Energy Price Freeze

Albert Owen Excerpts

Wednesday 6th November 2013 Commons Chamber

[Caroline Flint (Don Valley) (Lab)]

I beg to move,

That this House calls on the Government to freeze electricity and gas prices for 20 months whilst legislation is introduced to ring-fence the generation businesses of the vertically integrated energy companies from their supply businesses, to require all electricity generators and suppliers to trade their power via an open exchange, to establish a tough new regulator with the power to force energy suppliers to pass on price cuts when wholesale costs fall, and to put all over-75-year-olds on the cheapest tariff.

At the heart of this debate is a question about whether we believe that people have been overcharged and let down by a regulator that has failed to do its job, and that to win back the trust of the British people we need to mend this broken market. Today we put before the House a motion that proposes two measures to provide real help now through a temporary 20-month price freeze and by putting all those over the age of 75 on the cheapest tariff, as well as deep structural reforms to the way that this market works for the future. These are the measures that we will take if we win the next election, but these are measures that this Government could take now, for which they would have our full support.

[Albert Owen (Ynys Môn) (Lab)]

In those structural reforms, does my right hon. Friend consider that Ofgem, the regulator, would have responsibility for those who are not on the mains gas grid?

[Caroline Flint]

My hon. Friend coined the term “energy island” to describe his island constituency of Anglesey and I know he takes a keen interest. We have already said in the House and elsewhere that we believe that those who are off-grid should come under our new regulator. Of those people who are off-grid, only 10% rely on oil for both their heating and their light. The rest have oil for heating but rely on electricity, so our price freeze would have an impact on many off-grid customers as well.

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[Caroline Flint]

Beyond the customary theatrics that sometimes dominate debate in this House, for which we should all admit our responsibility from time to time, I would say that if one looks back over Hansard it is clear that for the past two years, whether at DECC questions, in Opposition day debates or in urgent questions, I have been putting forward measures to reform this market, including a break-up of the way in which the companies run their generation and retail sides. We have said in this House—I will obviously send this information to the Secretary of State—that we need to create, as we did with the networks, a separation in relation to the way in which the companies run things. That does not necessarily mean having two companies, but it does mean having two different legal entities. The Secretary of State is, in effect, saying, “Oh, it’s all right—it’s fine.” We have made this proposal time and again, and it has been reported in the press time and again. It is unfortunate that he lets himself down with that sort of intervention.

[Albert Owen]

The Secretary of State should read the transcript of last week’s Energy and Climate Change Committee meeting with the big six, at which the chief executive officer of E.ON, the only one who bothered to turn up, said that he had no problem with separating retail from generation.

[Caroline Flint]

We will be publishing a green paper that will expand further on our energy market reforms. Of course we welcome a discussion with the big six and others about how we take this forward, but we are very clear that we have to stop the cosy relationship between the generation and retail sides. It cannot be allowed to go on in the way it has.

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[Charles Hendry]

I will not, because we are all on a strict time limit.

Some of the projects that Labour says it cares about most will be hardest hit. Low-carbon projects are lumpier and require more investment upfront and so are most difficult to finance. I am talking about nuclear projects, renewables projects and in due course, I hope, carbon capture and storage. If companies looking to invest in those areas think that the terms under which they might invest could be changed retrospectively to their disadvantage, they will move away from the UK. We have to make this country more attractive to investment than elsewhere. If we do not, companies looking at international opportunities—

[Albert Owen]

Will the hon. Gentleman give way?

[Charles Hendry]

I will not. I know the hon. Gentleman’s enthusiasm for nuclear, and I want that nuclear power station built on Anglesey almost as much as he does. I care very strongly about that.

If we are to get the necessary investment, we must make a compelling case for why companies should come here, rather than go somewhere else.

We have heard reference to the decarbonisation target, but there is nothing in the motion about how that can be met. The measures in the motion would make it harder to get the investment we need to reach that target. Labour is going back to what it has done before, setting grandstanding, ambitious targets without putting in place the road map necessary to meet them. When we came into government, we had to put in place the renewables road map and the fuel poverty road map to address some of those challenges.

The motion is not only counter-productive, but shows breathtaking ignorance of the factors that have driven up prices. We know that prices in this country over recent years have been driven up more by the wholesale price of gas, which is beyond—I believe—even the control of the right hon. Lady and Governments of any colour. The International Energy Agency says that we are moving into a golden age of gas, but it warns us not to assume that it will be cheap, as countries such as Japan and Germany move from nuclear to gas and growth in China and India means a greater demand for gas there as well. Those will remain the issues really determining prices.

Labour’s policy is based on a deliberate falsehood about the causes of energy price increases and would be counter-productive, even if companies did not increase their prices to take account of it. It might play well with focus groups and work as a short-term political initiative, but it will do massive long-term damage to our ability to attract investment into the country, and in the process will do massive long-term damage to consumers, who will end up picking up the tab. That is especially unfortunate, because there are areas in the motion—for example, on transparency—where we could build on Ofgem’s work and deliver the common ground that many of us care passionately about.

So what do we do? First, we need to have an honest debate about the factors driving up prices and to link that with an understanding of the long-term investment we need in this country and how we are going to secure it. As the Secretary of State said, we need once more to take politics out of energy policy, just as John Hutton and Malcolm Wicks did and as we tried to do in the early years of this Government. That is an important objective in its own right. We also need action now on the changes that Ofgem is proposing. These decisions should be taken by the regulator, not by politicians. One of the changes that we have made is to say that the Government should set the policy framework and that a robust regulator should then deal with how the market operates, rather than having politicians constantly wanting to be regulators as well as policy makers. We also need to focus on ease of switching, and we need to do more to ensure that people are on the best available tariff.

Finally, I want to talk about what we in the Government can do to reduce the impact on bills. We could take some of the extra charges off the bills. In this regard, I have some sympathy with the amendment tabled by the Scottish nationalists. There are two elements of our energy bills that are highly regressive. The charges are borne by consumers including those on the lowest incomes, but the benefits often go to those on much higher incomes. They relate to energy efficiency and to feed-in tariffs for microgeneration, and I hope that the Government’s review of those policies will look at what could be done to fund those areas out of general taxation. They are good, important policies that we should support, but the way in which they are paid for at the moment means that people on the lowest incomes are paying a disproportionate amount towards their delivery. The Government have rightly decided to review that matter, and I hope that that will offer some early relief for consumers.

This is an important debate. We need to get away from the simplistic measures proposed in the Opposition’s motion. We also need to take this opportunity to have a debate about this country’s long-term energy needs, and about how we are going to meet security of supply requirements in a low-carbon way and, above all, in a way that will keep energy affordable now and into the future.

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[Albert Owen (Ynys Môn) (Lab)]

It is a pleasure to be speaking for the first time under your chairmanship, Madam Deputy Speaker, and I congratulate you on your election to the post.

I am very pleased that the former Energy Minister, the hon. Member for Wealden (Charles Hendry), is still in his place, because he is right that there was consensus between my good friend the late Malcolm Wicks and him, and they had a good working relationship. When he talks about political risk, however, he should not look across to this side of the Chamber. He should look within his own party and within the coalition, and see the debate within the coalition, which is causing divisions on energy policies today.

I am pleased this issue is high on the agenda. I have been banging on about energy prices for some time and I am glad it is now in the political mainstream. I am glad my party and party leader are leading on this issue, too, because I am afraid the Government are for ever in the wake on these issues. Only 18 months ago the Prime Minister had a summit in No. 10 Downing street. He was there for a few minutes—he was very busy—but he said he had sorted the energy companies out on prices. When I intervened on the then Energy Secretary, Chris Huhne, in a debate and asked him whether he had told the energy companies to hold their prices down, he replied, “No need, they’re already going to do it on their own,” but here we are today with rises in prices that people and business cannot afford.

[Ian Lavery]

My hon. Friend and I had the dubious pleasure of attending that Select Committee hearing last week, and comments about a modest return have been made here today, too. The Centrica boss said to the CBI yesterday that £2.7 billion was a modest return. That is £7.4 million per day, or £86 per second. Is that a modest return, or is it robbery?

[Albert Owen]

My hon. Friend will recall that I challenged the Centrica bosses. Indeed, I challenged the CEO of Centrica not to take his bonus this year, because his salary and bonus combined have gone up by 38% since 2008 while bills from his company have gone up by 36%. I am a customer of British Gas, although perhaps not for much longer. To be fair to the CEO, Sam Laidlaw, he has decided not to take his bonus this year. I hope that others will listen and follow suit, because it is immoral that these companies are saying, “We are making only a modest amount,” yet they are paying themselves more than a modest bonus out of their profit. They tell us that the internal market between generation and retail is working okay and that they are separate entities, but they pay their bonuses altogether as one company, and they take a huge amount in dividends for their shareholders.

[Mr Jim Cunningham (Coventry South) (Lab)]

Like my hon. Friend, I have raised this issue over a long period. I thought two or three years ago that we should have had a proper investigation into whether there is a cartel. When I was on holiday in Cornwall a couple of years ago, five tankers were lined up for a couple of weeks. If someone is telling me that something is not going on in that market, I do not know what to say.

[Albert Owen]

I used to work on oil tankers and gas tankers, and I know that they stay at anchor for some time waiting for the prices to vary before they empty their cargo and get the price for it. That is an important issue.

The energy market is flawed, as Government Members have actually agreed. The Secretary of State, who made an appalling speech and left quickly, did not tackle the issues at all and did not come up with any suggestions. He said that the Government were doing things for the consumer, but the reality is that the Select Committee and others have been lobbying hard for Ofgem, the regulator, to help the consumer. It is doing slightly more but not enough—and it is too late. It is a disgrace that the Secretary of State leaves so quickly after making so many interventions in this debate—he is not even prepared to sit there. The energy team has been reduced by half a Minister, as one of them is doing a job share with the Department for Business, Innovation and Skills, yet the Secretary of State cannot sit down there. Instead he has to get a Whip to sit on the Front Bench because the team has been depleted. Energy is at the top of people’s agenda, but it is way down at the bottom of this Government’s priorities.

The hon. Member for Warrington South (David Mowat) asked why, compared with Europe, we are paying less for our bills. One reason—I have told him this before and I hope he is listening—is that people in many other European countries pay VAT at 20% or more on their fuel and energy costs. I am sure that he is not suggesting that this country takes that approach so that we can make a comparison—

[David Mowat]

rose—

[Albert Owen]

I am not going to give way, as the hon. Gentleman has had a good number of interventions on that. VAT is one reason for the situation he describes.

For other things the hon. Gentleman has to look not to Europe but to his own Front-Bench team, because the ECO—energy company obligation—was introduced this January by the Government. The Prime Minister boasted that it was one of his flagships of the greenest Government ever and about how the green levies were going up, yet only last week he said he was going to change all that. The Prime Minister is making policy on the hoof—I will never accuse him of being consistent on anything and he is certainly not consistent on energy policy.

[The Minister of State, Department of Energy and Climate Change (Gregory Barker)]

Will the hon. Gentleman give way?

[Albert Owen]

Yes, I will. I hope that the Minister will give way when he is winding up, too.

[Gregory Barker]

Of course I will. Can the hon. Gentleman give me one example of when any Government Member boasted about levies going up? We may have boasted about policies, but when did we boast about levies going up?

[Albert Owen]

The Prime Minister has said numerous times on the record—I will find this and send it to the Minister—that his Government are the greenest ever and are putting on extra green levies; when he compares our schemes with the Government’s schemes he boasts that these levies are actually increasing to help on that. That is exactly what the Prime Minister has done, and I am sorry that the Minister does not understand his own Prime Minister—it is complicated at times.

[Toby Perkins]

rose—

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[Albert Owen]

I will give way briefly, but I am cutting into my own time.

[Toby Perkins]

This is the quote that my hon. Friend was looking for. The Prime Minister told “The Politics Show”:

“I think green taxes as a whole need to go up”.

[Albert Owen]

There we are. I am sure that the Minister agrees with the Prime Minister on that, and I thank my hon. Friend. Another levy that this Government have introduced unilaterally and which has pushed prices up is the carbon floor price. It is an Osborne levy if ever there was one. Again, the Government boasted in the Budget about how they were using these levies to control companies and push up costs on business. Those who blame Europe should remember that this is in addition to the European emissions trading scheme, and that companies in Britain are paying more because of what this Government have done this year—the levy came into being in April. It is no use their blaming Europe, or previous Governments. They must take responsibility, because all our constituents are paying the price of this Government's energy policy. That is why we are having the debate today.

I want to mention small businesses, because they are suffering more than the domestic customer. Average rises for small businesses, which do not have the luxury of comparison sites on which they can switch easily, have been up to 20%. I hope that the Government—and, indeed, my right hon. Friend the Member for Don Valley (Caroline Flint)—will consider helping those businesses. They cannot absorb the cost, so they pass it on to the customers. That means that we pay for those rises.

I am a member of the Select Committee on Energy and Climate Change and we had a robust discussion with the energy companies last week. Let us be honest. We hear the Government talking about Labour’s big six, and the Prime Minister leads on that. They forget that in 1993, Sir John Major—that Marxist, who has been accused of being a red by many people for wanting to intervene in the market—set up the integrated system we have now and allowed the then big three to dominate the energy market. Let us not take any lessons about how the big six were set up. Flawed privatisation policies and the former Prime Minister’s interventions allowed the companies to be both generators and retailers. That is the situation. I know that it does not sit comfortably with the Conservative party, but it is a fact and I challenge the Minister to say otherwise.

We have talked about green levies and wholesale prices.

[Gregory Barker]

I promise the House that I will not make a habit of jumping up and down to intervene before I get the chance to wind up. Will the hon. Gentleman give a little of his speech to the 13 years in which the Labour party had the opportunity to shape energy policy? Will he defend what went on in those 13 years?

[Albert Owen]

I am certainly happy to do that. I sat on the Committee that considered the Energy Bill in 2008, which helped many places. It even helped to set up the Hinkley Point agreement that we just reached. The Liberal Democrats voted against the Bill. The Energy Act 2010 gave more powers and responsibilities to the regulator to deal with prices. I remind the Minister that we did not get into office in 2010 and I wish that he would use those powers, which he and his party supported at the time. I am happy. We enacted the Climate Change Act 2008 and we set up the Nuclear Decommissioning Authority to deal with legacy waste in our country. We have a record of which we can be very proud.

We are in the Chamber today after three years of a Government under whom we have seen rocketing prices, and all they want to do is blame somebody else. It is time the Government stood up and were accountable for their actions. The Liberal Democrats are helping them—I am not just having a go at the Tories. We need to get consumer rights, which is why I was happy to hear my right hon. Friend the shadow Secretary of State say in response to an intervention I made earlier that under a Labour Government, a new regulator would look after customers who were not on the gas mains. Switching and the reduction for those on dual fuel do not apply to lots of constituents in this country, and we need to extend the reach. I am very pleased by that commitment, because I have been asking this Government to introduce such a provision—I have asked each Minister, and there have been quite a few—and they have refused to do so.

In this country, we need a party and a Parliament that stand up for the customer—for small businesses and individuals who, year after year, not as a spike but as a trend, are being ripped off by the energy companies. It is time for Parliament to act and today is an opportunity for us to do so. I am proud to support the motion tabled in the name of my right hon. Friend the shadow Secretary of State and my right hon. Friend the Leader of the Opposition. When we are in government, we will make the changes that the people of this country deserve.

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[Gregory Barker]

No, I will not.

For 13 years, Labour Members presided over the energy sector. For 13 years, they dithered and delayed over crucial investment. In the previous Parliament, fuel poverty rose every single year—something we did not hear from the Opposition Benches. For 13 years, they presided over unprecedented corporate consolidation, creating the real lasting Labour legacy—the big six. It is a cheek for Labour Members to say that we are the friends of the big six when in fact they picked their ministerial team from the big six. Is it not a fact that the leader of the Labour Front-Bench team in the House of Lords is the former head of government affairs at SSE—its top lobbyist? Labour Members are not just friends of the big six and they did not just create the big six—they recruited their team from the big six, so we will hear no more from them on that.

For 13 years, Labour Members let real competition wither while consumers were bombarded with a blizzard of tariffs that, under their watch, grew to over 400. For 13 years, they failed to simplify bills and increase transparency. For 13 years, they failed to build the foundations of a safe, clean energy future. For 13 years, they failed to build a single nuclear power station or get an agreement to do so. For 13 years, they saw Britain languish at the bottom of the European league table for deployed renewable energy. Labour Members stood by and watched British energy go bust. Now they want another go, but we have not finished undoing the damage they did last time.

[Albert Owen]

The Minister mentioned tariffs. The Prime Minister has promised this House and the country that people will be put on the lowest tariff. Will the Minister now tell the House, at this late stage, how much less they will pay for their bills under that policy—or will they go up? Which one will it be?

[Gregory Barker]

It will be different for different people, but from December people will get a much better deal out of this Government, putting them on to the cheapest tariff—something the Labour party did not do in its 13 years in government.

We continue to undo the damage that Labour did to consumers’ bills. We have taken Labour’s renewable heat incentive off energy bills, saving consumers £179. The right hon. Member for Don Valley (Caroline Flint) said in our last debate or at questions that £100 was not very much. I have to tell her that Government Members know that, for a lot of families, £100 is a great deal: that £179 on people’s bills was not welcome.