Cost of Living

Debate between Alan Whitehead and Jake Berry

Wednesday 16th May 2012 Commons Chamber

[Jake Berry]

It was 46p when I bought it last weekend, but since the general election, the cost of the pint of milk that I buy for my milky coffee has gone up by 10%. Although that is not the world’s greatest economic indicator, all hon. Members can accept that it is a symptom of the huge increase in the cost of fuel, which puts pressure on families in all our constituencies.

I am a great supporter of the great British pint—I am sure some of my colleagues think that litres are a European abomination—but one thing that we buy in litres is fuel. The cost of fuel in my constituency is 6p or 7p a litre more expensive than in the neighbouring towns of Bury and Bolton. I became absolutely fed up with that, so I wrote to the major supermarkets to ask why there is such a difference. Apparently, for people who live in rural isolated areas such as Rossendale and Darwen, the local supermarket sets the cost of the fuel at the pump. Therefore, in a small geographical area that encompasses my constituency alone, the biggest retailer in my patch—the supermarket—sets the price and is the major supplier.

People in my area say, “Welcome to rip-off Rossendale or dearest Darwen if you want fuel in your car.” That situation cannot be right. It is wrong that supermarkets behave in that way on fuel pricing. I can find out the price of a Tesco pint of milk or a can of beans by going on its website, but it is not prepared to set a tariff for fuel nationally and instead discriminates against rural and isolated areas.

I support the Government’s idea of getting energy suppliers, particularly the utility companies, to write to their customers to offer them the lowest tariff, but supermarkets should offer petrol at the cheapest price to the young, hard-working families in my constituency—they might have to put diesel in a van to go to work or petrol in a small car to take children to school—and not at a price that they know they can get away with just because of location. The major supermarkets have had a monopoly—the hon. Member for Westmorland and Lonsdale (Tim Farron), who is no longer in his place, spoke extremely well on farming and the price of milk in that respect. Anti-competitive practices on fuel are pushing small, independent fuel retailers out of business, which is bad for businesses and for my area.

That extra £5 a week where I live to put fuel in a vehicle to go to work is the difference between people being able to turn the heating on or not, being able to feed their children healthy food or not, or being able to go out and spend money in the economy or not. I hope fuel price setting is part of the Government’s programme to look at the relationship between supermarkets and their suppliers.

The cost of gas and electricity is another major issue raised by all our constituents. Those costs have ballooned beyond anyone’s increase in income over the past few years. They have risen by as much as 20%. We tell people to switch supplier. When people visit me in my patch, they say they will not switch supplier because they are nervous of bill shock. Uniquely, virtually, in a service industry supplying utilities to our houses, it is expected to be self-service. People are asked to read their own electricity meter. People in my advice surgeries have told me that they purposely underestimate how much electricity or gas they have used to help manage their cash flow. That builds up a huge legacy bill. Others simply have underestimations having had their meter readings underestimated over a long period.

Those people are worried about switching, because they know that when they switch they will have to give an up-to-date meter reading and will have a huge legacy bill that they cannot pay. These people, sometimes those on the most expensive tariff, are unable to switch because they cannot pay their historical bill. That is why it is absolutely right that the Queen’s Speech sets out a programme to introduce smart metering. Bglobal, a successful business in my constituency, which I am delighted to see has retained its profitability, does business-to-business smart metering. There is an opportunity for us all to have smart meters in our homes.

[Dr Whitehead]

Does the hon. Gentleman think that consumers should pay for smart meter installation or should other methods of payment be considered?

[Jake Berry]

However they are paid for, ultimately the consumer will pay, because if the electricity company pays, it will be added to the bill somewhere.

I am glad that the hon. Member for Southampton, Test (Dr Whitehead) is interested in smart metering. As I said, Bglobal, a business-to-business smart meter supplier in my constituency, is doing very well. The great thing about smart meters is that they enable us to pay only for the energy we use. There is not the bill shock; there is not the legacy bills which make people nervous. Paying only for the energy we use helps us to manage our electricity consumption and means that we can reduce it over time. People underestimate their readings so that they can manage their cash flows and pay their bills, but that is not real; they are simply putting off the pain. I want people to understand that by smart metering they can regulate their utility use and genuinely reduce their bills.

Bill shock is a real block to switching, as too is the fact that switching between the majority of energy suppliers involves an online medium. I refer to the uSwitch website, which I am sure many Members have used. That is a real block for the elderly and people on low incomes who do not have an internet connection. There are plenty of silver surfers in my constituency—they e-mail and tweet me—but that is not for everyone, so switching online is not right for all. People without phone lines or internet connections cannot switch.

Having said that, uSwitch does make the switching facility available in paper form. I am sure that many Members, like me, have collected the uSwitch envelopes and taken them out to elderly constituents, saying “Get your last utility bill, put it in here, and uSwitch will write back telling you the best tariff to go on.” As MPs, we should be publicising that and ensuring that vulnerable constituents are not excluded from saving what can be hundreds of pounds by switching their electricity supplier.

I support the Government’s proposal that energy suppliers should be compelled to write to their customers every year offering them the cheapest tariff. That does not enable people to switch between suppliers, but it at least ensures that they are on the best tariff. Of course, that is not always the one with the lowest electricity charge. Some people—those with very low usage, for example—might choose not to pay the standing charge and pay slightly more for their electricity. Tariffs have to be tailored to individuals.

Finally, I turn to the proposal to ensure that power generation in this country is environmentally sustainable. Often in this place we obsess far too much about short-term issues. As important as things are such as the eurozone, part of our job has to be horizon scanning. If I scan the horizon and think about what might affect our children or grandchildren, global warming is probably the biggest issue that I spot. I absolutely support the Government proposals to move to more sustainable electricity generation, but we have a problem with wind energy. In my constituency, 30 planning applications for wind turbines are currently under consideration by the local authority. That points to a market that is completely out of kilter with commercial reality. We saw it with solar energy: we had a sort of gold rush, because people suddenly realised that they could get 16% guaranteed by the Government tax-free. We are now seeing similar speculation by major energy suppliers, with the applications for large wind turbines in my constituency.

We all support wind generation, but I do not want to see my patch become the wind capital of the UK—although colleagues might look at me and think that it already has become that. I hope that the Government will have a look at the subsidy for wind generation and try to ensure that we cut the “get rich quick” merchants—the speculators—out of the market. I am happy to see the development in my area, but I want to ensure a local benefit, so that it really works for our children and grandchildren.