Energy Bill [Lords]

Albert Owen Excerpts

Wednesday 14th September 2011 Commons Chamber

[Mr Baron]

I thank my hon. Friend for those questions. I hope that both of them will be addressed by the research undertaken if the group deemed it necessary.

[Albert Owen (Ynys Môn) (Lab)]

I apologise for coming in and out of the debate because, like many other hon. Members, I have had to deal with other issues. Does the hon. Gentleman envisage his amendment covering people who are off-grid who are not protected by Ofgem and have difficult suppliers? Indeed, their supplies can be cut off at short notice. We are dealing with people who are connected to both gas and electricity mains, but more than 4 million households are not on the grid. Those people can be highly vulnerable and experience the greatest fuel poverty.

[Mr Baron]

I thank the hon. Gentleman for making that point. I hope that there will be no discrimination in how the information is presented. It is as simple as that. Bills go out to everyone in the land, and the information would be pertinent on those bills. Again, the research would ensure that we reached all sectors of our communities.

--- Later in debate ---

[Guy Opperman]

I totally endorse that. In certain areas in Northumberland, such as in the communities of Tarset and Allendale, similar approaches are being pursued by local communities’ grouping together and purchasing from a local supplier. In my area, we thought we had 21 different companies but in fact we have one company masquerading as 17 providers and four independents. Fortunately, the four independents have been identified and should be supported; indeed, I assure hon. Members that they will be supported because of the way they are trying to do business and support the local economy and are not an Irish-based provider in a cartel.

Following on from the community projects we have been talking about, I endorse the work of organisations that have addressed this issue and worked to improve the position for the individual consumer and constituent. To their great credit, Age UK and the National Farmers Union have done tremendous work to address the matter. It is worth noting that of the 10 things most likely to be stolen in thefts and burglaries of people’s houses, the sixth-highest is fuel—in Northumberland, the figure is probably even higher. The Countryside Alliance should also be complimented because the rural action that it has proposed is massively successful; it is identifying ways in which the community can be assisted, and not just in farming communities and market towns. In my constituency there is no question but that fuel poverty is an issue in residential parts of places such as Prudhoe, Haltwhistle and west Wylam. Those are not areas of farmland and sheep—they are nothing other than normal houses where people are struggling to stay above the fuel poverty line.

Today, I met representatives of the Young Foundation, which supports The U—a citizens’ university-based organisation in Hexham that is working for specific energy efficiency projects. Those projects are just the sort of thing that will benefit from the green deal in future. They, along with the Green Alliance and several Members of Parliament, are working together to try to provide flagship examples and leadership for the type of constituency and community that is putting green policies at the heart of the community. There is great scope for a community-based way forward to try to strengthen our ability to address energy efficiency.

I support the Bill, but I want to touch briefly on new clause 19, which was tabled by my hon. Friend the Member for Basildon and Billericay. It will be no surprise to hon. Members who have listened to my contributions to hear that I should like to see clarity of provider ownership on bills. At the moment, individual consumers are being misled by their failure to understand which parent company owns particular providers. I accept and endorse my hon. Friend’s comments that new clause 19 is a way forward. It addresses the additional information that should be supplied by energy suppliers on bills and I hope that the Government will support it. It is supported by Which?—an organisation that self-evidently works on behalf of individual constituents and consumers—and a number of other organisations that are greatly to be credited. Anything that ensures that a generic signposting message is displayed prominently on all customers’ energy bills, detailing how they might reduce those bills, should go ahead. We should ensure that such messages are on bills. Indeed, I go further in saying that it would be of great benefit if something were supplied on that issue this year, although I accept that it might be difficult to do that by 1 December given the bureaucracy involved.

I should like to have seen a further subsection added to new clause 19—it is to my detriment that I failed to table an amendment to it—that would have touched on clarity of ownership, but perhaps we can return to that after the OFT has produced its report, when we know what it says about the role of DCC Energy.

I support the Bill and the green deal. The constituency that I represent and the whole of Northumberland is well behind the green deal and the objectives that it seeks to achieve.

[Albert Owen]

It is a pleasure to follow the hon. Member for Hexham (Guy Opperman). I welcome him back to the House. He is in good campaigning mode on fuel poverty and off-grid fuels in peripheral areas of the United Kingdom. I support new clause 1 and the other Opposition new clauses and amendments, but I shall limit my remarks to new clause 19, tabled by the hon. Member for Basildon and Billericay (Mr Baron). He highlighted in his opening remarks how important energy issues are to households and how the price hike of recent months and the trend that is forming are hurting every household in the United Kingdom. That is something that we need to address.

Good measures have been taken by previous Governments and, indeed, this Government with social tariffs, but the market simply does not work for many people. The price hikes are unsustainable, hurting and causing fuel poverty across the country. I welcome new clause 19 when it talks about clarity and simplifying bills, so that people have ready information.

I am glad that the Minister of State, Department of Energy and Climate Change, the hon. Member for Bexhill and Battle (Gregory Barker) is still on the Front Bench. He is on record as saying that he was so confused by the information available when he tried to switch supplier that he just gave up. I am in the same league as him. Energy companies deliberately give so much information to their potential consumers and customers that they do not bother.

I am a member of the Select Committee on Energy and Climate Change. We have held a number of inquiries and a mini-inquiry when price rises were announced just before the recess. We took evidence from three of the big six companies. There has been a review and there will be further reviews of energy pricing and tariffs and how the companies present their bills. It was interesting that 40% of those who decide to switch supplier are no better off when they do so, and many of them do so under duress; they switch just to get rid of cold-callers. So it is important that we have such a clause as well as other legislation and regulations that allow individuals to have clear and concise bills, so that they can make clear and concise choices and, we hope, reduce their energy prices, thereby reducing fuel poverty.

We will extend the retail market inquiry being undertaken by the Department of Energy and Climate Change to find out more from experts, including consumer groups, which have been helpful. I join hon. Members in putting on record my appreciation of the work done by consumer groups, such as Which?, Consumer Focus and Citizens Advice, in helping to frame proper protection guidelines for energy consumers.

The confusion needs to be addressed, and new clause 19 would go some way to doing so. When I intervened on the hon. Member for Basildon and Billericay to ask whether he would expect the measure to be extended to people off-grid and not on the mains, he said that he would. Of course, such an extension would be difficult because, as has been said in the previous contribution, the off-grid is not a regulated market. I am not sure—I am willing to take an intervention—how he envisages that independent suppliers would do what would be required of the big six, with dual tariffs and so on. Obviously, people without gas supplies cannot get the dual tariffs or other reductions that many people have.

[Mr Baron]

I think I said that subsection (c) of new clause 19 calls for research to choose the best message and consider how to communicate it. I envisage that we could at the very least consider that issue, without making any promises, when subsection (c) was triggered.

[Albert Owen]

I am grateful to the hon. Gentleman for the spirit in which he made his intervention. However, I think that that would be difficult. For some time, I have suggested—the Bill may not be exactly the right place to deal with this, but the electricity market reform White Paper is looking at it—that the regulator should look after people who are off-grid so that they have the same protection and rights as others. As has been said on numerous occasions, people in hard-to-reach areas on the periphery have the greatest need and are in the greatest fuel poverty. They are often off the mains, so they need equal if not better protection than people with access to mains gas and electricity.

[Mr Weir]

I very much agree with the hon. Gentleman. I, too, have called for those changes. Earlier, I was trying to make the point that new clause 19 will not help those people at all because there are no tariffs in that market: there is a set price for the oil that they buy. One of my constituents told me that last winter the supplier would not quote them a price. They had to buy the oil, paying the price set on the day of delivery, as prices were volatile. Unlike gas and electricity consumers, they do not receive a bill so that they can look at those things; they are given a price, and so much oil is delivered.

[Albert Owen]

The hon. Gentleman is absolutely right, which is why those people need greater protection. The Office of Fair Trading is undertaking a review, and I hope that, rather than just refer something to the Competition Commission, it will come up with proposals and take action. I hope—and I know that the Minister is listening, because this is a serious issue—that people who are off-grid receive better protection in future. I shall certainly work with the Government—and I know that the Select Committee on Energy and Climate Change will do so, too—and help them to try to reach those people.

The hon. Gentleman made an important point about the contracts and the sums that individuals have to pay. The hon. Member for Hexham touched on that. I have received anecdotal evidence from my constituents that, during the big freeze in December last year, an individual in an isolated hamlet applied to have their tank filled up. They were told that they could have only half the amount that they usually received, and they were charged 50p a litre. Six weeks later, the company came to replenish the tank, and charged them 70p a litre. Members up and down the country will be familiar with such examples. Those people are suffering real hardship and are in fuel poverty, which is why we should all work together to ensure that people who are off-grid receive the proper protection afforded to those on the gas and electricity mains.

The new clause is a good measure, and we are moving towards clearer bills that include such information: informed people can make informed choices, as I have said. We need that information, and the choice of suppliers should extend beyond the big six. That has been mentioned, and the Government and Ofgem are looking at it. The proposal has cross-party support, because the monopoly enjoyed by the six companies that generate 80% of electricity and gas yet supply 99% of consumers does not produce a fair market. That is why we need intervention and tighter regulations, to achieve the outcome that we all want to achieve: price stability and clarity, so that people know from their bills what percentage of what they pay is going to fund energy efficiency measures, and what percentage is used for external measures such as transmission and so on. Transmission has not been discussed at great length, and it is ironic that people who live at the periphery of the United Kingdom, in areas that generate much of the electricity that goes to the grid, pay more for their electricity and gas than people in other areas.

[Tessa Munt]

I cannot resist the opportunity to discuss transmission. Does the hon. Gentleman agree that, in fact, the costs of modernising electricity transmission are minimal compared with the increased prices charged by electricity and gas companies?

[Albert Owen]

Absolutely. To be fair to the national grid, as part of our inquiry into the market, we went to see the National Grid Company which, for the first time, is offering choices and options in transmission, such as underground, overground and subsea. I agree that these hikes are ripping people off. They want choices and if they choose underground and it costs more in certain areas, we might have to consider paying more for it, but at the moment we are getting a poor deal when we have the minimum upgrade to the transmission lines and the infrastructure, and are paying the maximum amount through our bills. That balance needs to be addressed.

I realise that time is of the essence, but in closing I want to highlight the point about off-grid so that all households in the UK are treated equally. We need to ensure that we have a level playing field for people in peripheral areas as well as in large towns and cities when it comes to the green deal and paying for electricity and gas. I am sure that there is consensus on this and we need to move forward.

I congratulate the hon. Member for Basildon and Billericay on raising this important point about simplicity, the changing of the tariffs and how we can get a better deal for all those whom we represent, because at the moment they are being ripped off.

[Gregory Barker]

I shall speak to all the amendments tabled by the Opposition and Back-Bench Members in this group. The first important cluster of amendments covers the green deal. I thank hon. Members for all the amendments and the opportunity, even where we have not agreed, to debate a set of issues that are of particular significance to all our constituents. As we look towards the winter, people will be looking to us for leadership on the important issues of our energy bills and energy efficiency.

I start with amendment 1, tabled by the hon. Members for Ogmore (Huw Irranca-Davies) and for Liverpool, Wavertree (Luciana Berger), and new clauses 1 and 2, also tabled by the hon. Members and by the hon. Member for Rutherglen and Hamilton West (Tom Greatrex). The amendments might appear to duplicate existing legislation, but they raise important issues. On our aims for meeting carbon budgets and tackling fuel poverty, legislation already exists to compel this, as the amendments highlight. There is no doubt about the coalition Government’s commitment to both those issues, and we have already met our first and second carbon budgets and published our strategy for the third. We will be publishing our strategy for meeting the fourth carbon budget in the 2020s this autumn.

As I have said, the green deal and the ECO must be seen in the context of our overarching carbon budgets. The amendments tabled by the hon. Member for Southampton, Test (Dr Whitehead) emphasise the importance of taking a broad view to maximise cost-effectiveness. Our strategy will set out the role played by the green deal and the ECO in support of the green deal. We have already committed to report to Parliament specifically on this.

The Climate Change Act 2008 already obliges us to justify any shortfall and to take action to address it. Likewise, the Act also enables the Committee on Climate Change to provide advice, which I will come to later. This aim commits the Government to ensure household energy efficiency makes a fair and appropriate contribution to delivering our existing legally binding carbon budgets. We will report each year on what our energy efficiency policies are delivering and to what extent they contribute to the carbon budgets. It will be clear to all who wish to challenge us if our policies are underperforming. That is already in the Climate Change Act or in the Bill.

Only English households are covered because energy efficiency is a devolved matter. It is not for the UK Government to dictate the ambitions of the Government of Scotland and the Welsh Assembly, but we are working in tandem with devolved Administrations, and I have been pleased with the way in which, particularly at official level, but also at a political level, there has been real agreement. We are definitely heading together in the right direction.

Amendments 9 to 12, tabled by the hon. Member for Southampton, Test, relate to energy efficiency in a broader sense. I certainly support the principle behind them. He is right to say that successive Governments have ignored at their own expense—or rather, at ours—the compelling argument in favour of energy efficiency improvements before leaping to build new generation capacity, and they have failed to pick up the money available from energy efficiency action on the ground. Energy efficiency within that spectrum of measures must always focus on the most cost-effective savings. Cost-effectiveness is enshrined in policy making within the coalition, and all existing energy efficiency policies come with impact assessments for that purpose. The costs and benefits for UK plc are always in the foreground, not stuffed into the small print. It is for this reason that we propose the green deal as a market mechanism. We will publish an updated impact assessment of the green deal and the ECO, along with a consultation and full details of the secondary regulation, next month.

I assure the hon. Gentleman, who has a substantial record of campaigning and contributing to serious debate on energy efficiency, that it is something my Department now takes far more seriously. We are not just using words to show this, and it goes beyond the green deal. The green deal is clearly a radical, ambitious and key part of our efforts and a flagship policy of which we are extremely proud, but it is certainly not the end of the story. We will establish by the end of the year a new energy efficiency deployment office to deliver energy efficiency; it will sit within the Department alongside the office for renewable energy deployment and the office for nuclear energy deployment, and with equal weight. For too long, and for some extraordinary reason, while successive Governments have exalted the building of new energy generation capacity, energy efficiency, when not ignored altogether, has been dispersed around the Department. It will now have its rightful place in the Department’s hierarchy of actions and priorities.

I am happy to meet hon. Members privately to explain in detail our plans for bringing together the energy efficiency deployment office. It will not only be a first for the UK, but set a precedent around the world. In the international forums I attend, I have found real interest in what we are doing. We are looking at new market models that have not been tried anywhere else. We will certainly look abroad for best practice to build on, but I really think that we will come up with something that has a leading edge.

The energy efficiency deployment office will be tasked with identifying ways of driving further carbon abatement across the economy, which the hon. Gentleman seeks in his amendment, and learning from best practice in other countries. At the heart of its mission, as expressed in the amendment, will be analysing the cost-effectiveness of energy efficiency and energy generation, and it will have the resources to do that. We are recruiting the senior staff with appropriate experience to drive that effort. I hope that that satisfies him and that he is content not to press his amendment to a vote.

The amendments also raise the important matter of the role of non-domestic buildings in the green deal. I assure the House that, as I have said on many occasions, the green deal is an opportunity not only for homes and households, but for businesses and communities. There will be more detail in the consultation document, which we intend to publish next month, about how the green deal will be tailored for non-domestic—invariably business—customers. The UK’s building stock is a key sector of our annual carbon reporting, so the green deal’s contribution to both domestic and non-domestic buildings will be covered. I take the green deal’s contribution to our carbon budgets very seriously, which is why I tabled an amendment in Committee to include in the Bill that reporting commitment, as many stakeholders and other members of the Committee suggested.