Energy Prices
Debate between Baroness Laing of Elderslie and Caroline Flint(10 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. The hon. Gentleman is not making a speech. An intervention has to be short.
Caroline Flint
This is a chance for us to come together and pass the motion so that we can tell the public that we understand that regulation does not protect them when wholesale prices fall and those cuts are not passed on to them.
Let me start by explaining exactly what has happened to wholesale prices. Energy suppliers source their energy in a variety of different ways over a period of time. For the big six, some will be bought from their own generation arms, some will be bought in bilateral deals with other generators, and some will be bought via an open exchange. This process of buying and selling, and re-buying and re-selling, will begin some years before the energy is required for delivery. Not all of those trades are made public. It is precisely that lack of transparency that lends weight to the suspicion that energy companies can always find some kind of wholesale price movement to justify whatever prices they want to charge.
On the data that we do have, however, and to which the regulator has access, the picture is clear: wholesale prices are down, and not just slightly down, but substantially down, month after month. Forward prices are 16% lower for gas this year compared with last year, and 9% lower for electricity. Spot prices are 38% lower for gas compared with last year, and at their lowest level since September 2010, and electricity prices are 23% lower and at their lowest level since April 2010. But so far, the only people to benefit are the energy companies.
One of the things that happened when Labour was in government was that Ofgem began requiring companies to report publicly on their profits. Two weeks ago, in its most recent supply market indicators, Ofgem found that the profit margins on selling gas have now hit 10%, double the 5% margin the companies were making this time last year. The profits on a dual fuel bill have more than doubled during the last year, too. But consumers have not seen any benefit, and if the energy companies fail to cut their prices for the rest of this year, a typical household could miss out on savings of more than £130. The same is true of businesses, which have even fewer protections than households, a problem that my hon. Friend the Member for Streatham (Mr Umunna) and I are determined to correct.
Cost of Living
Debate between Baroness Laing of Elderslie and Caroline Flint
Caroline Flint
Yes, further delays to that programme were announced last week. Whether it is smart metering, the green deal or changes to the feed-in tariffs, we have seen one mistake after another and bad handling of what should be very good policies not just for consumers, but for creating jobs and growth in this country.
Curbing the costs of energy for Britain’s households is very important, but the Government have introduced an energy market reform Bill that does nothing to reform the energy market. They have cut winter fuel payments for pensioners, despite promising not to. They have halved the fuel poverty budget while claiming it is bigger and better than ever. They have closed Warm Front, which helped well over 2 million households to insulate their homes. They stand proudly as the first Administration since the 1970s not to have a Government-funded energy efficiency scheme.
If this was our Queen’s Speech, we would be providing real help now for people and reform of the energy market for the long term. Here are three Labour policies that we would have included. [Interruption.] Well, we have been mentioning all these policies for the past year and this is another opportunity to confirm them again. First, elderly customers, who are most vulnerable to the cold weather and most at risk of fuel poverty, are among the least likely to be able to access the cheapest online deals or to switch supplier. We would put that right and put all those over 75 on the cheapest tariff for their gas and electricity. If we did that, as many as 4 million pensioners—including nearly 8,000 in the Secretary of State’s own constituency—could save as much as £200 a year off their bills. [Interruption.] The Minister of State, the right hon. Member for Bexhill and Battle (Gregory Barker), might like to listen, as I am offering him this policy to put in the Energy Bill. The energy companies know that that is our policy and they know that it can be done. The Government can have that policy for free; take it, put it in the Energy Bill and get help to those who need it most.
We also want everyone to benefit from a competitive and more responsible energy market. That means wholesale reform of the way in which energy is bought and sold. At the moment, no one really knows what the true cost of energy is. If energy companies were forced to sell the power they generate into an open and transparent pool, anyone could bid to retail energy.
But it does not stop with energy prices. Let us look at another basic need on which every household relies; water. Ofwat estimates that some 2.2 million households—one in 10—spend more than 5 per cent of their income on water and sewerage. As my hon. Friend the Member for Wakefield (Mary Creagh) has pointed out, despite Labour’s legislation, which allowed for new social tariffs to help people squeezed by rising water bills, the Government have washed their hands of any responsibility and are leaving it to water companies to decide whether to introduce social tariffs. We think that that is a responsibility that the Government should take on and deal with.
Mrs Eleanor Laing (Epping Forest) (Con)
The right hon. Lady is coming forward with all these ideas now, but why did her Government spend 13 years neglecting the country’s energy needs? Why did they not bring those matters to the House during that time?
Caroline Flint
I refute that accusation; investment in energy was up, there were more starts in terms of renewables, some of which will be completed under this Government—that is our legacy—and by tackling fuel poverty, the insulation programme through Warm Front and the decent homes programme we helped millions of households.
To answer honestly, I have witnessed things over the past three years that have made me challenge what we need to do for the future in terms of how the energy market works. It is up to all of us to reflect on where we are today and on what has happened in the past three years and try to put it right. That is why we believe that we need to encourage new entrants, increase competition and ease the upward pressure on prices.
One of our other proposals is to deal with Ofgem. Ofgem removed price controls a decade ago, so in the belief that competition had developed sufficiently and that privatisation had delivered a functioning competitive market. I believe it is clear now that that was a mistake. We need to create a tough new regulator that people can trust and ensure that the regulator has the power it needs to protect consumers. That is why we would abolish Ofgem and create a tough new regulator with a statutory duty to monitor the relationship between the prices that energy companies pay for their energy and the bills the public pay and the power to force them to cut prices when wholesale costs fall. We believe that that is very important.