Oral Answers to Questions

Debate between Greg Clark and John Penrose

Tuesday 30th January 2018 Commons Chamber

[John Penrose (Weston-super-Mare) (Con)]

T1. If he will make a statement on his departmental responsibilities.

[The Secretary of State for Business, Energy and Industrial Strategy (Greg Clark)]

Since our last Question Time, it has been my pleasure to introduce my new colleagues, my hon. Friends the Members for East Surrey (Mr Gyimah) and for Burton (Andrew Griffiths), to the Department and to see our agenda progressing. We announced the automotive sector deal, supporting British innovators and manufacturers with a joint commitment of millions of pounds of investment from industry and Government. The Society of Motor Manufacturers and Traders said that the deal would place the UK at the forefront of electric, connected and autonomous vehicles. I am delighted to announce that Lotus Cars has announced its intention to invest significantly to expand its production, creating 300 new jobs at its plant in Norfolk. Production will increase fivefold in the years ahead.

[John Penrose]

Energy distribution network operators charge obscenely high prices on our energy bills and make absurdly large profits for running safe, low-risk monopoly businesses that get energy to our homes. Does the Secretary of State agree that Ofgem has been far too soft on these firms for ages, allowing them to get fat and lazy at customers’ expense? Will he join me in urging Ofgem to get a great deal tougher in future?

[Greg Clark]

I agree with my hon. Friend and welcome the decision by SGN, SSE and National Grid to refund excess returns to consumers—the others should follow suit. He is absolutely right, and in the next price control period, Ofgem should have a much tougher regime.

Oral Answers to Questions

Debate between Greg Clark and John Penrose

Tuesday 7th November 2017 Commons Chamber

[John Penrose (Weston-super-Mare) (Con)]

Dieter Helm’s recently published “Cost of Energy Review” says that

“the prices of oil, gas and coal have fallen…contrary to the modelling and forecasting of both the Department of Energy & Climate Change…and the Committee on Climate Change”.

He means that however hard they try and however worthy their intentions, mandarins and regulators are rubbish at discovering or predicting energy prices. Does my right hon. Friend agree that the provisions for the draft Bill’s absolute energy price cap, which would require mandarins and regulators to meet twice a year to pick a number, would repeat the same mistakes so should be replaced by something more closely linked to the few competitive energy prices that already exist?

[Greg Clark]

I know what a great campaigner my hon. Friend has been on this issue. We have published the draft Bill, which includes our intentions, and I hope that he will give evidence while the Bill is being scrutinised. We are eager to hear his views, and we are eager to hear whether the Select Committee agrees with his analysis.

Retail Energy

Debate between Greg Clark and John Penrose

Thursday 12th October 2017 Commons Chamber

[Greg Clark]

If one thing would be disastrous for consumers, taxpayers and business confidence in this country, it would be the hon. Lady and her Front-Bench colleagues’ proposal for nationalised energy companies. It is not even clear how it would be paid for, but there are only three ways: taxing more, borrowing more, or expropriating assets. If that is about achieving the confidence of British business, she has a long way to go.

The hon. Lady asked about the action being taken and the required pace. I remind her that in 13 years of Labour Government not a single protection was put in place for consumers. It was the Conservative-led Government who commissioned the Competition and Markets Authority report—something that the right hon. Member for Doncaster North (Edward Miliband), when he had the opportunity, signally failed to do—as a result of which 4 million consumers will benefit this winter from a cap on prepayment meter tariffs, which again is something the previous Labour Government failed to do in their 13 years in office.

Since taking on this role, I have been absolutely clear, on the basis of the CMA’s assessment, that we require nothing less than the eradication of that detriment of £1.4 billion, which is why, in response to my requirements, Ofgem has announced that a further 1 million will be protected this winter, with a further 2 million to follow. I have been clear, however, that that is not comprehensive enough, and it is because I am not satisfied that we are introducing the Bill. We published it and submitted it to the Business, Energy and Industrial Strategy Committee, which I hope will give it urgent pre-legislative scrutiny so that we can reflect what I think is a broad consensus in the House that the objectives should be an energy market that works for all and, before that, protection for the consumers currently suffering the detriment identified. I hope that there will be a consensus around that so that we can proceed with the Bill.

As I said in my statement, however, it is open now to energy companies to move people off the standard variable tariffs identified as overcharging customers. Indeed, Ofgem has made it clear that it expects them to do so. They should do so now and not wait for the Bill.

[John Penrose (Weston-super-Mare) (Con)]

I congratulate my right hon. Friend on embracing the huge cross-party consensus on protecting 17 million households from rip-off energy bills. This is a good day. It is great that we can now move on to discuss how, rather than if, we make it happen. In the spirit of consensus, will he listen to the widespread concerns that an absolute cap would throttle competition, be out of date as soon as the wholesale price of gas changed and mean energy companies spending more time lunching their regulator than delighting their customers, whereas a relative cap would preserve competition, make the customer king and provide far wider consumer choice?

[Greg Clark]

I pay tribute to my hon. Friend’s personal energy in this matter. He has been assiduous and tenacious in pursuing consumers’ welfare. The reason for publishing the Bill for pre-legislative scrutiny was to build the consensus that I know he will participate in. Our proposal is for an absolute cap—to ensure a clear limit on what can be charged—but I know he has thoughtful views that he will want to convey during the scrutiny process.

Oral Answers to Questions

Debate between Greg Clark and John Penrose

Tuesday 12th September 2017 Commons Chamber

[John Penrose (Weston-super-Mare) (Con)]

17. Whether Ofgem is able to implement a domestic energy price cap within its present powers.

[The Secretary of State for Business, Energy and Industrial Strategy (Greg Clark)]

Ofgem has extensive powers that would allow it to establish a cap on household energy prices that cause consumer detriment. The Competition and Markets Authority identified a consumer detriment averaging £1.4 billion a year, which I expect Ofgem to take measures to eradicate.

[John Penrose]

I thank the Secretary of State for that clarification. Is it not pathetic of Ofgem to ask the Government to pass a law ordering it to impose an energy price cap when, as he says, it has the legal powers to do that already? Does that not show that Ofgem is miserably failing to stick up for energy customers? Will he therefore push Ofgem to grow a spine and introduce a cap without delay?

[Greg Clark]

Ofgem has yet to respond to my request. I have the power to oblige Ofgem to put a cap in place. Doing that would seem excessive, and it would require primary legislation. Ofgem has those powers, so there is no need for that. That is why, faced with this huge detriment of £1.4 billion on average, I believe it is essential that Ofgem uses the powers that Parliament has given it to eradicate the detriment.

Energy Price Cap

Debate between Greg Clark and John Penrose

Monday 3rd July 2017 Commons Chamber

[Greg Clark]

I am grateful to the hon. Gentleman for his questions. I hope he will see that I answered many of his points in my initial response to the urgent question. He will share my view—indeed, I think it is his view, too—that we should act as soon as possible to provide relief to consumers. That will require Ofgem to use its powers. It has powers that it can use immediately, and I have encouraged it to do so.

The hon. Gentleman mentioned my letter. I am sure that, as he was hoping to come into government, he studied the prospective use of the powers, so he will know that legislation requires me to ask Ofgem for advice. I did so under exactly those terms and Ofgem has responded by saying that it will work with consumer groups to identify how far the protection should go. I have been clear that I want the detriment of £1.4 billion a year to be eradicated. It is a test of Ofgem’s responsiveness that it should use its powers to that end. The constituents of Government and Opposition Members will look to the regulator to make use of its powers to prevent the continuation of such an unacceptable situation, which involves more than £1 billion a year.

[John Penrose (Weston-super-Mare) (Con)]

To build on my right hon. Friend’s most recent answer, some 17 million families are being ripped off by expensive standard variable tariff deals. Ofgem’s proposals will deal with at most 3 million of them, leaving 14 million still being preyed on by the big six energy firms. Does my right hon. Friend agree that Ofgem’s proposals will be viewed as a great betrayal of those 14 million households? If we are going to create an economy that works for everyone, will he distance himself from this big six stitch-up and pledge to help the millions of households that Ofgem seems set to ignore?

[Greg Clark]

My hon. Friend has done great work with many Members from various parties to establish that there is an appetite and need to tackle the problem exposed by the CMA, which has been going on for too long. In response to my letter, Ofgem has said today that it will work with consumer groups and come forward with a range of responses. I will look at them closely, as I know my hon. Friend will, and I am sure that the Business, Energy and Industrial Strategy Committee will, too. I have said clearly that the test of the adequacy of the responses is that they address the clear detriment that the authorities have identified.