Energy Price Freeze
Debate between Mel Stride and Phillip Lee
Dr Phillip Lee (Bracknell) (Con)
In this debate about an energy price freeze we have heard some interesting contributions from colleagues on both sides of the House. I understand that the Opposition’s position, in effect, is to assume that the price freeze is in place and then think about what they are going to do next in the process. I have not heard about the sorts of things they would like to see in future. If the House will allow me, I would rather discuss the future than the present.
It is often said that the energy market involves a trilemma, but I tend to disagree with that principle because it implies that all the elements are equally important. For me, the cost of energy is key. Of course, security and decarbonisation matter, but ultimately energy is directly linked to GDP growth; we need only to look across the Atlantic to see evidence of that. We must concentrate on cost as our primary target. There is also an argument, which I will make, about the limits of markets. The privatisation of the Central Electricity Generating Board in the 1980s was welcome, and it brought about an increase in efficiency, but I wonder whether we are all missing a trick in not realising that there comes a point when the market can deliver no further gain and we might want to consider a different model, particularly in the supply and distribution of electricity and gas.
As I say, the primary concern must be the cost of energy. When I stood for election to the DECC Committee in 2010, more than one colleague came up to me somewhat surprised that I was going for such a “lowly” Select Committee and asking why was I not going for something interesting like health or education. I pointed out to each and every one of them that I thought energy was a key challenge for this Government, and indeed Governments to come, alongside ageing. As a doctor, I could talk all day about the ramifications of an ageing population, but I did not know that much about energy and the energy market. We are now approaching the fourth anniversary of our joining these Select Committees, and in those four years I have concluded that the complexities of the energy market in this country are quite remarkable. Although I think it is going too far to call it a cartel, certainly the public’s view is one of a sense of things acting in concert. An investigation into this market is long overdue.
The motion mentions an increase in competition, but I wonder where that would take us. An analysis of the economic profits of the energy companies shows that they are actually making losses. Centrica made an economic loss of £345 million in 2013. Yet we are expecting these companies to invest and bring private investors into the market. We must reflect on that. Although it makes very easy headlines to say that these companies are making massive profits, in fact they are not. Any profits that they make tend to be in their generation arms, not in their retail arms.
Mel Stride (Central Devon) (Con)
On the increased competition in the market that we would all like to see, does my hon. Friend agree that the suggestion that Government arbitrarily step into a marketplace and apply a blanket freeze is likely to scare off investors and be a significant brake on the very competition that we want to promote?