Energy Market Reform

Ian Lavery Excerpts

Wednesday 24th October 2012 Commons Chamber

[Mr Jones]

The hon. Gentleman’s comments are interesting. I am a firm supporter of nuclear energy—he might not be, but it is absolutely necessary. This Government are trying to incentivise companies to make sure that nuclear is a firm part of the energy mix and that we are not switching off the lights.

[Ian Lavery (Wansbeck) (Lab)]

The hon. Gentleman mentions Daw Mill colliery in his constituency. It faces closure, yet it has thousands of tonnes of reserves—it has one of the biggest reserves in the country. What do the Government intend to do to save those jobs and exploit those reserves?

[Mr Jones]

I thank the hon. Gentleman for raising that point, as this Government have been helpful and have followed the situation at Daw Mill very carefully to try to help it have a future. I am aware that positive negotiations are going on between the work force, the unions and the company to try to secure its future after many years of poor management, which left the colliery without the necessary work being done on the coal faces to help the company sustain an operation employing 800 workers. There are challenges there, but I am confident that the interested parties can come to a deal. I assure the hon. Gentleman that my hon. Friend the Member for North Warwickshire (Dan Byles) and me, as constituency MPs, and the Minister responsible for energy have spent a lot of time trying to help.

Let me move on to discuss another important part of our future energy policy—shale gas. Notwithstanding the environmental impacts and assessments that need to be done, I very much feel that shale gas has a real future. In coming years, it will help to create sufficient energy supplies and contribute to energy security, as well as helping to bring people’s bills down, as it has in the United States.

The energy market itself is an important matter. The right hon. Member for Don Valley (Caroline Flint) came up with a gem—or probably what I would call an “off-gem”—when she admitted that Labour had created the problem by reducing the number of energy providers from 15 to six. She now expects the current Government to sort it out, which is quite interesting and seems to be a recurring theme: this Government having to sort out the inadequacies and the mess left by Labour.

I went on to a price comparison website this morning to find out the position if I chose to move energy suppliers. Under the dual fuel section, I clicked on to E-ON and noticed that I could change to any one of 52 tariffs. For example, there was the E-ON fixed price 5, E-ON fixed two-year Tesco clubcard points, Age UK one-year fixed, not to mention the other 49 different tariffs of different descriptions. There is a real issue of transparency; people need to know what they are signing up to and what else is available to them. I welcome the Prime Minister’s announcement that the Energy Bill, or part of it, will be used to encourage energy suppliers to take responsibility for letting people know the lowest tariff and for trying to move people on to it.

The cost of living is another important point, and I shall particularly mention the mortgage market. People finish a fixed deal with a mortgage lender and are put on to a standard variable rate, which might not be the best rate, or are not told that a better rate could be achieved. People who do not always look at these things are paying more than they need to. We definitely need to consider this issue across the piece.

We need to ensure more consumer choice for energy. We have more competition and more transparency in the market. I am heartened by Ofgem’s proposals to pare down all complex, multi-tier tariffs and limit energy companies to a smaller number of core tariffs. I think that will help people better to understand what they are signing up to and what they can go on to. We must also ensure that people know that they are getting value for money. We know all the trouble and hassle that swapping providers can cause; we know that it puts people off, so we need to make it as simple as possible to swap providers.

In my remaining minutes, I want to highlight consumption as a major issue. We must keep working hard, and I know that the Government are trying to reduce people’s energy consumption. I am sure that the green deal will make it easier for people to make home improvements that reduce their energy consumption. Many people who have worked and are working hard might not have the necessary capital sum available, might not qualify for benefits and might not be able to get other incentives, payments or grants to improve their property, but the green deal will give them the opportunity to help themselves to reduce their bills.

We need a balanced, open and honest debate on this issue. We need to make sure we do all we can to reduce the cost of living across the piece for all our constituents in these hard-pressed times. What we certainly need to do through this debate—and, I hope, through the Energy Bill—is to put in place a framework that will ensure that we have long-term energy security, enabling our constituents to reduce their bills in the coming years.

--- Later in debate ---

[Ian Lavery (Wansbeck) (Lab)]

This debate provides a great opportunity to discuss the Government’s energy policy, which is in a state of total disarray. The Secretary of State says one thing, the Minister says another, the Department says another, and they are all trumped by an out-of-touch Prime Minister.

Let us be honest. The statement made by the Prime Minister last week at Question Time was ridiculous. It probably was not a statement, but it could be described as a reactionary outburst. I enjoyed the urgent question, which was replied to by the Minister of State, Department of Energy and Climate Change, the hon. Member for South Holland and The Deepings (Mr Hayes), a man for whom I have tremendous respect. He valiantly and gallantly supported the Prime Minister, defending the indefensible. It was something that every Member of Parliament would have been pleased to experience. That was a very difficult task.

We are determined to decarbonise our energy sector. We set target after target. We do not have a cohesive energy policy, we do not have a cohesive strategy, yet we set targets in line with commitments that we are not sure we can keep. The Department of Energy and Climate Change is at its lowest point in my time here. There is uncertainty out there among large and small businesses, leading to investment unrest. They are not sure whether the energy plans proposed by the Government will change from one day to the next. There is no evidence-based financial structure to the policies being pursued by the Government. That creates mayhem for businesses that wish to invest in all types of energy in this country, mainly renewables and nuclear. DECC is in meltdown. It has some grand ideas, but the problem is that those seem to be hugely curtailed by the Treasury.

As has been suggested today, there is a huge problem for the coalition partners, who seem to be at odds about all sorts of policies. They are at each other’s throats about energy policy, whether on wind turbines, nuclear or subsidies. We live in a perverse world, with tax cuts for the rich and fuel poverty for the poor. This winter people will have to choose whether to eat or to heat, because they cannot afford to keep themselves warm and to keep themselves fed. There are 6.6 million people who cannot afford to heat their homes this year, which will put them at severe risk of health problems.

At the same time as energy companies are inflicting massive hikes on their customers, they are recording massive profits for their shareholders. British Gas increased its prices by 18%, EDF by 15.4%, E.ON by 18.1%, SSE by 18%, Scottish Power by 19% and npower by 15.7%. That is modern-day Britain, divided into those who have and those who have not.

In the time available, I shall focus on the problems of poverty. Research shows that a quarter of all households in England and Wales—5.7 million households—are now in fuel poverty. The proportion of homes in fuel poverty has increased from 18% to 25%. The Hills fuel poverty review warned that unless Ministers change course, 200,000 more people are set to be in fuel poverty in the next four years, and millions of families will be pushed deeper into fuel poverty. There are more frightening statistics. The typical dual fuel bill is up by £200 since the last election to £1,310. More people—up by 25% to 850,000—are in debt to their electricity suppliers. The figure for gas is in the region of 700,000, a rise of 20%. People cannot afford to pay for their energy and are in debt to both the gas and the electricity companies.

I had planned to say much more, but the time allocated to us has been cut substantially, as is normally the case when I get up to speak. There are many topics that we could have discussed. The green deal was touched on. Some of the comments from the Government Benches were wholly incorrect and should be put right on the record. We could have discussed the success of Warm Front, the carbon price floor and the emissions performance standard. Another critical issue is the strike price of the contracts for difference. All these are important, but I wanted to focus on fuel poverty versus the excessive profits being made by the energy companies. We are living in a multi-tier Britain, which we need to highlight.