Annual Energy Statement

Caroline Flint Excerpts

Thursday 31st October 2013 Commons Chamber

[Caroline Flint (Don Valley) (Lab)]

Oh, dearie me. A coherent energy policy? I must say that I feel for the Secretary of State, because he has to deal with the fact that the Government’s energy policy is increasingly being made at the Dispatch Box by a Prime Minister who has completely lost the plot. I would like to thank him for early notice of his statement and its contents—on Sky, on the BBC’s “Watchdog” last night and on the “Today” programme this morning.

The Secretary of State was meant to be making the annual energy statement, but what we heard today would be better described as the annual excuses statement—excuses for why people’s bills are going up, excuses for why Ministers are doing nothing about it, and excuses for why each and every time they give the companies what they want and leave consumers to foot the bill.

The energy companies blame social and environmental obligations for their price rises, so the Prime Minister promises to roll them back. Threatened by Labour’s price freeze and plans to reset the energy market, suddenly the companies are clamouring for another review to kick the issue into the long grass. On Tuesday the chief executive of E.ON told the Energy and Climate Change Committee:

“I believe that we need to have a thorough Competition Commission investigation, supported by Ofgem, because they are the experts—they have been in the industry for a decade.”

Lo and behold, today the Government have given the energy companies what they want: their review, led by the very same regulator that has let them get away with ripping people off in the past.

Then, today, we heard the big announcement: encouraging people to switch from one company to another. But the truth is that no amount of tinkering with tariffs, telling people to shop around or, as the Prime Minister suggested, wearing another jumper will solve the real problem with Britain’s energy market, because even the cheapest tariff in a rigged market will still not be a good deal.

The proof of how weak and spineless the Government are when it comes to standing up to the energy companies is that only three weeks ago the Minister of State, Department of Energy and Climate Change, the right hon. Member for Bexhill and Battle (Gregory Barker) told the BBC that the idea that Government levies were responsible for bill rises was “nonsense”, but now, boxed in by a Prime Minister who is not willing to stand up to the energy companies and a Chancellor who is actively courting climate change deniers in his own party, the Government say that the levies are to blame.

It is interesting that the Secretary of State conspicuously did not talk about rolling back the green levies in his statement. The truth, of course, is that any obligation to support clean energy or improve energy efficiency must deliver value for money, but how is it possible that social and environmental obligations that, according to his Department’s own figures, make up only £113 of people’s bills can account for price rises of £400? Will he tell us which of the levies, 60% of which were introduced by his Government, he now wants to scrap? Is it the energy company obligation, at £47, the warm home discount, at £11, or the carbon price floor, at £5? Does he accept that, whether it is bill payers or taxpayers who pay, unless he deals with the way people have been overcharged, he is letting the companies off the hook?

As for the annual competition review, I remind the Secretary of State that there have been 17 investigations into the energy market since 2001. If he is today announcing the launch of a new annual review of competition in the energy market, what on earth has Ofgem been doing all this time, and what does he expect it to find out in the next 10 months that it has not discovered in the past 10 years? The last review by Ofgem, to which he gave his full backing, finished only in June. This is what he said at the time:

“I welcome the continued progress of Ofgem’s reform of the retail energy market…That’s why I am backing Ofgem’s reforms”.

The Minister of State, the right hon. Member for Bexhill and Battle, was even more effusive. He said:

“It’s encouraging that Ofgem is going full-speed ahead with these crucial reforms to the retail energy market.”

Today we hear the Secretary of State saying that the Government will build on the BDO recommendations on reform of the energy market, but the truth is that Ofgem ignored BDO’s recommendations and the Government stood by it.

We do not need another review: we need action. We need action to freeze people’s energy bills and fix this broken market; to break up the big six by ring-fencing their generation from supply; to put an end to secret deals and require all electricity to be bought and sold via an open exchange; and to create a tough new watchdog with the power to force these companies to cut their prices when wholesale costs fall—which, I am pleased to tell the House, is now supported by the hon. Member for Westmorland and Lonsdale (Tim Farron), the president of the Secretary of State’s party. That is what real action looks like.

Today’s annual energy statement could not have come at a more important time. Energy prices are rising three times faster under this Government than the previous one, bills are up by £300, and the latest price rises will add another £100 this winter. For people in fuel poverty, the gap between their bills and what they can afford is at an all-time high, but for the companies, the mark-up between wholesale costs and the prices they charge grows ever wider. Fifty-seven households have had work done under the green deal and 7,000 workers in the insulation industry have lost their jobs. Investment in clean energy has halved, and the Government have legislated to stop any future Administration setting a decarbonisation target until 2016 at the earliest. Last year, the UK’s carbon emissions increased by more than any other country in the EU.

That is the Government’s record. As we learned from Age UK on Monday, what it means in reality is that 3 million elderly people will not be able to stay warm in their homes this winter. They want their bills frozen, not their homes. The question they want answered today is simple: why are this Government too weak to stand up to the energy companies?

[Mr Davey]

I thank the right hon. Lady for her response, in which there was clearly not a single apology to Britain for the black hole in energy security that the Labour party left from when it was in government.

The right hon. Lady talked a lot about Ofgem. Who created Ofgem? The Labour party. Who reformed Ofgem to make it stronger? The Leader of the Opposition. In attacking Ofgem, an independent regulator, she is attacking her own party leader’s record. We are reforming Ofgem; we have given it new, stronger powers. We have created a new regime in the Energy Bill, and there is new leadership. I believe that Ofgem can deliver on competition where the previous Government failed to deliver. We are not kicking competition into the long grass. I am determined that this first annual energy assessment on competition should deliver by next spring.

The right hon. Lady talked about levies. The question is whether levies should be on bills or on taxes, and we are looking at that issue. Interestingly, she referred to a figure of “only” £112. I hope that people noticed that, because her energy freeze will deliver only £120—we think. So she is admitting that her energy freeze is actually the con that we have been saying it is all along.

I end by thanking the right hon. Lady for tabling an Opposition day debate on energy bills for next Wednesday. I want to debate energy with her every day of the week, because I want to expose Labour’s appalling record on energy and its appalling policies, which would feed into the big six that it created. Labour’s big six need competition, and we are up for it—Labour is not.