Climate Change and Flooding

Debate between Caroline Flint and Kerry McCarthy

Tuesday 15th December 2015 Commons Chamber

[Kerry McCarthy]

I entirely agree. It seemed that money was no object in the short-term clear-up exercise, although there were delays in people getting the money promised to them. The Government are trying to speed up that process this time, by giving the money to local authorities, but council leaders have raised concerns that they simply do not have the resources and staff for that administration. I hope the Environment Secretary will provide some clarity on that.

Last week, the Environment Secretary was still assuring the people of Cumbria that the Government would learn the lessons, and the Prime Minister, on a fleeting visit up north, told them:

“After every flood, the thing to do is sit down, look at the money you are spending, look at what you are building, look at what you are planning to build in the future and ask: ‘Is it enough?’”

I am not convinced that it is enough. In June, the Committee on Climate Change gave flood adaptation a double-red warning, and the Environmental Audit Committee gave the Government a red card for climate adaptation. The Prime Minister did not have to wait for the floods to ask, “Are we doing enough?” The experts had already provided the evidence that we were not.

[Caroline Flint (Don Valley) (Lab)]

On learning the lessons, is my hon. Friend as surprised as I am that about half of the Chancellor’s fast-track zones to build houses are on floodplains? It is estimated that 9,000 new houses built on these floodplains might not be insurable because of the risk of flooding.

[Kerry McCarthy]

That is certainly an issue. Cockermouth has had planning permission approved for new houses, yet we have seen from the recent floods that the defences, which people thought were safe enough to withstand what was described in 2009 as a once in a lifetime or a once in a century event, were not good enough. The Government need to reassure me, therefore, that any defences around new housing in those areas would be sufficient to protect people and deal with the issue of insurance.

Energy Company Licence Revocation

Debate between Caroline Flint and Kerry McCarthy

Wednesday 3rd September 2014 Commons Chamber

[Caroline Flint]

I absolutely agree. One of the problems with the lengths of these inquiries, and a reason why we need greater clarity—and, I would suggest, greater deterrent factors within the conditions under which these companies operate—is that time gets lost. By the time all the lawyers have got together and everything else—and by the time, perhaps, that the company is found guilty of the offence—we lose momentum in making the change that needs to happen.

The timing of the inquiries is important, but a culture change is also needed. We need to address whether the inquiries are hampered by the energy companies responding too quickly by setting their lawyers on to the matter and deterring effective action and preventing justice from being seen to be done.

It is in a spirit of constructiveness that we present our proposals today. We believe that they are eminently sensible, and we hope that the Government will offer the same constructive approach as we have offered on numerous occasions in the past. The best way of protecting consumers is not to provide a redress framework—much needed though that is—but to prevent companies from ripping people off in the first place. At the moment, too many energy companies operate at the margins of what the rules allow, because they know that they will often not be caught. Even if they are caught, the penalties do not present enough of a deterrent. Too often, energy companies seem to view the regulator’s fines as a cost of doing business, and not as a warning that they should get their act together.

Information provided to me in answer to a written parliamentary question shows that, since 2001, Ofgem has issued at least 31 fines totalling at least £90 million. On top of that are the informal cases that the regulator has dealt with, in which, even though no formal fine or notice was issued, action was taken and in some cases financial measures ensued. If we were to add on those cases, the total would be in excess of £100 million. For companies with annual global turnovers running into tens of billions, that is still some way from the maximum fine that the regulator could have imposed. Nevertheless, it is clearly not an insignificant amount.

[Kerry McCarthy (Bristol East) (Lab)]

Does my right hon. Friend agree that, no matter how large the fines might be, they are likely simply to be passed on to consumers through their bills and that they therefore do not act as a deterrent to the energy companies at all? In fact, fining companies penalises the customer, so we need to find an alternative to the fining regime.

[Caroline Flint]

I could not have put that better myself. There is no evidence that the shareholders or managers of the companies take a hit in terms of the benefits they receive; the cost of the fines is often absorbed back into the pot that the bill payers have to pay.

We have heard about the 31 investigations and about the fines that have been imposed. The Secretary of State might claim that this is a sign of success and evidence of a tough new regulatory environment, but that would be true only if there were evidence that companies had changed their ways and that the fines had deterred them from breaking the rules again. The evidence shows that they have not learned their lessons despite all the previous fines and penalties. Information that I have obtained under the Freedom of Information Act reveals that those firms are now facing another 15 probes into poor customer service, incorrect billing and other bad practice. No company has a God-given right to be in the market, to charge its customers and to make a profit just because it has always done so—least of all, those that inherited millions of customers from before the industry was privatised and opened to competition.

Today’s motion proposes a new power for the regulator to revoke energy companies’ licences when there have been repeated instances of the most serious and deliberate breaches of their licence conditions that harm the interests of consumers. Of course, any decision to revoke a licence would have to be subject to due process and to be consistent with the regulator’s overriding objective of protecting consumers and promoting a competitive, transparent and fair energy market.

This proposal would build on best practice from regulators overseas. In some parts of the United States, energy regulators already have the power to revoke an energy supplier’s licence. The Pennsylvania Public Utility Commission, for example, has the power to revoke a supplier’s licence if it breaks consumer protection law or transfers customers without their consent. That sends out the clearest possible message to energy companies that if they carry on mistreating their customers, their licence will be on the line. That strikes me as a pretty common-sense measure.

I hope that the Secretary of State will be able to support our motion today. I say that because when I announced this proposal in August, it was telling that the Government did not put anyone up to discuss it on television or on the radio, and that no Minister commented on the proposal. All we had were anonymous quotes from a Conservative spokesman and a Liberal Democrat source, and between them they could not muster a single good reason not to support the measure. All they seemed to suggest was that Ofgem already had this power, which is simply not true. I have discussed the issue of non-financial penalties with Ofgem and written to it about our proposal, and it has made it absolutely clear that this would be a new power. Indeed, the statement that it issued on the day of my announcement began

“Ofgem is always interested to work with government on any new powers or refinements to existing powers which would help to further protect consumers.”

As today’s motion notes, the regulator has limited powers to revoke licences in certain specific cases, but they are largely of an administrative nature—for example, if a company goes into administration, if it gets a licence but does not supply any gas or electricity in the following year, or if it does not pay a fine.

Energy Price Freeze

Debate between Caroline Flint and Kerry McCarthy

Wednesday 2nd April 2014 Commons Chamber

[Caroline Flint]

I absolutely agree, which is why one of our proposals is to create an electricity pool or power exchange whereby all energy for that sector is put into a pool, enabling anybody to come in and compete on price to retail. Small suppliers, and, I have to say, increasingly some of the bigger players, recognise that this idea is making some headway in the discussions on what the future should offer. We look to Northern Ireland and other countries to learn from their experiences. We do not operate in a bubble; it is worth looking elsewhere for ideas.

The report identifies five significant problems. Many of them were things that Labour Members raised in the eight previous Opposition day debates on this issue and that feature in our Green Paper. The first problem is weak competition. Companies are able to increase their profit margins at will, without any obvious efficiencies or improvement in customer service. They are simply getting away with passing on cost increases, but not cost reductions.

The second problem is market segmentation: suppliers enjoying big market shares in their old monopoly areas, and companies charging some customers, particularly loyal customers, significantly more than others, even though they are providing them with an identical product. Thirdly, there is tacit co-ordination between suppliers: price announcements, normally increases of similar amounts, being announced at the same time and with growing lead-in times. Fourthly, there are barriers to entry and expansion for new players in the market. In particular, the lack of liquidity in the wholesale market makes it difficult for non-integrated players to access power at competitive prices. The fifth problem is weak customer pressure: low and declining levels of customer trust in this market.

That is the final reason a price freeze is so important. Yes, it is about compensating consumers for overcharging in the past. Yes, it is about protecting them from any more unfair price rises while the market is being reformed for the future, but it is also a line in the sand. It tells the companies that their days of overcharging are over, and it tells consumers that the rules of the game have changed for good. It tells them that the rules are no longer set by six giant companies, but by one Government acting for the many not the mighty few.

[Kerry McCarthy (Bristol East) (Lab)]

Did not Ofgem identify—in, I think 2008—16 things it thought was wrong with the energy market? It admitted, in 2011, that 12 of them had got worse or had stayed the same. Is it not key to have an energy watchdog that stands up for consumers, takes on the big six and rectifies the issues my right hon. Friend has identified?

[Caroline Flint]

My hon. Friend is right to draw attention to recent Ofgem investigations. In fact, in the past six years I think it has had three major investigations: on supply, the retail market and the wholesale market. It has failed to get to grips with the real problem. We have seen piecemeal changes that are just not having any impact. Even when there were recommendations about the market and how it could be reformed, it did not take them on board. It is only recently that it seems to be waking up to that.

Ultimately, competition will work only if companies are constrained by the fear of losing customers if they increase their prices too much. Consumers will be prepared to engage in the market, to invest their time and effort to secure the best deal, only if they believe the market is fair and if there are proper rules in place to prevent them from being ripped-off. We should be honest, too, that switching cannot be the only metric of a healthy market. There will always be those for whom regular switching is not a reality, either because they do not have the confidence to switch, even in a simplified system, or because they may have the confidence, but are time-poor and seem to spend their whole life switching from one thing to another. A healthy market must be a managed market, and that is why the price freeze is so important.

Rape Defendants (Anonymity)

Debate between Caroline Flint and Kerry McCarthy

Monday 7th June 2010 Commons Chamber

[Caroline Flint]

Again, my hon. Friend makes a very good point. Where do we draw the line in establishing someone’s identity—whether on arrest or charge—and then allowing other victims the time to present their experiences? We are meddling in something that should not be meddled in. Plenty of other parts of the justice system need to be attended to, and this is not one of them.

[Kerry McCarthy (Bristol East) (Lab)]

I share my right hon. Friend’s relief that the Government seem to be showing signs of back-pedalling or U-turning, or at least having a serious rethink on the issue, but does she share my concern that the proposal was not in either of the other two parties’ manifestos, yet it suddenly appeared in the coalition agreement? Does she share my hope that the Minister will explain why the proposal ended up in the coalition agreement and who was responsible for pushing the idea forward?

[Caroline Flint]

Yes, it was in neither the Conservative nor the Liberal Democrat manifesto at the general election, although I would have thought that that was the platform from which to make such a proposal. I really think that it was nine short words that conveyed this policy in that coalition agreement, and those nine short words developed a policy that has not been thought through, but is very dangerous.