John Baron
Main Page: John Baron (Conservative - Basildon and Billericay)Energy Bill [Lords]
John Baron Excerpts(12 years, 8 months ago)
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Mr Deputy Speaker (Mr Lindsay Hoyle)
I have now to announce the result of a Division deferred from a previous day. On the motion relating to access to a lawyer, the Ayes were 303 and the Noes were 192, so the Question was agreed to.
[The Division list is published at the end of today’s debates.]
Mr John Baron (Basildon and Billericay) (Con)
I want to speak to new clause 19, to which my name is attached.
There is much evidence to suggest that too many customers are overpaying for their energy and failing to take advantage of the best offers from energy suppliers. The coalition agreement rightly contains a commitment that energy suppliers will provide information about cheaper tariffs on the bills and statements that they send to their customers, but although energy bills have become longer, evidence suggests that the additional information has had only a limited effect in encouraging customers to switch to cheaper tariffs. What is required is much clearer information on tariffs, tailored to a customer’s actual usage and payment option, to help customers to move to a company’s cheapest tariff. New clause 19 aims to make that a reality.
The case for more clarity on bills is very strong. The average annual energy bill has doubled since 2004; bills have risen significantly this year alone, and may do so yet again before the winter. According to analysis by Which?, the cost of energy is the number one financial concern of nine out of 10 customers. It is of particular concern to the vulnerable in society, especially those who live in fuel poverty. Estimates of their number vary, but I do not think there is any disagreement on the fact that there are between 5 million and 6 million of them.
The problem is that tariff structures are too complex. According to Ofgem’s retail market review, well over 300 tariffs were available to customers at the beginning of 2011. Research by Ofgem and Which? has found that people are baffled by not just the number but the many components of energy tariffs, such as standing charges, tiered rates, discounts and cashback offers. Ofgem calculates that one third of those who switch do not achieve a price reduction, although the vast majority switch in order to save money. That fuels cynicism in the energy market. Only one in three customers trusts the supplier to sell them the best tariff, and Ofgem believes that as many as six in 10 energy customers are inactive, many being completely disengaged from the energy market and potentially paying over the odds.
A further complication is that different payment methods have different outcomes. According to Ofgem, a customer who at the beginning of last year had changed their payment method from standard credit—paying on receipt of a bill—to direct debit could have saved more than £120. Which? estimates that more than 11 million households could benefit from switching to a direct debit payment method. I do not claim that all such households would want to, or that all would be able to, because many do not have a bank account, but that figure is great enough for this issue to warrant closer scrutiny.
Jim Shannon (Strangford) (DUP)
Clarification is needed on the green deal and prepayment meters, which are a method that households can use to manage their budget.
Mr Baron
The hon. Gentleman makes a decent point. There is a lack of clarity on a range of issues. We want to encourage people to get on to their company’s cheapest standard direct debit tariff. We must try to ensure that bills are clearer, otherwise people will continue to pay too much for their energy.
Graham Jones (Hyndburn) (Lab)
I am concerned that some people with prepayment meters will not be able to switch to direct debit. What is the hon. Gentleman’s view on prepayment meters? People will load up and pay heavily on the meter in the winter, but budget and save in the summer. Under the green deal, payment rates will now differ, however. By the end of the summer, people may have a backlog in what is effectively a standing charge on the green deal.
Mr Baron
That is a fair point, but I would say in reply that we need greater clarity on bills on the availability of cheaper tariffs depending on payment method, which would include prepayment. We are not getting that at present. At best, we are getting generic messages saying, in effect, “You may be able to save money if you ring this number,” but the evidence suggests that such messages are not sufficiently strong to incentivise people to find the cheapest tariff. New clause 19 addresses that specific point.
In the Retail Market Review, Ofgem stated its disappointment that the energy suppliers have not abided by what it considers to be the spirit of its post-2008 Energy Supply Probe standards of conduct, and that they have not always made details about switching as prominent as they might—although some companies have gone further than others. Ofgem is therefore frustrated about the lack of progress in this area.
Having questioned both the previous and the current Governments about the need to do more in this area, I was pleased to see a coalition commitment that energy suppliers should provide information about cheaper tariffs on the bills and statements they send to their customers. In October last year, I sent a letter to the Secretary of State suggesting a solution to these problems, which involved energy suppliers printing clearly on customers’ bills how much money they would save if they were on their supplier’s cheapest standard tariff, assuming different payment methods. I felt that talking about pounds, shillings and pence—I was brought up in the pre-decimalisation era—sent a much stronger message than giving just general signposting information.
Discussions followed and in June 2011 I was invited by the Minister of State to chair a billing stakeholder group to make recommendations about the implementation of the coalition agreement commitment. The group comprised representatives from the Department, from ERA—the energy retail association, representing the energy suppliers—and from consumer groups such as Which?, Consumer Focus, Citizens Advice and Ofgem. Useful meetings were held over the summer and I thank all the members of the group for their contributions.
Tessa Munt (Wells) (LD)
I am particularly concerned and exercised about people who never receive a bill, particularly pre-payment meter customers or card meter customers. Of course, there is the opportunity to have a large message printed on the receipt printout that one receives when paying at an outlet, and I hope that that option is included in the proposals. Also, there may be the option of ensuring that people who pay in advance for the sake of convenience or because they have an erratic income might be given a clear definition of what they might save by moving to a standard tariff.
Mr Baron
My hon. Friend makes a good point and I shall come to that issue in relation to new clause 19.
Although ERA objected to the second proposal, the general consensus in the group was that the second, more tailored proposal was the way forward, because a message about potential savings in pounds, shillings and pence was thought to be more powerful than a simple signposting message. Ofgem acknowledged that this was in line with its direction of travel and cited research finding that customers are more likely to be interested in information that is personalised to their needs and circumstances. ERA was opposed to the second proposal for a variety of reasons—for example, that suppliers’ billing systems could not handle such a change in time for this winter and that they wished to wait for Ofgem’s retail market review findings.
Let me outline the recommendations from the billing stakeholder group. First, it accepted ERA’s view that the second proposal was not possible this winter. It was therefore agreed that energy suppliers should send out a letter to their customers—not an annual statement, because a lot of people do not get one—in time for this winter, clearly detailing the extent to which customers were overpaying or underpaying compared with that supplier’s cheapest standard direct debit tariff. Ofgem already requires this to be done once every 12 months, but has been disappointed by energy suppliers’ responses to date. We are asking not for anything new, but simply for something that Ofgem already requires energy suppliers to do. The group suggested that suppliers should send a letter rather than a text or e-mail because this is an important communication and such a system would allow consumer groups such as Which? to get behind the letter and mount a co-ordinated campaign to generate interest. Such groups have historically been very good at doing that and many of the stakeholders in the group, including Which?, would be happy to undertake such a campaign. An e-mail would be acceptable only for those already paying by online tariff. We thought the letter should be sent to all customers because even those already paying by direct debit may not be on that supplier’s cheapest standard tariff.
Mr Baron
If I may finish dealing with the two proposals, I will give my hon. Friend her chance again.
Secondly, it was agreed that the energy suppliers would introduce their idea of a generic signpost message on bills, again in time for this winter. Thirdly, it was agreed that the two proposals outlined—ERA’s generic signpost message and Which? and my more tailored message—would be market-tested to determine which was the more effective and how best to present such information to customers. Energy suppliers would abide by the conclusions, once researched, in time for the implementation by the winter of 2012-13. The amendments and new clause 19 reflect the group’s recommendations.
Tessa Munt
I wonder whether my hon. Friend’s proposals and discussions include a number of people who pay by direct debit. It noticeable—is it not?—that people can overpay by direct debit. They might be on the cheapest tariff, but the arrangement in place involves high regular payments. Energy companies never hesitate to contact us to let us know that we should pay more, but I have never been contacted to say that I am paying too much. We need to get a grip on that, because it affects people who do not necessarily understand the fantastically complex information that is sent out on bills, and there is a lack of fairness.
I should like to draw out a point about estimated bills. I met members of various energy companies last week, and they have no idea how many people receive estimated bills. Those who have received estimated bills for a year and are billed now for the outstanding amount will pay the new, inflated prices.
Albert Owen (Ynys Môn) (Lab)
I apologise for coming in and out of the debate because, like many other hon. Members, I have had to deal with other issues. Does the hon. Gentleman envisage his amendment covering people who are off-grid who are not protected by Ofgem and have difficult suppliers? Indeed, their supplies can be cut off at short notice. We are dealing with people who are connected to both gas and electricity mains, but more than 4 million households are not on the grid. Those people can be highly vulnerable and experience the greatest fuel poverty.
Mr Baron
I thank the hon. Gentleman for making that point. I hope that there will be no discrimination in how the information is presented. It is as simple as that. Bills go out to everyone in the land, and the information would be pertinent on those bills. Again, the research would ensure that we reached all sectors of our communities.
Guy Opperman (Hexham) (Con)
Does my hon. Friend agree that the clarity of bill point that he is making eloquently and well would not necessarily be of use without clarity of ownership? He will be aware that a multitude of companies supply heating oil, which we debated in Westminster Hall in January this year, but the market is dominated by one monopolistic company—DCC Energy—which is being investigated by the Office of Fair Trading. Does he agree that the proposal should include clarity of ownership, so that proper price comparisons can be made?
Mr Baron
My hon. Friend makes a fair point. Undertaking market research into the two proposals and getting energy suppliers to abide by the findings of the research in time for next winter would have the advantage of making it much easier for a customer to get a figure from their company, based on their actual usage, because the message would be tailored. That would make comparisons with other companies much easier. At the end of the day, all we can do in the House is legislate to try to help consumers as much as possible to gain the necessary information for them to make informed choices. If they have that information, direct comparisons with other companies could help competition and consumers generally.
Mr Weir
To pursue the point made by the hon. Member for Ynys Môn (Albert Owen), does the hon. Gentleman not accept that the real problem with the off-grid market is the fact that there are no differential tariffs, as there is a set price for oil and gas? There are no social tariffs as there are for gas and electricity, so does he agree that that must be tackled before his excellent proposal could take effect in that market?
Mr Baron
The hon. Gentleman has a point, but his proposal goes only so far. My problem is that energy bills are far too complex. I want to set hon. Members’ minds at rest: I do not stay up at night studying my energy bills, despite what Ministers think, although I might create the impression that I spend my time doing nothing else. The essential information is often contained on one page, followed by five or six pages of bumpf which compares usage with neighbourhood usage, and even usage overseas and so on. It is a lot of nonsense. What we want is clear information to cut through the 300 existing tariffs, which can be confusing. We need greater clarity, and there is no better way of getting that than making sure that we have information on a bill that says in pounds, shillings and pence how much would be saved if that customer was on the company’s cheapest standard tariff, taking into account actual usage and payment method. If that information was clearly laid out in no more than four or five lines, we could cut to the quick very easily indeed.
Before I accepted a series of interventions—hon. Members were right to make them and I hope that I have answered their questions—I described the three proposals suggested by the billing stakeholder group: two for this winter, the letter and the generic message; and one for next year, which would be an obligation on suppliers, following research on which is the clearest message, to put that in place for winter 2012-13 . Ofgem supports the billing stakeholder group’s general direction of travel, but I am aware that it is about to publish detailed proposals, following consultation, as part of its retail market review. One measure that it is considering is increased prescription on suppliers’ communications with customers in bills and annual statements. Having discussed that with the Minister, I understand that he has asked Ofgem to publish its findings before Christmas. He and I have therefore agreed that we will wait to see what those findings are before the billing stakeholder group and the Minister consult on whether Ofgem’s recommendations go far enough. If not, the third recommendation, in subsection (c) of new clause 19 will be triggered.
I therefore seek assurances from the Minister that the recommendations from the billing stakeholder group, as reflected in the new clause, will be agreed by the Government, with the qualification that we await the findings of Ofgem’s proposals in December this year before deciding whether to trigger subsection (c). The Minister has kindly indicated in previous discussions, following my letter to him of 8 September this year containing the stakeholder group’s recommendations, that he supported the proposals—something that I very much welcome, and for which I thank him. I therefore look forward to his response.
Graham Jones
I should like to speak to amendments 24, 23 and 25, which deal with the registration of information with landlords, and amendment 47, which would bring forward the date on which the standard came into force from 2018 to 2016.
I am pleased to make a contribution to this vital debate, and I thank my hon. Friend the Member for Liverpool, Wavertree (Luciana Berger) for tabling the amendments on landlord registration, as they are important for constituencies such as Hyndburn. The problems that parts of the country such as mine have in trying to comply with any form of action must be appreciated.
During the summer recess, many hon. Members enjoyed the less than balmy summer statistics released on fuel poverty. They show that far too many of our constituents dread the coming of winter because it will mean living in a home that is cold and damp, and the daily choice between whether to turn on the heating or to go without food or other essentials presents itself. Official statistics show that, in 2009, 5.5 million households in the UK could not afford to heat their home to a reasonable level and lived in fuel poverty. My constituency has a worse than average level of fuel poverty, with 7,352 households—one in every five—living in fuel poverty. This summer also brought the dreadful news that the big energy companies are to push up their prices even further, which will increase those numbers. It will result in more misery for the people in my constituency. Citizens Advice handled 104,000 fuel debt inquiries last year.
The worst conditions are too often found in properties rented by landlords. The most recent English housing survey found that more than 40% of private rented homes were not of a decent standard compared with 27% of local authority housing. Some great work on conditions in the private rented sector is being done by charities such as Shelter and Crisis, but we must do more. Last week, tenants in privately rented homes came together to form the national private tenants organisation, a move that I warmly welcome. It certainly has my support. They deserve the attention of the Minister for Housing and Local Government, who seems unable to hear anything but the voices of the landlord lobby. Almost as soon as he stepped through the door of the Department for Communities and Local Government, he declared:
“With the vast majority of England’s 3 million private tenants happy with the service they receive, I am satisfied that the current system strikes the right balance between the rights and responsibilities of tenants and landlords.”
Albert Owen
It is a pleasure to follow the hon. Member for Hexham (Guy Opperman). I welcome him back to the House. He is in good campaigning mode on fuel poverty and off-grid fuels in peripheral areas of the United Kingdom. I support new clause 1 and the other Opposition new clauses and amendments, but I shall limit my remarks to new clause 19, tabled by the hon. Member for Basildon and Billericay (Mr Baron). He highlighted in his opening remarks how important energy issues are to households and how the price hike of recent months and the trend that is forming are hurting every household in the United Kingdom. That is something that we need to address.
Good measures have been taken by previous Governments and, indeed, this Government with social tariffs, but the market simply does not work for many people. The price hikes are unsustainable, hurting and causing fuel poverty across the country. I welcome new clause 19 when it talks about clarity and simplifying bills, so that people have ready information.
I am glad that the Minister of State, Department of Energy and Climate Change, the hon. Member for Bexhill and Battle (Gregory Barker) is still on the Front Bench. He is on record as saying that he was so confused by the information available when he tried to switch supplier that he just gave up. I am in the same league as him. Energy companies deliberately give so much information to their potential consumers and customers that they do not bother.
I am a member of the Select Committee on Energy and Climate Change. We have held a number of inquiries and a mini-inquiry when price rises were announced just before the recess. We took evidence from three of the big six companies. There has been a review and there will be further reviews of energy pricing and tariffs and how the companies present their bills. It was interesting that 40% of those who decide to switch supplier are no better off when they do so, and many of them do so under duress; they switch just to get rid of cold-callers. So it is important that we have such a clause as well as other legislation and regulations that allow individuals to have clear and concise bills, so that they can make clear and concise choices and, we hope, reduce their energy prices, thereby reducing fuel poverty.
We will extend the retail market inquiry being undertaken by the Department of Energy and Climate Change to find out more from experts, including consumer groups, which have been helpful. I join hon. Members in putting on record my appreciation of the work done by consumer groups, such as Which?, Consumer Focus and Citizens Advice, in helping to frame proper protection guidelines for energy consumers.
The confusion needs to be addressed, and new clause 19 would go some way to doing so. When I intervened on the hon. Member for Basildon and Billericay to ask whether he would expect the measure to be extended to people off-grid and not on the mains, he said that he would. Of course, such an extension would be difficult because, as has been said in the previous contribution, the off-grid is not a regulated market. I am not sure—I am willing to take an intervention—how he envisages that independent suppliers would do what would be required of the big six, with dual tariffs and so on. Obviously, people without gas supplies cannot get the dual tariffs or other reductions that many people have.
Albert Owen
I am grateful to the hon. Gentleman for the spirit in which he made his intervention. However, I think that that would be difficult. For some time, I have suggested—the Bill may not be exactly the right place to deal with this, but the electricity market reform White Paper is looking at it—that the regulator should look after people who are off-grid so that they have the same protection and rights as others. As has been said on numerous occasions, people in hard-to-reach areas on the periphery have the greatest need and are in the greatest fuel poverty. They are often off the mains, so they need equal if not better protection than people with access to mains gas and electricity.
Gregory Barker
I broadly support those recommendations, although we might have to address some of the detail, such as the nature of the communication. We want to ensure that we have the best possible advice. However, I am happy to confirm that we are on exactly the same page in broadly supporting the three recommendations my hon. Friend has made.
In summary, although I am sympathetic to the well intentioned principles behind many of the amendments, and I apologise if I have been unable to speak in detail to some of them, I hope that the hon. Members for Liverpool, Wavertree, for Ogmore, for Rutherglen and Hamilton West, for Southampton, Test, for Brighton, Pavilion, and for Gower, and my hon. Friend the Member for Basildon and Billericay, have found my reassurances, explanations and commitments satisfactory, and that they consider not pressing their proposals to a Division, given that we have moved a long way since the Bill was first published—
Chris Huhne
I am grateful to the hon. Gentleman for his intervention. The bulk of the Bill is about energy efficiency and energy saving, which means that we will need fewer types of electricity generation of all descriptions, including windmills. I disagree with him, as I think that windmills are beautiful and we should have a lot more of them. They provide the most economical form of renewable energy, and I trust that he will come up with ideas for many more windmills in and around his constituency.
There are provisions in the Bill for a new energy company obligation, or ECO, which is critical for delivering carbon savings in homes that are hard to treat. It will protect the most vulnerable groups and those on the lowest incomes, focusing on households that cannot afford to heat their homes adequately. The provisions relating to the private rental sector are a significant step forward. They are designed to increase efficiency to protect tenants in some of the worst housing and to boost overall carbon savings.
The Bill contains a number of provisions relating to energy markets and infrastructure. It ensures that I will have sufficient information to publish an assessment of future electricity capacity requirements, and that I have a duty to do so. That sits alongside the much more significant package of reforms covered in the electricity market reform White Paper. To improve security of supply, the Bill contains powers that, if taken, will give incentives to gas providers to continue to supply their customers, should Britain suffer its first gas supply emergency. Through this Bill, we will be able to de-designate areas of our continental shelf—a small but important amendment to the existing legal situation. Should negotiations between industry players over access to infrastructure in the North sea break down, the Bill gives us the ability to intervene and work to find a resolution, so that our energy security will not suffer.
The Bill contains powers to ensure that the interests of consumers are paramount. For example, we have taken powers to oblige suppliers to specify whether a cheaper tariff is available.
Mr Baron
On that issue, may I congratulate the Secretary of State and the Government on accepting the recommendations of the billing stakeholder group and, indeed, the need for a letter, where appropriate, provided that it is supported by a campaign by Which? and others, to make consumers aware of the cheapest tariffs? However, does he share my view, and that of the Minister of State, Department of Energy and Climate Change, my hon. Friend the Member for Bexhill and Battle (Gregory Barker), that Ofgem should publish its findings from the consultation on the retail market review before Christmas this year?
Chris Huhne
I am grateful to my hon. Friend for his intervention. The ministerial team is pressing Ofgem to move further and faster as quickly as possible on all of this, and I very much hope that it will be able to come forward with conclusions before Christmas. Clearly we are then getting into the period before the highest energy bills, and it is important that consumers should have access to that information and to those potential safeguards. I will certainly be pressing Ofgem to do that.
These measures are accompanied by a number of minor yet vital provisions in the Bill that we need to make to secure our supply of low-carbon energy, and I am grateful to the House and to Members in the other place for taking the time to scrutinise and contribute to the Bill. It has a substantial measure of support across the House, despite the differences that we have had. I certainly pay tribute to Opposition Members. This is one of those cases where success has many parents and, as we all know, failure is an orphan. I hope that bodes well for the success of the Bill when it comes to improving dramatically our energy efficiency.
We have here the keys that will unlock the door that stands in the way of an energy efficient and energy secure Britain, and I commend the Bill to the House.