Energy Prices

Debate between Cathy Jamieson and Damian Hinds

Wednesday 19th October 2011 Commons Chamber

[Damian Hinds]

My understanding of the recent Ofgem announcement is that there is some provision for ensuring that what it calls innovative price tariffs must have a fixed element to them—funnily enough, I was just coming to more or less that very point. I welcome Ofgem’s new requirement for a single, simple tariff per payment type, but we need to ensure that that does not beguile us. I used to work in the hotel business, and anyone who has ever stayed in a hotel might be familiar with the rack rate. That is the price pinned on the back of the door, which is nominally a perfect reference price that people can use to compare hotels. The problem is that hardly anybody pays the rack rate; rather, all the competition centres on the other rates. That does not mean that such rates are a bad thing, but we would not necessarily be able to say that we had thereby solved the problem.

When it comes to solving the problem, we have to remember that the comparison websites—all the puns about meerkats and Go Compare were getting a bit much earlier—are commercial enterprises. Although they allow people to compare, the click-through payments that they receive mean that they have an incentive for screen biasing. The Consumer Focus code and accreditation are welcome, but that is not quite the same thing as ensuring that comparison sites operate absolutely perfectly in the public interest. I hope that it might be possible to consider a new model of comparison websites to sit alongside those that already exist, which would be broadly modelled on a website called Lenders Compared. I do not know how many hon. Members are familiar with Lenders Compared—probably not that many—but it was set up as a result of the Competition Commission investigation into high-cost lending and enables consumers to compare the cost of various home credit operators and others.

[Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)]

I am listening carefully to what the hon. Gentleman is saying, some of which I agree with, but I wonder whether he will take up the point that my hon. Friend the Member for Glasgow North West (John Robertson) made about many people on low incomes, particularly those with disabilities, not having access to websites. I met a constituent this week with a visual impairment who is finding it extremely difficult to get information that he can access easily.

[Damian Hinds]

The hon. Lady is absolutely spot-on; indeed, I was just coming to that point. There are organisations and individuals who assist people with such matters, and a simple comparison mechanism could be very useful for them, too.

I raised the question of how many hon. Members had heard of a website called Lenders Compared. I suspect that the answer is not many, which illustrates a problem. It is all very well having a pure comparison website, but if no one has heard of it and no one looks at it, it is not doing its job. Such sites therefore need some marketing spend behind them. I suggest that Ministers might have a discussion with the industry about creating such a service, to be funded by the industry itself. People might ask why the industry would want to do that, as it would cost it money, but I think we might be surprised at how much it might be willing to consider, if not fully welcome, such a proposal, because of the pay-per-click marketing fees that it would save as a result of that tranche of its business going through such a site. So, that is my suggestion du jour for Ministers. I am grateful to you for calling me to speak, Mr Deputy Speaker.