Ed Davey
Main Page: Ed Davey (Liberal Democrat - Kingston and Surbiton)(11 years, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text
Ian Lavery (Wansbeck) (Lab)
18. What steps he is taking to help households with their energy bills.
The Secretary of State for Energy and Climate Change (Mr Edward Davey)
With your permission, Mr Speaker, I would like to group this question with several others.
I am taking many steps to help, which come under three broad categories—
Mr Speaker
Order. I think the Secretary of State is seeking to group this question with Questions 6 and 18. I understand the concept of the broad brush, but it can be taken a bit far. We need greater specificity.
Mr Davey
As always, I am very grateful for your advice, Mr Speaker, as I am sure the House is, too.
I will start again. I am taking many steps to help households with their energy bills. Those steps come under three broad categories: first, direct help for millions of people, with money off their bills and money to help to pay their bills, through the warm home discount, winter fuel payments and cold weather payments; secondly, energy efficiency, to help people to cut their bills by wasting less energy, through the energy company obligation, the green deal and smart meters; and thirdly, competition. I am intervening to make electricity and gas markets in the UK ever more competitive, so that energy companies cannot exploit people through market power.
Mr Davey
Of course I am disappointed by energy companies that are putting up their prices. The key thing is competition, and we in this Government have pushed competition hard. The big six were the creation of the last Government, when we saw the number of companies reduced. Under this Government, competition is increasing. I would urge people who are disappointed by increases from their energy company to shop around and switch, because there are some very good deals out there.
Mrs Glindon
Last week the Prime Minister said that Labour had definitely “struck a chord” on energy prices and that
“There’s a certain amount you can do freezing prices,”
so will the Minister freeze prices, which will benefit more than 47,000 households in my constituency?
Mr Davey
The hon. Lady was obviously not at Prime Minister’s questions yesterday, because the Prime Minister called it a con, and he is right. Labour’s energy price freeze is a con. Let me explain to the Opposition why it is a con, because when people see a politician promising something for nothing, they do not believe them. The policy cannot control prices before Labour’s price freeze and it cannot control prices after it, so energy companies are likely to hike prices before and after. Consumers will be worse off as a result of such a measure.
Ian Lavery
Energy bills have already risen by £300 and are set to increase by perhaps another £100 this year. In my constituency, more than 36,000 people would benefit if the Government took action to freeze bills this year, which could save up to £120 per household. Why will the Government not stop defending the big six companies and other companies, and get on the side of the consumers and help them out this winter?
Mr Davey
We are on the side of the consumer, because we are promoting competition. The hon. Gentleman and his party, through their price freeze, will hurt competition. Let me explain it to him. Whereas we have seen companies entering the market under this Government, a price freeze would hurt small suppliers. If he doubts my word, he should listen to the small suppliers themselves. Nigel Cornwall, of the Energy Suppliers Forum, says that Labour’s policy
“ignores real progress made in increasing competition in the market over recent years”.
Small suppliers do not like Labour’s policy because they know it would hurt consumers.
Neil Parish (Tiverton and Honiton) (Con)
Does my right hon. Friend agree that nobody suffers more than consumers in rural areas that are off grid? The ECO system was supposed to ensure that 15% of the funding went to upgrade hard-to-reach homes in rural areas, but the evidence on the ground is that the big six are unwilling to assist with supplying new oil-fired liquefied petroleum gas boilers. Given that energy bills are more than 50% higher in off-grid areas, will he raise the issue with the energy companies and ensure that all households can receive help?
Stephen Mosley (City of Chester) (Con)
The Opposition want to have their cake and eat it. They say they want to decarbonise the energy market, yet they also say they do not want people to pay for it. Can my right hon. Friend bring some reality and honesty to the argument and tell us how we decarbonise the economy while at the same time trying to keep costs to consumers to a minimum?
Mr Davey
My hon. Friend is absolutely right. The Energy Bill and electricity market reform do just that. He may be interested to know that we have today asked the Leader of the Opposition 10 questions about Labour’s policy. If we look at it, we not only find that it is a con that will reduce competition and hurt the small suppliers, but that it will hurt investment, too, which is needed to keep energy security and to decarbonise. Labour’s policy is economically illiterate.
Mr Alan Reid (Argyll and Bute) (LD)
SSE’s 8.2% average price increase—we should remember that some people have to pay more than that—is unacceptable when the company is boasting on its website about the large dividends it pays out to its shareholders every year. I see competition as the answer. Will my right hon. Friend tell my constituents what concrete steps are being taken to improve competition and when they will be able to have a much wider choice than they have at the moment?
Mr Davey
My hon. Friend is absolutely right. When big energy companies make these high price rises, I would urge all their customers to look at the competition available. There is a lot of choice out there. In fact, there is far more choice than there has been for a long time—possibly ever. The last Government killed choice and reduced competition; under this Government, we have seen a big increase.
Caroline Flint (Don Valley) (Lab)
Let me tell the Secretary of State that if Labour is elected, our price freeze will happen, and if companies collude to increase prices beforehand, we will take action. The right hon. Gentleman is the one in government, so if companies try to hike up their prices beyond anything that can be justified before 2015, will he stop them—yes or no?
Mr Davey
We will help customers to get the best deals. The right hon. Lady knows that. She knows that on the current market, customers can get much better deals than those offered by the big six. She knows that the number of small suppliers has increased. She knows that in 2011 there were no independent suppliers with more than 50,000 customers. Thanks to our policies, there are now three with more than 100,000 and a further seven companies have entered the market in the last two years. That is the choice; that is the solution: people can cut their bills significantly by changing supplier.
Caroline Flint
There you have it, Mr Speaker: every single time, this Government put the energy companies before consumers. According to figures from the House of Commons Library, energy prices are rising three times faster under this Government than under the last Labour Government. Our price freeze will save money for 27 million households and 2.4 million businesses while we reset the market. It is the right hon. Gentleman’s policy that is a con; he says everyone will be put on the cheapest tariff, but is it not a fact that 90% of people will see no benefit from his policy at all?
Mr Davey
Millions are seeing benefits from our policy of competition. The right hon. Lady has made a very interesting point today. In response to our charge that Labour’s policy is a con, because energy companies could push up bills beforehand and after, she said that Labour would take action if they do. Does that mean that she is going to introduce full price regulation? Is Labour now promising that, because that is the implication of what she said?
Alex Cunningham (Stockton North) (Lab)
3. What steps he is taking to help households improve their energy efficiency.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
5. What recent assessment he has made of the competitiveness of the UK energy market.
The Secretary of State for Energy and Climate Change (Mr Edward Davey)
I keep the competitiveness of the UK energy market under constant review and have acted to make it more competitive. In retail markets, where companies are supplying customers, we have acted by deregulating to increase the number of suppliers and by reforming bills and tariffs. In wholesale markets, where companies are selling power they are generating to suppliers, Ofgem measures and measures in the Energy Bill will boost competition and market access for independent generators across the UK.
Chi Onwurah
Npower told my constituent Alan Gowers, a pensioner, that his tariff was ending and his new one would be 50% more expensive. SSE estimated that my spend would go up by 10% and so it tripled my direct debits. I have worked in competition regulation for six years and I can tell the Secretary of State that this is not a competitive market. When a market is not functioning—when it is fuelling a cost of living crisis—do a Government who stand up for people not intervene?
Mr Davey
We are intervening, because the market we inherited from the previous Government was not as competitive as it should have been. Before Labour’s previous energy market reforms, there were three generators and 14 suppliers—17 companies—but after those reforms the number went down to six, so Labour reduced competition. Labour is the party of the big six. This coalition Government have acted to make sure that we have competition to take on the big six, so the hon. Lady should speak to her Front Benchers because Labour is the party of non-competitive energy markets—the party of the big six—whereas our coalition Government are taking on the big six.
Jim Sheridan (Paisley and Renfrewshire North) (Lab)
As part of the competition assessment, the Secretary of State could do worse than visit the workers at Ineos at Grangemouth, who supply the energy needs for the whole of Scotland and, indeed, the north of England, and whose jobs are now under threat from a belligerent employer that has walked away from talks with the trade unions and, more seriously, is now demanding taxpayers’ money in order to invest in the company.
Mr Davey
I am grateful for the hon. Gentleman’s question. I hope he will be reassured by the fact that I have spoken personally both to key Unite trade union leaders and to Ineos. We persuaded them to go into ACAS talks. I regret that those talks have broken down, but I urge both parties to resume them and try to resolve this situation without industrial dispute. May I take this opportunity to say that, working with the Scottish Government and industry, we have done everything we can to make sure that if there is a dispute, the fuel will flow through Scotland’s economy?
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
My hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah) gave two of the many examples that hon. Members could give of how the retail energy market is not working in the interests of households or businesses. Ensuring that all power trading is on an open exchange and stopping companies selling power to themselves at secret prices, as we are proposing, will reset the market, encourage other entrants and ensure that people know why they are paying what they are paying. Will the Minister confirm the speculation in The Times at the weekend that his Government will shortly perform a welcome U-turn and adopt our proposal to introduce a pool that will bring clarity, fairness and transparency to the UK retail energy market?
Mr Davey
No, we will not, because we have got a much better policy. Working with Ofgem and in the Energy Bill, as the hon. Gentleman ought to know now, we are tackling the real problem in the wholesale market—a problem that the previous Labour Government completely failed to deal with. Interestingly, Labour’s new policy reverses the policy that Labour implemented in government —talk about confused; never have an Opposition been so confused in their policies.
Nicholas Soames (Mid Sussex) (Con)
7. What progress has been made on exploratory drilling in Balcombe, West Sussex.
The Secretary of State for Energy and Climate Change (Mr Edward Davey)
The licence holder, Cuadrilla, has drilled a well, including a horizontal section, in accordance with the planning permission granted by West Sussex county council, to explore for oil. Apart from the scrutiny by the planning authority, the proposals were subject to scrutiny by the Environment Agency, the Health and Safety Executive and my Department to ensure that the operations are safe and that the environment is protected.
Nicholas Soames
My right hon. Friend will know that Balcombe lies in the constituency of my right hon. Friend the Member for Horsham (Mr Maude), who, as a Cabinet Minister, is unable to ask parliamentary questions. Will the Secretary of State confirm that the exploratory drilling at Balcombe was, as he said, subject to the most rigorous monitoring and regulation, that further detailed regulatory approvals would be needed before fracking could take place and that the recovery of these valuable energy resources will not override the need for local residents’ understandable concerns to be heard and registered?
Mr Davey
My right hon. Friend will know that I have spoken to our right hon. Friend about that. We have also ensured that the regulatory regime applying not just to west Sussex but across the country is as tough as any regulatory regime anywhere in the world and we keep it under review to ensure that it remains that tough. He might be interested to learn that the Minister of State, Department for Business, Innovation and Skills, my right hon. Friend the Member for Sevenoaks (Michael Fallon), as Energy Minister, will meet west Sussex MPs next week to discuss the issue.
Jeremy Lefroy (Stafford) (Con)
8. What proportion of UK energy demand is met by renewable sources.
Steve McCabe (Birmingham, Selly Oak) (Lab)
T1. If he will make a statement on his departmental responsibilities.
The Secretary of State for Energy and Climate Change (Mr Edward Davey)
Since the last Energy and Climate Change questions we have been busy. The Energy Bill is continuing its progress through Parliament and we hope that it will achieve Royal Assent by the end of the year. That will help deliver the modernised infrastructure and cleaner energy that the country needs to meet our energy security requirements and climate change obligations. The House might be interested to know the latest figures we have on investment: we have seen at least £35 billion invested in increased electricity infrastructure alone since 2010, a 56% year-on-year increase in renewable energy investment and a doubling of renewable electricity generation under this Government. Also, our policies to help the fuel poor are in place for the winter.[Official Report, 1 November 2013, Vol. 569, c. 7MC.]
Steve McCabe
Pensioner Val Soames has been in touch to advise me that E.ON has told her that it is scrapping its fixed-rate StayWarm pensioner tariff as a result of Government policy, just in time to increase the bills of thousands of pensioners this winter. When exactly did the Minister last speak to E.ON about this problem, and how is he going to put it right?
Martin Horwood (Cheltenham) (LD)
T3. The Government are rightly encouraging investment in energy infrastructure by institutional investors through initiatives such as the Treasury’s pensions infrastructure platform. Will the Minister’s Department tell the Treasury how important it is that that investment in infrastructure is low-carbon and compatible with our overall climate change goals, and will he welcome ShareAction’s campaign to encourage institutional investors to invest in truly green energy futures?
Mr Davey
My hon. Friend knows that we are a champion of low-carbon energy investment. I strongly welcome ShareAction’s campaign to promote responsible investment by pension funds and fund managers. People who operate these pension funds should think long term, and there is no longer-term problem and challenge for the people they are investing for than climate change.
Caroline Flint (Don Valley) (Lab)
During these questions British Gas has announced that from 23 November it will increase its gas prices by 8.4% and its electricity prices by 10.4%. This is the company that, with Centrica, has passed on the highest share of its profits to its shareholders while making the least amount of investment into what we need to ensure our energy security in future. Two years ago the accountancy firm BDO warned that the big six energy companies could be under-reporting their profits and recommended tighter rules, but the Government and Ofgem failed to act. We backed the new rules, and so did a recent Select Committee report, but in their response all the Government could say was, “Government is not in a position to comment.” Why will not the Secretary of State stand up for consumers, support Labour’s price freeze and make the energy companies tell us exactly how much money they are earning?
Mr Davey
First, that is extremely disappointing news for British Gas customers. British Gas will need to justify its decision openly and transparently to bill-payers. British Gas was the only energy company not to meet its targets under the previous obligation to make its customers’ homes more energy-efficient. That left more homes cold and its customers paying over the odds. British Gas has form in failing to meet its targets, the last of which was set by Labour. I hope that the right hon. Lady will join me in making sure that British Gas is more transparent about its costs. We are pushing competition, and I urge British Gas customers who are unhappy to change their supplier.
Andrew Jones (Harrogate and Knaresborough) (Con)
T4. I welcome the emphasis on microgeneration, including ground-source and air-source heat pumps, plus deploying solar PV on rooftops and brownfield sites where appropriate, and I recognise its potential, but what is being done to stop deployment of the unwanted large-scale ground-mounted PV farms?
Hugh Bayley (York Central) (Lab)
T2. Under this Government, according to Ofgem’s latest figures, average household fuel bills have increased by £315 a year, while wholesale energy prices have gone up by just £145 a year. That leaves a gap of £170 a year. How much of that is made up by the extra tax taken by the Government from consumers, and how much by higher profits taken by the energy companies?
Mr Davey
The hon. Gentleman will know that the vast majority of the rises in people’s bills have come from wholesale prices, as he said, and network cost rises. He should know that a bill is made up of a host of things: the biggest portion is wholesale and the next biggest is network cost. They are the big cost measures that people are unfortunately experiencing.
Andrew Bridgen (North West Leicestershire) (Con)
T7. In my constituency there are two major brick-manufacturing companies. As hon. Members will know, brick making is highly energy-intensive, and I am concerned that, without action, increased energy costs will make their product potentially unaffordable to the construction industry, which is getting on with the essential task of building the homes we desperately need. What is my right hon. Friend doing to address this urgent and pressing issue?
Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)
T5. On the question asked by my right hon. Friend the Member for Don Valley (Caroline Flint) about British Gas price rises, will the Secretary of State explain how British Gas has increased its operating profit to nearly £1.6 billion, as announced in June 2013, and yet people around the country will now see their prices rise by 8% and 10%? How can that be fair to this country’s consumers? When will the Government get a grip on this and finally do something about it?
Mr Davey
We are doing things about it. Not only are we promoting competition and urging people who are unhappy with suppliers such as British Gas to change and choose others—there are plenty out there, thanks to this and not the hon. Gentleman’s Government—but we are also making sure that the energy companies are more transparent. I urge British Gas to publish and be more transparent about the increased policy costs that it is blaming for these bill rises. We have looked at its initial figures and question whether the policy costs, which it claims are putting up the bill, are the root cause.
Nigel Adams (Selby and Ainsty) (Con)
T9. Given the importance that the Minister has placed on converting coal-fired power stations to biomass, including the plans for those in Drax and Eggborough in my constituency, and also in the light of National Grid’s winter outlook report, which states that capacity reserves could be as low as 5%, will he update the House on the progress of those two strategically important projects?
Michael Connarty (Linlithgow and East Falkirk) (Lab)
A missive from Ineos Grangemouth, which supplies 80% of the fuel for Scotland and the north of England and accounts for 10% of the gross national product of Scotland, says that the plant is
“shut and will remain shut”.
I have kept all Ministers informed through the Secretary of State for Scotland, as well as those on the Opposition Front Bench. The Secretary of State for Energy and Climate Change said earlier that he wanted people to get back to ACAS. However, he has also made it clear that supplies will still get through to Scotland by other means. The company has prepared for this and the cold shutdown of the refinery and petrochemical plant has been done deliberately. It must be urged to start up the plant again and to take the knife from the throat of the workers and the gun from the head of the Scottish people.
Mr Davey
I know that the hon. Gentleman takes a close interest in this matter and is a voice of moderation. He knows that I have worked hard to get the ACAS talks going. They did get going, but unfortunately they broke down. I repeat my request that all sides get around the table and resolve the matter without a dispute. I am pleased that Unite called off the strike. We have been working with the Scottish Government and the industry to ensure that Scotland gets the petrol, diesel and heating oil that it needs.
Sarah Newton (Truro and Falmouth) (Con)
When will the Government publish the Atkins report and their response so that we can begin to unlock the huge potential in Cornwall and the UK for deep geothermal energy?
Andy McDonald (Middlesbrough) (Lab)
Given the announcement from British Gas, would the Secretary of State not be best advised, rather than just expressing disappointment and urging transparency, to send out the message that there will come a point when he will intervene on these companies that are jacking up prices? At what point will he intervene?
Mr Davey
I have done more than that from the Dispatch Box. I have said to British Gas customers that if they are worried about the prices, they should change supplier. A range of competitors and alternative suppliers are offering much better deals. By the way, those suppliers are there because of the actions of this Government. In 2011, no other independent supplier could compete with British Gas and SSE, and none had more than 50,000 customers. We now have strong, independent suppliers that customers can turn to and I urge them to do so.
Julian Sturdy (York Outer) (Con)
In welcoming the new solar road map, in which the Minister sets out guiding principles for the appropriate siting of solar PV, may I ask what added protection from solar farms the road map gives to green-belt land?
Mr Davey
We believe, and there is a huge amount of evidence for this, that the Ofgem reforms will lead to more competition, because they will get rid of a lot of the confusion and complexity. The last Government failed to act on the multitude of tariffs, which have got in the way of the consumer’s ability to choose. There may well be a few people who see an increase in tariffs in the short term because of Ofgem’s reforms, but because of the extra competition that will bear down on prices, the majority of people will get a better deal.