Energy Company Charges

Jesse Norman Excerpts

Tuesday 4th February 2014 Commons Chamber

[Ms Margaret Ritchie (South Down) (SDLP)]

I thank the hon. Member for Harlow (Robert Halfon) for bringing this topic to the Chamber through the Backbench Business Committee and for his tireless work on behalf of consumers and the wider community, and I thank the hon. Member for Ynys Môn (Albert Owen), too.

In addressing today’s debate and the motion, which focuses on direct debit payments for electricity bills, we must also take into consideration the current economic situation faced by consumers. People are already paying excessive energy bills. Nearly all the major UK operators increased the cost of annual bills by about 10% last year, while Power NI delivered a staggering 17.8% increase in Northern Ireland. Although the recent jobs and GDP figures for Northern Ireland give some cause for hope, the truth is that this limited recovery is not being felt by families who are faced with higher energy bills, rising petrol costs and real-terms pay cuts. In this economy, every pound matters and that is why today’s debate is so important.

It is understandable if a company wants to give a discount to customers for paying by direct debit, and that is an entirely valid pricing structure, provided that it reflects the genuine saving to the company of the payment option. However, what is not acceptable is the vast price differential which seems to be prevalent in the current market between customers paying by direct debit and those not paying by direct debit. It would seem that those not paying by direct debit are actually paying a penalty to subsidise other customers’ lower bills. That is clearly unacceptable.

This is not a plain and simple matter of consumer choice. There are over 1 million people in society who do not hold current accounts and who therefore do not have the option of paying by direct debit. Moreover, 45% of all bill payers, including many of those with bank accounts, do not pay using direct debit for a variety of valid reasons. Such people, who are often vulnerable or elderly, should not face a penalty for that. Sadly, the people facing penalties, which can amount to hundreds of pounds a year, are often also those most likely to be facing fuel poverty or for whom such an amount of money would make the biggest difference.

[Jesse Norman (Hereford and South Herefordshire) (Con)]

I thank my hon. Friend the Member for Harlow (Robert Halfon) for calling this debate and I apologise for missing the early part of it. The hon. Lady is making a very valuable case. Does she agree that the additional cost to which disadvantaged people are being put by these meters and other payment systems that are not direct debit is grossly disproportionate to the amount of savings that are supposed to be generated for the power company and therefore represents an extortionate extraction of value from the poor member of the public who has to pay for it?

[Ms Ritchie]

I thank the hon. Gentleman for his intervention, and I fully agree with him, because I have seen that, not least in my own community in Northern Ireland.

Many people are likely to be pushed into financial difficulties by such charges and they often have the least flexibility when it comes to arranging their financial affairs. I support this motion on the simple principle that price structures and options should offer customer choice, not be determined by customer constraint.

It should also be pointed out that not every company operates in this way. In contrast to Power NI, there is Budget Energy in Northern Ireland. It does not penalise customers for non-direct debit payments. In fact, its cheapest tariff per unit is for prepayment meters. Other companies should be encouraged to consider similar pricing structures that do not penalise certain bands of customers. Again the issues of transparency and equity and fairness come into play.