Domestic Gas and Electricity (Tariff Cap) Bill

Ben Bradley Excerpts

2nd reading: House of Commons
Tuesday 6th March 2018 Commons Chamber

[Ben Bradley (Mansfield) (Con)]

It is a pleasure to follow my hon. Friend the Member for Ayr, Carrick and Cumnock (Bill Grant). I support the Bill, because the energy price cap will help to ensure that overcharging for energy use is brought under control, which will support some of the most vulnerable people in our society and in my constituency.

Allowing the independent regulator, Ofgem, to cap energy tariffs until 2020 will mean that an absolute cap can be set on poor-value tariffs. That will help to protect the 11 million households on low standard variable or default tariffs who are not protected by existing caps. As hon. Members have said, the difference between the cheapest tariff and the average standard variable tariff from a big six supplier is about £300 a year, and it has been at about that level for the past six months. That is an awful lot of money for constituents in some of the poorest parts of our region, as well as others in the UK. The Competition and Markets Authority’s recent investigation into the energy market found that the domestic customers of the big six energy suppliers pay on average £1.4 billion a year more than they would in a truly competitive market. I do not think that there is any argument in the House about the fact that the market is not truly competitive.

Although I believe that promoting competition is generally the most effective way to ensure that customers receive the best value in their service, I welcome the fact that the Government are prepared to act when it becomes apparent that markets are not working for consumers. As colleagues have said, the technological advances that will improve the market are not happening fast enough to support vulnerable people now.

The Government made a manifesto commitment to extend the price protection that is currently in place. I welcome Ofgem’s commitment to protect a further 1 million families from expensive standard variable tariffs for the first time, taking those protected to a total of more than 5 million people. Despite that, however, not all consumers on the most expensive tariffs are helped. As my right hon. Friend the Secretary of State suggested, it is not enough just to support people who have ticked the right boxes for vulnerability on paper. We must support all vulnerable people and others who are being overcharged to the detriment of their standard of living.

The Bill strikes the right balance by protecting those on standard tariffs while ensuring that energy customers who shop around and switch suppliers can find the best energy deals. I am confident that the Bill will also ensure that Ofgem can set a cap that will enable suppliers to compete effectively. It is obviously vital that that is set at the right level, and that the outcomes are measured and reviewed. There is an interesting discussion to be had about how that will work, which I shall come on to later.

It is right to highlight, as many colleagues have, that this is a cap, not a freeze. Companies will still be expected to compete below the cap to attract customers, just as they were before. Nobody will be prevented from reducing their bills by switching supplier or changing tariff, and energy companies will still be able to pass savings on to consumers when possible. It is also important to acknowledge that the price cap is intended as a temporary measure while innovations such as smart meters and more reliable switching are fully rolled out. It is not always easy to switch. Even in my own house, my wife and I are trying to work out why the bills are so high—is it an appliance, are we doing too much washing, are we drinking too many cups of tea, or is it my tariff? That is not easy to work out without a smart meter, but my energy supplier will not give me one, so it all gets very complicated.

It is important that we take steps now until such services are available so that people can switch quickly and easily. There are provisions to ensure that the cap is set at a sensible level and reviewed regularly, and Ofgem will have to consult on how to calculate the level of the cap. The cap will also have the flexibility to go up and down depending on market conditions, and I agree with my right hon. Friend the Member for West Dorset (Sir Oliver Letwin) that it should be a formula, not a number.

I support initiatives that help to encourage consumers to switch energy suppliers and, of course, I support a competitive energy market. The number of suppliers has increased from 13 to more than 60 since 2010, which can only be a good thing. My right hon. Friend the Member for Harlow (Robert Halfon) mentioned Robin Hood Energy in Nottinghamshire, which is a great local example of a new, competitive company delivering lower prices.

It is people who do not have the means to call around asking for different energy quotes or do not have access to the internet, including elderly people who perhaps do not feel confident using price comparison websites, who suffer the most under the current system, as well as families who have too much on ever to get around to switching. Ofgem’s recent survey found that vulnerable consumers were the most negatively affected by the market, and I am sure that no one in the House supports that situation.

The number of consumers switching energy suppliers continues to be notably low. It would be great if that was because everyone was happy with their bills, but I am not sure that any of us believes that that is the case. Citizens Advice assisted more than 74,000 people with issues related to fuel last year, which again shows that the market is not functioning as well as it should, and it is great news that that organisation has offered its support to the Bill.

The Bill has huge potential to benefit the most vulnerable customers. If it achieves Royal Assent by the summer, the cap can be in place by next winter, providing protection for my constituents in Mansfield and millions of customers across Britain. It is therefore very important that we crack on and deliver it.