Energy Price Freeze

Sharon Hodgson Excerpts

Wednesday 6th November 2013 Commons Chamber

[Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)]

There are 6,196 households in my constituency that are in fuel poverty, using the 10% of income measure, but those statistics are from 2011 and are the most recent. Since then prices have risen at least twice, while real wages are stagnating, so I am sure those figures will be much higher now. Energy prices are a key driver of the Prime Minister’s cost of living crisis, which has seen on average £1,200 wiped off the real value of the annual incomes of working people in the north-east.

Those fuel poverty figures do not tell the whole story. They do not show the households on the borderline of fuel poverty or those that may have a decent income, but for which energy costs are just one of a number of ever-rising costs that they have to meet, such as rent, child care bills, kids’ clothes, school uniforms, food and groceries. It is this reality that this Prime Minister and this Government do not understand. It is all very well telling people to wear a jumper around the house. Does the Prime Minister not realise that people do that already, my family included?

In the north-east, where it gets cold from September onwards, we put blankets over our legs when we watch telly. Some people even use quilts to keep warm, especially the elderly. There is a whole north-south divide element to this debate that needs to be addressed. As someone who lives in both places all year round, I know that there is regularly a 10° C difference, and that is without the added wind chill factor. According to the BBC’s weather forecast, at 4 o’clock today, when I last checked, it was 14° C in London and 8° C in Sunderland, and that is a mild gap. What about those who have to wear jumpers or layers of clothing when they go to bed at night because they have been unable to put the heating on all evening, or all week?

Why are energy prices rising? As we have heard, average wholesale prices have risen by just 1.6% a year since 2011, which accounts for around £16 of the increase in bills since 2011, but consumers’ bills have risen by 10.4% on average. That is six times more, at around £100 a year. That is being used to fund the fat-cat salaries of the big six and double the profits for their shareholders. Are Ministers really telling the residents and small businesses of Washington and Sunderland West, including the 6,196 households living in fuel poverty, that they would rather stand up for the right of the big six to boost their profits than for the people they are elected to this place to serve?

We must not lose sight of the fact that it is still the very poorest and most vulnerable of my constituents who pay the highest unit costs for their energy because they are on prepayment meters. They cannot switch to cheaper rates because there is very little competition, if any, for their business. They cannot pay a set amount by direct debit each month to spread the cost of winter over the rest of the year because the energy companies will not give them that credit facility. If they cannot afford the £10 to top up the meter, the lights and boiler just do not go on.

The energy company executives who appeared before the Energy and Climate Change Committee last week assured my hon. Friend the Member for Glasgow North West (John Robertson) that they would not cut off the elderly or disabled this winter, but those on prepayment meters cannot just keep using their heating; they are cut off the minute they run out of money or emergency credit.

[Mr Anderson]

My hon. Friend will remember from the days when she worked with me in Unison that we had discussions with the energy people when they changed to prepayment meters, meaning that people now self-disconnect. Companies can now say that they no longer cut people off or have responsibility for that, but those people are forced to disconnect themselves. The number of people in this country who live without access to heat, fuel and warmth because they have no choice is hidden, and that is a disgrace.

[Mrs Hodgson]

My hon. Friend makes a very good point. I would like to know what advice the energy company executives will give all those people. Will they offer them a deal they can afford in order to keep warm this winter, as they said they would during the Select Committee hearing?

I am going to share something quite personal today. I know that there are some MPs, although not many, whose background is similar to mine. I grew up in poverty. I know what it is like to have no central heating, and I know what it is like when you then have central heating but are not able to put it on because your mam cannot afford it. I know what it is like to wake up so cold that you cannot bear to undress to get washed and ready for school. I know what it is like to have a thick layer of ice on the inside of your bedroom window—I used to think everybody did in winter. I know what it is like to have the electricity man knock on your door and cut of your power when you are 13 years old and minding your two younger brothers while your mam has popped out to see your nanna because it is the middle of winter. I know what it is like to sit and wait, scared in the cold and dark, until your mam comes home, trying to keep two little boys occupied and make them feel safe.

That was in 1979, the first year of the previous Tory Government, and the year I was politicised and realised what it actually meant to have a Tory Government. My mam was not feckless; we were poor. There is a difference. A lot of people living in fuel poverty today are working. They are not feckless either, but there is a cost of living crisis beyond their control and not of their making.

I know that 34 years later some families still have experiences similar to mine. I remember talking to a member of staff at a Sure Start children’s centre who told me about the mothers of young children who often came to the centre with their child for hours at a time because it was warm and they were unable to use their appliances or TV at home because they could not afford to top up the meter.

I have recently heard about heat buddies in the north-east—groups of people who go to each other’s homes in turn to save heating their home in the evening. I have also heard that bath houses are being requested—in 21st-century Britain—because people do not have the money to heat their homes or water, so they wash with a kettleful of water in a sink and cannot face even trying to boil enough water for a bath as their home is too cold for them to bathe in. For goodness’ sake, Mr Speaker, what sort of country are we living in? Is it Victorian Britain? Is it Dickensian Britain?

[Mr Anderson]

Tory Britain.

[Mrs Hodgson]

Tory Britain—exactly. What are the Government doing for these people? What they need—what we all need—is an energy market that is forced to work in the interests of consumers, not shareholders. But until a Labour Government have the opportunity to make the required changes stated in the motion, they need a Prime Minister with the bottle and the guts to tell the energy companies that enough is enough—that people in 21st-century Britain should be able to have a bath in their own home and to go to bed warm enough to wear just a nightie or a pair of pyjamas, and not to die because of the cold with central heating they cannot afford to use.

[Toby Perkins]

I very much appreciate what my hon. Friend is saying—she is making a very powerful speech. The problem is not that the Prime Minister does not have the courage to stand up to the energy companies; it is that it is not in his make-up to stand up to the energy companies. It is not what he wants to do; it is not what he came into politics to do. He is not in politics to stop the energy companies making profits and to make consumers better off.

[Mrs Hodgson]

Is not the country all the worse for that? Well, I hope that the Prime Minister and his Government sleep warm in their beds at night, because huge numbers of people in the country he governs certainly do not, and will not this winter.

I would like to wrap up my remarks by quoting some extracts from a letter that I received a couple of weeks ago from Mrs Templeton, a constituent of mine from Biddick in Washington. Mrs Templeton wrote:

“I am writing to say how disgusted me and my hubby are about the rise in energy prices…Mr Miliband says he will freeze prices in 2015, but what can be done now?...I cannot believe the country is taking this on the chin...we should fight back…The top people in these companies will not worry about the increase, but believe me, most of the country are afraid of putting their heating on.”

There are millions of Mrs Templetons across the country—people who are sick of their bills keeping on going up but never coming down, sick of seeing energy companies’ profits ballooning while they have to choose between heating and eating, and sick of this Prime Minister doing nothing about it but defend the status quo. If he does not have the strength to fight back on behalf of Mrs Templeton and all those other people across this country, I suggest that he should stand aside and let someone who does do so.

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

It is an honour to follow my hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson), who made an impassioned speech. I seek to echo some of the points she made and to speak strongly in support of the Opposition’s motion. I do so as the MP representing the constituency with the third highest level of fuel poverty, according to the Government’s new definition.

Not a week goes by when I do not have a constituent come to me to raise their serious worries about their energy bills. That is sometimes because they have been ripped off by their energy company. We have heard many examples of people who have paid above the odds for their direct debits or have been penalised when they have moved and have not received the credit to which they are entitled. We have heard about specific issues to do with people who have prepayment meters but often find that very difficult and have to pay over the odds in any repayments that they have to make. I speak in support of the motion on behalf of all my constituents and people right across this country.

The constituents we represent, and people up and down the country, are paying a staggering £315 more for their energy bills than they did back in 2010. That is against the backdrop of a cost of living crisis in which people have seen prices rise faster than their wages in 39 out of the past 40 months. Many of my hon. Friends have talked about the real choice that people in our country—the seventh most industrialised in the world—are having to make between heating and eating. That is not a joke or a catchphrase—I have seen it on far too many occasions, as have many of my hon. Friends. We are the only G7 country in which the Red Cross is providing emergency food aid. It does not help that people are having to spend £1,400 a year on average for their dual fuel bill, but have not seen their wages go up accordingly.

Some 700,000 people have accessed emergency food aid through a food bank. That is a national disgrace. The responses that the Prime Minister has given from the Dispatch Box at Prime Minister’s questions have been pitiful. He has not acknowledged the depth of the problem in this country. It is a stain on our national conscience. I am ashamed that people in my constituency have to go to a food bank because they cannot afford to put food on the table. To link that point back to this energy debate, people are often unable to use the goods in the emergency food aid bag that they receive from the Trussell Trust because they cannot afford the gas that it would take to heat them up on the cooker.

Those are the issues that our country faces in 2013. I look forward to the Minister’s response because what the Secretary of State said was pitiful. He talked about switching, but for all the people who are facing a very cold winter, the best deal in a broken market is not a good deal. The figures that were released yesterday showed that the gap between the wholesale price and the prices that energy companies are charging us is getting wider. The wholesale price has gone up by 1.7% and the average bill has gone up by 9%. At a time when people are struggling to get by and there is a cost of living crisis, it is difficult for people to deal with those price increases.

That is why I support the Opposition motion. We need a price freeze. The Government have an opportunity to implement the price freeze today. I sincerely hope that they will, even though the Secretary of State indicated that they will not. A price freeze would assist 40,221 households in my constituency alone. It is not just households that will benefit, but businesses. We need a price freeze so that we can implement the raft of measures that are needed to reform the market. I notice that many Government Members are fixated on the freeze. The freeze is the vehicle by which we will implement the changes in legislation that are needed to fix the market.

What are the changes that are required urgently? We need to separate the retail market from the generation side. I mentioned in an intervention on my right hon. Friend the Member for Don Valley (Caroline Flint) that I have been to one of the energy companies. I saw for myself the physical collocation of the generation and retail sides. The room in which the company oversees its generation—the big six generate 70% of the capacity in the UK—is right next door to where it buys and sells its energy. The idea that the two sides do not liaise or engage with each another is ludicrous. That is why we need urgently to separate the retail side from the generation side.

We need to introduce a two-way pool in the energy market so that there is transparency in the cost of energy generation, which we do not currently have. It is in the best interests of the energy companies to charge themselves a high price. We do not know what that price is because it is decided in back-room deals among themselves. There is a pool, but it makes up only a fraction of the market. We need the whole market to use the two-way pool so that we can see the price of energy and to encourage new entrants into the market. At the moment, the big six dominate the energy market, making up about 99% of it, and there is little opportunity for new entrants to come in.

We need to have standardised tariffs so that people can compare energy prices properly. At the moment, the tariffs are very confusing. People need the switching websites because they cannot compare prices for themselves. The previous Secretary of State for Energy and Climate Change told the Select Committee that when he had tried to switch, he could not do so because it was so complicated. There are hundreds of tariffs. If we had standardised tariffs, people would be able to compare prices easily.

[Mrs Hodgson]

My hon. Friend is making an excellent speech. Does she agree that it is important that over-75s are put on the lowest tariff automatically, for the very reasons that she has just given?

[Luciana Berger]

I thank my hon. Friend for that intervention as I was just about to make that very point. I am delighted that the motion reinforces our policy that energy companies should automatically put over-75s on the cheapest tariff. That would assist 5,867 people in my constituency, and constituents of hon. Members across the House. Older customers are less able to benefit from direct debit deals because they are less likely to have access to a bank account, or access to the internet to get online deals. It is possible, perhaps through data-sharing, for energy companies to put the over-75s on to those cheapest tariffs. They could do that today and make a real difference to hundreds of thousands of pensioners up and down our country.

I am supporting the motion today because we need a tough new watchdog. We know that Ofgem is not doing a proper job because back in 2008 it was investigated, and 16 different areas identified.