Business Energy Supply Billing: Regulation

Nick Timothy Excerpts

Tuesday 1st July 2025 Westminster Hall

[Nick Timothy (West Suffolk) (Con)]

I am pleased to respond to the debate on behalf of the Opposition. I congratulate the hon. Member for Tamworth (Sarah Edwards) on securing it. She gave a serious and passionate speech about the injustices experienced by too many businesses, and I commend her campaign and encourage all small businesses to visit her website so that they can tell their stories and give their evidence.

Every Member’s speech confirmed what a significant problem this is. The hon. Member for Strangford (Jim Shannon) reminded us of the effects on our high streets. With his usual journalistic flair for arresting language, my hon. Friend the Member for Dumfries and Galloway (John Cooper) questioned Ofgem’s wide remit, which ranges from regulating careless errors, such as mix-ups between night and day meter readings leading to intimidating demands for bills as high as £18,000, to systemic failures and cynical malpractice. We need the Government to act.

Even apparently innocent mistakes come with a terrible burden for small businesses. We all know the pain and stress of the bureaucracy we have to handle when there is a problem, and sometimes that bureaucracy feels like a deliberate hurdle that has been constructed by the businesses in question. Small firms have to contend not just with high costs, but with lost time, which is a highly precious commodity for them.

We must also consider the systemic problems. The hon. Member for Tamworth mentioned kickbacks for brokers who push more expensive contracts, and she rightly asked about the powers available to deal with errant companies. I thought her comparison with fines for breaches of data laws was apposite. Will the Minister tell us when we can expect the review of Ofgem to conclude? Can we expect increases in the fines levied against companies when they fall short?

As the hon. Member for Stevenage (Kevin Bonavia) suggested, high energy costs themselves are a huge problem. It is not just about the conduct of businesses; we must explore the effects of wider Government policy, too, because no country in history has ever made itself richer by making energy more expensive. First fossil fuels and then nuclear powered the industrial and technological revolutions of the 19th and 20th centuries, and yet it is the policy of our Government to increase the price of energy and make its supply less reliable. They are defying common sense by pushing up demand for electricity with their ideological targets for decarbonising the grid and rolling out heat pumps and electric vehicles. Large-scale electrification is pushing the grid to its limits; it is already struggling to supply new homes, factories and data centres. We can clearly see the effect on energy bills for businesses.

The Climate Change Committee—an unelected and unaccountable quango against which Ministers offer little or no resistance—says the cost of electrification must be shifted on to bills for gas and oil. For years the climate lobby insisted that renewables were cheaper than gas, but now that they have to put their money where their mouth is, they want to put the public’s money where their mouth is—now that the world can see the truth, they want to transfer the massive cost of renewables on to gas bills.

The renewables obligation, feed-in tariffs and the capacity market are all direct costs to business. Environmental levies are already projected by the Office for Budget Responsibility to increase from £9.9 billion last year to £14.8 billion by 2030. Those hidden costs support the complex web of public subsidies that prop up wind and solar. Wind and solar generators are given billions of pounds in subsidies paid through green levies. Without those subsidies, most of them would not be commercially viable. The levies are not the only costs created by a dependence on unreliable renewables; customers also bear the balancing costs that are paid to generators to switch their power on and off. As wind and solar expand, those costs will triple to £8 billion by 2030.

Grid decarbonisation will create a carbon price of £147 per tonne of CO₂, which is 2.7 times higher than the current level. Ever-rising carbon prices will be locked in under the EU reset deal, which will keep us aligned with the EU emissions trading system. We already have the highest industrial energy prices in Europe. Our energy consumption fell last year by 0.1%—we were the only G7 country where that happened, apart from Japan and Germany. Despite global energy demand getting ever higher, our energy supply fell by an average of 2.1% per year between 2014 and 2024. Output from energy-intensive industries has fallen to its lowest level since the 1990s.

Decarbonisation is undoubtedly fuelling deindustrialisation. Just last week, it was announced that a facility in Teesside, one of the largest chemical plants in the country, will be permanently closed. The Grangemouth oil refinery stopped processing crude oil last April. British Steel has been brought to its knees. Yesterday, we heard the sad news about the Prax Lindsey oil refinery.

The Energy Secretary wants to blame international gas prices for our insane energy prices, when he has been throwing policy costs on to British industry to subsidise expensive and unreliable renewables. Now he says he will subsidise heavy industry to counter the cost of the renewable subsidies he is making it pay. There are countries, such as the United States, that rely much more on fossil fuels and have lower energy costs than we do. Labour is trying to con the public by blaming global prices, when it is the one that is piling on policy costs.

--- Later in debate ---

[Miatta Fahnbulleh]

We will raise the issue of deemed contracts with the regulator and the ombudsman. More broadly, my hon. Friend has raised specific concerns about the ombudsman’s approach. There is a clear complaints procedure, so if constituents feel that they have not had the service that they require, there is a process to escalate their complaint up the hierarchy of the ombudsman and consumers should use it.

My hon. Friend also raised the important issue of the Ofgem review, as did other Members. I could not agree more; we need a regulator with teeth that is on the side of consumers. As part of our manifesto, we promised to strengthen Ofgem, to ensure that it can hold companies to account for wrongdoing and require higher standards of performance, and to make sure that customers receive automatic customer compensation for poor service. To address that, in December, we launched a comprehensive review of Ofgem. We are in the weeds of that review, which will conclude in the autumn. Critically for me, the review will establish Ofgem as a strong consumer regulator. It will ensure that Ofgem is equipped to address unacceptable instances of customer failing and, importantly, we want it to reset consumers’ confidence in a system that, quite frankly, they have lost confidence in.

In response to the hon. Member for Dumfries and Galloway (John Cooper), the review will specifically look at whether Ofgem has the right remit, mandate, tools and powers to do the job that consumers expect. We want to ensure that all the examples are represented, so we have done a big call for evidence. We are doing huge amounts of engagement to make sure that all the evidence informs the final conclusions of the review. Critically, it will also look at redress, because we know that we need to get that right. The point has been made over and over again that it is about setting in place the right regulatory framework, but also about making sure that there are repercussions when compliance does not happen, and that there are clear enforcement mechanisms. We want to ensure that the regulator has all that.

We know that the cost of energy is a massive issue for businesses across the country, particularly small businesses. This issue, and the question of whether we cap energy bills for non-domestic customers, was raised by my hon. Friend the Member for Stevenage (Kevin Bonavia) and the hon. Member for South Cambridgeshire (Pippa Heylings). We have taken the judgment that the way that we respond to energy bills that are too high is to sprint in order to deliver clean power and break our dependence on fossil fuel markets so that we can drive down costs and bills for consumers. The shadow Minister is wrong: this is not and never was ideological. We have seen the worst energy crisis in a generation and our dependence on fossil fuels was at the root of that. That crisis, not on our shores, meant that businesses and consumers across the country were paying the price. That is why diversifying our energy mix, whether Members believe in net zero or not, and generating home-grown clean energy that we control are the routes out of this bind and out of volatility. That will deliver energy security for families and fundamentally secure family and business finances.

[Nick Timothy]

The Minister, as Ministers do, made a point about the volatility of gas prices. When wholesale gas prices fell and the price cap was lowered, the Labour party put out posters saying, “Labour have just cut your energy bills.” Will she accept that it was wrong for the Labour party to do that, when that fall was because of the reduction in wholesale prices and nothing to do with policy costs, which were actually increasing?

[Miatta Fahnbulleh]

My words were very clear. We welcome the reductions in energy prices, but we were very clear that we are on a rollercoaster: prices go up and prices go down. We must get off the rollercoaster so that we deliver energy security. That will deliver price stability and fundamentally secure family finances.

[Nick Timothy]

Will the Minister give way on that point?

[Miatta Fahnbulleh]

I will make some progress.

I want to end by addressing the issue of energy brokers, which has been raised. We know that many energy brokers can help businesses to save money on their bills with contracts tailored to their needs. However, we have also seen evidence of opaque charging structures and unfair sales practices. We are hugely conscious of that, and last year the Government launched a consultation on introducing regulation of third party intermediaries such as energy brokers, aimed at enhancing consumer protection, particularly for non-domestic consumers, where we have recognised that there is an issue that must be addressed. The consultation has now closed, and I can assure my hon. Friend the Member for Tamworth that the Government are working through the huge volume of responses that we received and will respond in due course.

Finally, to the hon. Members—