Domestic Gas and Electricity (Tariff Cap) Bill

Baroness Bloomfield of Hinton Waldrist Excerpts

2nd reading (Hansard): House of Lords
Tuesday 22nd May 2018 Lords Chamber

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, I will speak briefly in support of the Bill—very briefly, because at this stage of the debate, much of what I wanted to say has been said by other noble Lords.

At first glance, the imposition of price controls would not immediately strike one as a true Conservative policy. Edmund Burke, however, held that it was the duty of government to prevent people—whether consumers, workers or investors—from being exploited. That is exactly what the Bill does. As we have heard, the Bill seeks to protect the consumer from the significant price increases that can arise from standard variable tariffs. These are imposed on those of us—11 million at the last count—who fail to renew our tariffs with energy suppliers in a timely fashion. If any noble Lords here have not made contact with their supplier in the past two years, I suggest they do so today, as they will almost certainly be on a default tariff—although it may take them until tomorrow, as we have just heard.

Under the Bill, Ofgem must set retail price controls in the form of a temporary but absolute cap through consultation with the industry using an agreed transparent methodology in the next five months. As my noble and learned friend Lord Mackay observed, that is no small task. Notwithstanding the very poor behaviour that has been prevalent in the industry over the past decade, I add my voice to concerns expressed by my noble friend Lord Hunt and my noble and learned friend, as well as by the noble Lords, Lord Whitty, Lord Stevenson and Lord Carlile, about the options for redress and the building-in of poor governance to this legislation.

It is proposed that the only recourse to an appeal that a retail supplier or a consumer will have to challenge the cap proposed by Ofgem is through a judicial review. As has been said, a judicial review is many things, but it does not seem entirely appropriate to judge anything beyond the legality of the control or indeed whether the process by which it has been imposed has been executed in an appropriate fashion. Further, it has no time limit and in many ways it seems a pretty blunt instrument to use as a mechanism for dealing with retail price controls.

Meanwhile, as we have also heard, the Competition and Markets Authority is an established feature of the existing regulatory model in the UK. It has proved itself to be faster and more effective at providing the level of forensic, commercial analysis that may be needed to resolve disputes. Other sectors of the economy —water companies, mobile phone companies, Openreach and networks that can be subject to price controls—have recourse to the CMA, and I remain unconvinced that judicial review represents the best route to good governance in this instance.

The last thing I seek to do is to put the regulator in a weak position, particularly with regard to this industry. I understand that there is a fear that questioning the appeals procedure could be a delaying tactic by the major energy suppliers, which are seeking to delay the imposition of any cap. This would seem unlikely, as any CMA appeals process could run alongside the imposition of the cap.

In the long term, only healthy market competition will obviate the need for a permanent cap. However, I believe that a temporary cap is necessary while other measures are taken to promote competition. If set at a sensible level, competition need not be stifled, and there should be plenty of scope for smaller operators in particular to compete effectively.

To conclude, I support the Bill and the intentions behind its interventions. I am confident that it can be made to protect vulnerable consumers and to remove the penalty for loyalty. In common with others present, I just have reservations about the appeals process contained in the Bill, and I look forward to the Minister’s response.