Government Levies on Energy Bills

John Redwood Excerpts

Monday 3rd March 2014 Commons Chamber

[Mr Yeo]

I thought that the Minister was a bit like Oscar Wilde, who could resist everything except temptation, but perhaps he will resist it on this matter. I understand why the floor price policy was introduced, but it does not cut greenhouse gas emissions by a single kilogram, and it raises the costs of British business. If the Treasury’s priority is to help Britain to become more competitive, it is slightly bizarre for it to insist on that policy. There are of course now widespread rumours that we will soon hear that the floor price for carbon will be frozen, instead of going ever upwards. If that is the case, the sooner that it is made clear, the better.

[Mr John Redwood (Wokingham) (Con)]

Given the mounting pressure generally from industry across Europe against very high energy prices, which forces investment outside Europe, does my hon. Friend think that the whole European framework on carbon is due for substantial amendment?

[Mr Yeo]

I cannot go down the route suggested by my right hon. Friend and remain within the scope of this debate, but I simply say that it is in everyone’s interest to make the European Union emissions trading system work more effectively. If it did, there might be no need for the floor price for carbon anyway. An EU-wide carbon price driven by a trading mechanism would at least be even-handed in its impact across the 28 countries of the EU, and it would not place a special burden on Britain in the way that the floor price for carbon currently does. I therefore urge the Minister to throw Britain’s full weight behind efforts being made to make the EU emissions trading system work more effectively.

In conclusion, I draw attention to my Committee’s recommendations about how the Department should report to Parliament on the cost of all schemes funded by the levy control framework. I hope the Minister agrees that accepting the recommendations would boost confidence in the Government’s readiness to seek value for money from levy control framework funds and to be transparent about decisions. As I have mentioned, the present system of renewable obligation certificates is pretty hard for most consumers to understand; feed-in tariffs, contracts for difference and the whole levy control framework should be easier for the public to comprehend. The establishment of the levy control framework was a positive and helpful development, but I am sure that my right hon. Friend recognises that exercising effective parliamentary scrutiny on how those very substantial sums of money will be spent is essential for public confidence. I commend my Committee’s report to the House.

--- Later in debate ---

[John Robertson]

The hon. Gentleman makes a very good point. I have always felt that the amount of information that goes out to the ordinary person in the street when he opens his gas and electricity bill is either too complicated for him to understand or too simple and does not provide enough information. The Government have to ensure that people are educated. I am not talking only about the education of the general public, but about the education of the energy companies. They need to understand exactly what their job is in relation to customers. Yes, they are there to make money and to deliver electricity and gas, but they forget that they are dealing with real people—real people’s lives and jobs.

There has to be stronger control of the companies. If we are to take money through the levies, we need to ensure that it is spent properly and, to go back to the Treasury’s statement, that it is used to look after people in fuel poverty. We need to make it easier to show that the energy companies are trying to pull the wool over our eyes.

[Mr Redwood]

Does the hon. Gentleman not understand that the main reason that the bills are so high is the adoption of low-carbon technology? It is not the gross profits of the companies but the low-carbon technology that is pricing us out of markets and creating high bills for consumers.

[John Robertson]

The right hon. Gentleman and I have bandied a few comments between ourselves over the years. The simple answer is that I just do not agree with him. I think he is wrong. He should look at the big picture and not just at one side of the equation. There are always two sides to an equation, with an equals sign in the middle. Both sides have to be looked after, otherwise there is an unfair balance. That is what we have at the moment.

The levies make up £112 or 9% of a bill. However, bills have gone up by £300 in the past three years. Energy companies often blame the levies for the increase. An example of that is npower’s patronising propaganda in its “Energy Explained” document of January 2014, which blamed levies and even the public for the increase. Its chief executive, Paul Massara, said:

“The actual unit price of energy in the UK is one of the lowest in Europe—but bills are high because British houses waste so much energy.”

That comes from a company whose executives get a fortune in bonuses. They do all right from their company, but at the end of the day, vulnerable customers cannot afford to pay their bills, let alone install energy efficiency measures.