Energy Price Freeze
Debate between Caroline Flint and Martin Horwood
Caroline Flint
I will give way shortly but I want to make this point. The Secretary of State also boasts that on his watch 18 new entrants are challenging the dominance of the big six. He is right: 18 other suppliers are in the domestic market, but when did they enter it? When did companies such as Good Energy, First Utility, and Ovo Energy enter the market? Was it under this Government? No, it was not—it was under the previous Labour Government.
Caroline Flint
I will finish this point. Good Energy: 2003; First Utility: 2008; OVO: 2009. In total, there were not just six suppliers in 2010, as the Secretary of State likes to say, there were 14, and in recent years the growth of those companies has begun to erode the market share of the big six.
Yes, there are more suppliers out there challenging the incumbents, and the market share of the big six is down from a huge 99% to a still pretty massive 95%, but that is no thanks to the Secretary of State. If he does not even understand the problems with our energy market, why should anybody trust him to fix it? Let us not forget that the only reason we are having this debate, and the only reason the energy market has been referred to the Competition and Markets Authority, is the way in which Labour, along with others, has stood up for customers and refused to be silenced.
Caroline Flint
In 2011, Labour, under my right hon. Friend the Member for Doncaster North (Edward Miliband), a previous Secretary of State for Energy and Climate Change, supported a full market investigation. The former Secretary of State opposed that. [Interruption.] No, I am sorry, but this is a very important point. Labour supported an investigation two and a half years ago and the Government opposed it. Labour then looked at ways of reforming the market, short of a CMA. The truth is that we welcome the CMA, but we also know that we should not allow this issue to be kicked into the long grass. We should be planning our reforms now. The Secretary of State cannot ignore that.
The Secretary of State told the House in a statement last week that the energy market has improved since 2010. Ofgem’s assessment shows precisely the opposite: things have got worse since 2010, not better. Apart from a spike in switching in a couple of months at the end of 2013—which I have to say had more to do with the Leader of the Opposition’s speech at the Labour conference than anything the Government did—the number of people switching has fallen. The latest statistics, published by the Government last week, show that 2013 was the second-worst year on record for the level of switching. The spike at the end of 2013 appears to have been completely reversed.
Small suppliers have been gaining customers and their market share has been growing, but paragraph 5.16 of Ofgem’s assessment is clear that last year, for example, half the so-called growth in market share for smaller suppliers actually resulted from npower selling Telecom Plus, which just so happens to have a 20-year contract with npower for its energy supply. In any case, as figures 28 and 29 show, the overall rate at which suppliers have been winning customers has fallen. Figure 39 of Ofgem’s assessment also clearly shows that the total amount of energy being traded has fallen in each year since the general election, as has the churn rate.
The only things that have increased on this Government’s watch are people’s bills and the profits of the big energy companies, which, paragraph 6.10 of the report notes, have increased five-fold in the last three years—up from just £200 million in 2009 to £1.2 billion in 2012. Let us not forget the increase in households in fuel poverty, and the growing queue of people who cannot get their home insulated after the Government’s tinkering with bills last autumn. The Secretary of State must be so proud.
The notion that the energy market is, as the Secretary of State puts it, “improving”, is very obviously wrong. What the report shows, and again I quote directly from section 4, is that
“things are getting worse for consumers.”
That is the conclusion of the report; and that is a verdict on this Government’s record.
Martin Horwood
The right hon. Lady mentioned Good Energy. I met Good Energy this morning and it is quite clear that Labour’s policy would cause it real problems as a small green supplier. Is not the truth that this would be bad for competition, and, as it wrote to the right hon. Lady, that it treats the symptom not the cause?
Caroline Flint
I am not surprised that energy suppliers, big or small, do not like having their prices frozen. I would be surprised if they did support it. However, when Stephen Fitzpatrick, the chief executive of Ovo, was asked whether it would affect his company model, he said:
“No I don’t think so, we set up our business to make sure that we are able to pass on the greatest amount of savings possible to energy customers.”
When asked, “Will you be affected?” he replied:
“No I think it will probably be great for our business to see any kind of pressure put on the big six.”
The same goes for Co-operative Energy. The big prize for Good Energy, Co-operative Energy, Ovo and the others is a reforming of the market to ensure that they have greater access to the products they wish to sell. There is a big prize for them that many of them support through our reforms.