Energy Bill

Lord Bishop of Chester Excerpts

Tuesday 9th July 2013 Grand Committee

[Baroness Maddock]

My Lords, my amendment uses nice, simple words. As I said earlier, I am not a lawyer and not very good at this. I discovered that in Schedule 14, page 200, line 43, there is a rather more flowery way of putting it:

“publishing the statement in such manner as the Authority considers appropriate for the purpose of bringing the statement to the attention of those consumers”.

I found that after I had made up my simple amendment, which, luckily, was accepted. It is quite interesting that my noble friend Lord Caithness made exactly this point in his intervention in the previous series of amendments.

Like my noble friend, I am interested here simply because of the bills that I, my friends and my 94 year-old mother have had. You look at them. We have sometimes changed our supplier, and when we got a condensing boiler for the first time—we are on to our second as the first one burnt out—I tried to work out how much gas we were saving. That was difficult. I am an A-level mathematician and I still could not work out with ease whether we had saved. I worked it out in the end but it was very complicated. Gas is the most complicated because they use therms and things that make it much more difficult.

It is from that standpoint that I am concerned. If we really want people to get the best tariff, to understand what they are doing and how much energy they are using and to use less energy, we need better bills and better formats. As the noble Earl said, bills can run to five pages. Sometimes I have had four pages. You also sometimes find that you have something on the first page and then on the third page it is something quite different.

The other thing that concerns me is something that I mentioned at Second Reading. As someone who has produced political leaflets for years, I was told by people who had carried out research what to do if you want to get your message across: where it is on the page, what sort of type you use and the colours that do not work. If there is yellow print on top of something, older people cannot read it at all. There are all sorts of things that surprise me about the way in which companies, the big six particularly, produce their bills. I remember British Gas coming to me and showing me a bill saying, “Isn’t this good?”. I said, “Well, actually, no. The thing you want is not in the place where people look first on a page”. This is quite important. It is difficult to prescribe—you cannot prescribe in that much detail to the energy companies—but it is important that we try to ensure that it is simple so that people can understand it and really compare. They, particularly elderly people, must be able to read it.

Quite a lot of us are older now. We cannot read tiny print in the wrong colour. That is why I put down the amendment. It may not be appropriate at this point in the Bill, I do not know, but it seemed to fit in with what was going on. These might not be the right words but I think that everyone will understand the sentiments. It is quite clear that other noble Lords share those sentiments. I hope that the Minister can give a reasonably positive reply to my amendment. I beg to move.

[The Lord Bishop of Chester]

My Lords, if I may make a brief contribution here, I get electricity to my home, which is also in Scotland but in the southern part, from a Scottish company. I have tracked the way in which the bills have developed over the years, and it is a sad fact of the modern age that the more information you can provide, the less informative the document often is. This is partly a feature of the digital age in which we live; the more e-mails we get, the less we understand about the world around us, and so on.

There is one particular matter on which I would like the Minister to offer some reassurance: the various government obligations that arise out of climate change policies. We may have different views about the importance of those policies, but there really should be clarity in bills about just what the government obligation element is. There is the 5% VAT but there is also another percentage that is going up quite steadily and rapidly, and I think that should be listed.

The company I have mentioned, which I shall not name, used to do that. The bills were shorter but they said, quite simply, “Government obligations”, and gave an amount. Now, for some reason and I do not understand why, the company has hidden that information. You can find it if you dig around, but I hope that these bills, in addition to the unit cost—the actual cost of the energy—and the VAT, list as a discrete amount what we consumers are asked to pay to subsidise wind farms or whatever, in the interests of transparency. As I say, I have seen a particular company, for whatever reason, perhaps inadvertently, move backwards on this issue. I hope that this can be taken on board in the interests of clarity and transparency.

[Lord Jenkin of Roding]

Is the right reverend Prelate asking that this should be a separate figure in pounds and pence on each consumer’s bill? At the moment, on my bills those figures are all given as percentages of the whole bill. Government environmental obligations come out at 11% of whatever the amount is, and one is able to work out what that is in relation to the bill. I would like to know what he is actually asking for.

[The Lord Bishop of Chester]

I am all in favour of both. You should be able to put the percentage and say what that percentage is. That is just two parts of one line, isn’t it? The noble Lord has mentioned 11% but the figure that I had in my mind was 7% or 8%. However, I think it will be going up to 15% before long on the track that we have. If we are worried about fuel poverty, and we all are, I would be quite interested to know how many people are put into fuel poverty by these precepts on the energy bills. That is a factor that we have not considered. Still, that is by the by. I just think we need clarity and transparency in an easily understandable way.

[Baroness Maddock]

On the point about percentages, we need to be careful. Surveys have been done, and the noble Lord, Lord Whitty, probably knows this, which show that the understanding of percentages in the vast majority of the population is not very good. They would probably understand better how much of their bill they were paying rather than a percentage.

--- Later in debate ---

[Lord Whitty]

My Lords, I have two issues. First, I support the clarity referred to by the noble Lord, Lord Teverson, that is promoted by the amendment proposed by the noble Baroness, Lady Maddock. Secondly, there are issues relating to the cost of carbon, and so forth, which need to be reflected in energy bills, but I am not sure that I would agree with what the right reverend Prelate says in how we present that. There is a cost to all of us of carbon and to isolate it separately in a crude way would not necessarily improve understanding. The Government would have difficulties in that respect.

On the consumer issue, I would just mention the survey about unit pricing that I referred to under the earlier group of amendments. On the question of percentages, the public do not understand APRs when they take out loans, so they will not understand TCRs in relation to this operation. The Which? survey shows that three out of 10 people using the tariff comparison rate found the cheapest rate whereas more than 80% found the best comparison when they were demonstrated by unit prices. So the use of clear figures but not necessarily percentages will help in that regard, and I support the noble Baroness, Lady Maddock.

[The Lord Bishop of Chester]

Can I just come back on this point? What I wanted was for the government obligations to be listed. One justification for these green taxes is that it saves money in the long run because of this, that or other theory. However, when the Government themselves impose a financial tax or precept, or whatever you want to call it, we should all surely want a degree of transparency about it. Then there is an argument about whether it is justified because of other long-term savings. The danger is that if you hide these things away you cause the lack of confidence in consumers that the amendments that we have discussed are precisely about.

[Baroness Verma]

My Lords, noble Lords must forgive me for trying to step in before the noble Lord, Lord Whitty. I am extremely grateful to my noble friends Lady Maddock and Lord Roper for their amendment. This is a follow-on from our previous discussion. My noble friend Lord Caithness rightly then ensured—and continues to ensure—that this debate around simplification and clarity is high on the agenda. The amendment proposed by the noble Baroness tries to lay that out in simple terms, saying that the information provided as part of a message on bills, annual statements and other communications detailing the suppliers’ cheapest tariff must be provided in a clear and easily understandable format.

Ensuring that consumers are provided with clear and simple information regarding their existing tariff and others available to them is one of the key aims of the powers in question and Ofgem’s retail market review. A power to require suppliers to provide consumers with personalised details of the expected cost of a given tariff and information on the supplier’s cheapest tariff for them is one of the means by which this will be achieved. That consumers should receive information about tariffs in a clear and understandable way is something that we have made plain to suppliers as being central to our proposals. Should it become necessary to use these powers, we expect to set this out explicitly within the actual amendments to suppliers’ licence conditions. Indeed, Ofgem’s proposed changes to suppliers’ licence conditions to implement the RMR already include such provisions. Standard licence condition 31E, once amended, will set out specific plain and intelligible language and presentation requirements for information provided to customers. We have always been clear that we expect suppliers to provide information to consumers that is clear and understandable. However, if noble Lords feel that we have not been clear enough then we are happy to consider this matter further and return to it on Report.

In response to the concerns of the right reverend Prelate the Bishop of Chester, I sincerely understand his desire to see clarity on bills, but that is up to suppliers to do. Ofgem can direct, but it is actually for suppliers to do it. Somewhere I have a note on this that I have now conveniently lost. Ofgem is producing factsheets that provide a breakdown of the costs that make up a typical energy bill. We are aware that some suppliers are already providing this, and the right reverend Prelate mentioned that there may be one that he would not mention by name. We do not hold comprehensive data on each individual supplier’s approach. Maybe that is something that Ofgem needs to look at. Given that I am taking this matter away to consider it further, perhaps this is something else that I may reflect on. I hope that my noble friends will find my explanation reassuring and withdraw the amendment.

[The Lord Bishop of Chester]

May I probe the Minister’s position in this way? Can she give the Committee any reason why there should not be a requirement on energy companies to provide a line that simply says what the Government’s tax or obligations are? I cannot see a reason why that should not be done. As she says, some suppliers do it but some seem to change their policies. Given that the amounts are already significant and will be even more significant before long, the bottom line, as the noble Lord, Lord Whitty, began his speech by saying, is that the most important thing to people outside this Room is how much this costs.

[Baroness Verma]

As I have said to the right reverend Prelate and to the Committee, suppliers are not obliged. Still, I will take this away and reflect on how we can make bills easier and simpler for consumers to understand.