Energy Prices

Debbie Abrahams Excerpts

Wednesday 14th January 2015 Commons Chamber

[The Secretary of State for Energy and Climate Change (Mr Edward Davey)]

I thank the right hon. Member for Don Valley (Caroline Flint) for bringing her policy ideas to the House again. Some colleagues will remember the last time we debated a similar motion, on 18 June last year, and it was not a happy experience for the Opposition. Since then, the evidence that our policies are working has increased, and the Opposition have still failed to explain how their policies would work.

People out there—from pensioners to families—need our help with energy bills, and whether it is competition or regulation, energy efficiency or direct payments such as the warm home discount, I am determined that they get it. Indeed, I am open to any policy that genuinely helps people to pay their energy bills. However, the Labour party’s proposal would actually make things worse. My argument to the House today is as follows. First, when it comes to delivering lower gas and electricity prices for consumers, competitive markets are more effective than Government price fixing and heavy-handed regulation. Moreover, I will show not only that this Government have successfully acted to make these markets more competitive, but that we are not complacent—that we know more needs to be done for consumers—and that we will continue to work to improve competition further. Above all, I will show that, thanks to our policies on competition, consumers can now get the benefits of lower energy bills.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

How can the Government justify not passing on the fall in oil prices to customers? Some 8,000 households in my constituency are in fuel poverty, and nearly 3,000 people are accessing food banks. People are choosing between heating and eating. How can the Secretary of State justify not doing anything?

[Mr Davey]

The hon. Lady refers to oil prices but we are talking about gas and electricity prices. Oil prices relate mainly to transport—to petrol and diesel. However, assuming that she meant gas and electricity prices, thanks to competition, some of these price falls are coming through, and I want to give the House more detail about that.

Consumers can get the benefits not just of lower wholesale prices; many can get even greater savings, often more than double the savings from lower wholesale prices. Again, however, we need to do more to help consumers know that they can cut their energy bills today.

--- Later in debate ---

[Mr Davey]

The hon. Gentleman rightly says that it is clear that there is a lot more fuel poverty in rural areas than was previously known about. When we redid the way we analyse fuel poverty figures, because the measures we inherited from the previous Government were not measuring fuel poverty very well—the Queen was in fuel poverty under their approach—we discovered that those in rural areas were suffering some of the worst fuel poverty. That is why we are changing some of our policies. I have some good news for him, because the falling oil prices have meant heating oil prices have dropped, too. That is good news for some people in rural areas who depend on heating oil, as it is at prices last seen in 2009. I know that that is not the full answer, but I hope it at least shows some welcome signs.

Let us just examine why our extra competition appears to be resulting in better deals and lower prices from the new entrants. There is now greater diversity in how firms buy forward, and with many different firms we are seeing different hedging strategies, new business models, new purchasing strategies and innovation. It looks like that is enabling many people to benefit from lower wholesale prices now. But despite that progress, the Opposition have turned their back on successful competition.

[Debbie Abrahams]

rose—

[Mr Davey]

I shall give way to the hon. Lady for a second time, too.

[Debbie Abrahams]

Given what the Secretary of State is saying now, can he explain what the Chancellor meant when he said it was “vital” that falls in wholesale prices are passed on to families through utility bills?

[Mr Davey]

There is no difference between me and the Chancellor here: of course we want to see price cuts go through to consumers. The question is: what is the best way of doing it? Is it through heavy-handed regulation, which has to be changed? As we have heard today, the price freeze has had to be changed because bills are coming down. If that regulation had been put in place, consumers would have seen higher bills now, not lower ones. That is why regulation is not—