Energy Bill

Baroness Maddock Excerpts

Tuesday 9th July 2013 Grand Committee

[The Deputy Chairman of Committees (Lord Haskel)]

I have to inform your Lordships that in Amendment 50H, which is part of this group, there is a misprint. It should read:

“Page 99, line 41”,

not “line 40”.

[Baroness Maddock]

My Lords, I am very grateful to the noble Lord, Lord Whitty, for tabling these amendments and have a great deal of sympathy with the points that he made. One of his opening questions was on why we are having to change the system and give the Government more powers, and perhaps change the role of Ofgem. The answer is because competition has not worked in the interests of consumers. That is what we are trying to grapple with to see whether we can do something better. Let us hope that we can.

I am also grateful to the noble Lord because, when these amendments were introduced in the Commons, they were accepted with little or no debate. Therefore, it is important that the Minister here is given more opportunity to tell us how they will work. I wish to ask one or two questions. Interestingly, some of them, and the points that I shall make, arise because I was speaking in Newcastle last Friday morning at a conference of CAN, the Carbon Action Network, which grew out of the HECA organisation that came from the Act of Parliament that I got through.

Some interesting points were raised at the conference. One of them, made by a lady, was that people think that we are asking energy suppliers to offer the cheapest variable rate; but she also made the compelling point that some customers would like the cheapest fixed rate. This lady works with clients trying to help people get a better deal. She said that since last winter, which went on for ever and during which we all burnt more fuel, older people in particular have become even more concerned than before about their bills. She thought that we should have a measure on this point in the Bill. I am not a lawyer and cannot always understand the jargon in the Bill so I am not clear whether it enables that to happen. I hope that the Minister will explain whether it does.

The lady tackling me on these issues on Friday is the energy and affordable warmth officer in Redcar and Cleveland. The other interesting point that she raised was how the change in demand for certain types of tariff will work, particularly the warm homes discount. She spends a lot of time working with clients, many of them in fuel poverty, trying to help them get a better deal. She said that this year there were huge differences in the criteria that the energy suppliers were using to decide whether people would get the warm homes discount. She has found that the big six have all changed their criteria. Some cover low income and others means-tested benefits only, such as income support, jobseeker’s allowance and employment and support allowance. Some look at non-means-tested disability benefits or personal independence payments while others look at things such as eligibility for school meals and maternity and medical exemptions. Again, I would be interested to know how the Minister sees these proposals working with other things that the Government have proposed such as the warm homes allowances under ECO. At the conference there was somebody from E.ON who tried to explain how this worked. I am hoping that either today or at another point the Minister will be able to help us understand exactly how these proposals work with other things.

From what I have managed to look at in the fuel poverty booklet that I picked up today, it may be appropriate to discuss some of these issues when we come to discuss the fuel poverty amendments because some of those issues are mentioned in the booklet. One of the things that the Secretary of State is looking at in proposing to take fuel poverty more seriously is the way that everything interacts together. I did not know before we had this debate today, or in what happened on Friday, that today we would have a whole booklet about fuel poverty so I am quite happy if the Minister does not answer all the points now because there will be an opportunity when we get to the fuel poverty amendments.

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[Lord O'Neill of Clackmannan]

My Lords, I congratulate my noble friend on taking us through this tortuous issue with great clarity. I declare an interest as one of the vice-presidents of National Energy Action, as is, I think, the noble Baroness.

[Baroness Maddock]

My Lords, I should have declared that interest as well.

[Lord O'Neill of Clackmannan]

Given the large sums involved and our positions as members of that body, we must do that. There are various elements involved in fuel poverty: the condition of the house, the circumstances of the individual householder and the nature and size of the energy tariffs that the individual has to pay. Very often, people in fuel poverty are in comprehensively complicated social circumstances and the complexity of the tariff system just adds to their confusion. Quite often, they do not know what they are paying for. Quite often, they do not understand the bills. Invariably, they are unable to make full payment. If they are on the payment meter system—as has already been said—they pay rather more for the privilege of paying as they go but that normally enables them to self-disconnect, in the sense that if they cannot afford to pay they do not use electricity.

One of the statistics that is never given proper examination in arguments about privatisation is that we say there are not the disconnections that there were under public ownership. That is because nowadays people self-disconnect. There was a time when, certainly as a young Member of Parliament, I had a succession of cases where I would intervene with the nationalised industry, the utility, to ensure that the gas or electricity was restored and some kind of proper payment system introduced. In some respects, you might say that for a Member of Parliament that is a chore they no longer need to carry out but it was certainly one that enabled people to come to terms, at least for a period, with the straitened circumstances of fuel poverty. What we have to do here, regardless of the off-the-cuff remark from the Prime Minister, which I am sure he regrets having made—not because he did not believe in it but because of the complexity of the issue; this is a classic case of unintended consequences—is to take advantage of the legislation to make the tariff system for electricity intelligible, simple and, I hope, more affordable. My noble friend has addressed a number of the challenges that that remark presents to us.

We know that in some respects there has been a major shift. There has been the publication of a report, which I confess I have yet to read, and amendments, in which we will all take great interest. It is fair to say that the Hills report was a wee bit of a curate’s egg, but there are always problems with the oversimplistic definition of the 10% rule. Perhaps we can get a change in the definition that enables us to target and prioritise. I know that those are the kind of words that people like to use in these circumstances. In the previous debate, we discussed having an annual report on energy. We will be looking very carefully, maybe not next year but the year after next, when a number of these amendments will have kicked in.

It is important that we have a debate like this and that we get from the Minister a clear picture of the Government’s thinking in relation to tariffs. The remedies for fuel poverty in a broader sense will be debated later, but people know well enough that serious near-criminal activities have been undertaken by the oligopolies. People say that the market works, but it has not worked; it has been abused consistently and methodically by cynical people who at the end of the day pay the fines in the certain knowledge that we as consumers then have to make our contribution to the compensation of the poor shareholders, who have been happy to have these chancers running these businesses. That is where we are coming from on this; a group of cynical manipulators of the tariff system have made the plight of disadvantaged people even more disagreeable. The rest of us can probably say, “It serves us right—we should be looking after ourselves”. However, a lot of vulnerable people have not been given any protection by the market, and we are now looking to the Minister and her response to this debate to tell us how we are going to get tariffs that people can understand and perhaps pay a little more easily than they have been able to in the past.

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Moved by

[Baroness Maddock]

50C: Clause 127, page 97, line 32, at end insert “in a clear and easily understood format”

[Baroness Maddock]

My Lords, my amendment uses nice, simple words. As I said earlier, I am not a lawyer and not very good at this. I discovered that in Schedule 14, page 200, line 43, there is a rather more flowery way of putting it:

“publishing the statement in such manner as the Authority considers appropriate for the purpose of bringing the statement to the attention of those consumers”.

I found that after I had made up my simple amendment, which, luckily, was accepted. It is quite interesting that my noble friend Lord Caithness made exactly this point in his intervention in the previous series of amendments.

Like my noble friend, I am interested here simply because of the bills that I, my friends and my 94 year-old mother have had. You look at them. We have sometimes changed our supplier, and when we got a condensing boiler for the first time—we are on to our second as the first one burnt out—I tried to work out how much gas we were saving. That was difficult. I am an A-level mathematician and I still could not work out with ease whether we had saved. I worked it out in the end but it was very complicated. Gas is the most complicated because they use therms and things that make it much more difficult.

It is from that standpoint that I am concerned. If we really want people to get the best tariff, to understand what they are doing and how much energy they are using and to use less energy, we need better bills and better formats. As the noble Earl said, bills can run to five pages. Sometimes I have had four pages. You also sometimes find that you have something on the first page and then on the third page it is something quite different.

The other thing that concerns me is something that I mentioned at Second Reading. As someone who has produced political leaflets for years, I was told by people who had carried out research what to do if you want to get your message across: where it is on the page, what sort of type you use and the colours that do not work. If there is yellow print on top of something, older people cannot read it at all. There are all sorts of things that surprise me about the way in which companies, the big six particularly, produce their bills. I remember British Gas coming to me and showing me a bill saying, “Isn’t this good?”. I said, “Well, actually, no. The thing you want is not in the place where people look first on a page”. This is quite important. It is difficult to prescribe—you cannot prescribe in that much detail to the energy companies—but it is important that we try to ensure that it is simple so that people can understand it and really compare. They, particularly elderly people, must be able to read it.

Quite a lot of us are older now. We cannot read tiny print in the wrong colour. That is why I put down the amendment. It may not be appropriate at this point in the Bill, I do not know, but it seemed to fit in with what was going on. These might not be the right words but I think that everyone will understand the sentiments. It is quite clear that other noble Lords share those sentiments. I hope that the Minister can give a reasonably positive reply to my amendment. I beg to move.

[The Lord Bishop of Chester]

My Lords, if I may make a brief contribution here, I get electricity to my home, which is also in Scotland but in the southern part, from a Scottish company. I have tracked the way in which the bills have developed over the years, and it is a sad fact of the modern age that the more information you can provide, the less informative the document often is. This is partly a feature of the digital age in which we live; the more e-mails we get, the less we understand about the world around us, and so on.

There is one particular matter on which I would like the Minister to offer some reassurance: the various government obligations that arise out of climate change policies. We may have different views about the importance of those policies, but there really should be clarity in bills about just what the government obligation element is. There is the 5% VAT but there is also another percentage that is going up quite steadily and rapidly, and I think that should be listed.

The company I have mentioned, which I shall not name, used to do that. The bills were shorter but they said, quite simply, “Government obligations”, and gave an amount. Now, for some reason and I do not understand why, the company has hidden that information. You can find it if you dig around, but I hope that these bills, in addition to the unit cost—the actual cost of the energy—and the VAT, list as a discrete amount what we consumers are asked to pay to subsidise wind farms or whatever, in the interests of transparency. As I say, I have seen a particular company, for whatever reason, perhaps inadvertently, move backwards on this issue. I hope that this can be taken on board in the interests of clarity and transparency.

[The Lord Bishop of Chester]

I am all in favour of both. You should be able to put the percentage and say what that percentage is. That is just two parts of one line, isn’t it? The noble Lord has mentioned 11% but the figure that I had in my mind was 7% or 8%. However, I think it will be going up to 15% before long on the track that we have. If we are worried about fuel poverty, and we all are, I would be quite interested to know how many people are put into fuel poverty by these precepts on the energy bills. That is a factor that we have not considered. Still, that is by the by. I just think we need clarity and transparency in an easily understandable way.

[Baroness Maddock]

On the point about percentages, we need to be careful. Surveys have been done, and the noble Lord, Lord Whitty, probably knows this, which show that the understanding of percentages in the vast majority of the population is not very good. They would probably understand better how much of their bill they were paying rather than a percentage.

[Lord Jenkin of Roding]

When I first went to the Treasury in 1970, one of the things they said was, “You’ve got to realise that 50% of the population does not understand what 50% means”.

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[Baroness Verma]

My Lords, as I said earlier, I am taking the amendment away and shall reflect on what the right reverend Prelate the Bishop of Chester has raised. Like noble Lords, I am very keen that information is available, simple and understandable, but I am also keen to ensure that I can deliver what I am able to. Part of that is by taking this away and giving it further consideration.

[Baroness Maddock]

I am grateful to the Minister for her explanation. I have to say that the proposal is fairly simple and I cannot see that it would damage the Bill tremendously if it were in there, but I suppose that it is too much to hope for. When I was in the Commons, I once got a Minister to accept an amendment in its entirety and I practically fell off my chair as he said it. At that time I was the only Lib Dem on the Committee. I had a whole raft of amendments and was busy looking at my notes for the next amendment when I suddenly heard what he said. I am disappointed that the Minister today was not able to do that, but never mind.

I thank her for taking this issue seriously, because we all think that it is important. The amendment goes to the heart of what we are trying to do about getting better information about tariffs to enable people to make decisions. It is clear to me, as I commented in the previous amendments, that people working with those who could do with better tariffs are finding it very difficult to do so because it is so complicated. The simpler that we can make things, the more chance we have of achieving the aims that we all have in the section that deals with tariffs. I am pleased and disappointed all at the same time, but I recognise that we are where we are and beg leave to withdraw the amendment.

Amendment 50C withdrawn.