Energy Markets Competition Assessment

Ed Davey Excerpts

Thursday 27th March 2014 Commons Chamber

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

With permission, Mr Deputy Speaker, I would like to make a statement on competition in the energy markets. Today Ofgem, the Office of Fair Trading and the Competition and Markets Authority have published the first annual assessment of competition in the energy markets, and I have made copies available to the House.

Efficient, open markets made up of diverse businesses competing for trade are the best way to ensure that consumers get the best deal on price and service. Strong and independent regulation of competition helps consumers too, because constant political interference for short-term gain can add to long-term risk and costs.

When the coalition Government took power, we inherited energy markets that were not working in the best interests of the people of Britain. The supplier base had shrunk from 15 majors in 2000 to just six in 2010—Labour’s big six. Many people found it difficult to switch. The profusion of more than 350 complex tariffs and complicated bills, for example, made it difficult for people to work out how to get on the right tariff for their circumstances. The wholesale market was also dominated by the big six as they either supplied themselves or opted for over-the-counter deals with no transparency.

The coalition Government, working with the regulator Ofgem, have set about the long task of improving the energy markets to make them work for consumers. We have opened up the markets to new suppliers and generators. Labour’s big six now face 18 new retail competitors whose market share has more than doubled since 2010. The best-buy energy tables are now dominated by the independent suppliers. Tariffs are simpler, bill formats clearer, and the process for switching suppliers is being speeded up. According to the latest statistics, compiled by ElectraLink and Energy UK, almost 3.5 million people switched electricity suppliers last year, and independent suppliers gained more than 700,000 new customers—about 20% of switchers. In January and February this year, almost 500,000 people switched suppliers, with independents gaining more than 200,000 new customers—more than 40% of switchers.

The wholesale markets are also being opened up, with liquidity in the day-ahead market transformed. The forward markets are set to follow suit under Ofgem’s market maker reforms to be introduced from next week, so the energy markets have improved since 2010. Despite all these reforms, however, the Government are determined to do more.

That is why in October last year we announced that Ofgem, working closely with the Office of Fair Trading and the Competition and Markets Authority, would undertake annual reviews of the state of competition in the energy markets. That first annual assessment, and its recommendations, back our decision to turn to the independent competition authorities.

This expert review has found five areas in Britain’s energy markets of real concern that need further investigation. First, a low level of trust and lack of engagement in the energy market by consumers, which is not compatible with healthy competition. Secondly, evidence that the markets retain the geographical pattern that existed before privatisation, and can mean higher prices for customers who do not switch from their home supplier. Thirdly, evidence of possible tacit co-ordination between energy companies, which includes a strong alignment of pricing announcements in timing and extent. Fourthly, barriers to entry and expansion for new companies that make it difficult for them to challenge the big six. Finally, evidence that the big six have seen increasing profits that do not appear to reflect increasing efficiency, which is indicative of a possible lack of competition.

Although the assessment notes that there has been real progress in improving competition in recent years—especially in the growth of the number of independent suppliers—the big six are still dominant with a 95% share of the domestic energy supply market. In the electricity markets, the big six operate a model of vertical integration that is not transparent, and forward markets that are not currently liquid, as I have argued from this Dispatch Box. Although Ofgem’s new market maker reforms may assist that, the assessment rightly wants to dig deeper. However, as the assessment today shows, it may be that vertical integration is in the consumer’s best interests and can ultimately save people money. The assessment cautions against rushing to judgment or to solutions, as some have sought to do.

It is not just the electricity markets that we need to address. On average, people spend £150 more per year on their gas bills than on their electricity. The gas market does not have a vertically integrated structure. Britain’s gas wholesale market is one of the most liquid in Europe, with large volumes of gas bought and sold openly between suppliers and producers. The assessment shares my concern that parts of the gas market, particularly the domestic gas supply market, may not be delivering for consumers. Latest analysis suggests that profit margins for gas supply are around three times higher than that of electricity, with some companies making five times the profit supplying gas, compared with the profit margin on electricity.

In the light of that assessment, Ofgem is now proposing a tough but sensible course of action: a full market investigation reference. That would be undertaken by the new Competition and Markets Authority, which has the robust powers required to investigate the market and take the action needed to strengthen competition. As the Minister responsible for the decision to create that powerful new competition body, I am particularly pleased that Ofgem is proposing to make energy markets its first major task. A market investigation reference is a course of action that should not be lightly undertaken, particularly when the energy market is going through radical changes to introduce new low-carbon generation while ensuring security of supply. Tackling those issues through independent competition authorities provides companies and investors with the confidence that the process will be evidence-based, fair and just, and free from political interference.

Today Ofgem has published the legally required consultation on its proposed market investigation reference, which will run until 23 May, and it will make a final decision on referral by the summer. If a reference is made, the Competition and Markets Authority must complete its work within 18 months, which means we can expect its report and recommendations before the end of 2015. While the competition authorities take forward that work, the Government will continue to support families, individuals and businesses, and will bring forward policy packages throughout the year to put consumers in control of their energy bills, help the fuel poor, and further support competition. That will include: halving switching times; customers off dead tariffs; the first fuel poverty strategy in more than a decade; smart meters installed; help for those on prepayment meters; boosting the green deal; criminalising market manipulation; and boosting independent suppliers. That is a course of action that consumer and business groups such as the Federation of Small Businesses, Which?, Consumer Futures, and Citizen’s Advice have called for. Energy companies such as npower, E.ON and EDF have also argued that a market investigation reference would be the best way to restore consumer trust and decide what changes are needed on the basis of the evidence.

On the basis of the evidence provided by the regulators published today, this is the right course of action to take. It is not a quick fix, but it is the right way to restore people’s trust that the energy markets are working for their benefit. It is the right way to create long-term certainty for investment. The Government strongly support the process. I urge the whole House to join us in that.

[Caroline Flint (Don Valley) (Lab)]

I thank the Secretary of State for early sight of his statement. The Opposition welcome the decision to refer the energy market to a competition inquiry. The launch of a full-blown market investigation is confirmation that the energy market is broken, but while it is happening, consumers should be protected from any more unfair price rises, and energy bills should be frozen until 2017.

Does the Secretary of State accept that Ofgem’s decision to refer the energy market for a full competition investigation is a clear admission that there are serious problems with the way in which the energy market works? Does he believe that the Government were mistaken to reject the proposal put forward by my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier) for a competition inquiry in 2011?

In the light of today’s report, what assessment has the Secretary of State made of the effectiveness of Ofgem? As he will know, in the past six years, Ofgem has undertaken three major investigations into the energy market. In none of those did Ofgem feel the need to make a reference to competition authorities, or indeed to acknowledge that there are fundamental structural problems with the energy market. Just last December, the Secretary of State told the House:

“Ofgem is fit for purpose.”—[Official Report, 2 December 2013; Vol. 571, c. 634.]

However, is not today’s decision a clear admission that Ofgem has failed to protect consumers? Will he therefore ensure that the market investigations look not just at the players in the market, but at the regulator, too?

In the Secretary of State’s statement, he made the bizarre claim that the energy markets have improved since 2010, but the chief executive of Ofgem today told the BBC that it referred the energy market for investigation for the very reason that conditions in the market have got worse. Is the Secretary of State saying that he disagrees with that assessment?

Today’s assessment also clearly identifies vertical integration as one of the main issues for a full market investigation. The Secretary of State seems conveniently to have forgotten that the last Conservative Government privatised the energy industry and removed the restrictions on vertical integration. Therefore, if he wants to blame anyone for that, he should take it up with his colleague, the Minister of State, Department of Energy and Climate Change, the right hon. Member for Sevenoaks (Michael Fallon), who was a Minister at the time.

The Secretary of State has previously claimed that a ring fence between the generation and retail arms of energy companies had real problems and could push up prices. Therefore, in the light of today’s report, will he admit that he was wrong to rule out Labour’s proposals for a ring fence?

I want to ask the Secretary of State a few specific questions on the details of how the investigation will work. First, will the market investigation cover small businesses as well as domestic consumers? Small businesses face many of the same problems as households but enjoy fewer protections. Does he agree that it would be a mistake to exclude them from the remit of the market investigation? Secondly, on the timetable, when does he expect Ofgem formally to refer the energy market for investigation, and when will the investigation begin? Thirdly, when does he expect the CMA to appoint a market reference group to undertake the investigation?

The only reason for the statement today is the speech by my right hon. Friend the Member for Doncaster North (Edward Miliband) at the Labour party conference last year. The Secretary of State, the Prime Minister and the energy companies all said that a price freeze was unworkable and impossible to deliver. Yesterday’s decision by SSE showed that a price freeze is possible, and today’s confirmation that the energy market is broken shows that it is needed by all customers. The public want radical action to reform the energy market, as Labour has proposed, but while the review takes place, they rightly want to know what help they can expect now. If I were standing where the Secretary of State is standing, I would take action to impose a price freeze for all consumers. Instead of defending the big six and asking for their co-operation, why does he not just enforce a price freeze now?

[Mr Davey]

First, I welcome the right hon. Lady’s welcome for today’s announcement. That is very important for people outside this House to see: not just consumers and small businesses who will be the beneficiaries of this action, but investors and the industry. Cross-party agreement on the way forward to promote competition in energy markets is very important for investment, so I strongly welcome her welcome. Political agreement is a good step forward for energy markets.

I disagree, I am afraid, with some of the right hon. Lady’s other comments. Of course I agree that there are serious problems. One of the reasons why the Government have been reforming energy markets from day one is that we thought there were problems. One of the reasons we asked Ofgem and the competition authorities to do this work is because we were impatient that not more was happening in the markets. What is interesting about the referral is that the Leader of the Opposition could have done it when he was doing my job, but he refused to take this measure. He refused to do so when he had the power, so I have to say to her that Labour does not really have a leg to stand on. Labour created the big six; we are taking action to create competition.

I am surprised that the right hon. Lady continues to bash Ofgem, the independent regulator. It has taken action in the past few years, particularly under this Government, to improve competition. I thought Labour supported the retail market review and the wholesale market reforms of the market maker obligation. I know she was not on top of reforms in the wholesale market, but Ofgem has taken that action and is now proposing the referral. In the spirit of welcoming the statement, she should also welcome the action Ofgem has taken. Labour set up Ofgem and when the Leader of the Opposition was doing my job he reformed it to make it more effective, so it is ironic for the right hon. Lady and the Opposition to criticise their creation that they reformed.

The right hon. Lady asked one or two specific questions. She asked me whether small business would be covered in the reference. Yes, it will. That is, of course, the independent competition authority’s business, but we believe that it will be and that it should be. On the timetable, as I set out in my statement, we expect the consultation to finish by 23 May. Ofgem will then make its final decision. We expect all of that to happen and the assessment to get going before summer.

The right hon. Lady asked about the price freeze. The problem with Labour’s blanket price freeze is that it is a pro-big six policy. Labour created the big six and it is supporting the big six. Of course SSE is able to have an energy price freeze—it is a big company. Big companies have the balance sheets that enable them to buy 18 months ahead. We have never said that the big six could not have a price freeze. It is the smaller competitors who oppose the price freeze. When the Leader of the Opposition made his announcement to the Labour conference, it was the small companies that were complaining, saying that it would put them out of business. That is the true Labour party: putting the smaller competitors out of business.

The right hon. Lady needs to reflect on all her policies. I am delighted that she has, at long last, changed her mind and agreed to the market investigation reference. That is good to hear, but the Government have been acting to help people with their bills through the warm home discount for the 2 million lowest income households, through the average £50 we took off bills before December, and through our work on energy efficiency and switching. We have been extremely active and will continue to be active during the review, as will Ofgem. The Government are in favour of better prices through more competition to deliver secure green energy.

[Mr Tim Yeo (South Suffolk) (Con)]

I warmly welcome my right hon. Friend’s statement and, in particular, the recognition by Ofgem—belated, admittedly—of both the market failure and the dangers of vertical integration in the energy industry. Will he confirm that although it is absolutely right for the Government to do everything they can to promote competition in the energy industry, it would be dishonest for any Government, either current or future, to pretend to consumers, anxious as they are, that energy bills may never rise in future? By far the biggest component in the energy bill is the wholesale price of gas, which is completely beyond the Government’s control.

--- Later in debate ---

[Mr Davey]

My hon. Friend is absolutely right, and that is one of the problems that many have with the official Opposition’s policy. Governments do not control wholesale prices. We have seen large increases in wholesale gas prices over a long period, primarily driven by the increase in energy demand from countries that are growing such as China and India. My hon. Friend is absolutely right to say that we cannot control that, but we can do everything in our power to help people, whether by promoting competition or helping people to save energy through energy efficiency.

[Dr Alan Whitehead (Southampton, Test) (Lab)]

Bearing in mind that the “State of the Market” competition report contains a number of different headings of concern about the market, has the Secretary of State done any work, or will he do any, on the relative urgency of those headings? If he is considering referring the headings in Ofgem’s report to the CMA inquiry, does he think the two-year time scale will give his Department sufficient urgency to deal with them all?

[Mr Davey]

First, for the avoidance of doubt, it will be Ofgem that makes the referral to the Competition and Markets Authority, not me. However, I want to make it clear to the House that we have been acting on competition issues in energy markets from day one in 2010 and will continue to do so. Where evidence is brought to our attention or Ofgem’s that more can be done, we will do it. As I said in my statement, consumers can look forward to our work with the industry to drive forward faster switching times, for example. We want to halve switching times, so that competition works for people and they can get the best deals in the market. We are not going to do nothing during the review; we are going to be very active. However, the review is critical to doing a deep dive and getting a deep analysis of what is going on.

[Christopher Pincher (Tamworth) (Con)]

My right hon. Friend is quite right to suggest that the vast array of tariffs, which the last Government allowed to proliferate, is one reason why many people are deterred from switching supplier, but so, as he says, is the speed at which one can switch. Will he say a little more about how we will drive down and halve switching times, so that people can enjoy lower energy prices, rather than the frozen prices that the Opposition want, but which, rather oddly, in the same breath they say are too high?

[Mr Davey]

My hon. Friend is absolutely right. We are rather more ambitious than the official Opposition: we want to see low energy prices through competition, not just to freeze them. He is right that reducing the number of tariffs is important—the Labour party refused to do that in government—and the retail market review by Ofgem, which the Labour party wants to abolish, has led to a reduced number of tariffs. As for switching times, which he has focused the House’s attention on, we have already been working with the industry through Energy UK, which has a body working with all other parts of a chain of companies involved in switching customers. We will report later this year on the progress we believe can be made and how it can be made. It is complicated, but we are determined to deliver it.

[Thomas Docherty (Dunfermline and West Fife) (Lab)]

On 12 February, the Secretary of State criticised Labour’s critique of the wholesale energy market as deeply flawed, so does he think he is as stupid as he looks right now?

[Mr Davey]

It is always nice to have charm in the House. I have to tell the hon. Gentleman that Labour’s proposals include introducing a pool. The problem is that the day-ahead market, which is like the pool, has grown dramatically under this Government. That is one of the reasons why I said that Labour’s policies are absolutely flawed: because the Opposition have not looked at what is actually happening. Indeed, I asked the right hon. Member for Don Valley (Caroline Flint) in that debate whether she had read the report and it was clear that she had not. That is one of the reasons why we think Labour’s policy proposals are flawed.

[Sir Andrew Stunell (Hazel Grove) (LD)]

As a Liberal Democrat, I very much welcome today’s statement and the vigorous way in which the Secretary of State set about it. Does he share my view that it is amazing that Labour, having set up both the big six energy companies and Ofgem to regulate them, should now be so grudging about his taking the action necessary to ensure that consumers get a fair deal?

[Mr Davey]

My right hon. Friend is absolutely right. The Labour party created the big six, and now it seems to be worried about the fact that we are trying to take action. Its policy would entrench the big six, and would undermine the competition that we have delivered. The Labour party set up Ofgem, and now it wants to abolish it. People listening to the Labour party and looking at its record must be astonished that it has the gall even to pretend that it has a sensible energy policy.

[Nia Griffith (Llanelli) (Lab)]

In its report on energy prices and fuel poverty, the Select Committee said that Ofgem was failing consumers because it had not been properly using the powers at its disposal. Can the Secretary of State tell us what action he took as a result of that report, why prices have not fallen, and why consumers have repeatedly found themselves in financial difficulties because the Government did not act earlier?

[Mr Davey]

I think that recommendations made by the Select Committee to Ofgem are matters for Ofgem. In the Energy Act 2013, we set out a new approach for my Department, working with Ofgem, and provided for the introduction of a strategy and policy statement. We have made the reforms that we believe are needed to ensure that Ofgem works well with the Government in promoting competition. I am delighted to note that, although the Labour party still seems to want to abolish Ofgem, it supports its proposal for a market investigation reference.

[Mr Philip Hollobone (Kettering) (Con)]

I am sure that residents of Kettering will welcome the inquiry into the electricity and gas markets.

I was interested to hear what the Secretary of State said about vertical integration. Surely the problem is the small number of energy suppliers that are vertically integrated. If 20 energy suppliers were vertically integrated, there might be the requisite level of competition. If a small number of energy suppliers were not vertically integrated, that might work. Surely the lethal combination for consumers is a small number of suppliers that are vertically integrated. I shall be extremely surprised if the inquiry does not conclude that that vertical integration needs to end.

[Mr Davey]

I am pleased that the competition assessment is focusing on vertical integration, because I think that it needs to be looked at. Ofgem proposed the introduction of a market making obligation because it wanted to tackle some of its concerns about vertical integration. However, the consultation document states:

“We recognise that there are benefits to vertical integration in terms of cost efficiency…and in terms of supporting investment to maintain security of supply. However there are also costs in terms of barriers to entry.”

The report is balanced, and, unlike the Labour party, has not rushed into making a judgment. Everything cannot be the fault of vertical integration. The gas market is not vertically integrated, but I believe that there are serious problems related to competition in the domestic gas supply market.

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

Any review of the energy market is welcome, but yesterday, referring to nuclear power, Scottish and Southern Energy said

“the deal which the UK government has reached with EDF”

—the French energy giant—

“over the construction of two reactors at Hinkley Point…will add considerable costs to consumer energy bills for 35 years.”

Will the “full market investigation” cover the cost of nuclear power and its effect on comprehensive spending review bills, and if not, why not?

[Mr Davey]

The investigation will not deal with that, because it involves policy on the generation mix. A mixed, diverse source of low-carbon energy is the best way in which to protect the consumer. There are Members of Parliament and, no doubt, many people outside who know the future—who have a crystal ball and know what the various technology costs will be in the 2020s. Perhaps SSE has a crystal ball; perhaps the hon. Gentleman has a crystal ball, but I do not. I have created a framework in which there is competition between technologies, and I believe that that is the right way in which to proceed.

[Mr Peter Bone (Wellingborough) (Con)]

I am amazed that the Labour party wants to freeze energy prices when they are high, when wholesale prices are falling, and when the Government are reducing—as the Prime Minister delicately put it—Labour’s green crap. Would the Minister care to congratulate the Prime Minister on reducing subsidies for green energy, thereby driving prices down for the consumer?

[Mr Davey]

It is always nice to be able to agree with my hon. Friend on the odd occasion—[Interruption.] Not necessarily on everything he said—the right hon. Member for Don Valley (Caroline Flint) is very worried about that—but on his point about the Labour party and competition, I do agree.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

One of the headline findings of the market assessment in the Ofgem press release is that switching has fallen in recent years:

“There was a brief spike in late 2013 but no indication of a permanent increase.”

Indeed, there has been a substantial reduction since January this year. Given that switching has so far not really had the effect in driving down prices that the Secretary of State suggested it might, why should we expect consumers to wait for two years for the outcome of this assessment to see some action being taken to drive down prices?

[Mr Davey]

I am glad the hon. Gentleman has raised that point. Switching rates have fallen in this country primarily because of the end of doorstep selling. That method of trying to persuade people to switch was one of the reasons why switching numbers increased in the early days after privatisation. However, all Members in their constituencies will have experienced cases of doorstep mis-selling, and it was the many problems that that caused that led many people in this House and the regulator to say that it was not an acceptable way of driving competition. Doorstep selling has gone out of the picture and that has been the main cause of the reduction in switching. We have therefore had to address that and look at new, innovative ways to try to get the rate of switching going back in the right direction. That is why we are looking at simpler bills, fewer tariffs, collective switching and faster switching times. We are relentless in trying to get those switching rates back up again, and the recent evidence suggests we are on the right track.

[Andrew Jones (Harrogate and Knaresborough) (Con)]

I welcome my right hon. Friend’s statement. Does he agree that the whole House today should be backing Ofgem and the investigation, which I believe is in the long-term interest of consumers—and the key is “long term”?

[Mr Davey]

I strongly agree with my hon. Friend and I am genuinely pleased at the way in which the discussion has gone among the parties in the House. It is important that we allow the independent competition authorities the time to get to the bottom of the matter. Let the professional experts deal with it, and let the political parties listen to them and follow their advice.

[Sammy Wilson (East Antrim) (DUP)]

The report highlights that, because of local monopolies, barriers to entry and colluding between the big six, they have been able to hold on to 95% of the market share and increase their profits. Is that not an indication that now is the time for quick action rather than further reviews, and would one quick action be to reduce the subsidies to the renewables industry, which the Secretary of State’s own Department admits currently add 10% to energy bills?

[Mr Davey]

I certainly do not recognise that figure, and the hon. Gentleman needs to look at what has been driving up bills: it has been the price of wholesale gas. Whether it is that trend in the past decade or the events in Ukraine and Crimea, people should worry about relying on just importing gas from abroad. We need to diversify, so we need to invest in renewables, nuclear, carbon capture and storage, and energy efficiency. We need a diverse approach. That is the best way to ensure that we get prices down and keep the market competitive.

[Mrs Emma Lewell-Buck (South Shields) (Lab)]

In December, the Secretary of State said that Ofgem was not fit for purpose. He has also said that we cannot rely on guesswork to fix the energy markets. Why will he not admit that today’s decision to refer the energy market for a full market investigation is a clear admission that the market is broken and Ofgem is not fit for purpose? May I also offer him some polite advice? He does not need to rely on guesswork; he needs to listen to the Labour party.

[Mr Davey]

I am grateful for the hon. Lady’s question, but I have been accused by the Opposition of saying—in the same debate, I believe—that Ofgem is fit for purpose and that Ofgem is not fit for purpose. I believe she was quoting her Front-Bench colleague, the right hon. Member for Don Valley (Caroline Flint). I will let the hon. Lady try again next time.

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

In November 2011 the Government ruled out a full energy market investigation. Is the Secretary of State willing now to admit that the Government got it wrong and made a mistake, and can he explain to the House the difference between tacit co-ordination and collusion?

[Mr Davey]

On that last point, one is illegal and one is not, but I think we can all agree that they both need to be investigated by the independent competition authorities. It is interesting that Labour is complaining—at least, some Labour Members are complaining—that we did not make this referral before, given that Labour’s leader, when Secretary of State, refused to make the market investigation reference. Let us remember that in the previous Parliament electricity bills and gas bills increased faster on average each year than they have done under this Government. He had all the reason to make that reference to try to improve competition, but he flunked it when he had the chance.

[Barry Gardiner (Brent North) (Lab)]

May I extend my sympathy to the Secretary of State, as it must be galling for him to have to make this statement to the House, particularly with his minder, the right hon. Member for Sevenoaks (Michael Fallon), present? The Secretary of State has known for many years that what the Labour party has been saying, and what the Select Committee has been saying, has been correct, but he has been prevented from doing anything by the Treasury. Now he has had to come to the House to accept that all the things we were asking for—the Competition Commission referral, a proper examination of this situation and addressing vertical integration—are going to come to pass on his watch. Having said that, can he explain why, when the profits made by the companies in Europe are between 2% and 3%, whereas in this country they are between 5% and 7%, he will not do anything now?

[Mr Davey]

If the hon. Gentleman reads the assessment, he will see that the competition authorities have focused on that last point. On the market investigation reference, I have to remind him, again, that it was the leader of his party who flunked that opportunity. I also have to tell the hon. Gentleman that he should read the record, because Labour’s spokesperson in this area, the right hon. Member for Don Valley, was saying just a few weeks ago that a market investigation reference was not a good idea, that to make such a reference would be to kick things into the long grass and that it should not happen. I am glad that Labour has changed its position.

[Nick Smith (Blaenau Gwent) (Lab)]

In his statement, the Secretary of State says, and has just acknowledged, that there is “evidence that the big six have seen increasing profits that do not appear to reflect increasing efficiency”—too right! So why does he not acknowledge that he has been too slow to act today?

[Mr Davey]

I completely disagree with the hon. Gentleman; this coalition Government have been acting from day one. We inherited Labour’s big six. We have deregulated, and we now have 18 independent new suppliers taking on the big six. The best buy tables show that people can save hundreds of pounds by switching from Labour’s big six to the new competition that has come about under this Government. We have been making lots of efforts, but because we are impatient and frustrated and we want to do more, we set up this annual competition assessment and we welcome its proposals today.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

I welcome the Secretary of State’s statement. I always remember him as a fair-minded, independent Liberal Democrat, and I get on very well with him, but it does stick in my craw when I hear him repeating this Conservative mantra about the big six and Labour. I have been in this House long enough to remember the botched privatisation of the energy sector, which is at the heart of the rotten energy sector we have inherited today. That is the truth, and he is better than what he said today.

[Mr Davey]

I like the hon. Gentleman, despite his question. It is not a Conservative mantra—it is a Liberal Democrat mantra, a coalition mantra and a consumer mantra. Let us remember that the people who have been calling for this reference include Which?, Citizens Advice, Consumer Futures and the Federation of Small Businesses, and we are delivering on that today.

[Dr William McCrea (South Antrim) (DUP)]

No matter what politicians say in this Chamber today, many of our constituents believe that they are being ripped off on energy costs. How can we assure them that the cost of electricity and gas is a genuine cost and has not been set by a cartel of the big six?

[Mr Davey]

The hon. Gentleman can do that by backing this reference by the competition authorities, which will ask all those questions. I say to him and his constituents that if they are worried now, they should look at the best buy tables and use the competition that is there now. I hope that, as a result of this reference, we will supercharge that competition. There is choice now, because this Government have brought it in.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Last but certainly not least, the voice of Hyndburn, Graham Jones.

[Graham Jones (Hyndburn) (Lab)]

I was most interested in the answer that the Secretary of State gave to my hon. Friend the Member for Blaenau Gwent (Nick Smith)—that he had had four years of impatience or that he had been impatient over the period. Looking back, does he not regret that the Energy Act 2013, which took more than a year to go through Parliament, does not contain a single concrete measure to improve competition in either the wholesale or the retail energy market?

[Mr Davey]

Even though the Act may have taken a year to get through this House, I am afraid that the hon. Gentleman did not manage to read it. We had measures supporting Ofgem from both its retail market review and its wholesale market review. There was also the overall reform of the electricity market to ensure that we had competitive markets for the future. I am afraid that the hon. Gentleman is wrong.