Albert Owen
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Albert Owen Excerpts(10 years, 10 months ago)
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Albert Owen (Ynys Môn) (Lab)
I beg to move,
That this House is disappointed that 17 energy companies in the UK charge their customers more if they do not pay their bills by direct debit; acknowledges that some firms do not charge their customers any extra at all; notes that Department of Energy and Climate Change statistics show that this adds £114 to the average consumer’s bill; further notes that 45 per cent of people do not pay their energy bills by direct debit; recognises that over one million people in the UK do not have access to a bank account; believes that these charges are a stealth tax on the poor; and therefore urges Ofgem to hold an inquiry into these practices, encourages energy companies to operate with more transparency, and urges the Government to consider ways of limiting these charges, such as by introducing a cap.
I was going to start by paying tribute to the hon. Member for Harlow (Robert Halfon) on opening the debate; I am sure we will reverse that role when he arrives. I think it is an appropriate time to have such a debate. I am pleased to be among the many Members who have signed the motion. I am not sure—I seek your advice, Mr Deputy Speaker—whether I should stop my speech when the hon. Gentleman arrives, or whether I should continue.
Albert Owen
That is what I wanted to hear.
Energy prices have been a serious issue for some time, but attention has recently been concentrated on it because of the high hikes in those prices. Fuel poverty is very much on the agenda again as many people are feeling the strain of the energy price hikes, particularly in rural areas. I know that the Minister has been before the Energy and Climate Change Committee on this issue. The Department’s own figures show that twice as many people in rural areas as in urban areas are suffering from fuel poverty. It is worth putting that on the record, because people in my constituency and in many constituencies across the UK are really suffering from energy prices.
As many people are now acknowledging, the energy market is flawed in many ways. As hon. Members will know, it was set up when gas and electricity were privatised. The old structures were used and the energy market developed from that. There were price controls very early on, and the regional distributors and energy companies all came together. In the beginning we had the big three; the big five and the big six were not invented at the time of the near-monopoly under Labour.
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
The hon. Gentleman is setting out the context of this debate extremely well. Does he share my concern that the people who are paying the most for their energy are often those least able to afford it under the current regime?
Albert Owen
Yes, absolutely—I am coming to that.
I want to deal with a number of groups and issues, including the two main themes—vulnerable customers and choice, which the Government talk about all the time but which some people do not have. This is about helping and protecting vulnerable people, and that is the purpose of the motion. It is good to see that the proposer of the motion, the hon. Member for Harlow, is now here. I am taking over his role for a few minutes, but I am sure, Mr Deputy Speaker, that he will catch your eye and will not be penalised for being late.
There has been some progress on energy prices. Compared with a few years ago, bills are more transparent and a number of tariffs have been simplified. I pay tribute to Ofgem, the regulator, for setting up the retail market review, which was helpful, and to the work of hon. Members, including those who serve on the Energy and Climate Committee, which has been very proactive in holding the energy companies to account on tariffs and the price mechanisms in bills.
A few weeks ago—it seems like a long time ago now—we debated a proposed price freeze. Many people’s reaction was to say that it was a con. In terms of cons by political parties, we have to look closely at what the Prime Minister has said on several occasions about people going on to the cheapest tariff. The reality is that many people are adversely affected by prices. If they are off the gas grid, for instance, they will never get the best deal offered by energy companies because they cannot have the dual fuel discount. Equally, there are people on fixed charges and various other things that are built into the system. However, there is now simplification and the situation is improving regardless of legislation.
Mr Mike Weir (Angus) (SNP)
Is not the situation even worse than the hon. Gentleman suggests? Under the legislation, people on pre-payment meters, for example, can never get anything like the lowest tariffs available.
Albert Owen
Absolutely—that was my next point. These people are in vulnerable positions—not only those in houses in multiple occupation but those in rural areas. I know small estates in my area where people have these very high payments and are unable to get the best tariffs. It is a bit of a con. Although we passed the legislation and had those debates, it is worth putting this in its proper context, and I thank the hon. Gentleman for his intervention.
Mr David Hamilton (Midlothian) (Lab)
As regards the price freeze that Labour is proposing, does my hon. Friend agree that a member of any party that does not agree with it, such as the Scottish National party, has to be asked in their constituency why that is?
Albert Owen
The purpose of the proposed price freeze, which is not the main theme of this debate, is to have a pause, take stock, get the regulator to look at the issues and think about future legislation. I believe that we are where we are because of rushed legislation to privatise both gas and electricity, which created the wrong starting point for an energy market.
Many people on prepaid meters will never be on the cheapest tariff, and that fact was never addressed by the Government when the Energy Act 2013 made its way through Parliament. I want to concentrate on those who are hardest hit by the price discrimination to which the motion refers. They are really struggling with their bills and I make no apology for highlighting that fact time and again. Many of my constituents do not have the best prices. They also have lower incomes and higher transport costs in rural areas, which all adds up to a cost of living crisis.
Caroline Dinenage (Gosport) (Con)
The inflexibility of the prepayment system means that many families end up having to go to a shop to prepay. Does the hon. Gentleman agree that, rather than have the Government compel the energy companies, those companies should use their initiative and take the profits from over-inflated prices to invest in new and more flexible ways for people to make their prepayments?
Albert Owen
The hon. Lady makes a good point. I think that the onus is on the energy companies, but it is also on the Government and the regulator. It is a heavily regulated market and the regulator has a role to play. The point I was making—I will move on from it in a moment—was about cons: it was incorrect to make bold statements to the people of this country, while legislation was making its way through Parliament, that they would be put on the lowest tariff.
David Simpson (Upper Bann) (DUP)
Does the hon. Gentleman agree that the whole issue of direct debit payment hits the most vulnerable in our society and that the threatening nature of the correspondence from these organisations puts a lot of fear into the elderly in particular?
Albert Owen
Yes, and that is why I support the motion, which deals with that very issue. A high percentage of people choose not to pay by direct debt—I will come to the question of choice later—but others have no choice, and they are the ones who feel most threatened.
Mr Jim Cunningham (Coventry South) (Lab)
Does my hon. Friend agree that it is a bit of a con to ask people to shop around for a lower tariff? It is about time we had a proper inquiry into the energy companies, particularly the way in which they operate as a cartel. Only a week or two ago, I watched a television programme in which the regulator admitted that it could only advise companies to lower prices and that it could not impose such a measure.
Albert Owen
I am grateful to my hon. Friend for his intervention. He is absolutely right to refer to the regulator’s lack of teeth and its lack of willingness to use the powers it already has. That is an important point.
Some people say, “It’s a free market. Why should we over-regulate it?” They would also oppose the motion’s suggestion that the Government should consider introducing a cap, but it is important to realise that we have been here before. There is no doubt that the price of energy rose considerably between 2006 and 2008. Ofgem undertook an energy supply probe and agreed to place a licence condition on the energy companies to ensure that different segments of the customer base did not face undue price discrimination. This motion—I am certain that the hon. Member for Harlow will make this point more accurately than me, because he has done a lot of research on the issue—does not ask for very much, only to return to the position we were in previously. The licence condition that Ofgem introduced in 2008 after its energy supply probe lasted three years. My hon. Friend the Member for Coventry South (Mr Cunningham) has hit the nail on the head. We have been here before and Ofgem has the ability to address the issue.
My party has talked about having a new body to put consumer rights at the top of the bill. The opening line of Ofgem’s website states that it is there “to protect the interest” of the customer. In this case, I believe that it is failing, and falling short of what it should do on behalf of the consumer. I am very pleased that my party now considers that off-grid customers need the same protection as those on the mains gas grid, so that everybody in the United Kingdom is treated fairly in relation to energy and can have somebody to fight on their side.
Hon. Members have intervened about those who are hurt most by direct debit payments. I confess that I pay my utility bills by a mixture of direct debits and good old quarterly payments on paper—
Albert Owen
My hon. Friend is absolutely right. That was my next point—that I use the services of my local post office to pay my energy bills, which helps the local community in many ways. We get drawn into using direct debits, because it is a little bit cheaper, but sometimes there is extra social value from using other methods.
Sheila Gilmore (Edinburgh East) (Lab)
My hon. Friend has rightly explained how we can exercise choice and use other options, but such a choice is very limited for many people. He might be interested to know that in a recent pilot for direct payments of housing benefit, my local housing association found that many people did not want to get involved in such things as direct debits, because of bad experiences of payments coming out at the wrong time.
Albert Owen
My hon. Friend is absolutely right. I am sure that that issue will be addressed again as the Consumer Rights Bill goes through Parliament. I can remember a time when cash was cool. People went in on time and paid their bill in cash, and that was considered a good method of payment. Today, people are being penalised for exercising that very choice.
The hon. Member for Harlow has singled out companies in his early-day motions, but many companies have good practices. For instance, my supplier gives an early payment bonus to people who pay early by cheque or cash, or in other forms. There are mechanisms that can be used, but they need to be adopted by the whole industry.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. A lot of Members are waiting to speak. I know that the hon. Gentleman is coming towards the end of his speech, which is heading towards 15 minutes.
Albert Owen
I was dragging out my speech, because some hon. Members had not arrived in the Chamber. That explains the slowness of my opening remarks, but I am now getting to the crux, if not the end, of my argument. The points made in interventions are important: people do not choose to be in such a position, but some are, and there should be a mix of payment methods.
Those who use buzzwords about a free, open and liberal market are missing the point. Much of the energy we consume involves fixed costs over which companies have argued in the past few months that they have no real control. I am talking about such matters as commodity prices and transmission costs. Companies should be fairer in how they bill people, and should not penalise people or discriminate against them through their payment methods.
Other hon. Members have mentioned the choice to switch. To be honest, it is very perverse that energy companies and the Government push switching. No other sector of industry says, in a competitive market, “If you don’t like what we do, go somewhere else.” Can we imagine supermarkets adopting that policy?
I want energy companies to give loyalty bonuses to people who stay with them as long-term customers, rather than tampering with their accounts and penalising them for how they pay. I am told by energy companies—I have no reason to dispute this—that the regulator does not allow it. We should look at that, and if we had the proper review called for in the motion, the regulator would have to consider such issues and help people by alleviating the effects of the high percentage increases of the past few weeks.
The motion is about Ofgem doing its job and standing up for the consumer, the Government being on the side of the consumer, and us, as a Parliament, being on the side of the people we were sent here to represent.
Gregory Barker
The right hon. Lady suggests that the competition test, which is new, will be a distant solution and that action is needed in the meantime. The competition test is alive now and we expect the first results shortly. This is not something we are kicking into the long grass; this is live. She raises a legitimate point on prepayment meters, as other Members have from across the House. Do not misconstrue me: this is a serious point and she is right to raise it. The Government take it very seriously.
We also take seriously the crux of today’s debate: are customers who elect to pay by cash or cheque, by standard payment through the post or at the post office, being unfairly penalised for doing so? That is not the same as saying that everybody should pay the same. I am afraid that there may be a genuine difference of opinion on that point. It is not our view that all customers should pay the same. There should be healthy competition, but—and it is a very important but—the differential between paying by direct debit and paying by cash or cheque should be cost-reflective and cost-reflective only. That is a key element of the licence condition under which energy suppliers operate. It is vital that Ofgem looks at that forensically and in detail, and answers to Ministers who have asked whether that is really happening.
Gregory Barker
In just a moment. I want to make some progress and I have to give my hon. Friend the Member for Chatham and Aylesford time to wrap up.
My hon. Friend the Member for Harlow drilled to the centre of the issue when he raised the fact that Spark Energy is charging a premium of £300-plus. That is staggering. Scottish Power, one of the big six created by the Labour party, is offering a premium—or a discount, depending on which way we look at it—of £99. The right hon. Member for Don Valley (Caroline Flint) asked why we were not doing anything. We are doing something: there is already a specific ongoing investigation into Scottish Power. This is not just about Scottish Power, however: for npower, that figure is £95. As part of the competition test, we have asked Ofgem to look at all the energy suppliers to ensure genuine cost reflection. We want to know why these costs are so much more than those charged by other utilities providers, such as water and telephone companies.
Gregory Barker
Ofgem will be reporting in the near future as part of the competition test. It has the necessary powers, and we have made it clear that we expect a forensic analysis of the cost differentials and criteria.
This is not a new phenomenon, however. The Labour party had 13 years to crack it, but it took no action. Moreover, the Leader of the Opposition spent two years as Secretary of State for Energy and Climate Change, so the question is not “Why has it taken since 2011?”, but “Why did Labour do nothing, between 1997 and 2010, when it had the time, the power, the majority and the authority?” What did Labour do? Zero, zip, nothing. So before they ask, in high dudgeon, why we are not acting faster, would they please explain why they did nothing to help consumers for 13 years? When we get a credible answer, we will give their criticisms more credit.
I do not want to go off on a completely partisan rant, however, because some good questions have been raised, and I do not want to diminish their seriousness. We take the issue of prepayment meters and standard payments seriously, but we are also looking at direct debits. Some 55% of people pay by direct debit and 45% pay by standard payment.
Albert Owen
Did I understand the Minister correctly? On cost reflection, he said that Ofgem still had the power to intervene over the licence. I understood that in 2012 it gave up that power and introduced the retail market review. Is he now saying that Ofgem can still exercise that power? If so, why does he not tell it to do so? Then this debate would be null and void.
Gregory Barker
We have done it already. The hon. Gentleman was not listening. We have spoken to Ofgem, and it has confirmed publicly what we have discussed privately—that this will form a key part of the competition assessment. That is a new development, and a sign that the Government take this seriously and are on the side of consumers. We will not wait 13 years to do something about it.
We are not just acting for people on prepayment meters or trying to get a better deal for people who pay by a standard payment method; we are taking action to get a better deal for people on direct debits as well, because they do not always get a fantastic deal. We know that many people do not realise they are inadvertently building up stores of credit with the energy companies, as has been highlighted by Members on both sides of the House, including the hon. Member for Sunderland Central (Julie Elliott), I believe. We will soon be announcing proposals that will give consumers a much better deal. That is just one of the measures we are taking to get a better deal for British consumers, particularly the most vulnerable, and comes on top of the £135 warm home discount, guaranteed winter fuel payments for pensioners and energy efficiency support for the most vulnerable through the ECO.
This has been a good debate. I am pleased that we were able to benefit from expertise from across the House and that the concerns shared across the House on this issue were properly aired. I pay tribute to my hon. Friends the Members for Harlow and for Chatham and Aylesford for bringing it to the Floor of the House and allowing us to demonstrate that this coalition is taking action for British consumers.