Energy Prices

Patricia Gibson Excerpts

Thursday 16th March 2017 Commons Chamber

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

I am delighted to be a co-sponsor of this debate, and I am grateful to the hon. Member for Weston-super-Mare (John Penrose), the right hon. Member for Don Valley (Caroline Flint) and, indeed, the Backbench Business Committee, for enabling it to take place. As has been pointed out—this is one of the disadvantages of speaking so far down the list—this debate is long overdue. Ultimately, it is a debate about how we can empower consumers, as they too often face injustice in relation to energy prices.

We know that average annual domestic gas and electricity bills in Scotland increased by up to 114% and 50% respectively between 2004 and 2015, but the price that consumers pay varies, depending on their method of payment, and the consumer does not always have control over their method of payment. On average, electricity and gas consumers across Scotland using standard credit and prepayment meters face bills that are approximately 10% higher than for those able to use direct debit. The cost of a unit of gas is similar across Scotland and the rest of the British energy market for domestic consumers, but the unit price of electricity differs considerably within Scotland. Consumers in the north of Scotland pay on average between 8% and 9% more per kilowatt-hour of electricity, depending on payment type, than in the rest of Britain.

The big six energy companies supply gas and electricity to over 50 million homes, with a market share of 85% of UK domestic customers. Last year, the Competition and Markets Authority completed a two-year inquiry into the energy market, and the hope is that costs can be driven down by increasing competition between suppliers and helping more customers to switch to better deals. However, as we have heard, there is a problem. The Competition and Markets Authority has found that the

“vast majority of people don’t switch providers”,

and, even worse, that 70% of all big six customers are on the default standard variable tariff, which means that 16 million homes are paying more for their energy than they should. As the hon. Member for Weston-super-Mare pointed out, loyalty is treated as something to be exploited, rather than rewarded. The premium that standard variable tariff consumers pay over those who switch has tended to increase over time. In 2008, it was less than £100 each year, but by mid-2015 it stood at £330, and it currently stands at about £230. In all that time, rates of switching are no higher, so clearly, as the motion sets out, the way to protect consumers cannot be done simply by encouraging them to switch suppliers; much more is required.

Consumers on standard variable tariffs are much more likely to be older, disabled, on low incomes, living in rented accommodation and without internet access. Those on standard variable tariffs did not see their bills fall by much when the cost of providing energy dropped in 2014-15. Such savings as were available were passed on only to consumers who were active switchers. Not all consumers can engage in the switching process, so clearly suppliers need to do more to ensure that these customers are not trapped in poor deals.

The existing market provides scope for households to save money on their energy bills by switching, but a low level of consumer engagement in the market still persists. Indeed, the Competition and Markets Authority found in its investigations that one of the main issues is

“a lack of engagement in the markets on the part of many customers which suppliers are able to exploit by charging high prices.”

Some 34% of domestic energy customers had never considered switching supplier, with 56% saying they did not know if it was possible or did not know if they had done so in the past. In the context of this debate, I want to draw attention to one issue of concern. Switching can take up to 21 days, which is a considerable period. A consumer thinking about switching may be concerned or fear that something will go wrong during that extended period, for which I do not believe there is sufficient justification.

One result is that energy is becoming increasingly unaffordable for consumers. Between 2004 and 2014, average annual domestic gas prices rose by about 125% in real terms. Significantly, consumers who are engaged in the market are typically higher income earners who have access to both a mains gas supply and the internet, so they can carry out comparison shopping much more easily, and they can of course pay by direct debit. This is yet more evidence that the way to protect consumers is not simply to encourage them to switch suppliers.

Energy efficiency measures are important, as we have heard. The Scottish Government have done a lot of work on that, and they are driving down fuel poverty, although it still remains stubbornly high. Ultimately and fundamentally, however, we need effective regulation of the retail energy market, and we need to work collaboratively with energy suppliers to explore ways of helping low-income households with their energy bills. We need a market that works equally well for all energy consumers, regardless of where they are on the income scale.

It will be important to monitor closely the widespread review that Ofgem is currently undertaking of its consumer regulation framework. Given what we have heard today, there must be a case for the safeguard tariff—the limit on the amount prepayment customers are charged—to be expanded to include consumers on the standard variable tariff who are eligible for the warm home discount on a credit meter. It is also important for the Government to set targets for suppliers to reduce significantly by 2020 the number of customers on standard variable tariffs. If suppliers cannot or do not meet these targets, consideration must be given to broadening the safeguard tariff to protect other standard variable tariff customers. I would very much like the Minister to address these issues today.

Just because consumers, who very often are vulnerable, are not able to negotiate the process of switching does not mean they should be left at the mercy of a market that punishes them for it. Energy is an essential utility and much more must be done to protect those who are currently very poorly served and overcharged. I think we all agree that doing nothing is not an option. I hope the Minister addresses the concerns that I and others have raised today, and reassures the House that he is protecting consumers and putting energy companies on notice that things cannot and must not continue in the same way as they have been.

Draft Claims in Respect of Loss or Damage arising from Competition infringements (Competition act 1998 and other enactments (amendment)) regulations 2017

Patricia Gibson Excerpts

Wednesday 22nd February 2017 General Committees

[The Chair]

Ms Gibson.

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

rose—

[The Chair]

Please sit for a moment. It is normal and acceptable etiquette always to let the Bench know before a debate if you are going to represent your party and want to speak. Failing that, it is acceptable and appropriate to rise to catch the eye of the Chair—you should have been called before the Opposition spokesman. Peering gently and shyly at me is not a way to let me know you want to speak. In May, it will be two years since the general election and it would be appropriate if members of your party began—I have to make such remarks in almost every Committee—to abide by the acceptable rules of debate.

[Patricia Gibson]

Thank you, Ms Dorries; I apologise. I have served on such Committees before, but have always just caught the Chair’s eye. As you say, that is perhaps not the way to do it.

I am pleased that in the drafting process for the statutory instrument the Department for Business, Energy and Industrial Strategy liaised with the Scottish Government, among others. Members of the Committee would all agree that consumers and businesses should not be disadvantaged by businesses that choose to operate in an anti-competitive manner. It is important that if that happens those affected should be able to claim damages to cover the amount they have lost as a result of that behaviour. The reforms to the Consumer Rights Act 2015 were welcome improvements to such access to redress. My question to the Minister is simple and short. Will she explain the implications of the decision to leave the EU for the UK Government’s understanding of EU competition law?

Smart Metering: Electricity and Gas

Patricia Gibson Excerpts

Thursday 9th February 2017 Westminster Hall

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

Thank you, Mr Turner, for calling me to speak, and I also thank the hon. Member for South Basildon and East Thurrock (Stephen Metcalfe) for introducing this debate.

I have always been very supportive of the programme to install smart meters. I always believed that smart meters gave consumers control over, and information about, the energy they are using, in near to real time. Smart meters enable the transmission of readings for the amount of gas or electricity being used in each property, as well as the transmission of information from suppliers to consumers, such as current tariff rates. What could possibly go wrong? An in-home display, or IHD, connects with the smart meter and shows consumers exactly how much their bills will be. The Government’s smart metering implementation programme requires energy suppliers to offer 53 million meters to homes and small businesses in Great Britain by 2020. For all these reasons, I was always very supportive of this initiative.

I had understood that high levels of satisfaction with smart meters had been recorded and that consumers were using the technology to help them to gain some control over their energy consumption. I believed that smart meters supported households as they tried to change their behaviour and conserve energy, which would be good for the environment as well as the purse.

Smart Energy GB found that 82% of smart meter users had taken at least one step to use less energy, that 80% of smart meters were checking their IHD regularly and that 81% of users said they would recommend smart meters to other people.

Smart Energy GB’s campaign seemed to be creating a positive shift in the levels of understanding of smart meters and the propensity to have them installed. Research suggested that the number of people who understood in detail what a smart meter was, what it did and what it could do had risen to 33%, and of those people 71% said that they would be interested in having a smart meter installed if they did not have one already.

However, like the hon. Member for South Basildon and East Thurrock, who spoke before me, I have learned—with some concern—that the Science and Technology Committee has found that the Government do not appear to be clear on the benefits of smart meters. The Government listed 11 different objectives for the project, including saving customers money on energy bills, and yet the amount of money saved by individual consumers is, it seems, expected to be small.

The Committee’s report said that the Committee would continue to monitor the implementation of the smart meter programme. I am very interested in longer-term monitoring of it, because the contradictory pictures that are emerging are confusing for consumers. I have been deeply alarmed by some of the findings of the report, which has pointed out that the cost of providing smart meters, some £10.9 billion, is being borne by consumers through their energy bills—an average of £215 per home, including installation costs.

Concern has also been expressed that the smart meters currently being installed are not of the highest specification in terms of function and data security. Indeed, the Committee took evidence that

“the smart meter network is being installed before its requirements as an Internet-connected energy system have been fully determined”.

In addition, in March last year the Financial Times reported that GCHQ had “intervened” in smart metering security and that the agency had discovered glaring loopholes in meter designs. That poses real questions, and consumers need to be reassured that their data and security are robustly protected in the course of this roll-out.

In Scotland, the priority of the Scottish Government is to press the UK Government to ensure that the programme is delivered to the greatest number of Scottish consumers at the lowest possible cost, while enhancing the benefits to the most vulnerable in our communities and those at risk of fuel poverty.

Concerns have also been addressed that the smart meter roll-out may be hindered by a lack of focus and clarity about its purpose. At the heart of this programme, we need consumer satisfaction and a genuine, hard commitment to tackling fuel poverty. If the documentary referred to by the hon. Member for South Basildon and East Thurrock is correct that the biggest beneficiaries of smart meters are the power companies themselves, that would be most alarming.

Of course we want consumers to be more energy wise, to be more informed and to have greater control over their energy use, and we want to use all the means at our disposal to tackle fuel poverty. However, this report by the Science and Technology Committee on the costs and benefits of smart meters for consumers can only be described as alarming. It is to be hoped that the recommendations of the report are acted upon as soon as possible.

If smart meters genuinely empower consumers, help them to save money and help to tackle fuel poverty, we await longer-term independent analysis, which will help to illustrate these things unequivocally. I hope that analysis is forthcoming. Consumers are waiting; we are all waiting.

Backbench Business

Patricia Gibson Excerpts

Thursday 17th November 2016 Westminster Hall

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

I thank the hon. Member for Luton North (Kelvin Hopkins) for bringing the debate forward. I really wanted to speak in the debate because I recall the round of post office closures in 2008 and 2009. I remember going door to door with others gathering hundreds and thousands of signatures on a petition to save local Crown post offices in towns around what came to be my constituency. That was done in response to the anger and despair so many felt about the closure of the local Crown post offices. I remember speaking at public meetings when I encountered at first hand the sense of resignation felt by too many people that what they wanted and their community felt it needed was simply not valued—it did not matter to the powers that be. In the event, five vital and much-beloved post offices were closed.

We often hear politicians talking about community—how it is important, how it matters and how it should be valued. It should also matter when a community comes together to express its concern about a valued asset, the local Crown post office, which in so many ways is the beating heart of a community, if not one of its ventricles. Post offices provide a lifeline: they are the lifeblood, even, of our communities. That is even more true of our rural communities. For such communities, post offices boost their diversity and resilience as well as protecting jobs and customer service.

The decline of the Crown post office is a matter of great sadness. Over the years, this trusted institution on our high street—perhaps it is the most trusted institution on our high street—has been stripped of too many of its functions. That is despite its highly trained staff and its perfect position to provide banking and other services. However, instead of modernisation, increasingly we see decimation.

More and more services are being outsourced to retailers such as WHSmith, with that chain installing its wee counters at the back of its stores, meaning poorer service as well as the loss of a beloved community asset. WHSmith and other outlets do not want to match the terms and conditions that the Post Office offers its employees. Even if it did, the income that the post office counters offer those retailers would not cover that cost, so there is now the absurd situation of the Post Office using tens of millions of pounds to pay off long-serving staff, so they can be replaced by part-time workers on the minimum wage, which has led to uncertainty and understandable industrial unrest across the whole network.

The Scottish National party firmly opposed the privatisation of Royal Mail. However, at the time it was privatised the UK Government said that the Post Office would be kept wholly in the public sector. Instead, a new 10-year deal with WHSmith to relocate yet more post office branches into those stores was announced. Will the Minister tell us where this is leading? Will she give us assurances that the promise to keep post offices in public ownership will be honoured?

Franchising is quite rightly viewed as soft privatisation, and the Minister needs to address that point to reassure Members. We need to know that our post offices have a future, and that that future is in the public sector, as promised. We need a plan for our post offices, and we could do worse than explore the measures France undertook for its post offices when it established La Banque Postale— excuse my pronunciation. Alongside those problems, we have seen high street banks gradually withdrawing and retreating from our high streets, so that must be a reasonable option.

Like in France, our post offices could make a plan to grow revenues in areas such as financial services, with which France has had huge success. Our post offices need not be in managed decline, and I am very interested to hear the Minister’s response and how she views the future of what remains of our post offices, which are community assets held in deep affection, and how they can be secured.

Living Wage

Patricia Gibson Excerpts

Thursday 3rd November 2016 Commons Chamber

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

I thank and congratulate the hon. Member for Mitcham and Morden (Siobhain McDonagh) on bringing this debate forward.

We are celebrating Living Wage Week, which is about raising awareness of the vital need for all those who go out to work to earn enough to meet the cost of living and to applaud those employers who have signed up to this scheme, committing to pay their staff the living wage. Of course I am talking about the real living wage of £8.45 an hour, which has just come into effect. It is not the same as the UK Government’s “pretendy” national living wage, which is set at £7.20 for people over the age of 25.

The national living wage relates to average earnings, not living costs. Therefore, it should not be called the living wage and it is disingenuous to call it so. By contrast, the living wage is calculated according to the basic cost of living and so takes account of adequacy of household incomes for achieving what everybody should aspire to have—an acceptable minimum standard of living. It cannot be too much to ask employers to pay their staff literally enough on which to live.

[James Berry]

Will the hon. Lady give way?

[Patricia Gibson]

I will indeed.

[Mr Deputy Speaker]

Let me explain. The Minister had probably 18 minutes in which to speak. The Front-Bench speeches are down to six or seven minutes. It is not fair. It is up to Patricia Gibson whether she wishes to give way.

[Patricia Gibson]

On the basis of what you have just said, Mr Deputy Speaker, I will proceed so that others can get in.

In the light of all that I have said, how can we not conclude that the UK Government’s so-called national living wage is not a living wage at all? By contrast, the Scottish National party Government have long championed the payment of the living wage and they see the real benefits to our economy of treating working people much more fairly.

Paying the real living wage—not the pretendy one—makes economic sense for employers. It increases productivity, reduces staff absence and reduces staff turnover. All the research on this area bears that out. Some 80% of employers felt that their staff delivered better quality work after paying the living wage and 75% of employees agreed that their work improved after receiving it. We know that low pay is a driver of in-work poverty, so with around 20% of Scotland’s workforce still earning less than the living wage, there is still much more work to do. However, the UK Government’s so-called national living wage also creates problems because it discriminates against people under 25. People aged 24 do not have a cheaper lifestyle than those aged 25, so the distinction is false and spurious.

The real living wage pays all workers over 18 years old the same pay. I am proud that Scotland has the highest proportion of employees paid the living wage—some 79.9%. A job should help people out of poverty, not keep them there. It is important that we understand that a real living wage makes a real difference to the lives of working people. It ought not to be controversial that workers earn a wage that they can live on. I wish the UK Government would take a leaf out of the Scottish Government’s book. The Scottish Government have long championed the living wage, understanding that it is important and it is a matter of social justice that people earn a minimum standard of living, not a wee pretendy national living wage, as the Government try to tell us.

[Several hon. Members rose—]

Faulty Tumble Dryers (Fire Risk)

Patricia Gibson Excerpts

Tuesday 13th September 2016 Commons Chamber

[Andy Slaughter]

I will talk about that particular gentleman in a moment. I am grateful to the hon. Gentleman for giving the House his own experience. He illustrates my point that no one is immune to these tactics. This is a studied campaign by Whirlpool to ensure that it delays for weeks, months or even years before it carries out the repairs. It knows that there are millions of machines out there, but it is not prepared to provide the resources to deal with the problem. The hon. Gentleman will probably get a number and be told to ring back in a couple of months, at which time he might be told that he will get an appointment to get his dryer repaired several months after that. He will also be told that, in the meantime, he can continue to use it. That is very dangerous.

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

Does the hon. Gentleman agree that, given that we are talking about public safety, there is a clear responsibility to protect consumers? I have a constituent who has been told she will have to wait at least 16 months, and she is now about halfway through that wait. There is no apparent end in sight, and this is a real evasion of responsibility. We need the Government to provide much more protection for consumers when companies behave so irresponsibly.

[Andy Slaughter]

It is extraordinary for someone to be asked to wait 16 months when a machine that could catch fire at any moment is in their home, yet the manufacturer is saying that they can continue to use it provided they are at home at the time.

We have also heard from Electrical Safety First, a well respected charity, and the chief executive of the Chartered Trading Standards Institute, who was on the radio, on “You and Yours”, earlier this week has told people not to buy Whirlpool products. I know that the Minister was praying trading standards in aid earlier, but she should look at what the Chartered Trading Standards Institute is saying before she does so again. Many people who are far more expert than I am in this field are concerned about this.

I also want to mention the media. It is always nice to mention them when they are doing good things. The Daily Mirror has run a fantastic campaign and put this issue on its front page many times, and ITN has run an excellent campaign. However, this multinational corporation appears to be immune to all that, and to what many Members of Parliament have said about the issue.

I hope that my hon. Friend the Member for Swansea East (Carolyn Harris), who chairs the all-party parliamentary group on home electrical safety, will have a chance to contribute to the debate. My hon. Friend the Member for Poplar and Limehouse (Jim Fitzpatrick), who has more than 20 years’ experience as a firefighter, and I attended a meeting today of the all-party parliamentary fire safety and rescue group, chaired by the hon. Member for Southend West (Sir David Amess). The Chair of the Business, Innovation and Skills Committee has also raised the matter with Whirlpool. The problem is not that there are no well-informed people lobbying hard; it is that the corporation is not prepared to listen and that the Government do not seem prepared to make it listen.

Three things have shocked me. I appreciate that I am coming late to the issue, but my first point is about the scale of the Shepherd’s Bush fire. A senior fire officer said to me today that as he arrived at Shepherd’s Bush Green on 19 April and saw the flames running up the side of Shepherds Court from the 7th floor to the 11th floor, he thought that the London Fire Brigade would be dealing with multiple serious injuries and fatalities because of his experience at the Lakanal House fire.

I have tracked down 750 fires caused by Whirlpool dryers and by dryers from brands owned by Whirlpool between 2004 and 2015. We know about 127 models, but Whirlpool will not publish the full list. At least 5.3 million machines were manufactured and sold over the period. There have also been deaths. Two young men died in Wales, but I will not talk about that case in detail because it is subject to an inquest that has dragged on for two years.

Moving on to the second thing that shocked me—the hon. Member for South Leicestershire (Alberto Costa) will appreciate this—I wrote to and actually got quite a speedy response from Maurizio Pettorino, the chief executive of Whirlpool UK, asking what the company was going to do given the circumstances of the Shepherd’s Bush fire. Mrs Defreitas was in the same room as the dryer throughout and suspected that the dryer might be responsible even though there was no smoke at that time. She unplugged it and rang the fire brigade as soon as she could and then retreated from the flat, shutting the door. What more could she have been expected to do? I wrote to Mr Pettorino the week after the fire with those points. In what I think was a standard letter, he wrote back saying

“we are advising consumers that their tumble dryers can continue to be used while the repair programme is underway… We are also asking customers not to leave their dryers unattended during operation, either while asleep or out of the house.”

That is comforting. The flat was relatively small, but if someone has a large house, it appears from those instructions that the company would be perfectly happy for them to be on the second floor while the dryer is merrily catching fire in the kitchen. I simply do not understand how that can continue to be the advice. It is not right—I asked the Minister about this morning and I hope she has had time to reflect on it—that these dryers, with their known faults, continue to be in use even if someone in the house is awake and alert. We know from Mrs Defreitas’s experience that if a machine catches fire, there may be nothing that can prevent it from burning down not only the consumer’s property but neighbours’ properties, too.

The third thing that shocked me—I take no pleasure from saying this because I am trying be consensual—is the Minister’s response. I wrote to the Secretary of State for Business, Energy and Industrial Strategy—I am glad he is in his place on the Front Bench—on 1 September but have not yet received a response. I thought that I might get one today given that this debate was happening, but I am sure that I will in due course. I gave notice of the questions that I wanted answered and tried to adopt a consensual tone, but the response that I received at Question Time this morning was that there is

“an effective system of product recall”,

that a steering group has been established

“to consider the recommendations in Lynn Faulds Wood’s… review”,

and that

“a full risk assessment of the product that has been agreed with Peterborough… trading standards”.

I am sorry, but that is not good enough. The risk assessment has not been published and it is the practice of manufacturers not to publish such assessments. Why are the public and the people who are being advised to continue using these admittedly dangerous machines not able to see the risk assessment? I am afraid that the response has been anything but robust. I am totally sympathetic to local trading standards departments, which have had, on average, 50% of their budgets cut. There is no equality of arms between Peterborough City Council trading standards and the Whirlpool Corporation, a multinational, multi-million-pound organisation. In many cases, trading standards have neither the resources nor the powers to deal with situations such as this. If they felt that what recall process there is was not being satisfactorily dealt with, they could take Whirlpool to the magistrates court, and if they were successful—this would take a lot of time and effort—there might be a fine running into hundreds or possibly even a few thousand pounds, for a regulatory offence. I do not believe that is enough to motivate Whirlpool to change from its current policy of waiting 16 months before effecting a repair to one where it immediately says, “You have a dangerous machine that we have manufactured in your house. Do not use it. We will come to repair or replace it immediately.” Such a change is what I would like to see.

--- Later in debate ---

[Patricia Gibson]

I want to pick up on the important point that the hon. Gentleman made about the obvious health and safety risk. We heard from the hon. Member for Hammersmith (Andy Slaughter) that people’s lives have actually been at risk. I am wondering, as I sit here listening, if we know that these machines are not safe, if someone was using one of these machines, even under their watchful gaze, and there was damage to their property as a result, what would their insurance company say? Would they be covered? Would the insurance company pay out to fix the damage?

[Alberto Costa]

That is a very interesting point, because I would imagine that the phrase “contributory negligence” would come in if there were a personal injury matter raised under those circumstances.

The hon. Member for Hammersmith is right: there should be a total recall of this type of equipment. It is clear to me that the senior management at Whirlpool are wholly out of their depth; they are unable to deal with this in a proper, efficient, commercial manner. They are just hoping that it will go away. Well, it’s not going to go away, and it is right that we are discussing this in our national Parliament, so that Whirlpool hears clearly tonight—and I hope that the Minister is hearing clearly tonight and I look forward to her response—that Whirlpool must change its attitude in how it deals with these faulty products.

I am mindful of time and of the fact that other hon. Members want to speak. The hon. Member for North Ayrshire and Arran (Patricia Gibson) said that her constituent had been told that she would have to wait 16 months. As I said earlier, I have not received a response at all. I should add that my letter to the managing director was quite separate from my initial online form, which did not mention the fact that I am a Member of Parliament, so as an ordinary consumer I have still to hear from Whirlpool about what it intends to do about the faulty tumble dryer. The sooner the Government assist in this matter, the sooner the consumer will benefit. Whirlpool, a company that we want to see succeed, should take on board the important messages that hon. Members are sending tonight, which I hope the Government will confirm in their response this evening.