Energy Company Licence Revocation

Debate between Huw Irranca-Davies and Caroline Flint

Wednesday 3rd September 2014 Commons Chamber

[Caroline Flint]

I absolutely agree. I can hear the Secretary of State saying over and over that it is already available—[Interruption.] Obviously, he has his brief and has not been listening to my speech. As I have outlined clearly and as has been confirmed by Ofgem, the regulator can revoke a licence when a company is going into administration or is insolvent or when it fails to supply gas or electricity, but what is missing at the moment is the ability when there are repeated offences that act against the interests of consumers to take the ultimate sanction and revoke the licence.

[Huw Irranca-Davies (Ogmore) (Lab)]

I want to try to assist the Secretary of State. My right hon. Friend has rightly said that this will very much be an option of last resort—an ultimate sanction—that we hope will never be used, but the fact that the sanction is available should influence the behaviour of the companies and their investor backers. When an investor community sees that the credit rating of a company that has to gear itself appropriately in the market is jeopardised by a series of serious breaches, we can bet our bottom dollar that they will be banging on the doors of the corporate boardroom saying, “Get your act in order.” It is not a case of when the sanction will be used, as we hope that it will not be. Does my right hon. Friend agree that what is important is the deterrent effect, the cooling effect on reckless decisions in the boardroom, and the good behaviour that that will drive through the investor community into those companies?

[Caroline Flint]

I absolutely agree with my hon. Friend. The question we should be asking the energy companies is, “Why would you be afraid of this?” The question we have to ask the Secretary of State is, “What is his problem?” [Hon. Members: “What is he afraid of?”] What is he afraid of? It is quite ridiculous.

Cost of Living: Energy and Housing

Debate between Huw Irranca-Davies and Caroline Flint

Thursday 5th June 2014 Commons Chamber

[Caroline Flint (Don Valley) (Lab)]

The Government’s record is simple: since they came to power, working people have seen their pay fall by £1,600 a year on average, and by the end of this Parliament, people will be worse off than at the beginning. That is a record that no other Government can match, but it is not one to be proud of. The averages and statistics provide only a glimpse of what is happening to families caught in the cost of living crisis. It is a crisis that runs deep into people’s lives and deep into our country, because something fundamental has happened. The link between the wealth of our nation and everyday family finances has been broken, so the single biggest challenge facing our country is to restore that link so that growing prosperity is shared by all and not just a few at the top. On that challenge, this Queen’s Speech falls badly short. Today, I want to set out why it fails, and how Labour would take immediate action to deal with the pressures facing families and make the big long-term changes that we need so that hard-working people are better off.

Let us start with energy. There were suggestions yesterday that communities would be given the right to purchase a stake in local renewable energy projects, which was one of the community energy ideas in “The Power Book” which we published back in 2012. If that is what the Government are announcing, we welcome it and we look forward to more information on how and when it will apply.

We also heard that, subject to their consultation, the Government intend to bring forward legislation to give oil and gas developers underground access rights without requiring landowner permission. We have always been clear that provided it can be done in a safe and environmentally sustainable way, we will support shale gas exploration, but we have set out six conditions which we believe need to be met, four of which the Government have agreed to. That leaves two—first, an assessment of groundwater methane levels, and secondly, ensuring that all this monitoring is done for a full 12 months before any drilling can proceed, so as to ensure that we have robust baseline measurements to which we can always refer back. That is one of the lessons we need to take on board from the American experience, which did not go as well there.

As the Secretary of State mentioned, the changes to underground access rights announced in the Queen’s Speech will put shale gas on the same footing as other industries such as coal, water and sewage, so we will not oppose them, but we will continue to push for the environmental framework to be strengthened, and for assurances that the responsibility for clean-up costs and liability for any untoward consequences rests fairly and squarely with the industry, not with taxpayers or homeowners.

However, as the Secretary of State knows, companies have only exploratory licences, so full shale gas production is still some years away. Even if it does happen, unless we see significant shale production not just in Britain but right across of Europe, most experts believe it will have little effect on gas prices in the UK. The idea that it will in any way help with the cost of living that people are facing in relation to energy prices is therefore pretty wide of the mark.

One would not know it from the Secretary of State’s complacent speech, but in real terms energy bills have risen three times faster under this Government than under the previous one. The average family’s energy bill is now £300 a year higher than it was back in 2010, and businesses say energy is the second biggest cost they face. The consequences are being felt around the country. Figures out this week show that more than 1.5 million households are in debt to their supplier—saddled with more than £1 billion-worth of debt. If the Government had published their annual fuel poverty statistics last month, as I believe they were meant to, I imagine we would see the fuel poverty gap—the gap between people’s bills and what they can afford—increasing too. Perhaps the Secretary of State could enlighten us today on whether that is the case and explain why these statistics were not published.

On Tuesday we learned that in the past year alone the profit margins of the big six energy companies from supplying gas and electricity have doubled, so what is there in the Queen’s Speech to help bill payers? What is there to stop companies exploiting their customers? Nothing. The Secretary of State spoke about the Government’s dodgy deal with the energy companies, which he claimed had cut the average bill by £50, but let me remind the House of a few things that he forgot to mention. He forgot to say that because the energy companies increased bills by, on average, £110 at the same time as cutting green levies, the average family’s bill is still more than £60 higher than last year. He forgot to say that 3.7 million households on fixed price deals will not even receive the full saving, even though the Minister of State, Department of Energy and Climate Change, the right hon. Member for Bexhill and Battle (Gregory Barker) said it was “not acceptable” for the energy companies to fail to pass it on.

The Secretary of State forgot to say how the Government cobbled this deal together—a £5 cut in network charges, to be repaid in full next year, with interest; £12 from the warm home discount moved from people’s bills to their taxes, and somewhere between £30 and £40 of cuts to vulnerable and hard-to-treat households, which should have got help with energy efficiency and insulation through the energy company obligation. That amounts to 440,000 fewer households getting help to make their homes warmer. These are the people who have been made to pay, not the energy companies.

Then we heard the Secretary of State wax lyrical about the impending market investigation by the Competition and Markets Authority. I have been clear that we support the market investigation. I have also said that the review should cover the role of the regulator too, because one cannot properly investigate a market without looking at how it is regulated. The very fact that Ofgem has deemed it necessary to refer this industry to the competition authorities is an admission that the market is not working for consumers. Yet the review will take 18 months to complete and has not even been given the go-ahead yet. The test for the Government was what they would do to help households and businesses in the meantime, and on that test this Queen’s Speech fails.

I can tell the House exactly what we would do if this were Labour’s Queen’s Speech. We would protect households from any more unfair price hikes by freezing energy bills for 20 months. That would stop suppliers increasing their prices, but of course they would still be able to cut them. We would also begin the work of reforming the market. Consumers will not thank us if we use the CMA investigation as an excuse to avoid dealing with problems we can fix now. For instance, one of the biggest barriers to proper competition in this market, and one of the main reasons people find it difficult to trust the industry, is that companies can generate power and sell it from one arm of the business to another, at prices that are never disclosed, before finally selling it on to the public.

We could fix that problem quite straightforwardly by introducing a ring fence between the generation and retail arms of energy companies. We are not talking about companies being forced to divest bits of their business, although of course that may be something for the CMA to consider; we are simply talking about the way in which these companies operate becoming transparent. In fact, some suppliers already claim to operate in such a way. SSE has said, following the publication of Labour’s Green Paper on energy market reform, that it will legally separate its generation and retail businesses. So why wait? The CMA might report back with additional measures that need to be implemented, but if there are things we can do now to make this market work for the public and restore trust, then we should do them.

[Huw Irranca-Davies]

I commend my right hon. Friend for laying out the measures that would have been in an alternative Labour Queen’s Speech. Will she confirm that another measure would have dealt with the one in five or one in six people who are in rural off-grid households and who currently have no protection? One of the greatest measures we could have brought forward would be to allow those people to have their winter fuel payment paid early, so that they have the flexibility to buy at times of the year when the prices for off-grid oil, and so on, are much cheaper.

[Caroline Flint]

I absolutely agree with my hon. Friend. I commend the fantastic work he is doing with rural communities the length and breadth of Britain and thank him for the support he has given my team in addressing some of the issues facing households who are off the grid. As he says, for those off the grid this is an equally disappointing Queen’s Speech. There is nothing on bringing forward winter fuel payments, which would allow people to buy their heating oil when it is cheaper, or on bringing those who are off-grid under the energy regulator so that they can enjoy some of the protections that everybody else would enjoy. Labour would have put both those measures in a Queen’s Speech.

Solar Power (Feed-in Tariff)

Debate between Huw Irranca-Davies and Caroline Flint

Wednesday 23rd November 2011 Commons Chamber

[Huw Irranca-Davies (Ogmore) (Lab)]

Will my right hon. Friend expand on that point, because this proposal has affected not only the solar industry, but general confidence in the Government’s handling of the renewables sector? I spent an interesting evening yesterday speaking in depth with farmers who are concerned about the handling of this matter and about its impact on confidence in the anaerobic digestion sector, the biomass sector and so on. They do not trust this Government any more and they never will.

[Caroline Flint]

That is an important point. Some people say to me, “Caroline, this is all just about solar.” I say, “No it isn’t. It is actually about confidence, about the direction of travel and about being able to rely on the goalposts not being moved on a whim to effect some crazy policy dreamed up by these coalition Ministers.” What Ministers are doing is destroying this growing industry.

Interestingly, some of the social housing projects that have been brought to my attention wanted to put solar panels on the roofs of some of their properties, but they were also looking to use some of the gain from the tariff for other energy efficiency schemes, so the tariff would also have provided benefits beyond using solar power.

On Monday Solar Century brought it to my attention that it knew of a number of farmers who were interested in establishing solar. They were not thinking of solar farms, which caused some concern last year; they just wanted to generate energy to run their farms. They are now rethinking and cancelling their plans. That is not good enough.

Energy Prices

Debate between Huw Irranca-Davies and Caroline Flint

Wednesday 19th October 2011 Commons Chamber

[Caroline Flint]

I agree. There are measures that Government can take. However, they can also show leadership and exert moral pressure on the energy companies to be fairer and consider sharing some of their profits with those who are most in need, at the very least.

[Huw Irranca-Davies (Ogmore) (Lab)]

The Secretary of State has focused on the fact that switching suppliers might save people as much as £200. Is that not a bit rich, given that the energy companies’ profit per person is £125? Most people will never get around to switching, and meanwhile the big six are raking it in.

[Caroline Flint]

If it is true that every customer who followed the Energy Secretary’s advice could save £200, why do the companies not make it easier for customers by simply reducing their prices? The latest report does indeed show that their profit margins are £125 a head, up from £15 a head in June. If that does not set the alarm bells ringing in Government, I do not know what will.

As Members have pointed out—including, to some extent, Government Members—reforming the way in which energy is priced and sold will only ever work if there is genuine competition in the energy market. There is no such competition at present. The market is dominated by just six firms, which supply more than 99% of electricity and gas.