Prepayment Meters: Self-Disconnection

Debate between Anne McLaughlin and Alan Whitehead

Thursday 15th December 2022 Commons Chamber

[Dr Alan Whitehead (Southampton, Test) (Lab)]

I congratulate the hon. Member for Glasgow North East (Anne McLaughlin) on securing this debate—it is essential that we have it—and on her tenacity in also introducing a ten-minute rule Bill. I also congratulate her on her optimism; apparently, she really does think that the Government might do something about this issue in the near future. I wish I shared her optimism.

[Anne McLaughlin]

I thank the hon. Member for his kind words. I should probably clarify that I was always brought up to believe that if someone thinks and acts positively, they will get positive results. I also think, when I am asking for something as important as this, that it is probably best not to start off by being hyper-critical. I will wait to see what the Minister says and I might change my view, but I think that positive thinking will lead to positive results.

[Dr Whitehead]

I thank the hon. Member for emphasising her optimism; let us see how we get on this afternoon.

Hon. Members have added to the debate positively by setting out where we are on prepaid meters and a number of issues relating to their present operation, as well as where we need to go for the future. About 15% of UK households are on smart meters for electricity and 14% are on prepaid meters for gas. That may well have gone up since those figures were last calculated. As hon. Members have mentioned, about half a million warrants to place people on to prepaid meters have been successfully passed through the courts since the beginning of the covid pandemic in 2021, so the figure is likely to be higher.

The situation is, frankly, a snapshot of the way in which the have-nots in our society are treated, as opposed to the haves. We need to keep that centrally in mind, because overwhelmingly, a substantial number of people in vulnerable circumstances, on lower incomes and in poorer housing are on prepaid meters, whereas people who are not in those circumstances have accounts. As the hon. Member set out, that means that there is a two-tier arrangement on energy debt. On one side, those with accounts can manage and work their way through very large amounts of debt. On the other side, those on prepaid meters simply cannot do that, for the simple reason that as soon as they go over the credit limit, they are out—their meter has, effectively, been switched off—and they have no more energy. Let us be clear: from the point of view of energy supply companies, that is the most efficient way to get rid of the problem that they might face, under other circumstances, of having to pursue customers for debt. Companies can simply put people on prepaid meters and they then self-disconnect, ending the problem for the energy supply companies.

As my hon. Friend the Member for York Central (Rachael Maskell) and other hon. Members said, in a recent court case in the north of England, about 496 warrants were agreed in a very short period for people to go on to a prepaid meter despite what they wanted to happen. Some people like the way that prepaid meters operate, in terms of balancing the family budget, but I would suggest that they are in a minority. Most people are on prepaid meters because they have to be and their circumstances do not allow them to do otherwise. However, it is not really the case that the courts can just rubber stamp warrants. It would be very difficult to rubber-stamp 496 warrants in three minutes—that was the speed at which the warrants were recently dealt with in that particular court case. A conveyor belt of warrants for prepaid meters is currently going through the courts, adding up to the enormous figure that I mentioned.

As hon. Members have said, there is already a differential with prepaid meters. The have-nots pay more and the haves pay less on tariffs, standing charges and so on. That is remarkable because, prepaid meters are a very good thing for the cash flow of energy companies and for getting money in up front, which I would have thought would lead to lower rather than higher charges for prepaid meters.

[Dr Whitehead]

That is right. We are allowing a group of customers to be ripped off much more easily than other people in the energy sphere. It is good that we have shone a light on that this afternoon, because this needs urgent action. For the short term, I hope that the Government will say that there should be a moratorium on further warrants to put people on to prepaid meters, at least for duration of the energy crisis. That would at least mean that, as hon. Members have already said, we would not be putting more people into a situation in which they face impossible choices in their household management. In a number of instances, people literally cannot reactivate their systems when they have been disconnected, or have self-disconnected. They simply do not have the wherewithal to get back on the prepaid meter horse, as it were, because—among other things—the standing charges continue to ratchet up.

People are also paying grossly inflated prices when they are not the direct bill payer. I am thinking of people in park homes and in various other circumstances where the landlord has a meter-charge arrangement that bears no relation to what that should be, were the money to go into the meter. So, given the energy crisis, there are a great many areas in which the Government must take action in the near future in recognition of the fact that people with prepayment meters are at the coalface when it comes to energy poverty.

[Anne McLaughlin]

May I ask, for the purpose of clarification, whether Labour supports at least a moratorium on so-called self-disconnection, so that no one with a prepayment meter can be disconnected, at least over this winter?

[Dr Whitehead]

Yes, indeed. I said it a few moments ago, and I am happy to repeat it. That, I think, is the minimum that needs to be done at this point, given the crisis faced by people with prepayment meters. However, as has already been pointed out this afternoon, a number of other actions need to be taken in the longer term to ensure that people with prepayment meters are at least on a level playing field when it comes to their energy supplies, and I hope the Government will think about that very seriously. There are a number of ideas that Labour could offer for how that long-term level playing field might be achieved, and I should be happy to work with the Government to bring it about. However, what is most important is for the Government to understand and recognise the present dire situation, and for the Minister to confirm this afternoon that they will take the necessary action to put it right so that people are no longer in such a desperate position—in so many circumstances —and are, at least, not in a “have/have not” situation.