Energy Company Charges

Caroline Flint Excerpts

Tuesday 4th February 2014 Commons Chamber

[Gregory Barker]

My hon. Friend is right and it is to his credit that he raises an issue that invariably afflicts the poorest and most vulnerable customers. In most cases, however, those on a prepayment meter can switch to a supplier that will not charge them for coming off it. Even if they are on a prepayment meter, they can still switch supplier.

It is important that we do not become carried away with the idea that the only response to getting a better deal for consumers is for Government to intervene with a one-size-fits-all solution. We saw what the result of over-regulation was under 13 years of Labour. Ham-fisted over-regulation does not actually benefit the consumer—it created the big six. We saw real choice for the consumer collapse under the previous Government through ham-fisted inappropriate regulation. The real interests of consumers will be served by a renaissance in competition. Relighting the fires of competition under this market will create real competition between energy companies.

I am glad to tell the House that since the coalition came to power we have seen movement back the other way, correcting the downward slide towards an oligopoly that we saw under the previous Labour Government. We are seeing new entrants to the market and unprecedented switching. In the last two months of 2013, an unprecedented number of customers switched their suppliers, hitting the companies that penalise customers where it hurts. People voted with their wallets and moved to get a better deal. This Government stand for empowered consumers—not just a lucky few, but everyone. We do not want a return to a nationalised industry; we want fair regulation for a fair energy sector.

[Caroline Flint (Don Valley) (Lab)]

There were plenty of examples in the debate that made it clear that regulations are not being followed on prepayment meters, and that Ofgem is not even using the powers it has. Rather than kicking everything off to the competition review, the Minister should ask Ofgem why on earth it is not enforcing the powers it has. It should stop letting this happen.

[Gregory Barker]

The right hon. Lady suggests that the competition test, which is new, will be a distant solution and that action is needed in the meantime. The competition test is alive now and we expect the first results shortly. This is not something we are kicking into the long grass; this is live. She raises a legitimate point on prepayment meters, as other Members have from across the House. Do not misconstrue me: this is a serious point and she is right to raise it. The Government take it very seriously.

We also take seriously the crux of today’s debate: are customers who elect to pay by cash or cheque, by standard payment through the post or at the post office, being unfairly penalised for doing so? That is not the same as saying that everybody should pay the same. I am afraid that there may be a genuine difference of opinion on that point. It is not our view that all customers should pay the same. There should be healthy competition, but—and it is a very important but—the differential between paying by direct debit and paying by cash or cheque should be cost-reflective and cost-reflective only. That is a key element of the licence condition under which energy suppliers operate. It is vital that Ofgem looks at that forensically and in detail, and answers to Ministers who have asked whether that is really happening.