Albert Owen
Main Page: Albert Owen (Labour - Ynys Môn)
Caroline Flint
Obviously we will explore that in a little more detail, but I think it is clear that those who have mis-sold a package must pay back to people what they have lost through that, and must pay them compensation. It is clear that the fines are not working, because every time a consumer organisation conducts another survey, it finds more evidence of mis-selling. I think that this is quite straightforward, and I do not see why we need to go on talking about it. Let us just get on with it.
Albert Owen (Ynys Môn) (Lab)
Does my right hon. Friend agree that the Energy and Climate Change Committee, of which I am a member, should be praised for initiating the current inquiries? Already four of the big six have decided to stop doorstep selling, and we need to push that further. The Secretary of State knows that these companies are on the run; now he must put the boot into the big six, and ensure that our customers receive the compensation that they deserve. We need not measly words, but action.
Caroline Flint
My hon. Friend is entirely right, and I pay due respect to all the members of the Select Committee. They have done fantastic work on our behalf, highlighting some of the problems caused by the operation of the energy market and energy companies. It is about time that the Government stood up to the energy giants, because this is not good enough. I do not know how energy chief executives can go on television and brazen it out, talking about what their companies are doing for customers, when 80% of people are not on the best deal for them, and mis-selling appears to have reached the level that is being discussed in the Chamber and beyond. It is a disgrace, and the very least that those companies should do is fess up and pay back.
Albert Owen (Ynys Môn) (Lab)
It is a pleasure to follow the Secretary of State. I had intended to be non-partisan and speak in favour of consensus, but having listened to his opening remarks, I will find it difficult to be disciplined and keep to that line, because he rewrote the recent history of energy. I certainly take no lectures from him on nuclear power and many other things. I have stood on the Government side of the House and argued in favour of nuclear power, the base load, renewables and energy efficiency, and I see no contradiction between them. For him to try to knock the policy of the Labour party when it was in government is nothing short of cheek.
I welcome the debate because energy prices are the big issue for constituents and consumers across the country. I welcome the fact that my right hon. Friend the Member for Don Valley (Caroline Flint) chose this topic for her first outing as shadow Secretary of State. She gave an excellent overview of what has happened in recent weeks.
I did not want to be partisan, because the issue is too important for that, but when people criticise what happened in the past 13 years, I must remind them that, since 2009, there has been a trend of high gas and electricity price rises. The rise in 2008-09 was seen as a one-off resulting from a peak oil situation. In 2009-10 prices came down considerably. In 2009, gas prices rose by 51% in a single year and electricity prices also rose considerably, but the following year, when the wholesale price was half what it had been at its peak, prices came down by only 6% and 9% respectively. We have seen since then a trend of double-digit rises that are hurting every household in the country. That is why the House is right to debate the matter and look for ways to help.
I am very disappointed with the summit. I tabled a question last Friday, without knowing that there was to be a summit, asking when the Secretary of State last met the big six energy companies. He has partly answered that question, but I am disappointed that he did not ask them whether they would freeze their prices in future and what they would do to bring them down. The duty of the Secretary of State is to put the consumer’s view to those companies.
Our constituents are right to be annoyed by the fact that those companies’ profits have increased in the past few months from £15 to £125 for each household. I want to make it clear that I am not against energy companies making profits or having healthy balance sheets, because we need them to reinvest in our infrastructure as we move to a low-carbon economy, but I find it very upsetting that they claim that the wholesale price is high and put their prices up, but when the wholesale price comes down, the retail price does not follow suit. Our constituents are paying for that very dearly. As my right hon. friend said, that is the rocket-and-feathers concept—prices rocket after the wholesale price increases, but they come down very slowly.
Jonathan Edwards
As a proud Welshman, like myself, is the hon. Gentleman not perplexed that Wales, despite being a net exporter of electricity—we export twice what we consume—has a level of household energy poverty at 30%?
Albert Owen
I am a fellow Welshman, but my energy policy is different from that of the hon. Gentleman. Wales is a net exporter of energy because Wylfa nuclear power station, which is in my constituency, generates 30% of Wales’s energy needs. If that was to go, we would be in a difficult situation. However, he is right to point out that some regions of the United Kingdom that generate energy pay more in the retail price for their energy. The energy companies will tell us—I have raised this as a member of the Energy and Climate Change Committee—that that is because of transmission, but those areas, which are often on the periphery of the UK, generate electricity and send it to the national grid, but the consumers in those areas pay more for it. That is totally wrong and something we all need to work together to eliminate in future.
I wish to concentrate on two issues. The first is the reform of the regulator. I would like the regulator to have more teeth. That is not just my view. I can remember the Prime Minister, when Leader of the Opposition, saying that the regulator needs to get to grips with the energy companies and ensure that they deal with price rises. I agreed with him then, and I agree with that statement now. That is also why I am disappointed that there was a high-profile energy summit in No. 10 that resulted in these very tame reforms, if indeed they are to come about.
Ofgem has already suggested that we introduce greater accountability, greater transparency and simpler tariffs, and the Secretary of State was wrong about the time scale, because I believe that in the past year the number of tariffs has gone up considerably from 180 to some 400. I am not making a political point, because I know that many people, such as the Minister of State, Department of Energy and Climate Change, the hon. Member for Wealden (Charles Hendry) of whom I am very fond, have phoned up energy company call centres and tried to switch tariffs but found it extremely difficult to do so. They have spoken to people at call centres who, despite representing and working for the companies, do not themselves know the tariffs, so the system really needs to be simplified to ensure that people understand them and can make a choice.
Even if everyone were to switch to a cheaper tariff tomorrow, they would still in a year or two’s time be paying more for their energy, so switching is a peripheral issue. We want the energy companies to divvy out some of their profits to help customers directly or to build infrastructure for the future—[Interruption.] Somebody shouts, “They are,” but they are not using their profits to a considerable degree.
Albert Owen
The hon. Lady is trying to intervene. Would she like to intervene on that point?
Albert Owen
I am sorry if the hon. Lady was not listening, but I believe that we will have a new nuclear power station; the consortium, Horizon, is working towards that. Issues in Germany might affect its balance sheet, but it is committed, as the Labour Government were, to the project. Work is being carried out, and I support the site that has been allocated.
When huge profits are made, the customer should not be punished, as they have been, with high rises in their gas and electricity bills. If the hon. Lady thinks the opposite, she is in a minority in the House, because we have seen excessive profits.
Albert Owen
No, I am not going to give way again. I was talking about excessive profits, but I am going to develop an argument about the off-grid, which nobody has touched on so far.
When we talk about energy prices, and about double-digit rises for people with the big six energy companies and for the 99% of retailers who are on-grid, we should also consider those who are off-grid. They are not a small minority, because a considerable number of households are not connected to the grid and have experienced—I have seen evidence from constituents—increases of about 33% in the price of liquefied petroleum gas. The cost of oil has also gone up considerably, so I welcome the fact that the Office of Fair Trading is looking into the matter, but it will not be enough just to refer it to the Competition Commission; there needs to be direct action.
I should like a windfall tax. I am not afraid to use that phrase, and neither is the Chancellor of the Exchequer, who in his Budget introduced a fuel duty—a windfall tax—to help people who were suffering then. The Government should do exactly the same for domestic energy users and households. The excess profits of energy companies should be used to help build an infrastructure, for example by extending gas mains, so that people off-grid have the opportunity—the choice—to go on to mains-supplied gas and obtain the same prices as those who are on-grid.
Indeed, we should go further. I would link off-grid issues to reform of the regulator, because the regulator should have responsibility for those who are off-grid as well as for those who are on-grid. The priority of the regulator, in its terms of reference, is to protect the consumer, yet those who are off-grid receive less protection, so I am asking for the equalisation of protection.
The Secretary of State will remember that I asked him about that when he appeared before the Energy and Climate Change Committee, and I asked the head of Ofgem, too. The head of Ofgem said, “That’s a matter for the Government”, and the Secretary of State said, “It’s a matter for the regulator.” Well, I should like to invite both of them for afternoon tea and to sit them down in a room, because people off-grid are losing out considerably while the Secretary of State and the head of Ofgem have different opinions of their remit.
The solution is simple and it could be implemented very quickly. The Government could give powers to the regulator, and the people off-grid could have protection equal to that for those who are on-grid. The 33% increase that I heard about from a constituent happened in summertime—in August—and it is not sustainable in the rural areas that are not isolated and that contain decent-sized hamlets, small villages and sometimes even small towns.
We need to be radical in our reform. Of course I agree with the Secretary of State and the regulator when they talk about simplifying bills and about greater transparency by the energy companies, but we have to go a step further and give the regulator real teeth so that it can deal with these situations. That is important to every Member of this House and every constituent we represent. We should never forget that those who are off-grid are paying considerably more than those who are with the big six.
I support many of the measures that are being proposed by the Government for electricity market reform, but they are all about the medium and the long term and, in the short term, people are being really hurt by their bills when they receive them. We, as the House of Commons, the Government and the regulator need to be working together for the short term. I would like to believe that the measures that came out of the summit will make a huge difference to our constituents, but that will not happen in the short term. The House of Commons—I very much welcome this debate—must fix its mind on the short term to help each and every household in the United Kingdom with their energy bills in future. Yes, there will be peaks and troughs with the prices of fuels and external issues that affect the price of energy—we all understand that—but we need to have a fair system so that when prices do come down the regulator can look at the books and say, “Yes, prices for consumers should come down by X amount as well.” Ofgem tried to do this and produced a report, but the energy companies argued with that process.
This is not anti-business or anti the big six; it is pro-consumer and pro our constituents. We all have a duty to stand up and protect their interests. The regulator needs to be beefed up, it needs to have more teeth, and it needs to be more proactive—but so do the Government. It is important to have this debate not to score political points but to put the welfare of our constituents first. They will be anxious this winter given their experience of such cold weather in the past year, and they want certainty that the House of Commons is on their side.
Guy Opperman
With respect, I would say that the answer is somewhere in between. There cannot be regulation without submissions being made and investigations taking place. It is incumbent upon us not just to get upset about how our constituents are being affected by heating oil prices but to make representations to organisations such as the OFT. We must also invite the Energy and Climate Change Committee to investigate off-grid energy, which I very much hope it will do.
Albert Owen
I am pleased to help the hon. Gentleman by saying that we are going to have a further inquiry into the retail market, in which we will examine off-grid energy.
Guy Opperman
I am most grateful, and I hope that as part of that inquiry the Committee will examine the weighty report that the OFT has provided, as well as specific submissions from individuals and organisations that, like the previous three speakers, can give specific examples of price fixing or the appearance of price fixing. That is in the context of DCC, the company that I am particularly concerned about and have to deal with, recording operating profits of approximately 19.9% on an ongoing basis. I find that figure hard to square with the one given by the managing director, who when questioned in The Sunday Times said that the operating profit was only 2%—but I have taken my figure from the published accounts.
In Hexham five independents operate—WCF, Par Petroleum, Wallace Oils, GB Fuels Ltd and Rix Petroleum. I urge individual Members to draw to their constituents’ attention by every possible means, as I do for each and every constituent who is faced by heating oil problems, which independents operate in the constituency, so that they are in a better position to get a fair price.
I want to trumpet the great success of the way in which certain communities, such as Tarset, Allendale and Humshaugh, have come together and produced their own price comparison sites. For example, there is Humshaugh village shop, which is run as a co-operative. It was set up by the local community and is financed and run by the 60 people of Humshaugh. Every Monday they publish the prices available from all the genuinely independent local heating oil suppliers. Individuals can either go to the shop’s website or—this addresses the point that was raised about people who do not have internet access—see the prices in the village shop throughout the week. Everybody in the village can then assess who is providing oil locally. Such ideas need to be taken forward.
I welcome the fact that the OFT report indicates that there are problems. However, I would ask the OFT to go further, not least because the report shows that when a company is one of a multitude owned by a larger company, it is obliged to give people who telephone it specific information about who its ultimate owner is. That needs to be monitored, because it is not necessarily taking place. My researcher phoned one of those only yesterday and was not given that information, as should have happened according to the OFT report. I urge the various Committees involved to examine that point.
There is also tremendous difficulty for those who wish to compare prices themselves, because heating companies have no obligation to tell people the price that they are offering. Unless people ask to buy, they are not necessarily given the price. With respect, the Government can do something about that, and I invite them to sit down with individual suppliers, particularly the larger suppliers, and make that point very clear to them. If people ring up and ask for a price, they should be told it rather than the company withholding it.
Charles Hendry
I will give way if there is time later, but I want to respond to all the points that have been made.
At the end of a year when we have seen the worst nuclear incident for decades, the worst oil and gas incident and unrest in the middle east, where so much of our oil and gas comes from, it was inevitable that there would be upward pressure on prices. Looking ahead to next winter, the wholesale gas price is 40% more than it was last year, and gas makes up 40% of our generation, which makes a knock-on consequence inevitable. In the face of those global pressures, we should focus on how we—the Government, Parliament, industry, consumer groups and individual Members—can ensure that we support our constituents through this period.
I do not say this to make a political point, but we should recognise that there is a legacy issue that needs to be picked up as well. We need to secure investment in this decade at twice the rate of the last decade. We have to play catch-up, and the market reform process, which was put off for too long, now needs to be addressed. We have acted to prevent consumers from being affected by price increases that would otherwise have happened. The carbon capture and storage levy was going to be included in people’s bills; we have taken it off, saving them an equivalent of £1 billion over time. The previous Administration’s renewable heat incentive would have added an estimated £179 to annual bills by 2020, but we have removed it to ensure that we cut the impact on consumers, while the tough decision that we took on feed-in tariffs will save consumers £3.5 billion to 2020. The Labour party could not have been stronger in opposing that, but we believed that it was right to be on the side of consumers rather than wealthy investors. In the renewable obligation banding review, which we will publish shortly, we will show how we want to use those resources most efficiently and effectively to introduce the low-carbon economy that we want to see.
There has been criticism of the level of green charges—the hon. Member for East Antrim (Sammy Wilson) was one of the people who raised that—but it is sensible to put them in context. Some £20 of a typical gas bill of £600 relates to green or environmental charges, whereas £41 in an electricity bill of £500 relates to environmental charges—well under 10%—with a further £19 relating to energy efficiency programmes in the homes of some of the poorest in our communities, which is work that we should all support. In total, therefore, we are talking not about the figure of £200 that we read in the press—we have challenged the media to say why they have quoted that figure—but about £80 in a bill of £120, which is not the real reason why energy prices are being driven up. We have said clearly that we will look carefully at how those moneys are allocated to ensure that we deliver the best possible growth outcome in this country.
The right hon. Member for Wentworth and Dearne (John Healey) talked about standing charges and rising block tariffs, which the hon. Member for St Ives (Andrew George) also picked up. My concern is that switching the system would not just penalise people in the largest houses, but would hit the people who, because of circumstances beyond their control, are the major energy users. They are people who are older and at home more, and who need more warmth in the winter. They are people who have disabilities and perhaps cannot get out. They might be large families, perhaps on low incomes, or people who are out of work. In making the kinds of change that the right hon. Gentleman advocates, we would have to be very careful that they did not have a perverse consequence, and that the people who, through no fault of their own, have to use more energy—particularly heat—would not be adversely affected in the process. We will look at the ideas that he has put forward, but we need to be aware of the potential consequences.
We could have made progress on this matter earlier. My hon. Friend the Member for East Hampshire (Damian Hinds) called for greater transparency in energy bills. In the 2010 Energy Bill, we tabled new clause 4 on that subject, but it was voted down by the Labour Government. The kind of information that we will now require, proposals for which we are asking Ofgem to take forward, would have been addressed more effectively if that provision had been adopted. We tried even earlier, when we tabled new clause 4 to the 2008 Energy Bill. That dealt with environmental charges and clarity in bills, but it was voted down by the then Government.
We have heard many contributions on energy efficiency. That, too, is an area in which we could have made greater progress. We proposed the green deal in an amendment to the 2010 Energy Bill, but it was blocked by the Labour Government. We could have had 18 months more progress on insulation, on dealing with energy efficiency and on taking a long-term perspective on these issues, rather than trying to deal with them on a small-scale basis.
My hon. Friend the Member for Halesowen and Rowley Regis (James Morris) was absolutely right to highlight the important role that the warm home discount will play, and the help that it will provide. He was also right about the need to speed up the process on smart meters. We pushed for that in the 2010 Energy Bill, and I have been pushing for it since 2006. Only now are we in a position to try to take some of those measures further forward. In all those areas, we are making up for lost time.
Charles Hendry
I will not give way, as I have several other points that I want to make, including some on the hon. Gentleman’s concerns about off-grid consumers. He said that he would like us to meet up and talk about the issues, and I would like him and my hon. Friends the Members for Hexham (Guy Opperman), for Truro and Falmouth (Sarah Newton), for Suffolk Coastal (Dr Coffey) and for St Ives, and others, to talk to me about how we should take this work forward. Important work has been done by the Office of Fair Trading, and we need to look at how to take that further. The issue that was raised about differential pricing and price on delivery has been addressed, and the OFT has said that it will continue to look at examples of market abuse.
I want to see what more we can do to develop the gas grid, because that would be of real benefit to the constituents of the hon. Member for Ynys Môn. I also want to see what additional powers would need to be taken, and where. The OFT’s report suggests that the market is working in almost all parts of the country, but we need to be certain, as our constituents face very high bills over the coming months, that we are doing this in the most appropriate way.
The role of shale gas was mentioned, but that issue will not affect energy pricing this winter. It is too early to know whether it will be a game-changer in the United Kingdom, but it could have a significant role to play. I would say to my hon. Friend the Member for Wycombe (Steve Baker) that it would be unwise to bet the farm on shale gas, unless his farm happened to be in north America and sitting on top of a shale gas deposit. However, we look forward to these technologies and the contributions that they can make as we will take forward a wide-ranging, all-embracing energy policy.
There has been a legacy of neglect. There has been a failure to secure the necessary investment in new energy infrastructure, and to address fuel poverty, which rose from 2.4 million to 3 million households over the course of the last Labour Government. There has been a failure to give consumers the clarity that they want, and to facilitate an effective changing regime, but that is now being put right. There has been an absolute failure to grip the challenges of energy efficiency. The hon. Member for Liverpool, Wavertree said that, for too long, those issues had not been addressed, and she was right. For too long, they were not addressed, but we have now taken forward many of the measures that the motion calls for—