Energy Price Freeze

Debate between Caroline Flint and Guy Opperman

Wednesday 2nd April 2014 Commons Chamber

[Caroline Flint]

I am afraid that despite the Government’s tampering, bills have gone up by an average of £60. Furthermore, as a result of the Government’s tinkering, according to their impact assessment some 400,000 homes will not receive energy insulation. That is not something to stand up and crow about.

Hon. Members may recall that there were those who said that a price freeze was unworkable and impossible to deliver. It is not normally in my nature to name and shame people when their arguments have been well and truly demolished—[Hon. Members: “Go on!”] Okay. On this occasion, in the interests of openness and transparency, I am obliged to remind the House of what the Secretary of State said. This is the man who told the House last week:

“We have never said that the big six could not have a price freeze.”,—[Official Report, 27 March 2014; Vol. 578, c. 479.]

However, on the day my right hon. Friend the Leader of the Opposition made his speech to the Labour party conference, the Secretary of State said:

“Fixing prices in this way risks blackouts, jeopardises jobs and puts investment in clean, green technology in doubt”.

Last week, he said that SSE’s decision to fix prices was “good news”. He added:

“Let’s hope”

—I emphasise hope—

“some of the other companies now follow.”

It may be in the Secretary of State’s nature to follow, but it is in mine to lead. If he wants energy companies to freeze their prices, as he told the public last week, he should not wait for them: he should do it now.

I take the security of our energy supply seriously. That is why the collapse in investment under this Government is so worrying and why there has been so much concern about the length of time it took to get contracts for difference in place, and how long it is still taking to get the capacity market up and running—policies we have supported. That is why in government we will establish a dedicated energy security board. However, a Labour Government will not be held to ransom, and neither must the Secretary of State.

[Guy Opperman (Hexham) (Con)]

Does the right hon. Lady accept that an externally imposed price freeze does not control overseas supply or energy prices?

[Caroline Flint]

The price freeze we have suggested is in recognition of the dodgy dealing that has been going on, and we have proof of the fact that when wholesale prices have gone down, they have not been passed on to the consumer. If the hon. Gentleman does not get that, he will not win at the next general election.

The Government were wrong about our price freeze, and today is their chance to atone for their error. They have been wrong about much else besides. The Secretary of State likes to claim that Labour created the big six, but who botched the privatisation of our utilities, sold off our country’s assets for much less than they were worth, and removed the restriction on vertical integration? It was not us; it was the previous Conservative Government. As this week’s revelations about Royal Mail remind us, they are the same old Tories. They might think they know how to run a business, but they are not fit to govern.

Energy Market Reform

Debate between Caroline Flint and Guy Opperman

Wednesday 24th October 2012 Commons Chamber

[Caroline Flint]

I want to make more progress.

When this House last debated energy efficiency in May, I used information that I had once again obtained through parliamentary questions to warn that the energy companies were on course to miss their targets. The Minister of State, Department of Energy and Climate Change, the right hon. Member for Bexhill and Battle (Gregory Barker), complacently told the House that

“we fully expect them to deliver their obligations and we will make sure that they do.”—[Official Report, 16 May 2012; Vol. 545, c. 554.]

Now, with the schemes due to end in less than 10 weeks, Ofgem is warning that the companies will not meet their targets, and families across the country will miss out and be left facing a cold winter with poorly insulated homes. Why have the Government failed to get a grip on this situation? Why have they failed to tackle the energy companies’ lack of activity and joined-up activity with local people to deliver? We have 10 weeks left and it looks like we are not going to meet the targets that the Minister said we would in May.

We should not worry, however, because we are told that everything will be okay as a result of the green deal. The Government originally said that this scheme would reach 14 million households by 2020, so why is it that when the scheme was launched earlier this month there were just two registered providers? Why would anyone want to take up the green deal when they will end up paying more in interest rates and charges than for the actual energy efficiency measures? Support on energy company obligations for the fuel poor and low-income households will be cut by half next year, and the end of the Warm Front scheme means that this will be the first Administration since the 1970s not to have a Government-funded energy efficiency programme.

[Guy Opperman (Hexham) (Con)]

The hon. Member for Wansbeck (Ian Lavery) and I inherited in excess of 20% fuel poverty in the north-east when we were elected in Northumberland in May 2010—but I will leave aside the past. Does the right hon. Lady not accept that these plans for, to use her own words, more competitiveness, more transparency and a fairer way forward are, at the very least, a step in the right direction?

[Caroline Flint]

We are going to make three propositions today that we think will help boost the market and make it more competitive, and I look forward to receiving support from the Government’s Front-Bench representatives. I know that the hon. Gentleman has raised on many occasions the issues faced by his constituents who are off-grid. Part of our proposals for a new energy watchdog is to bring those who are off-grid back under the arrangements that everybody else benefits from by being under one regulator. That is one of the ways in which we would reform Ofgem.

We want to help people do the right thing. We believe that, even in opposition, we can help people make their homes more efficient and find the cheapest deal, which is why we have launched our own collective switching campaign, “Switch Together”. When it comes to it, that is the big difference between us and the Government. They think that the public are to blame, because when they tell people to shop around, what they are actually saying is, “It’s down to you. You’re on your own.” We do not think that the public are to blame for rocketing energy prices. The problem is the way in which our energy market works.

Let us look, therefore, at the dominance of the big six energy companies, which between them supply about 99% of the homes in Britain. By itself, that does not necessarily mean that competition in the market is ineffective. However, the fact that no new entrant has achieved anything like the scale of operations that would challenge the big six shows that there are barriers to newcomers trying to break in.

Secondly, let us look at the market shares of the big six energy companies in their former monopoly areas, which The Independent on Sunday exposed using information that I obtained through parliamentary questions. Privatisation was meant to lead to greater competition and a better deal for consumers, but in every part of the country, the company that used to run the regional electricity board still has a stranglehold over the market.

Thirdly, energy companies like to tell us that electricity and gas prices in the UK are among the lowest in Europe. However, when tax is taken out of the equation, which is an instrument of Government policy, not an indication of market efficiency, electricity and gas prices in the UK are among the highest in Europe, not the lowest. Tax on energy is lower than that on most goods only because Labour defeated the last Tory Government’s plans to increase the VAT on domestic fuel in 1994.

Fourthly—this is perhaps the most damning point of all—whenever the energy companies announce their latest round of price hikes, they tell us that they are only passing on their costs. However, if pricing is competitive and the market is functioning properly, falls in the wholesale cost should be passed on as quickly as increases. So why is it that when prices rise, bills go up like a rocket, but when prices come down, they fall like a feather, if at all? The only reason for that is that the market is not functioning in a proper, competitive way.

Of course the energy companies dispute that, but in 2011, Ofgem found evidence that energy suppliers were slower in passing on reductions in wholesale energy costs than in passing on increases. Its report stated:

“We have found some evidence that customer energy bills respond more rapidly to rising supplier costs compared with falling costs.”

That is what Consumer Focus thinks too. It found a gap between the price at which energy companies buy electricity and gas, and what they sell them to the public for. Its research shows that even though the wholesale prices for both electricity and gas have fallen since 2008, retail prices for both are significantly higher today than four years ago.

Energy Prices

Debate between Caroline Flint and Guy Opperman

Wednesday 11th January 2012 Commons Chamber

[Caroline Flint]

My hon. Friend is absolutely right: actions speak louder than words. The actions going on at the moment mean that the number of people in fuel poverty is going up and there is less support coming forward to help the most vulnerable. We are heading for a car crash when the Warm Front scheme ends and we wait to see whether the green deal will happen in a way that will help people. I shall say a little more about that later, and I am sure my hon. Friends will want to make some points about it in their contributions.

Let us talk about helping low-income families with their energy bills. The Secretary of State likes to boast about the warm home discount scheme. He says it is a statutory scheme and that Labour had only voluntary agreements—never mind that those voluntary agreements secured £375 million to help almost 1.6 million households with their energy bills over three years. What the Secretary of State forgets to say is that the present scheme exists only because Labour legislated for it when we were in office. When the present Government decided to take it on, we warned that, on the basis of their plans, they could exclude hundreds of thousands of people from the help that they needed.

In Committee, my hon. Friend the Member for Liverpool, Wavertree (Luciana Berger) said

“there are concerns about the make-up of the broader group and the discretion given to energy companies to fund it.”

She asked for assurances

“that the Government will evaluate how effective the discretionary nature of the broader group will be and, if necessary, take steps to expand the core group if households are falling through the gap”.—[Official Report, Third Delegated Legislation Committee, 28 March 2011; c. 6.]

The Government did not heed those warnings, and, as research by Save the Children revealed last week, only 3% of families who are eligible for help from the warm home discount scheme will receive the support to which they are entitled this year.

The Secretary of State may try to tell us that more people will be helped as the scheme develops, but those families need help now, not in three or four years’ time. This is not about spending more money or adding to customers’ bills; it is about standing up to vested interests in the sector, and telling them that they have a responsibility to their customers and to the public.

The Government are not only cutting help for people in need, however. They are also hitting families who want to do their bit—who want to do the right thing, to have more control over their energy bills, and to make their homes more energy-efficient. The Government’s disastrous and chaotic cuts in the feed-in tariff for solar power will be back in court on Friday. In defence of their plans, Ministers have been forced to resort to ever more outlandish claims about how much it is costing the public. First it was £26 a year, then it was £40, then it was £80. The actual figure—what it is really costing consumers—is just 21p per household per year, compared with average bills in excess of £1,300. What the Government do not seem to understand is that one of the reasons why so many people, especially pensioners, chose to install solar was the fact that it enabled them to control their energy use and cut their bills.

[Guy Opperman (Hexham) (Con)]

Today the Select Committee on Energy and Climate Change heard some of my constituents give evidence on the issue of off-grid energy. May I ask a simple question? Is the Opposition’s policy to regulate it—yes or no?

[Caroline Flint]

We have had a number of debates on the subject. One of the problems with off-grid energy is that some of the schemes that the Government are coming up with do not help the people who are affected by it. I shall say more about that later in the context of the green deal. There are real questions about who will be excluded, but we are talking today about energy prices, and about what we can do to make the market more competitive and responsible.

I look forward greatly to learning what the Select Committee has discussed in relation to off-grid energy, and will think about some of its recommendations. We will make up our own minds about what we should do, but I acknowledge that there is a problem. During the three months for which I have had my present job, it has arisen many times in debates. I also acknowledge that there are insulation problems for many people in rural communities whose homes have solid walls. I am afraid that I cannot give the hon. Gentleman chapter and verse today, but he can be reassured that the issue is on my radar.

Energy Prices

Debate between Caroline Flint and Guy Opperman

Wednesday 19th October 2011 Commons Chamber

[Caroline Flint]

I am afraid that Edwina Currie was in the news again only last week, when she said that she was not aware of anyone who could not afford to eat. People up and down the country are, however, facing the choice between keeping warm and having a hot meal. The sad thing is that many older people often make such sacrifices and keep quiet about them; they suffer on their own. In the voluntary sector, we are also seeing cuts to the services that support those people and help them to get access to their rights and to the deals that they deserve. This is a sorry tale of a sorry Government.

[Guy Opperman (Hexham) (Con)]

May I draw the attention of my right hon. Friend to the report on fuel poverty by the Office of Fair Trading, which was published this week? She asks what is being done. The report described the stopping of practices by BoilerJuice—something that was set up on her watch—which allowed only one company to be in a position to market its products, namely DCC. Will she “go compare” that?

[Caroline Flint]

Whatever we do in public policy, the important thing is always to see whether it is hitting the mark and working as best it can. Does that mean that policies always stay the same? No, it does not.

I thank the hon. Gentleman for calling me his right hon. Friend, but I must challenge him and the Secretary of State over Labour’s record on supporting families coping with their energy needs. I challenge the Secretary of State to deny that the Decent Homes programme, which involved the modernisation of 1.5 million homes, reduced energy consumption. I defy him to say that the code for sustainable homes did not improve the energy efficiency of new properties. I defy him to say that Warm Front did not reduce energy bills for more than 2 million households. I also defy him to say that the car scrappage scheme did not remove hundreds of thousands of old cars from Britain’s roads and replace them with more fuel-efficient vehicles with lower emissions. I challenge him to own up to the House today to the fact that the regulations that his Government are introducing, seven months after they were required, arise from the third energy package agreed by my right hon. Friend the Member for Doncaster North when he was Secretary of State for Energy and Climate Change. Yes, it was Labour that agreed the legal agreement across the European Union to make the gas and electricity markets more competitive, to give new powers to the regulator, to reveal the financial records of the energy giants and to put in place a more competitive market that new suppliers could enter. The role of this Government, 18 months into office, is to delay the process of implementation.

Perhaps the Secretary of State is not just the Prime Minister’s meerkat; perhaps he is also the Chancellor’s poodle. Following the Osborne doctrine, which states, “We are going to cut our carbon emissions no slower, but no faster, than other countries in Europe”, perhaps he now believes that, as the Chancellor said,

“a decade of environmental laws and regulations are piling costs on the energy bills of households and companies.”

Perhaps that is why, this week, the Secretary of State failed to stand up to companies over pricing, why he failed to express the anger that the public feel towards the energy giants, and why he meekly agreed to let the energy giants pledge not to raise their prices over the winter only after they had already increased them.

People expect, and deserve, a Government with the courage to stand up to powerful vested interests. This Government cannot even stand up to their own Back Benchers. A survey last year showed that, in spite of the overwhelming scientific consensus, one third of Tory MPs are climate change deniers who doubt the existence of climate change and its link to human activity. As ever, we are particularly grateful to the hon. Member for Mid Bedfordshire (Nadine Dorries) for the expertise that she brings to all matters scientific. On Monday, she solved an issue that has evaded scientists for generations when she told Radio 5:

“You can’t put solar panels on children’s shoes.”

I am glad that that thorny issue has been resolved once and for all, but this is all part of the background to the comments of the Chancellor at the Tory party conference, when he openly attacked low-carbon businesses to get cheap applause from Tory delegates. The truth is that this Government are not only out of touch but wedded to an out-of-date orthodoxy which, for too long, has allowed the City and companies such as the privatised electricity suppliers to do what they want at the expense of everyone else.