(1 year, 11 months ago)
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Anne McLaughlin (Glasgow North East) (SNP)
I beg to move,
That this House recognises that prepayment meter customers, who pay for their usage in advance, are not afforded the same rights when in energy debt as customers who pay in arrears, such as those who pay in direct debit; understands that a prepayment meter customer is automatically disconnected when they exceed just £10 of debt; acknowledges that, in contrast, those who pay in arrears are afforded time and support to resolve their debts before action is taken to disconnect; is deeply concerned that so called self-disconnection of prepayment meter customers will see the most vulnerable in our society left without heat, light and facilities to cook and wash over the coming winter; and strongly urges the Government to outlaw self-disconnection to ensure that the poorest and most vulnerable customers are not left without basic energy provision.
First, let me thank the Backbench Business Committee for agreeing to this debate, and for understanding the urgent nature of it and, thus, offering me a pre-Christmas date. It is urgent, because something needs to be done now, even if only on a temporary basis. It is urgent enough for me to say at the outset that I am not just trying to raise awareness today; I am asking the Minister to do something about this, preferably today. Perhaps he will be unable to do so because of procedure, but I hope he will at least resolve to listen closely and act urgently.
Anne McLaughlin
I see that the Minister is nodding and I thank him for that. I hope he is able to come back next week before Parliament goes into recess, before we are plunged into even colder temperatures than we are experiencing at the moment and before people start dying because they did not enjoy the same rights as the majority of people. I urge him to come back next week and tell us that he has decided to give everyone those rights and that he will do so by outlawing so-called “self-disconnection” for those on prepayment meters.
I am also calling on the energy suppliers to do the same. One of them surely will have the moral compass and backbone to lead the way and be the first to promise that nobody—none of its customers—will be subjected to self-disconnection simply because they are on a prepayment meter. I am calling on the big six, as those guys have the money—they have the billions—and they can do this. Those companies have to take responsibility, but we probably cannot wait for that and the Government need to compel them to do so.
The other thing I would like the Government to get on top of this side of Christmas is ensuring that everybody is accessing the energy bill discount of £66 a month. The consumer rights group Which? told me this morning that a reported £84 million of that money is not reaching half a million households—the ones who need it the most. That is happening for a variety of reasons. Every company has a different way to access this help, with some requiring people to go to the post office. With others, the help arrives by post and often the recipient thinks that this is junk mail or they are afraid to open the letter. That is what happens when someone is on a low income: they get scared of the letters coming through the door, so they bury their head in the sand. I know that the Secretary of State has written to these companies about this issue, but anything more that can be done must be done urgently.
Before I come on to the substance of the debate, may I also thank the many MPs, from all parties, who signed my debate application, both those who are here today and those who sent messages of support, as I very much appreciate it? More importantly, our constituents will appreciate seeing their MPs stand up and fight for them —I hate to say it, but in some cases they are fighting for these people’s lives.
I pay my gas and electricity bills by standing order. In common with those who pay by direct debit or pay when the bill comes in, I pay in arrears. Also in common with those who pay in arrears, if I stop paying my bills I can be disconnected by my energy provider but it is very much a final step—a last resort. That is not the case for those who pay by prepayment meter. Should they be unable to pay for gas or electricity, the first thing that happens is that they are disconnected from their supply. The minute they go over the £10 or, in some cases, £5 of emergency credit that is applied to each prepayment meter, their supply just stops and they are considered to have self-disconnected.
Rachael Maskell (York Central) (Lab/Co-op)
I congratulate the hon. Lady on securing today’s debate. Does she agree that it is an absolute disgrace that people on a prepayment meter are having to pay more for their energy, particularly as they are often the people in greatest deprivation and cannot afford to do so?
Anne McLaughlin
I absolutely agree on that. I should thank the hon. Lady, because I have a ten-minute rule Bill on this matter and she spoke up for it last week in allowing it to continue in this place. I will come on to that. It is so ironic that the poorest people are paying the most. We get to pay less, yet we are paying in arrears.
Catherine West (Hornsey and Wood Green) (Lab)
The hon. Lady is making an excellent beginning to her speech. Does she agree that what we see from the energy companies is the “rocket and feathers principle”, where the prices skyrocket when they first come in but then they drop like feathers? The gas price has actually gone down, so why are some people paying up to £4,300 for their energy just on their gas bill when that far outstrips what one would be paying on a direct debit or other form of payment for gas?
Anne McLaughlin
Yes, I absolutely agree with the hon. Lady on that. The whole system is wrong and crazy. Let me go back to what I was saying about the people who are just disconnected for their £5 or £10 of debt. When they are disconnected, they cannot boil a kettle or heat a room. They cannot even heat an electric blanket. They cannot wash their clothes, have a shower or watch TV—they cannot even charge their phones. In some cases, which I will come on to, they can no longer operate disability aids—that is an absolute disgrace. It means that I, as a well-paid MP and someone who is clearly able to pay their bills, could stop paying them just on a whim and, unlike someone on a meter I could then run up hundreds or perhaps thousands of pounds-worth of debt to my energy supplier before being disconnected, whereas people on prepayment meters—the ones with the least money—are limited to a debt of only £5 or £10 before they are cut off. It is that inequity that I want addressed.
I do not believe the Minister will tell me today that this situation is fair. I would be amazed if he did try to argue there was anything equitable about this treatment. So, as I have said in the past, I am hopeful, verging on confident, that the Government will support what I am calling for here. As I said at the start, the Government need to do it quickly—they need to do it now. I know how slowly things move in this place, but I also know the Government can move quickly when they need to, and I argue that they really do need to. I am desperately worried about people out there. I am worried that people are going to die—people who would have lived, had this awful practice been outlawed.
However, I want to start by talking about a very important group of people who do not fit that category, because they are not going to live for much longer regardless of the result of my campaign. I have been speaking to Marie Curie about its “Dying in poverty” campaign and have heard about the people it is supporting: people who return home after a lengthy stay in hospital or a hospice, try to top up the prepayment meter and discover that the large sum they have topped up by just is not enough.
Why is that? Because every day they were in the hospice, they racked up daily standing charges. They were not there and they did not use gas or electricity, but they have a big debt to pay off before they can even access heat or light. Worse, their daily standing charges are higher than our daily standing charges. When we consider that the average cost of an electricity bill can rise by 75% for someone who is terminally ill, it is doubly unfair. Would any of us want that situation for our own families? Of course we would not—and if it is not good enough for our families, it is not good enough for anybody’s family.
I want to run through some of my main concerns about these meters. Those on prepayment meters are generally on them because they are on low income and most are given no choice. Citizens Advice described the process as follows: people have a period where they are unable to pay their bills and their energy supplier is obliged to negotiate a repayment plan that takes in to account their ability to pay for the debt and their ongoing energy consumption. Because of the higher costs, however, many people do not have enough money to cover their ongoing usage, let alone pay towards arrears. They begin to fall behind on payments and, to recover that money, the supplier gains entry to their home and installs a prepayment meter.
Rachael Maskell
I do not know whether the hon. Lady saw this article in The Independent, but I was completely taken aback and shocked to read that Wigan and Leigh magistrates court took a call from the energy supplier and, in just three minutes 51 seconds, determined that 496 people would have their energy supply cut off. Where is the scrutiny in that? Surely we should not be cutting anyone off at this time?
Anne McLaughlin
That is exactly what the Good Law Project is working on; I think it was featured in that article. Tens of thousands of warrants are being rubber-stamped by magistrates in minutes. The Good Law Project has asked me to ask the Minister whether the Government will consider instructing Ofgem to require energy companies to halt all new installations of prepayment meters, including remote switching of smart meters.
There is a problem of people on smart meters being switched to prepayment without the need for a warrant, because the warrant is about gaining entry to the house and, if the switch can be done remotely, there is no need to gain entry. Ofgem called those practices “unacceptable” and said it would take action if they continued. Six weeks after it said that, they are continuing, so I am keen to know what action Ofgem plans to take and when it plans to do it.
The energy companies say that the reason those on prepayment meters pay more is the cost of installing the meter. I am not sure I buy that, and in any case I do not think the cost should be passed to the customer, but, if that is the case, surely they cannot charge higher amounts to someone who has been switched remotely? Another concern is that, as has been mentioned, people on prepayment meters pay more per unit of energy and higher daily standing charges, and they pay in advance while the rest of us get to pay in arrears.
I am also concerned about the numbers: 60,000 new meters were installed across the UK in the six months to March this year, reversing a long-term trend of falling numbers. However, the Department for Business, Energy and Industrial Strategy does not know how many people are being put on prepayment meters now and it cannot give me an answer to that. I think the Minister will be interested in finding that out for us.
Something else that concerns me is that, according to Citizens Advice Scotland, Scotland disproportionately bears the brunt of this situation. We have more prepayment meters per population than any part of the UK: roughly 15% of people in the UK are on them, but it is 19% of people in Scotland and in my city of Glasgow it is over 20%. Scotland is also colder, as you will know, Madam Deputy Speaker—I see you nodding in agreement. Estimates suggest that next year, while the rest of the UK will pay on average a shocking £2,500 a year per household for energy bills, in Scotland it will be £3,300 on average.
It stands to reason that Scotland will see more disconnections, because people cannot magic up an extra £800 on top of all the other increases. There is nothing the Scottish Government can do, because we are not independent and we do not have the power in Scotland to do anything about it. That is ironic, given the amount of energy Scotland produces. We produce six times more gas than we consume and 80% of electricity comes from clean energy sources. As my hon. Friend the Member for Aberdeen South (Stephen Flynn) said yesterday, we have the energy; we just do not have the power—yet.
Energy suppliers are supposed to be obliged to consider whether somebody is vulnerable before disconnection. I would argue that everyone on a prepayment meter, especially this winter and especially in the middle of a cost of living crisis, is vulnerable, but there are definitions that the suppliers are supposed to work to. Ofgem recently produced a report expressing a lack of confidence that they are doing so and certainly concerns that they are not doing it consistently.
Let us look at a few examples of people I would consider most vulnerable. We already know that those living with disability pay a financial premium; many of them have only ever known a cost of living crisis. The average extra cost of being disabled in the UK was £583 a month, and for the 24% of families with a disabled child, that figure was more than £1,000 a month before the cost of living crisis, so those figures will be higher now.
A report from Scope, the charity that fights every day for equality for disabled people, has shown that those with disabilities have higher energy needs in their homes and are even more exposed to the energy crisis—so exposed that 91% of those surveyed by Scope were worried that they would not be able to afford to pay their bills this winter. We often talk about choosing between heating and eating, but many of those paying a premium of well over £500 a month just to survive are now able to do neither adequately. For those on a prepayment meter that will spell disaster if we do not outlaw the practice of forced self-disconnection.
That is not always just about money. Many people with disabilities have mobility issues; I have heard of people who cannot reach their meter and have to wait for someone to help them with it, and others who have periods when they are unable to get out of the house to top up the meter.
Rachael Maskell
The hon. Lady is being very generous with her time. I want to highlight people who have to use home medical devices. This could be a feeding machine, sleep apnoea machine or bilevel positive airway pressure machine—there are many devices that people have to use at home. Those people are now having to make significant choices about their health. Should they not have an additional payment? I know the Government have put in a little bit of money for disabled people, but should there not be full cost recovery for running those devices?
Anne McLaughlin
I absolutely agree with that, and for another reason too: we have an issue in the health service with bed blocking. If people are unable to run the equipment at home, they will end up in some kind of care facility, which blocks beds and increases the NHS waiting list. But yes, the moral argument is that they should absolutely have those costs covered.
Then there are people who have been homeless, who have finally moved into their new home and almost always find it has a prepayment meter. The Simon Community in Glasgow told me that many of the people it works with are simply walking the streets again in an effort to warm up because they do not have the money to get the meter working. How can that be right?
Many pensioners are on prepayment meters, and some will inevitably find themselves in the situation I have described, where they have no gas and no electricity. That is bad enough for anyone, but for a pensioner it can be disastrous. Age UK tells us that being cold even for a short period of time can be dangerous to older people. Age UK is widely respected and not given to hyperbole, so we really should listen. We cannot have our pensioners being cut off from gas and electricity because they have gone £5 or £10 over, while the rest of us have the luxury of paying our bills months in arrears.
The Children and Young People’s Commissioner of Scotland is campaigning for the right of children and young people not to find themselves with no gas or electricity in their home simply because their parents use a prepayment meter. He is calling for the definition of vulnerable to be widened, so that instead of applying only to children aged up to five, it applies to those up to 18. It is hard for me to think of an argument against that, so instead I wholeheartedly support it, and I ask if the Minister would be good enough to look at that question and come back to me on it.
All I am really asking is for those on prepayment meters to be treated equally to the rest of us. The right to be treated equally is crucial, because I have heard just two arguments against my proposal: first that people could end up in debt; and secondly, that people might simply not bother to pay their bills. On the latter point, I would argue strongly that those on prepayment meters are no more likely to be morally predisposed to not bothering to pay their bills than those of us who pay by different methods. Living on a low income does not make someone any less honest than anybody else. Yes, there is a risk that stopping self-disconnection could lead to people being in debt, but I repeat what I said in my ten-minute rule Bill speech: if the rest of us, paying by different methods, are allowed to take the risk of ending up in debt, and we are trusted to find ways to resolve that without being disconnected, why not those on prepayment meters? Secondly, if anyone in the Chamber is asked to choose between debt or death for their constituent, who among us would seriously choose death? I know how dramatic that sounds, but life is dramatic. It is unpredictable at the moment, and our constituents’ lives are at risk if we do not sort this.
The campaigning organisation Debt Justice wants the Government to start thinking now about what will happen to people who simply cannot pay their energy bills, and those who will rack up unpayable debts despite living frugally, and who will never be in a position to pay it off. Debt Justice wants the Government to start thinking about debt write-offs, and how that would work and who would be eligible. As I said, in order to stay alive, some people will have to run up debt. If we do not start talking about that now, some people will be so worried about that debt that they will simply switch everything off and their lives will then be endangered.
A point was raised with me by the Children and Young People’s Commissioner Scotland about the legislation that allows companies to forcibly enter people’s homes and install prepayment meters in the first place, namely the Rights of Entry (Gas and Electricity Boards) Act 1954. First we were getting rid of the Human Rights Act, and then we were not, then we were again, and now I think I am right in saying we are not. We have the Human Rights Act, and we are keeping it, as we should, but the 1954 Act predates that. I would be grateful if the Minister could look into whether it is compatible with human rights legislation—I know that others are looking into that too.
We are heading for recess, and I have no objection to anyone taking a well-earned break. I know that we are not an emergency service, but we can do something now to prevent people from ending up in emergency situations. I am speaking up for everyone on prepayment meters, and I want nobody to be disconnected. I am most terrified for those whom I noted in my speech: young people, pensioners, those who were previously homeless, people living with a disability, and those living with a terminal illness. I repeat my call to the big six energy companies: will one of them please just have the backbone to be first to say that nobody will be forced into so-called self-disconnection this winter? We can argue later about how long that should last, but will one of those companies, today, please blaze a trail for their industry?
Finally, there would be no need for me to stand here and plead with those huge companies to throw people a few crumbs from their billions in profit if the Minister simply told them that they can no longer disconnect people on prepayment meters. A moratorium, a ban, right now—I don’t mind which. As long as when we head to our warm homes and our families for recess, we know that our constituents are guaranteed that their energy supply will not be cut off, leaving them in misery and their lives in peril.
Patrick Grady (Glasgow North) (Ind)
May I say what a moving experience it was to be in the Chamber this morning for the commemoration of the holocaust?
I congratulate my hon. Friend the Member for Glasgow North East (Anne McLaughlin). She is my constituency neighbour, and indeed my constituency MP, and she has done extremely well to secure this debate and in all her work on this important issue. I do not think there is anything wrong in principle with the concept of prepayment meters. There will always be consumers who find the ability to pay up front, instead of in arrears, helpful and convenient for a variety of different reasons. For some there will be a sense of security about their ability to budget, and to make sure that money is not spent on other things. There is perhaps a certain convenience, especially for those familiar with the technology, around digital prepayment where meters can be topped up from apps or by phone.
However, as my hon. Friend made clear, there is something fundamentally flawed about the way prepayment meter schemes work in this country, and as we have heard, the consequences are profoundly challenging. It has never been clear to me—I do not think it is clear to anyone in the Chamber—why there should be such a significant differential cost between prepayment meters and paying by direct debit. Although efforts have been made in recent years to align prices, there are still significant discrepancies. Citizens Advice has calculated that households who are moved to a prepayment meter this year alone will collectively spend £49.6 million more than they would have as direct debit customers over the coming winter. The excuses given by energy companies—that admin and infrastructure costs are higher—simply do not wash, especially with the arrival of smart meter and remote technology.
The much higher standing charge is particularly pernicious and unfair. My very limited experience of prepayment metering is relatively benign. Our campaign headquarters during the independence referendum campaign had a pay-as-you-go electric meter. In some respects that was helpful, because we did not need to worry about a bank account, and in theory we only paid for what we needed. However, on more than one occasion when we opened up the shop we found that the power was off because daily standing charges had eaten away at the credit, even though nobody had been in or used any power for several days. For us, that was a minor frustration and inconvenience, but for some of the most vulnerable in society, that represents a premium charge in already difficult and often heartbreaking situations.
Marie Curie’s “Dying in Poverty” report talks about situations where patients come home from hospital or a hospice to find the lights out, the heating off, or their meter in debt. People with terminal conditions, rushed perhaps at short notice to A and E, are unlikely to be thinking immediately about topping up their gas or electric meters, and if an extended stay leads to credit running down, they could return to a cold or dark property without immediate options to fix it. Marie Curie’s research also shows that a terminal diagnosis can lead to a 75% increase in energy bills. I have spoken in this place before about my very close friends Mel and Tom. Mel has very late stage cancer, and she explained some of the difficulties they are facing to Marie Curie:
“I live in the Highlands of Scotland, which is a colder climate and as soon as my bones get cold, they hurt. It’s very painful. We have to keep the house warm, but with the energy prices going up, we can’t do that.”
For customers like Mel and Tom who are on prepayment meters, the costs are already higher than they are for other customers. They already face high costs compared with those who can pay by direct debit, and those costs are rising as a result of overall market increases in prices. Overall usage is going up because of the particularly cold snap, and then usage is increasing again because keeping the house warm is literally a medical requirement. I think that counts as a quintuple-whammy, and it is all down to factors outwith their control. The Government and the Minister should listen to Marie Curie’s calls for all terminally ill people, regardless of age, to be eligible for support from the winter fuel payment and the warm home discount scheme.
Anne McLaughlin
My hon. Friend directed me to the story of the couple he mentioned. One of the most moving things to read was that, on top of needing to keep everything warm, all Mel wants to do is provide memories for her little boy—positive, happy family memories. She said that she cannot even begin to do that because she is too busy trying to keep on top of the energy bills. Does my hon. Friend agree that that is one of the hardest things for any parent to bear?
Patrick Grady
Yes, absolutely, and I recommend that everyone in the House reads that report, and not just that testimony, but testimonies from other people across the country. The point Mel made is that they are not unique. That situation is repeated up and down the country, and all of us will have such cases in our inbox. My hon. Friend mentioned Scope’s research, which found that 50% of disabled people who are on prepayment meters say they are forced to ration energy usage so that they do not lose supply, 26% are going off supply in order to save money, and 14% went off supply because they were not physically able to top up their meters due to their impairment. That is disgraceful behaviour on the part of energy companies—cutting people off because they physically cannot access their prepayment meters. Citizens Advice has documented similar cases. The increasing practice among energy companies of using smart meter technology to force people on to prepayment meters is particularly concerning, especially when they are using it as a means of avoiding the requirement for a warrant to enter people’s homes.
I echo Citizens Advice’s call for a moratorium on all forced switches to prepayment meters until at least April 2023. That chimes with the calls in my hon. Friend’s motion, in her ten-minute rule Bill and in other ten-minute rule Bills and motions that have been brought before the House. The Government have been using sitting Fridays in this Session to put a lot of very worthy legislation through the House, so there is no reason why they could not find a way to prioritise my hon. Friend’s Bill and offer some security to those who face fuel poverty or disconnection this winter.
The Government must work with and, if necessary, proactively regulate the energy companies to ensure that prices are aligned. Nobody should pay a premium just because of the type of meter or payment method they use, and especially not those who can least afford it.
Rachael Maskell
Does the hon. Gentleman agree that the Government really need to talk to directors of public health? We are seeing a real spike in respiratory syncytial virus among children and babies, and in community-acquired pneumonia and flu. People in cold conditions are often the most susceptible to illness. To prevent a further crisis in the NHS, it is therefore really important that preventive measures be put in place so that people are not cold and living in damp housing.
Patrick Grady
The hon. Lady is absolutely right. The case studies that we have highlighted show that this is a health issue: it is about people’s health and wellbeing. It is not about some sort of privilege or nice thing to have.
If people’s body temperature is not allowed to remain stable and they are not kept warm, the costs will ultimately be passed on to the NHS. Like a lot of interventions and preventive measures, this is going to have to be paid for somehow, so it should be paid for in a way that keeps people well, comfortable and cared for in their own home. Otherwise, the costs will be passed on via the interventions that come through the NHS. The energy companies need to realise that and step up their response. They are getting money up front from prepaying customers, and presumably they earn interest on money going into their bank account before the energy has been consumed, so you would think it would be in their interest to make prices fair across the board.
If the Government will not regulate the energy companies and the prices that people have to pay, they should devolve the powers so that Scotland’s Parliament can step up and step in. As my hon. Friend the Member for Glasgow North East says, we are talking about energy-rich Scotland, where people living in fuel poverty look out their windows and see cheap, renewable, clean wind turbines on the horizon—energy-rich Scotland, where the average energy costs are higher than in the other parts of the UK and the use of prepayment meters is disproportionately higher. Energy-rich Scotland, as we all like to say on the SNP Benches, has the energy but does not yet have the power. As with so many issues, if the UK Government will not act, people in Scotland will ultimately decide to take power into their own hands through independence.
Kenny MacAskill (East Lothian) (Alba)
I congratulate the hon. Member for Glasgow North East (Anne McLaughlin) and others who have contributed to the debate. I agree entirely with their comments and sentiments. I want to comment on two aspects: “self-disconnection” and prepayment meters.
I am a child of the ’60s. Families of that era will all remember, because they were universal, the strictures to switch off lights and the directions to ensure that every appliance was switched off unless, like a fridge, it required to remain on. “Self-disconnection” was just never mentioned; that has arisen only in the energy crisis. Let us be clear: it is a euphemism that masks something that is frankly quite appalling.
We have had other such euphemisms. The phrase “legitimate targets” has been used when civilians, civil servants, part-time police officers—usually farmers doing it in their spare time—or even customs officers have been murdered by terrorists. Describing them as “legitimate targets” takes away the horror of it. We see it even from Governments: we have had illegal wars with “collateral damage”. No, sorry: it was not collateral damage. It was the murder of families going to prayer, to a wedding or wherever else.
Now we have “self-disconnection”. It sounds very benign: who could possibly disagree with self-disconnection? Where is the harm in self-disconnection, if somebody chooses to manage their budget in that way? What we are really talking about when we use the phraseology of “self-disconnection” is the financial circumstances imposed on people by the cost of living crisis and the energy price rises, which are all within the control and the domain of a Government who are causing hardship—albeit that people are doing it themselves because they have literally no alternative. We have to move on from “self-disconnection”. This is a Government choice that has to be changed and has to be addressed.
Let me move on to prepayment meters. The cold snap that we are living through is affecting everybody. There will not be anybody who possesses a smart meter who will not be looking at it with some surprise. Many will be looking with horror, and some with abject misery, at just what their bill shows as the meter rises before their very eyes.
Let us be clear. It is not simply a question of heating, which is fundamental during the cold snap at the moment, nor is it simply about the question that is always posed about the insidious choice that people have between heating and eating. It is also about access to power. If someone is on electricity and they have to self-disconnect, as the euphemism has it, that will also affect their ability to have the fridge on. Maintaining a fridge allows people to buy food more cheaply and keep it for longer, which affects quality of life. People who want to wash their clothes—the person going to their employment who wants to look smart, the mother who wants to ensure that her children are not picked on at school—are not able to turn on their washing machine, because anybody with a smart meter knows how fast it ratchets up when they put the washing machine on.
It goes beyond even that. Access to power provides people with access to a phone or an iPad to allow their child to improve themselves. People require access to a phone to obtain employment; on some occasions, perversely, they may even require it to top up their prepayment meter. If they cannot even get access to a phone, how can they deal with that?
As other hon. Members have mentioned, access to power also fundamentally affects life. There are people who require power for their health. The fundamental concern is dialysis: the numbers are few, but there should be no basis on which anybody with a health requirement should be required to have a prepayment meter. I know that word has been put about that that is not normally what happens, but we all know from the charities that it does. That has to change.
What are the numbers that we are dealing with? We are not talking about a handful of individuals. In Scotland, there are 500,000 prepayment meters, which equates to almost a fifth of our people. The proportion is slightly less in the United Kingdom as a whole: it is 4 million there. We are not talking about the odd person in the odd street. We are talking about whole areas that are certainly in multiple deprivation and are being forced into this. That has to be dealt with.
Smart meters should be liberated. Technology is meant to advance our society. In many instances, it has done so; access to the internet has been beneficial, even though social media has a downside, as we all know. But 13% of smart meters are now on a prepayment tariff. That is simply unacceptable: it is bringing in a wrong, and it is perpetuating a wrong. Technology that should simplify the system and make it fairer is making it worse. No smart meter should be going on to a prepayment tariff.
I agree with the hon. Member for Glasgow North (Patrick Grady) that the issue is not prepayment meters per se, but the higher standing charges and higher tariff that apply. An argument could be made that there is a need for prepayment meters. Private landlords really do want them, and I can understand that in those circumstances they are acceptable. Some public landlords would also prefer them; that, in itself, is not an issue. Some people would even prefer them so that they can manage their own budget; I might advise or counsel them against that, but it is an option that they should be able to take if they so wish, after hearing such advice. What is entirely unacceptable is the higher standing charges and higher tariff that apply. It is simply perverse that those who have least and are most vulnerable, which invariably includes people on prepayment meters, should pay more. That must end.
I have spoken to the major utility companies. Previously, with prepayment meters, they used to bung everything to Utilita, but now that we are moving on to smart meters it is all going much wider across the board. The companies accept that it would be perfectly reasonable and easily possible, with the technology we have, to change everybody to the same tariff. This is a separate issue for another day, but actually we should have a social tariff of the kind that applies in much of Europe and should apply to the poorest and most vulnerable here. There certainly should be no increased tariff for those with prepayment meters. It can be done with the current technology. At most, it would mean a very modest increase for the rest of us on credit. That is the maximum issue that would be faced by the companies that provide it. If that has to be, so be it. I am my brother’s keeper as we come to the festive period. We have a taxation system in which those who have most pay most, and if it means a very minor increase for those on credit, so be it. There are other ways that we can remedy it, such as through windfall taxes. That is what has to be done.
This euphemism of “self-disconnection” has to be killed once and for all. That is not a phrase we should accept. It is enforced austerity, poverty, misery and sometimes even death. We have to ensure that higher standing charges and higher tariffs are ended for those on prepayment meters. It can be done—it is within the scope of Ofgem. I have asked Ofgem, and it says that it is a creature of statute; it can only act on the basis of a ministerial direction. How do we end the scandal of a higher standing charge and a higher prepayment tariff? The Minister writes a letter now to Ofgem and says, “Change it.” Ofgem would then invoke it, and this would be solved. I urge the Minister to do that.
Catherine West (Hornsey and Wood Green) (Lab)
It is a real pleasure to follow the passionate speech by the hon. Member for East Lothian (Kenny MacAskill), and I could not agree with him more. Despite our constituencies being so different, there are a lot of similarities, because in Hornsey and Wood Green, we have far too many people who are doing it tough this winter and are stuck on these dreadful prepayment meters, where the standing charges seem to change overnight without any advice and the tariffs are particularly high. Members across the House have emphasised the social inequity of this situation.
I pay tribute to the chief executive of the citizens advice bureau in my constituency, Mr Daniel Blake, and all his volunteers, who do an enormously positive job to help people in their hour of need. I pay tribute to my constituency caseworkers and all those throughout the House who work tirelessly day and night to assist our constituents when they have no heating, hot water or electricity. That is increasingly common, despite the fact that we have had sub-zero temperatures for at least 10 days now. I also pay tribute to the shadow Minister, my hon. Friend the Member for Southampton, Test (Dr Whitehead), and his team, who do an excellent job in briefing MPs on the situation with prepayment meters and are trying to research and provide up-to-the-minute advice for our constituents.
I broadly want to mention the dreadful customer service. I offered to assist my constituency caseworker with some work this week, because she was rather snowed under. It took 55 minutes for E.ON to pick up the phone, and this is probably what a lot of our constituents are experiencing; because they are at the bottom of the pile, they do not get heard. Other constituents have written to me telling me that they have not yet received their energy rebate vouchers. Since October, my constituents should have been receiving their £66 per month to help with soaring bills, yet they have not had any help. One of my constituents told me:
“I have been trying to get my voucher, with no success. I have tried calling British Gas several times and have been on the phone for hours but no one picks up. I have no other way to tell them that I have tried. I am now worried I will lose this voucher!! We are entering December now.”
This is in sub-zero temperatures. I have written to the energy companies about this, and I am still awaiting a response. The MP hotline is also failing to respond on time. We know that some of the most vulnerable people in our society use prepayment meters, and many are having to pay more for their heating and pay back any debt.
In fact, the cost of energy is not just an issue for those who are on prepayment meters. I noticed in yesterday’s press that there is even an MP who is feeling so out of pocket that he has had to claim over £3,000 from the Independent Parliamentary Standards Authority because he is not able to afford his energy bill. This is obviously affecting a great many people. I would imagine that with our income, we are in a slightly better position than others. I will not mention this person’s name, because I have not checked with his office. This is a wide-ranging issue facing many in society, but the people we should be worried about in terms of the public health implications are, as my hon. Friend the Member for York Central (Rachael Maskell) and others have said, people who either cannot reach their prepayment meter to adjust it or who have significant disabilities.
I look forward to hearing what the Minister says about the vouchers, because it has been well covered in the press and I hope it has been the subject of discussions with the private companies. He traditionally has been a great champion of consumers, and I hope he has not lost that zeal since he got into the bureaucracy; I am sure he has not and is just as passionate. I am sure that he listened to the hon. Member for Glasgow North East (Anne McLaughlin) and will take immediate action this afternoon, so that we can all go and have our Christmas break knowing that our constituents will not be left at Christmas and new year dealing with suppliers who fail to pick up the telephone, MPs’ staff pulling their hair out because they are not getting replies through the MP hotline, or standing charges that flip up without any advice at all.
As many will be aware, energy prices have soared in the last year. One constituent told me:
“It’s impossible to understand how families will manage to find thousands of pounds extra a year and the anxiety throughout the country is almost palpable. My rent (private sector) will go up significantly and I will almost certainly have to move as a result”.
People on prepayment meters have to pay a daily standing charge, and their electric and gas costs are significantly higher. To give one example, I received a text saying that it cost £12 for a 20-minute use of hot water—that is for four young students who are trying to survive, have their showers and get themselves ready for their studies. Extrapolated over a 12-month period, that is over £4,300 just for gas, which powers the heating. This is clearly completely unacceptable and desperately needs an urgent review.
I am extremely concerned about the high cost of prepayment meters and the impact on our constituents. Another constituent told me:
“I’m a single pensioner living alone and I’m honestly scared by what I’m reading on my prepaid meter. Prices aren’t going to come down in the future—they’ll only rise”.
What is being done to help our pensioners, many of whom are in damp and cold homes all day? We saw the tragic loss of life of a tiny child to damp and cold in the last month. We must redouble our efforts to put more pressure on the energy companies, so that they take immediate action for the most vulnerable on prepayment meters who are paying over the odds and in advance for energy that they have not even used.
Richard Graham (Gloucester) (Con)
The hon. Lady is making some excellent points, and this debate is incredibly important, which is why I signed the original motion. Does she agree that it is wrong for people who are already in arrears and need help with their bills to have to pay about 2% more, which I think is estimated at £84 between October and December?
Catherine West
The hon. Gentleman is right to emphasise that point. He lives on the cold Gloucester plain, which can get very chilly and snowy at this time of year, so he will understand the desperate anxiety that many people in this situation are feeling. I hope the Minister will take urgent action on this, because it is not a situation that affects people in only one part of the country. It is often people in privately rented accommodation, and these prepayment metres are literally taking all the money they have.
I want to briefly mention the inherited debt problem, which some Members will be aware of. When a tenancy changes, new tenants move in and inherit the debt from the tenants who were there before. In some cases, they put their £10 in thinking that it will keep them going for a couple of days, not realising that they are carrying the debt of the tenants before. That £10 then disappears, and they find themselves having to put in £50 or £60—which they may not have readily accessible, given all the costs that go with a new tenancy—and negotiate with a completely new provider. There has to be a way of regulating that more and getting the regulator to be much more proactive and agile in these situations, so that we do not have this inherited debt problem and new tenants do not have to suddenly find hundreds of pounds just so that they can switch on their heating. I hope that the Minister will address that problem in his remarks.
Will the Minister also comment on the practical difficulty when a supplier changes? I am aware of a constituency case in which service was very disrupted when a prepayment meter switched from npower to E.ON, which eventually got on top of the mess it inherited from npower, but the tenants had a very difficult time with only basic information. What can be done to clarify and explain the enormously costly standing charges and unit cost prices currently being charged to those in the most vulnerable housing in the UK?
Alan Brown (Kilmarnock and Loudoun) (SNP)
I commend my hon. Friend the Member for Glasgow North East (Anne McLaughlin) for securing this debate. She rightly said she is looking for action, and action now, rather than self-awareness, but she also said she is hopeful, verging on confident, that the Government will take action. I do not share her confidence, but hopefully the Minister will prove me wrong.
I also commend the hon. Members for Glasgow North (Patrick Grady), for East Lothian (Kenny MacAskill) and for Hornsey and Wood Green (Catherine West) for their contributions.
Obviously, I disagree with the inequity of higher standing charges being applied to people on prepayment meters. We have heard several times how people with disabilities already pay more just to get through their day-to-day life, and they suffer from paying these higher charges, too. My hon. Friend the Member for Glasgow North East and the hon. Member for Glasgow North paid tribute to Marie Curie and its “Dying without Dignity” campaign. It is heartbreaking to hear the personal example of the friends of my hon. Gentleman. I hope Mel and Tom get all the support they need. The hon. Member for East Lothian completely destroyed the euphemism of self-disconnection, and the hon. Member for Hornsey and Wood Green covered a range of topics and constituency issues.
As well as paying tribute to hon. Members, I pay tribute to the organisations that work tirelessly on these matters, including the End Fuel Poverty Coalition, National Energy Action, Energy Action Scotland and Citizens Advice Scotland. They all agree that forced prepayment meters, especially during this cost of living crisis, will create more problems for the most vulnerable and for society.
As we have heard, the reality is that people are automatically disconnected once they reach £10 of credit. Fuel Poverty Action says:
“Imposition of a pre-payment meter is disconnection by the back door. When you can’t top up the meter everything clicks off, regardless of whether you are old, ill, or have a newborn baby.”
Forced prepayment meters mean that people who are already struggling are put on a system where they have to ration their energy and can be automatically disconnected when they reach their credit limit. They are also more likely to have a cold, damp home, with the consequent long-term health implications and the immediate heating or eating dilemma.
It is estimated that 19% of houses in the UK are damp, but the figure increases to nearly a third, 31%, of houses with a prepayment meter. In other words, a household on a prepayment meter is 65% more likely to live in a damp house compared with the average baseline.
Health conditions associated with living in a damp house have a consequence for our already stretched national health services. That reality is confirmed by figures from YouGov’s “Warm this Winter” campaign, which show that 51% of prepayment customers have health conditions or disabilities.
As the hon. Member for Glasgow North said, we have to accept that, on one level, the majority of customers on prepayment meters have chosen this as a way of managing their cash flow and energy use, but it makes no sense that the most vulnerable pay higher standing charges and are therefore at more risk of being cut off because of the £10 credit limit.
Research by Utilita indicates that as many as 14% of the 4.5 million prepayment meter households—that is 630,000 households—did not actively choose to be on these tariffs but were forced on to them. The number will dramatically increase during this cost of living crisis unless the Government take steps to ban forced switching to prepayment meters.
A recent investigation for i revealed that energy firms have secured almost 500,000 court warrants to install prepayment meters in the homes of customers in debt since the end of lockdown. That is an astonishing number, and Ofgem and the Government need to get a grip. Further freedom of information requests reveal that 187,000 such applications were made in the first six months of 2022 alone. There is a real concern that the courts are now rubber-stamping warrants to install prepayment meters.
Although I have been talking about prepayment meters, the roll-out of smart meters means that customers can be forced on to prepayment mode without the need for a warrant or for the meter to be physically changed, as they were at one time. Again, I support the End Fuel Poverty Coalition’s call for a ban on switching customers to a prepayment meter under warrant and a ban on switching customers’ smart meters to prepayment mode without their active, informed consent.
The stark reality is that the most vulnerable are being forced on to prepayment meters. They then enter a cycle of unaffordability, energy rationing, disconnection and damp housing. To compound matters, many are missing out on the Government’s support package, which makes this pernicious cycle even worse.
Caroline Abrahams, charity director of Age UK, says recent Government figures suggest that more than 40% of vouchers sent to prepayment meter households are yet to be redeemed. She expressed her concern at the estimate that at least 150,000 older households relying on old prepayment meters will miss out on the £400. This is completely unacceptable, so I ask the Minister to advise the House on what the Government are doing to ensure that the most vulnerable are able to access and use their vouchers or, if they cannot, to get some form of credit on their account.
It is unconscionable to continue charging those on prepayment meters, who are more likely to be on lower incomes, more than customers who pay for their energy by direct debit. The energy companies may argue that prepayment systems cost more to administrate, which is probably true of collecting payments, but the additional cost should not be carried by those least able to afford it. Access to energy is literally a life or death scenario, and we need to remove this standing charge inequity.
Let me illustrate the difficulty. I know someone who chooses to be on a prepayment meter. He did not use gas at all over the summer, but when he wanted to turn on the heating at the start of winter, he had to pay £70 to clear the standing charge debt built up over the summer. He could afford to do that, so it was fine, but others who rationed their energy over the summer will not be so lucky.
A briefing from Energy UK confirms that, under licence requirements following Ofgem’s measures, suppliers should identify prepayment meter customers who are self-disconnecting and offer short-term support through emergency and “friendly hours” credit, as well as offering additional support credit to prepayment meter customers in vulnerable situations. In my example of a person having to pay £70 to clear the debt accrued over the summer, the supplier did not make contact to check whether there was any vulnerability or whether assistance was required. Ofgem and the Government need to ensure such steps are taken in the here and now. They must ensure that suppliers give such assistance, as per their licence obligations.
The Government may talk up the energy price guarantee, and the billions of pounds of support allocated by that package sounds good on paper, but the reality is that, even with the current unit caps, it is estimated that average bills will cost £2,500, or £3,500 in Scotland. National Energy Action estimates there are 6.7 million households in fuel poverty, which will rise by 1.7 million in April when the average bill rises to £3,000. Nearly a third of households in Great Britain will be in fuel poverty come April.
The reality is that the energy price guarantee is no guarantee at all. Average bills are much higher in Scotland, even though, as the hon. Member for Glasgow North said, we generate the bulk of the UK’s renewable energy. It is completely unfair that Scotland generates this energy, yet Scottish people are struggling to pay their bills.
I completely support a ban on forcing customers on to prepayment systems, and the higher charges applied to prepayment systems have to be abolished, and abolished now. It is time for a proper social tariff. I accept that the Government have confirmed that they are looking at implementing one, but I fear that that will take too long and that this will, invariably, be kicked into the long grass and left to the next Government.
I also support tiered tariffs, similar to the Dubai slab tariff. That would mean that those with the lowest energy usage got a significantly lower tariff. I would extend that to those classed as vulnerable and then have incremental tariffs based on usage. In general, therefore, those who used more energy and could afford to pay more would do so, as per affordability. Such a system would also incentivise demand management, which is good for the system overall.
The reality is that more action is needed on this now, as my hon. Friend the Member for Glasgow North East said. I look forward to what the Minister will say, but I find it strange that a Treasury Minister will wind up rather than a Minister for the Department for Business, Energy and Industrial Strategy, which I would have thought would be all over this.
Dr Alan Whitehead (Southampton, Test) (Lab)
I congratulate the hon. Member for Glasgow North East (Anne McLaughlin) on securing this debate—it is essential that we have it—and on her tenacity in also introducing a ten-minute rule Bill. I also congratulate her on her optimism; apparently, she really does think that the Government might do something about this issue in the near future. I wish I shared her optimism.
Anne McLaughlin
I thank the hon. Member for his kind words. I should probably clarify that I was always brought up to believe that if someone thinks and acts positively, they will get positive results. I also think, when I am asking for something as important as this, that it is probably best not to start off by being hyper-critical. I will wait to see what the Minister says and I might change my view, but I think that positive thinking will lead to positive results.
Dr Whitehead
I thank the hon. Member for emphasising her optimism; let us see how we get on this afternoon.
Hon. Members have added to the debate positively by setting out where we are on prepaid meters and a number of issues relating to their present operation, as well as where we need to go for the future. About 15% of UK households are on smart meters for electricity and 14% are on prepaid meters for gas. That may well have gone up since those figures were last calculated. As hon. Members have mentioned, about half a million warrants to place people on to prepaid meters have been successfully passed through the courts since the beginning of the covid pandemic in 2021, so the figure is likely to be higher.
The situation is, frankly, a snapshot of the way in which the have-nots in our society are treated, as opposed to the haves. We need to keep that centrally in mind, because overwhelmingly, a substantial number of people in vulnerable circumstances, on lower incomes and in poorer housing are on prepaid meters, whereas people who are not in those circumstances have accounts. As the hon. Member set out, that means that there is a two-tier arrangement on energy debt. On one side, those with accounts can manage and work their way through very large amounts of debt. On the other side, those on prepaid meters simply cannot do that, for the simple reason that as soon as they go over the credit limit, they are out—their meter has, effectively, been switched off—and they have no more energy. Let us be clear: from the point of view of energy supply companies, that is the most efficient way to get rid of the problem that they might face, under other circumstances, of having to pursue customers for debt. Companies can simply put people on prepaid meters and they then self-disconnect, ending the problem for the energy supply companies.
As my hon. Friend the Member for York Central (Rachael Maskell) and other hon. Members said, in a recent court case in the north of England, about 496 warrants were agreed in a very short period for people to go on to a prepaid meter despite what they wanted to happen. Some people like the way that prepaid meters operate, in terms of balancing the family budget, but I would suggest that they are in a minority. Most people are on prepaid meters because they have to be and their circumstances do not allow them to do otherwise. However, it is not really the case that the courts can just rubber stamp warrants. It would be very difficult to rubber-stamp 496 warrants in three minutes—that was the speed at which the warrants were recently dealt with in that particular court case. A conveyor belt of warrants for prepaid meters is currently going through the courts, adding up to the enormous figure that I mentioned.
As hon. Members have said, there is already a differential with prepaid meters. The have-nots pay more and the haves pay less on tariffs, standing charges and so on. That is remarkable because, prepaid meters are a very good thing for the cash flow of energy companies and for getting money in up front, which I would have thought would lead to lower rather than higher charges for prepaid meters.
Catherine West
Does my hon. Friend agree that this is yet another example of rip-off Britain?
Dr Whitehead
That is right. We are allowing a group of customers to be ripped off much more easily than other people in the energy sphere. It is good that we have shone a light on that this afternoon, because this needs urgent action. For the short term, I hope that the Government will say that there should be a moratorium on further warrants to put people on to prepaid meters, at least for duration of the energy crisis. That would at least mean that, as hon. Members have already said, we would not be putting more people into a situation in which they face impossible choices in their household management. In a number of instances, people literally cannot reactivate their systems when they have been disconnected, or have self-disconnected. They simply do not have the wherewithal to get back on the prepaid meter horse, as it were, because—among other things—the standing charges continue to ratchet up.
People are also paying grossly inflated prices when they are not the direct bill payer. I am thinking of people in park homes and in various other circumstances where the landlord has a meter-charge arrangement that bears no relation to what that should be, were the money to go into the meter. So, given the energy crisis, there are a great many areas in which the Government must take action in the near future in recognition of the fact that people with prepayment meters are at the coalface when it comes to energy poverty.
Anne McLaughlin
May I ask, for the purpose of clarification, whether Labour supports at least a moratorium on so-called self-disconnection, so that no one with a prepayment meter can be disconnected, at least over this winter?
Dr Whitehead
Yes, indeed. I said it a few moments ago, and I am happy to repeat it. That, I think, is the minimum that needs to be done at this point, given the crisis faced by people with prepayment meters. However, as has already been pointed out this afternoon, a number of other actions need to be taken in the longer term to ensure that people with prepayment meters are at least on a level playing field when it comes to their energy supplies, and I hope the Government will think about that very seriously. There are a number of ideas that Labour could offer for how that long-term level playing field might be achieved, and I should be happy to work with the Government to bring it about. However, what is most important is for the Government to understand and recognise the present dire situation, and for the Minister to confirm this afternoon that they will take the necessary action to put it right so that people are no longer in such a desperate position—in so many circumstances —and are, at least, not in a “have/have not” situation.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kevin Hollinrake)
Let me begin by thanking the hon. Member for Glasgow North East (Anne McLaughlin) for the positive way in which she introduced this important and sensitive debate. Like her, I have always adopted the principle that we get more with sugar than we do with salt, so I do whatever I can to protect the customers about whom she is concerned, particularly those with prepayment meters. As she said, the problems among that cohort will become worse during the winter, notably the cost of living crisis and the cold weather—nowhere more than in Scotland, she said, although north Yorkshire also gets fairly cold at this time of year, as, indeed, do other parts of the country: my hon. Friend the Member for Gloucester (Richard Graham) mentioned parts of his own constituency where people are being affected.
The Government entirely share the hon. Lady’s concerns. It is of course important to bear in mind suggestions, such as those made in today’s debate, of ways in which to keep our rules and regulations and processes under review to ensure that these vulnerable people are protected. However, we are able to provide robust protections and financial support for people in those circumstances, and I shall say more about that shortly.
The problems of debt create great anxiety, and that is another element that requires consideration. At times in the past I have been in debt, both personally and in my business life, and I know how anxious it can make people and their families. For some years I co-chaired the all-party parliamentary group on poverty, whose aim was to reduce the impacts of poverty and which considered matters such as the poverty premium, which is relevant to the issue of prepayment meters.
Ours is not the only country that has these meters; they are used around the world, with the purpose of managing debt. The one thing that people in circumstances such as this need to be able to do is budget properly. I think it was acknowledged by the hon. Member for Glasgow North (Patrick Grady) that prepayment meters have a role in helping people to budget, and can reduce the chances of their getting into debt or their debt increasing, making their position even worse.
Catherine West
I think the whole House would accept that advice on debt and debt management is crucial, but when a student household is spending £12 for 20 minutes of hot water, which, extrapolated over 12 months, is £4,300—and that is not even a dual fuel bill; it is a single bill—there is a problem, and it has nothing to do with debt management.
Kevin Hollinrake
That is definitely an issue. We need to ensure that people have access to fair deals, and I shall say more about that in a moment.
As was acknowledged by the shadow Minister, the hon. Member for Southampton, Test (Dr Whitehead), one of the difficulties involved in not using a prepayment meter is the fact that the only alternative would be court action, which could potentially increase the debt and affect someone’s credit rating, which is the least desirable outcome.
Anne McLaughlin
The Minister seems to be arguing that if the energy companies have to take people to court, it will cost those people more than having their prepayment meters cut off. The point is that they will not be taken to court immediately. Someone like me can wait for a year while the energy company is trying to work out some plan. Energy companies are more likely to work with the person concerned to find a way for them to pay their bills than to take them to court straight away.
Kevin Hollinrake
The hon. Lady has raised an important point about people being treated equally. In these circumstances, people will often have been through the processes that she has described. They will have been on normal payment terms, and there will have been a debt recognition and reconciliation process that may have ended up with people either adopting a prepayment meter voluntarily or, as a last resort, having one forced upon them. There are mechanisms, which I will explain in a minute, whereby people are granted abeyance and forbearance.
In the case of many households, if debt were allowed to spiral out of control—and that is not generally voluntary; it is more often due to matters beyond the control of those households, and it is important that we provide support for them—the suppliers themselves could find themselves in a perilous position. These are commercial suppliers of electricity and gas. In fact, this could force out of the market suppliers who specialise in cases such as this. The last thing we want is a lack of provision for people in these circumstances.
These prepayment meters have moved on from the ones that we used to have. The modern smart meters are far easier to top up remotely, and make it easier to check balances.
Stephen Kinnock (Aberavon) (Lab)
I thank the Minister for giving way; he is being very generous.
My constituency office is being contacted by a great many people who have still not received their prepayment vouchers from the energy suppliers, but are receiving letters from the suppliers telling them that if they do not use the vouchers by January they will be cancelled, which would of course push those people further into debt. What are the Government doing to ensure that they receive the vouchers and do not lose the money to which they are entitled?
Kevin Hollinrake
Other Members have made that important point, and I will come to it, but I had better make some progress, because you asked me to finish in about four minutes, Madam Deputy Speaker, which I shall endeavour to do.
We believe that there is a role for prepayment meters. Ofgem rules already require energy suppliers to offer a prepayment service only when it is safe and reasonably practicable to do so, and that applies whether a meter is smart or traditional. There are clear obligations on energy suppliers regarding customers in payment difficulty, and a prescribed process for occasions on which a warrant is required. That point was raised by the hon. Member for Kilmarnock and Loudoun (Alan Brown) and, indeed, by the hon. Member for Glasgow North East.
There are clear expectations for suppliers in respect of the steps to be taken before they instal a prepayment meter owing to debt, or switching a smart meter from credit to prepayment mode. Those steps include conversations to discuss debt repayment, budget management and energy efficiency measures, and referrals to debt advisers and charities. Before a prepayment meter is chosen as the debt repayment pathway, its safety must be assessed, as well as the customer’s ability to pay. Suppliers must give their customers seven days’ notice before installing a prepayment meter or switching a smart meter to prepayment mode. Ofgem recently published a regulatory expectations letter, in which it set out its expectation that suppliers will ensure that prepayment meters are safe and reasonably practicable in every case.
I would like to highlight some of the circumstances in which it is not deemed safe to have a prepayment meter, which include having specific disabilities or illnesses, or having children under five, as has been set out. Indeed, the hon. Member for East Lothian (Kenny MacAskill) raised that point. It is absolutely right that we provide support for those who are most in need.
The hon. Member also raised the issue of social tariffs, which were introduced in 2008 as part of a voluntary agreement between the Government and energy suppliers. They were replaced by the current mandated warm home discount scheme in 2011. This has improved outcomes by providing consistent and transparent benefits, and by utilising data matching to improve targeting. Clearly, it is important that we continue to review our current provisions and see what else might be done to help people in those circumstances.
Alan Brown
The Minister almost seems to be making an argument that the warm home discount scheme has been more successful than the social tariffs. Why then has the Department for Business, Energy and Industrial Strategy confirmed that it is considering revisiting social tariffs? I do support that, but he seems to be making a contrary argument.
Kevin Hollinrake
I do not think it is a contrary argument. We should always look to improve our rules. We believe it is an improvement on the past scheme, but there may be further improvements we can make. That is the right iterative process to take.
Richard Graham
On action, what does the Minister think can be done on social tariffs?
Kevin Hollinrake
That is a very good point. We are happy to listen to evidence from right across the House on different things that might be done, but clearly the most important thing is to ensure that support is targeted at those most in need. If there are better ways to do that, then we should certainly be listening. I would be very happy to talk to my hon. Friend at any point about any suggestions he might have. I know these issues are very important to him, so I am very keen to continue that conversation.
Kevin Hollinrake
I am sorry, but I am already past my time. I will have to conclude.
As Members will know, the Government have stepped in through various different mechanisms, including the energy price guarantee, energy bills support scheme and the energy bill relief scheme for businesses, with about £75 billion of taxpayer support for those areas.
The hon. Member for Hornsey and Wood Green talked about inherited debt, which is a very interesting point. We have not had evidence of that. If she has evidence of that and could write to me, I would be very interested in taking that up for her.
Before I conclude, I want to touch on standing charges, which is a very important point. We want to ensure that the market is as competitive as possible, so that people can access fair deals and we do not get the poverty premium that I mentioned earlier. Under Ofgem rules, charges must reflect the cost of delivering the service. It can be the case that there is a higher cost to suppliers for operating supplies for those on prepayment meters. It is important that we continue to look at that to see whether there might be better ways to ensure those customers are treated more fairly.
To conclude, the Government are listening to consumers and industry. We are providing a substantive support package via the energy bills support scheme and the energy price guarantee. Ofgem, the regulator, has set robust regulatory protections for consumers on prepayment meters. We are committed to providing the support and protections necessary to ensure that consumers and industry will thrive in the decades to come. [Interruption.]
I will conclude by talking about the vouchers. There is a problem in terms of vouchers. About 60% of people have managed to gain support through vouchers. We have written to suppliers on this particular matter. We need to improve the communication between suppliers and customers to ensure that take-up is higher. We believe that the take-up will improve over future weeks, but we are definitely keeping that under review and are keen to ensure all that support reaches households where it is intended to do so.
Anne McLaughlin
I thank everybody who participated in the debate and who signed the application. I also thank my team—it was my office manager, Margaret Young, who first brought this issue to my attention. I do not think she realised how much it was going spiral. I want to thank all my team, most of whom are sitting in the Gallery today: Michael Bannister, Robyn Hendry, Ruairi Kelly, Kilian Riley, Niamh McGeechan and Caitlin Burgess. The reason I am thanking them is because they have all got involved in this. They have all helped to develop this campaign—and it is a campaign, because this is not the end of it. I have not heard answers to my questions today, I am afraid to say, and I am really concerned.
One of the things I am concerned about is that the Minister says that we cannot allow debt to spiral out of control. In that case, we should all be paying our bills in advance as well, because our debt could spiral out of control. It does not, so why can everybody not simply be treated the same way?
The last point I will make is on processes. The Minister talked about how different processes have to be gone through, but there is no consistency of approach—Ofgem has said that there is no consistency of approach. The whole thing is a mess. There is so much that needs to be sorted out, so I will keep asking. I will ask every day, and I will not just ask the Minister.
I am going to ask for at least a moratorium over the Christmas and then, when we come back in January, we can start to sort out this mess of prepayment meters. We cannot go back to our warm homes now and say, “Bye, bye. I hope you don’t get cut off, but you probably will because you can’t afford to pay your bills.” We have to do something. A moratorium for now is the least we can do.
Question put and agreed to.
Resolved,
That this House recognises that prepayment meter customers, who pay for their usage in advance, are not afforded the same rights when in energy debt as customers who pay in arrears, such as those who pay in direct debit; understands that a prepayment meter customer is automatically disconnected when they exceed just £10 of debt; acknowledges that, in contrast, those who pay in arrears are afforded time and support to resolve their debts before action is taken to disconnect; is deeply concerned that so called self-disconnection of prepayment meter customers will see the most vulnerable in our society left without heat, light and facilities to cook and wash over the coming winter; and strongly urges the Government to outlaw self-disconnection to ensure that the poorest and most vulnerable customers are not left without basic energy provision.