Gas Prices and Energy Suppliers

Edward Miliband Excerpts

Thursday 23rd September 2021 Commons Chamber

[Edward Miliband (Doncaster North) (Lab)]

(Urgent Question): To ask the Secretary of State for Business, Energy and Industrial Strategy if he will make a statement on rising gas prices and the collapse of energy suppliers.

[The Secretary of State for Business, Energy and Industrial Strategy (Kwasi Kwarteng)]

I came before the House on Monday to update colleagues on the action we are taking, and I appeared before the Business, Energy and Industrial Strategy Committee yesterday to discuss the matter in greater depth. The Government have been clear that protecting consumers is our primary focus and shapes our entire approach to this issue. We will continue to protect consumers with the energy price cap.

The global gas situation has had an impact on some energy suppliers, and I have been in touch daily with Ofgem. As it set out yesterday, there are more than 50 suppliers in the domestic market, and we may, unfortunately, see more suppliers exit the market in the coming weeks. However, it is not unusual for energy suppliers to leave the market, for various reasons, particularly when wholesale global prices are rising. Ofgem and the Government have clear, well-rehearsed processes in place to make sure that all customers are supplied with energy.

Our approach will be informed by the following principles: protecting customers, especially vulnerable ones, from price spikes. The solution to this crisis will be found from the industry and the market, as is already happening, and I repeat that the Government will not be bailing out failed energy companies. We would like to see a competitive energy market that can deliver choice and lower prices. The energy price cap, which continues to protect millions of customers, will remain in place. Consumers come first, and that has always been the centrepiece of our approach.

[Edward Miliband]

On Monday, I said to the Secretary of State that he was being far too complacent about the situation we are facing. Events since have, unfortunately, borne that out: complacent about the crisis in the market; complacent about the impact on families; and complacent about the cost of living crisis. He pretended on Monday and again today that it was normal for a number of suppliers to go down each winter, but what we are dealing with is far from normal: 800,000 customers losing their suppliers yesterday alone and 1.5 million in the last six weeks. So will he now answer the question he has so far failed to answer: does he believe taxpayers’ money will be necessary to stabilise the market? If so, how will he ensure value for money and that we do not simply end up with greater concentration of the big six suppliers?

Next, I have a letter here that Ofgem wrote to the Secretary of State when he was the Energy Minister 18 months ago during covid, warning about

“systemic risk to the energy supply sector as a whole”.

It said the usual Ofgem mechanism, the supplier of last resort, may not be possible. It went on:

“The failure of medium and large suppliers would need to be handled via a special administration regime placing significant burden and costs on government.”

So will he answer the question of what planning was done for this eventuality following that letter? Surely the Government should be in a position now to know exactly what needs to be done where there is systemic risk to suppliers. Have they not left the country dangerously exposed, with them scrabbling around for solutions?

Finally, we are seven days from the cut to universal credit. This is the last time a Government Minister will be in the House explaining to millions of families why they are plunging them further into fuel poverty. Instead of warm words or platitudes, can the Secretary of State now tell the British people how he can possibly justify this attack on their living standards? Is it not the truth that there can be no defence of it, and that the only right, proper and fair thing to do is to cancel the cut?

[Kwasi Kwarteng]

Obviously, as usual, the right hon. Gentleman raises a number of issues. We have not been complacent. The whole point about the supplier of last resort process, which was interrogated last year, is that it is an organised, well-established process that can allow existing strong companies to absorb customers and failure. [Interruption.] If he would desist from chuntering from a sedentary position, he might actually hear my answer.

I remember the letter last year. We interrogated, all through the covid process, the systems we had in place. During that period, the supplier of last resort was found to work. So far this year, it has been found to work, so I am not going to try to talk ourselves into exacerbating the crisis.

With regard to the special administration regime, that is something that is in place. Thankfully, we have not had to use that, but the right hon. Gentleman knows as well as many people in this House that it is there should the case arise.

With respect to universal credit, I will say what I said earlier in the week. That is a matter across Government in terms of budgetary responsibility. There will be a Budget at the end of October and there will be plenty of time to discuss that then.

--- Later in debate ---

[Kwasi Kwarteng]

As I have said, we have a supplier of last resort process that has worked well in the past couple of years. It is not my job to state the terms on which customers are absorbed by other companies—

[Edward Miliband]

It kind of is.

[Kwasi Kwarteng]

No, not ahead of the process. However, most of these prices are at or just below the price cap, and that is fundamentally what will protect consumers in this period.