to deal with those issues.

That is why we have said that we will not oppose the motion—I could happily have written much of it myself. The motion states that the energy market is in urgent need of reform. That is why we ignored the Labour party’s claim before the election that there was no case for reform and have started the most wide-ranging reform process of the past 20 years.

The motion refers to concerns about Ofgem’s study into prices and margins. We encouraged Ofgem to carry out that work, and it was under this Government, not the previous Government, that it was started. The motion states that

“energy tariffs are confusing and unfair”.

Everyone who has spoken in this debate has talked about the difficulty of switching suppliers owing to the complexity of the system. That is an issue on which we really want to see progress. It also calls on us “to investigate mis-selling”. We are putting that right, although it would have been within the gift of the previous Administration to have addressed it—but they did not take that opportunity. The motion asks that we apply a simple format to tariffs so that people can compare them easily. Again, that is work that we are taking forward through Ofgem.

[Mr Watts]

rose—

[Charles Hendry]

The hon. Gentleman popped in 10 minutes ago, while others have been here for five and a half hours, so I shall not give way to him.

The motion calls for the publication of trading data, but Ofgem, under this Government, have now engaged forensic accountants to untangle the accounts of the big six. It also refers to breaking the dominance of the big six, but it is this Government who have started to facilitate the process by which smaller companies can enter the market and by which power generation can be auctioned off by the major companies. The hon. Member for Liverpool, Wavertree (Luciana Berger) asked whether the Government were going to stand alongside the big six. I think that we have shown, through our actions, that we are prepared to tackle the abuses that were there when the leader of the Labour party was Energy Secretary, and we have decided to move things forward.

The right hon. Member for Don Valley (Caroline Flint) talked about the energy summit. I hope that, on reflection, people will realise that the messages from that summit are important to our constituents. No one is pretending that they are the full answer or the long-term answer, but all our constituents would be well-advised, in the run-up to this winter, to consider what they can do themselves to mitigate high prices. My right hon. Friend the Secretary of State has never said that consumers should be blamed for current high prices, but he has said that there are things that we can all do and which we should be doing. Ridiculing that, as she did, might be good politics, but it does not help her constituents. If the alternative that she is suggesting is that they should not check their bills—my right hon. Friend has said how valuable that has been—consider switching or insulate, under her suggestion, her constituents would suffer this winter.