Energy Company Licence Revocation

Barry Gardiner Excerpts

Wednesday 3rd September 2014 Commons Chamber

[Mr Davey]

I am going to deal with the right hon. Lady’s proposal, as I have said. However, she failed to deal with one of the comments made by a Government Member about the importance of competition. Competition does drive good customer service, as I hope she will recognise. I wish she had done so in her intervention on me, but she did not.

[Barry Gardiner (Brent North) (Lab)]

The Secretary of State has given himself the power to change the contract for difference allocation framework, which is part of his regulation on competition, and the budget notice as close as 10 days before an allocation round begins. Can he assure the House that the European Commission regards 10 days as a sufficient period to determine whether the round is state-aid compliant? If he cannot, what assurance can he give that delays will not result from this? Crucially, what impact might this likelihood of change and delay have on investor confidence to create the very competition he is talking about?

[Mr Davey]

I congratulate the hon. Gentleman on getting that question into this debate. I say gently to him that on CfD and state aid we have clearance, so presumably the Commission has examined that matter. I have not specifically asked it that question, but it has given us state-aid clearance. The way we have proceeded with the allocation proposals for CfD is to ensure that we get just that investor confidence, and the fact that we are seeing such interest and such investment is tantamount to showing that we have it right.

Failing to focus on competition is a serious mistake by the Opposition, because many smaller suppliers competing against Labour’s big six are doing so not just on price but on the basis of better customer service. If we talk to the independents about their business model, we hear some of them say that higher quality customer service is their main competitive edge. The growth of competition since 2010 suggests that they are right and that competition has a key role to play here. From less than 1% of the market, the small suppliers now have more than 7% and it is still growing. Customers now have more choice than ever, with 25 suppliers competing for their custom.

Small suppliers provide electricity to 2 million customers, and they have gained more than 1 million customers in the past 12 months. Clearly, customers are voting with their feet when they are not happy with the service they are getting. Yes, we need to make the competition rule work more effectively, which is why we support the independent Competition and Markets Authority in the most profound investigation of British energy markets ever seen.

It was telling to hear that the right hon. Lady does not intend to wait to hear the result of the Competition and Markets Authority investigation. She will prejudge the authority’s report. That is quite a revelation, which is worthy of more debate. We are not simply waiting for that report from the Competition and Markets Authority. We have already done so much to encourage new suppliers and to make switching easier, simpler and quicker. We believe that we must continue to sharpen the competition tool for consumers, so that when they are poorly treated, they can vote with their feet.

I am acutely aware that competition has not always worked for the most vulnerable in society, such as elderly people who might not be internet savvy. During my time as Secretary of State, I have placed a focus on new business models and new ways of helping such people—from collective switching to developing, with the voluntary sector, citizens advice bureau, Age Concern and so on, new forms of advice with the big energy saving network. Ofgem is also increasingly focused on how we can ensure that energy markets better serve the fuel poor and the less well off.