Chris Huhne
Main Page: Chris Huhne (Liberal Democrat - Eastleigh)(12 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text
The Secretary of State for Energy and Climate Change (Chris Huhne)
Thank you, Mr Deputy Speaker. I shall try to take on board your injunction for brevity.
Last year, we saw a big energy price rise, which came on top of increasing petrol and food costs. With the cost of gas imports now falling, I welcome today’s announcement from EDF, which has responded to the smaller companies leading the way such as Co-op and Ovo by joining them in cutting domestic gas prices. Some of the big energy suppliers were quick to pass on rising costs last year and it is only right that they should now pass on cost reductions to hard-pressed householders as quickly as possible. I urge the remaining five large energy suppliers to follow suit and give consumers some respite this winter. If suppliers do not reduce prices, consumers can send them a clear message by voting with their feet and taking their business elsewhere.
Chris Huhne
I have been very rapid in my reaction to the EDF announcement and I have been pressing the energy companies and saying that they need to act to inform their customers about the cheapest tariffs.
The House last debated this topic in October, when I said that simply expressing concern and sympathy for those who are struggling to pay their bills is not enough. It is our responsibility to do everything we can to help. The clear steps we have taken to increase competition are working and it is right that energy companies should feel the pressure to keep bills down. We are not complacent and I can report that the action I promised then to help people with their bills is taking place now.
Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)
In the objectives that the right hon. Gentleman has set for himself and no doubt for the Government he makes the point about keeping energy prices down. Is he satisfied that Ofgem, the regulator, is exercising the powers that it has? Are those powers insufficient?
Chris Huhne
I am grateful to the right hon. Gentleman for raising that issue, which I shall address in greater detail. Ofgem is working closely with us on this and I think it is tackling many of these issues. I will give further detail on that.
Following the consumer energy summit, at which my right hon. Friend the Prime Minister and I brought energy suppliers, consumer groups and Ofgem together, we have been working together to make sure that consumers know about the help that is available and about how they can cut their energy bills this winter. In October the Government launched the “Check, switch, insulate to save” campaign on the Directgov website, and next week Citizens Advice is co-ordinating a big energy week campaign. Big energy week is designed to connect consumers who are struggling to cope with energy bills with the support available to help them to reduce their energy costs and maximise their income. More than 100 events will take place across the country, reaching out to people who might not know about those schemes.
In December, Ofgem published for consultation radical proposals to require suppliers to simplify their tariffs and billing information so that consumers can compare suppliers’ deals much more easily. Currently, as the right hon. Member for Don Valley (Caroline Flint) has pointed out, more than 400 different tariffs are available. Frankly, this leads to confusion rather than to greater choice. I suggest that is part of the reason why the switching of rates in the UK has declined over time. Ofgem’s proposals should help consumers to identify more easily the best deal for them. I support Ofgem’s work in this area and will continue to work with it to boost the transparency of bills and competition in the energy market.
It should be quick and easy to switch supplier. As part of our implementation of the EU third energy package in November, we have cut to just three weeks the time it takes to switch. Citizens Advice and Ofgem have received the highest level of funding yet from suppliers for the energy best deal campaign, which helps vulnerable consumers to shop around for the best available deal. Even without changing supplier, millions of households could save just by switching tariffs or payment method.
As agreed at our consumer energy summit, suppliers are placing messages on the front page of all bills to encourage consumers to phone them or visit a website to find out if they could be saving money. They are also writing to about 8 million customers who pay on receipt of their bill to tell them that they could save up to £100 a year if they move to direct debit payment. Nearly all these letters have now been delivered.
Tessa Munt
Has my right hon. Friend made any progress in sorting out the situation faced by people who have prepayment meters and therefore do not receive a bill? It is difficult for them to establish what they are paying over any period, and the most vulnerable customers are often in that situation.
Chris Huhne
I am grateful to my hon. Friend for the concern about prepayment meters. It is one thing that we have been looking at closely. Thankfully, people on prepayment meters are not paying more than was previously the case, and that is a step forward. I am sure there is more work to be done and we are looking at it closely.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
The hon. Member for Wells (Tessa Munt) raised the issue of people on prepayment meters. There are two other key issues concerning people. One million households across the UK do not have access to a bank account so they cannot have direct debits; likewise, there are those who do not have access to the internet—the digital divide.
Further to the point that the Secretary of State made about the energy companies that are writing to their customers, I received one of those letters asking me to go on to direct debit. I called my energy company, E.on. It wanted to put me on to a monthly payment, which would have cost me at least a third more and I would have had to wait until May before I could reassess the situation. So even when energy companies are writing to their customers, myself included, they are not offering consumers the best deal. I cannot move on to direct debit because the company wants to charge me more than I pay already.
Chris Huhne
I can only recommend that the hon. Lady look at switching energy supplier to see whether she can find a better deal. We know from Ofgem that people can save substantial sums of money by doing that—£200 a year. Her particular case is obviously regrettable.
Barry Gardiner
The Secretary of State rightly talked about the simplification of tariff structures. Will he give a commitment to the House to look carefully at the possibility of enforcing a rising block structure? In an era of rising energy costs, it seems inequitable that the highest per unit cost should be paid for the first tranche, which of course the poorest families have to use. We should be applying the “polluter pays” principle, which means that as we use more energy, we pay more per unit for it. Please will the right hon. Gentleman look at that?
Chris Huhne
The hon. Gentleman makes a good point. One of the first things I did on becoming Secretary of State was to ask for a serious look at the issue. It is unfortunately much more complicated than one might suppose at first glance, not least because there is such an enormous variation in energy use in different income groups. For example, among the poorest people measured by income, the variation in energy use, off the top of my head, was as much as a multiple of six. There could be dramatically different effects from a rising block tariff, which do not correspond neatly to what the hon. Gentleman and I would want.
We want the companies to take more account of the wholesale market. Up like a rocket and down like a feather—that was the old days, and it must end. I agree with the right hon. Member for Don Valley in her points on that, although I note that Ofgem did not find evidence that that was the case. We are helping, through greater competition, to get the consumer the best deal and we have done a great deal to defend the consumer interest over the past 20 months—rather more, I would say, than the right hon. Lady’s Government did in 13 years.
Caroline Flint
Will the right hon. Gentleman answer my question? How many consumers have switched since the energy summit?
Chris Huhne
I will let the right hon. Lady know the information as soon as we have it. When it is available, I will write to her.
It is important to get the message across that households can save money not only by switching supplier, but by using less energy. Insulating lofts and walls can cut energy bills. The six largest energy suppliers all offer free or cut-price insulation, yet many households still have not taken up the offer. That is why the Government are writing to 4 million of the most vulnerable energy customers to tell them that they are eligible for free or heavily discounted loft or cavity wall insulation, and I am pleased to say that the initiative has been funded by suppliers.
Mr Weir
Following up on the Secretary of State’s answer to the hon. Member for Wells (Tessa Munt), I note that Ofgem stated in its briefing for the debate:
“The number of gas and electricity customers paying by prepayment meters has increased compared to the same quarter in 2010, by 6% and 4% respectively”.
Those are worrying statistics indicating that people are moving to prepayment meters and falling through the gaps despite the Government’s attempt to contact them and get them on to cheaper tariffs.
Chris Huhne
I agree with the hon. Gentleman. Sadly, during tough times people tend to fall behind with energy bills and so can be moved on to prepayment meters. One of the things that it is very important the Department does is try to ensure that those who no longer need to be on prepayment meters, from a credit point of view, are moved back so that they pay more directly and can take advantage of those schemes.
Bob Stewart (Beckenham) (Con)
If the Government are writing to so many vulnerable people, can we not make it as simple as possible? When we start talking about the elderly shopping around, why can we not just say, “Here are two or three very good deals that will work for you”, and then use that to ensure that energy providers bring their prices down? We should say to energy providers, “We are going to recommend this, so you had better bring your prices down.” That is what we need. We want to keep it as simple as possible.
Chris Huhne
I entirely agree with my hon. Friend on the need to continue the whole process of clarifying energy bills and making them simpler so that they are absolutely transparent and people find it easier to switch. That applies to all age groups. Compared with those of us in our 50s, those in their 60s and 70s—the silver surfers—actually do more on the internet, so we should not underestimate the ability for that to happen.
My hon. Friend might be interested to know that the letters the Government are sending out direct customers to a dedicated independent helpline as part of our programme to ensure that an extra 3.5 million homes are properly insulated by the end of 2012, and later this year we will be rolling out the green deal to help even more households save money through energy efficiency. We are ensuring that extra support is available this winter for the most vulnerable households. We are requiring energy companies to provide help to around 2 million low-income households through the warm homes discount, at a cost of £250 million for 2011-12, which is 40% more in cash terms than last year under the voluntary arrangements operated by the previous Government.
The right hon. Member for Don Valley made much of our apparent meanness on this exercise, but I do not see how the Government can be accused of being mean to those in the most vulnerable groups when it comes to energy bills when we are increasing the warm home discount by 40%. The scheme will help around 600,000 of the poorest pensioners with a core group discount of £120 this winter. We are spending £110 million on heating and insulation for low-income and vulnerable households living in energy-inefficient housing through the Warm Front scheme. We will also provide winter fuel payments to pensioners and cold weather payments to some households in areas that have extended periods of very cold weather.
Robert Flello
Many of the houses in my constituency and others were built without cavities. Often people take the opportunity to insulate their roofs and loft spaces but cannot do more because there are no more cavities to fill. What will the Secretary of State do about that?
Chris Huhne
The hon. Gentleman’s constituency is clearly a perfect place for the green deal, because the ECO subsidy will in part subsidise solid-wall homes with solid-wall insulation. That will be a very substantial step forward for many people who have not been in a position to benefit from energy efficiency because they have not had cavities to fill. A very large number of people in housing built before the first world war, and in more recent housing built quickly after the second world war, are in that position, and this measure will help.
Chris Heaton-Harris (Daventry) (Con)
There was a ten-minute rule Bill yesterday on park homes. Will they benefit from the green deal?
Chris Huhne
Park homes will be eligible for the green deal. We in the ministerial team are very keen to ensure that park homes, which are often the Cinderella of the housing stock, are looked after, and we are trying our best to ensure that they are eligible for the full array of measures that are available elsewhere.
The new energy company obligation, alongside the green deal, will include support not just for solid-wall insulation, which I mentioned to the hon. Member for Stoke-on-Trent South (Robert Flello), but provide “affordable warmth” to low-income and vulnerable households, through heating and insulation measures. That is the direct replacement for the Warm Front scheme, so the right hon. Lady’s charge that we are the first Government not to pay for help through public expenditure is disingenuous, because there will be help, but it will be delivered in a different way through the ECO subsidy, and with greater targeting and, I believe, greater help.
Those policies will make a difference this winter and next, but, as I said in October when I addressed the House on this topic, we also need to take the right long-term decisions so that energy does not become unaffordable. We must keep the lights on in the cheapest, cleanest way to ensure that households get the best deal in the long term. Over the next 10 years, we need £110 billion of investment in power plants and another £90 billion of investment in energy infrastructure to avoid the risk of blackouts. We must invest now not only to improve our energy efficiency, so that we do not need to produce as much energy to keep warm, but to reduce our dependence on fossil fuels in the long term, so that we do not have to rely on ever-more expensive imports.
Alec Shelbrooke (Elmet and Rothwell) (Con)
I wonder whether we are in the position we are in today because of the previous Administration’s inability to take the decisions needed to ensure that we had a firm energy future.
Chris Huhne
My hon. Friend is absolutely right. The story of energy policy under the previous Government is one of stopping and starting, and of failing for many years to face up to the need to deal with the problem of renewing our energy infrastructure. But we are not dithering or delaying any longer: we in this Government are biting the bullet. We are determined to proceed with what is necessary to ensure that we have clean, green and secure energy for our nation.
Our proposals to reform the electricity market will deliver the best deal for Britain and for consumers, ensuring secure, low-carbon electricity supplies, and providing green jobs.
Malcolm Wicks (Croydon North) (Lab)
This is not the point that I was going to make, but I recall the Labour Government making the difficult decision on nuclear so convincingly that even the Liberal Democrats are now in support.
On the long-term issue, however, what is missing from this debate is the global dimension, although the Secretary of State has touched on it. Given that world energy demand is going to increase by 30-odd% in the coming years, with consequences for pricing, has the Department made any forecast of the implications for British energy prices and costs over the next 10 or 15 years?
Chris Huhne
I very happily exempt the right hon. Gentleman from my strictures about the previous Government’s policy, because when he was in the post of Energy Minister he certainly took some tough decisions, but sadly the record over the 13 years is not one of which Labour Members can be proud.
On energy prices, the right hon. Gentleman is absolutely right, and we have of course produced a forecast in the annual energy statement. Like all forecasts, it gets more uncertain the further out it goes, but it does point to a rise over time in oil and gas prices worldwide because of increased demand from, in particular, the far east. One of the current environment’s most striking features, about which there ought to be much greater public awareness and debate, is the sharp recovery in oil, gas and other commodity prices, despite continued relatively slow growth in Europe, the United States and Japan. This is the first time that that has happened in the post-war period. That shows the influence that the rapid growth and catch-up in the far east will have on world commodity prices.
Guy Opperman
I merely reiterate the point that with 24% of the north-east in fuel poverty, the situation in relation to heating oil and liquefied petroleum gas for off-grid customers is clearly unsatisfactory. Does the Secretary of State accept that and what specifically does he intend to do about it?
Chris Huhne
My hon. Friend makes a good and important point. People who are off-grid have traditionally had to deal with substantially higher costs than those who are on grid, and that continues to be the case. The case for regulating off-grid is weak, because as long as the market is competitive, it ought to deliver a reasonable result for consumers. I was surprised, as were other members of the ministerial team, that when we asked the Office of Fair Trading to look at the market, it was given a clean bill of health on competition grounds. We need to continue to watch this situation and we are very much on the case. With the renewable heat incentive and the green deal, it will be important that people who are off-grid think about other options rather than being reliant on heating oil, such as ground source heat pumps and biomass, which can already be cheaper than on-grid options.
Graham Stringer (Blackley and Broughton) (Lab)
The Secretary of State correctly points out that all projections on future energy prices show an upward trend. There is a debate about how much of that is down to renewables. One interesting difference between the UK and European market and the United States market is that there has been a decoupling of the gas price from the oil price in the north American market because of the intense use of shale gas that has been developed. What will the right hon. Gentleman do to develop shale gas in Lancashire and elsewhere in this country to change the projections so that the price of gas goes down?
Chris Huhne
I am grateful to the hon. Gentleman for his question. Shale gas is potentially an exciting development that could bring enormous prosperity to the parts of the country where it has been found, such as Lancashire. Provided that all the environmental safeguards are properly in place, it presents the opportunity to reduce the cost of gas. Of course, for the same calorific value, gas is about half as polluting in carbon terms as coal. Used with carbon capture and storage, it may be a long-term source of electricity generation. We are looking closely at this issue. We have been in contact with Cuadrilla, the energy company that has been involved in exploration in Lancashire. I hope that we will be able to make progress. Crucially, we must learn the lessons from the mistakes that were made in the United States. I do not want to see water tables contaminated; nor do I want the industry to be exempted from the provisions for clean water, which is what happened in the United States. There will be a different regulatory environment. In that context, I am sure that we can see success.
As so many people want to speak, I will curtail the remarks that I was going to make about our work with Ofgem. I will simply say again that we are considering giving Ofgem powers to order companies to provide redress to consumers who lose out as a result of a company’s regulatory breach. As a result of our implementation of the EU’s third energy package, companies are no longer able to block action by the energy regulator, Ofgem, by forcing it to seek a second opinion from the Competition Commission. We are determined to be on the side of the consumer in ensuring that the market is as competitive as we can make it.
We are doing everything that we can to help households with their energy bills this winter. On tariffs, bills and insulation, we are making it easier for people to save money and energy. We are taking action to help the most vulnerable households cope with rising bills and inefficient properties, and from the green deal to the reform of the electricity market we are making the right long-term decisions to ensure warm homes and affordable, secure energy for the future.