Energy Prices
Debate between Debbie Abrahams and Ed Davey(9 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text
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.
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
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—
Energy Bills
Debate between Debbie Abrahams and Ed Davey
Mr Davey
I am afraid that the hon. Lady is mixing up two things. Today, following our detailed review of Government policy costs, we can announce that on average households will see their bills fall by £50, which she ought to welcome. Our policy for the big six and other energy companies is to have fierce, robust competition. One of the best ways to ensure that energy bills come down is to enable people in the retail markets to switch and to ensure that the big six face real competition in the generating market. It is competition that will push bills down in the long term.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
My hon. Friend the Member for Bristol East (Kerry McCarthy) is absolutely right. The profits of the big six energy companies rose by 75% last year, while average household costs increased by £100, yet the £50 cut in fuel bills will come at no cost to the energy companies. Why are the Government not prepared to stand up to these big companies?
Petrol Prices
Debate between Debbie Abrahams and Ed Davey
Mr Davey
It is interesting that my hon. Friend supports the use of these powers by the European Commission competition directorate-general. I am grateful that he recognises that it is important to have an independent, strong competition body at European level. I think people will have noticed his support for that, and I am grateful for it. He asked whether the OFT, Ofgem and other regulators involved in enforcing competition have those powers. I believe that they do. If I am wrong, I will write to them. He will recognise, as I hope everyone does, that it is not for the Government to tell an independent regulatory body to go and do dawn raids. It is up to them to decide to do that, based on the evidence. We strongly support them when they use those powers, and we strongly support them in the powers they need to gather the information ahead of such raids. If the OFT and Ofgem were to make such raids based on proper information, we would support them.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
When did the Secretary of State find out about the European Commission investigation? If the investigation had not been undertaken by the EU, would the Government have been any the wiser?
Mr Davey
I found out about it late last night. We do not know on what evidence the Commission decided to launch the raids. Apparently, there were suspicions that companies had been giving a price reporting agency false information about prices in the market. We need to know more about what information it had. The question is whether the UK competition authorities had similar information. To date, my understanding is that they did not.
Oral Answers to Questions
Debate between Debbie Abrahams and Ed Davey
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
4. What steps he is taking to help households with their energy bills.
The Secretary of State for Energy and Climate Change (Mr Edward Davey)
The Deputy Prime Minister recently announced an agreement with energy suppliers to ensure that all consumers have good information on their supplier’s best tariff. This builds on previous actions by the Government to help people to control their bills, and complements Ofgem’s proposals in the retail market review to protect consumers. We are also encouraging consumers to harness their collective purchasing powers.
Debbie Abrahams
I thank the Secretary of State for his reply. In my constituency, 6,563 over 75-year-olds would benefit by £200 a year from being put on the lowest tariff. I appreciate what the Government are doing, but many of those people are unable to access online facilities easily. What else can the Government do to ensure that they benefit from these measures?
Mr Davey
Thanks to the deal that we have negotiated and that the Deputy Prime Minister has announced, those pensioners in the hon. Lady’s constituency will be written to every year by their energy supplier and advised of the best tariff for them. Furthermore, because of the warm home discount for which this Government have legislated, 600,000 of the poorest pensioners in the country are getting a direct discount of £120 off their energy bills. That is real action.