Energy Company Licence Revocation

Julie Hilling Excerpts

Wednesday 3rd September 2014 Commons Chamber

[David T. C. Davies]

Yes, please do take note. People should not think I am saying anything now that I have not said before. Indeed, I more or less said it a few months ago at a meeting with the Global Warming Policy Foundation at which the hon. Member for Blackley and Broughton (Graham Stringer) was present. I am absolutely not going to hide my views on this.

Most Members are completely wrong on energy policy because they have all bought into the idea that we are going to suffer runaway global warming, and the reality is that that is not happening. We are being told to look at the evidence. The evidence is clear: there has been no increase in temperature since 1997. We are told that in the 1800s we started putting carbon dioxide into the atmosphere, which is of course true, that carbon dioxide is a global warming gas, which is true, and that therefore CO₂ has been responsible for the very small increase in temperature that has taken place since then. However, if one looks at the evidence, one can see that there has not been a straightforward rise in temperatures; they fell between 1940 and 1970. That proves that something else was affecting them. As we started to industrialise, we were coming out of a particularly cool period that climatologists call the little ice age, so there had to be some increase in warming anyway.

Since 1997, as I said, there has not been any increase in temperature. That proves beyond all doubt that something other than carbon dioxide is affecting the climate, and nobody can say what that is. Nobody has been able to tell me what it is, and I have had meetings with people at the Met Office and all sorts of other people. It is therefore foolish of us to levy on our industries all sorts of taxes and subsidies that are affecting manufacturing and pushing up prices for home owners, and then to try to put all the blame on to the big six energy companies, as we are doing now, using them as a kind of whipping boy for the sins of those of us who have bought into the big green theories.

[Julie Hilling (Bolton West) (Lab)]

Does the hon. Gentleman agree that it is equally foolish to say, “It doesn’t matter then. We’re not quite sure why the climate is changing, so we’ll carry on pumping out CO₂ and pollutants into the atmosphere without any concern about what we’re doing to the world, because maybe, just maybe, it’s not having an effect”? Maybe it is having an effect? Is it not equally foolish to do nothing?

[David T. C. Davies]

Maybe it is and maybe it is not. Maybe, as the Prime Minister has suggested, we should be looking at dealing with antibiotics and the rise in diseases that are resistant to them. Maybe we should be doing something about a comet strike, which may or may not happen. Maybe we should be worried about a complete economic collapse—which, incidentally, is made far more likely by the policies of spending money that we do not have that are propagated by Labour Members. That is far more likely to keep me awake at night. Of course, we should also be very concerned about terrorism.

--- Later in debate ---

[Julie Hilling (Bolton West) (Lab)]

I do not intend to detain the House for long because I am not an expert on energy regulation. However, I want to support the motion because of my constituents’ great concern about the way they have been treated by energy companies and the rise in energy prices.

This goes back in time, because I was one of those who agreed to change their supplier after a doorstop seller convinced me not only that I would be better off getting both my gas and electricity from one supplier, but that the new supplier—unlike my supplier at the time—would not raise its prices. I therefore swapped, and guess what? A few weeks later my new supplier put up its prices as well.

I accept that when shoddy practice has been exposed, changes have been made, either by legislation or by fining the companies concerned. Clearly the current powers to fine companies are not working. If they were, companies would not be repeating their offences, and we would not have to continue to fine them time and again for exhibiting the same behaviour.

I was confused by the Secretary of State’s speech. He said the regulator had the powers we were asking for, but then said what we were asking for was wrong. Both cannot be true. I can only assume, therefore, either that he is protecting energy companies and their abusive behaviour, rather than getting a grip, or that he has been misled about what is in place and what we are asking for. It seems the Government think it okay for energy companies to break the rules again and again and for the supplier to pay the fine and wipe the slate clean. Why will he not agree that a company that persistently breaks the rules should know that its licence is on the line? The Pennsylvania Public Utility Commission has the power to revoke a supplier’s licence when it breaks consumer protection law. In April, its chairman, Robert Powelson, warned that as many as seven suppliers could lose their licence as a result of unscrupulous or fraudulent business practices. Why will the Government not agree that that is exactly the sort of tough regulatory approach that my constituents and every other consumer in Britain would benefit from?

As others have said, over the past 13 years, the regulator has imposed at least 31 fines worth at least £90 million, and more than a dozen investigations are still on the stocks. If fines alone are not enough of a deterrent to make energy companies treat their customers fairly, we need to take further action. Why should energy companies be able to behave in the same way time and again and only face the same fines? If the Secretary of State is correct that such a company could have its licence revoked, why does he oppose our motion explicitly stating that a company treating its consumers poorly could have its revoked? I do not understand his opposition. If he says the power exists, why does he oppose an explicit reference to it? I can only conclude that a company continuing to abuse its customers would not have its licence revoked under the current system.

The Government hide behind the power of the consumer to swap supplier. First, not all consumers can swap. If they are in debt, they cannot switch unless they pay off their debt, but if they could pay off their debt, they would not be in debt, so that seems to be nonsense. Perhaps more importantly, if we do not have robust policies to stop such behaviour, how can a consumer ensure they will not face exactly the same problems with their new supplier? Already, some people cannot afford to heat their homes. A constituent visited me a few weeks ago in my surgery to talk about her situation. She was recovering from cancer and had chronic obstructive pulmonary disease, but she was terrified of turning on her heating because of the exorbitant energy cost. This woman, who was recovering from a serious operation and had a serious, long-term condition, was sitting in a cold, damp house out of fear of getting into debt.

Since the last election, energy bills have risen twice as fast as inflation, four times faster than wages and faster than in almost any other developed country in the world, which is why we need the price freeze and market reform that Conservative Members reject. Funnily enough, the energy companies do not like the notion of a price freeze either—of course, they want to continue driving up their profits and exploiting energy consumers. It is time the House did something about it, and that is our commitment. I look forward to a Labour Government next May saying, “We will freeze energy prices. You cannot continue to abuse consumers like this.”

I and my colleagues in the Labour party are not against energy companies, but we are on the side of consumers. Fines are not stopping the abuses by companies and simply get passed on to the consumer anyway. Surely, it makes sense to provide the regulator with a power to revoke the licence of energy companies responsible for deliberate and repeated breaches of licence conditions that harm the interests of consumers. Good companies have nothing to fear; bad ones will have to change their practices or face the ultimate sanction. I believe the motion should be supported by both sides of the House.

[Heather Wheeler (South Derbyshire) (Con)]

I rise to speak because South Derbyshire is one of the fastest growing districts in the whole of the east midlands, and probably in the midlands and the whole country. One thing driving that growth in our economy is the massive manufacturing in our patch, and that is reflected in our need for more energy provision. We have given planning permission for two new power stations, and lots of conversations are being had with the people who are going to build them—some of the companies have been mentioned already, but others are new.

Why put at risk that growth and new build, those jobs, that fantastically efficiently produced new energy, that amazing amount of new income and regeneration, this amazing opportunity for new jobs and greater investment and confidence in an area with a superb history of coal production—not to mention the industries that went with it, such as clay, potteries and so on? Now we have car and other manufacturing industries, food and engineering industries—Rolls-Royce, JCB, Futaba; I could name so many, but I do not need to. Why risk all that by dangling this carrot of super new regulation? Why put at risk this incredible opportunity for new investment in South Derbyshire? “Nothing happened in 13 years. We didn’t get it right then. You’ve had four years and you haven’t got it right either”—that is the sort of tit-for-tat gesture politics that business people do not understand and which makes them so angry.

[Julie Hilling]

I do not understand the hon. Lady’s argument. Is she saying that new companies will not come into the market for fear of losing their licence if they abuse their consumers? Presumably, no company wants to enter the market believing it will abuse its consumers.

[Heather Wheeler]

I wish the hon. Lady was speaking from the Opposition Front Bench. The difficulty is we have not been told in what circumstances the Opposition Front Bench team would impose this regulation. They have not given us any examples—[Hon. Members: “Yes, we have!”] No, no, we have not had a direct example. They have been asked two or three times. Will the shadow Secretary of State give us some examples?

--- Later in debate ---

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

Following the excellent speech by our shadow Secretary of State, this debate wandered into the metaphysical question of whether a power of revocation exists or not, and, if it does exist, in what way it is demonstrated. The point that those of us on the Labour Benches have made very clearly—and which will resonate outside this place—is that such a power needs to exist and that a system of escalation needs to be put in place so that certain companies, whether in the energy industry or any other sector of the economy, can be held to account for their actions and behave within the regulations. It is the old philosophical debate between those of us on the Labour Benches and those on the other side of the House. We want regulation; they consistently argue against it—in particular, prior to the 2007-08 financial crash, when they were asking for less regulation in financial services. [Interruption.] I thought I would just throw that one in to provoke debate.

If we are talking about vacuous or tokenistic politics, as the hon. Member for South Derbyshire (Heather Wheeler) was, I would like to read out a few things that the Prime Minister has recently said on this question. For example, at Prime Minister’s questions in October 2012, he announced that he would be legislating to require energy companies to put all their customers on the lowest tariff, saying:

“We have encouraged people to switch, which is one of the best ways to get energy bills down. I can announce, which I am sure the hon. Gentleman will welcome, that we will be legislating so that energy companies have to give the lowest tariff to their customers”.—[Official Report, 17 October 2012; Vol. 551, c. 316.]

The Prime Minister has since repeated that promise 12 times. However, the Government’s own Energy Act 2013 gives the Secretary of State the power to require a supplier to change a customer’s tariff only when a customer is on a closed tariff. As a result, only people who are on dead tariffs—which are the most expensive and more expensive than the standard evergreen tariffs—will be moved to a cheaper tariff. Based on figures provided by the big energy companies, that is estimated to affect less than 10% of people. If we are talking about meaningless gestures or tokenism, I would highlight that as a prime example, but there is more.

[Julie Hilling]

Before my hon. Friend moves on, will he acknowledge that if everybody had to be on the lowest tariff, there would only ever be one tariff, which would always be the lowest, even though it could be much higher than the current low tariffs?

[Tom Blenkinsop]

Yes. I totally agree with my hon. Friend.

In December 2013, the Government announced changes to green levies on energy bills. The Prime Minister repeatedly claimed that that would save all consumers £50 on their energy bills. He told the House:

“It is on this side of the House that we have delivered the £50 off bills by rolling back the cost of the green levies.”—[Official Report, 12 February 2014; Vol. 575, c. 846.]

On another occasion he said:

“we have also cut energy bills by £50 by rolling back the cost of some of the green measures”.—[Official Report, 22 January 2014; Vol. 574, c. 300.]

However, much to the Prime Minister’s consternation, four of the big six energy companies—npower, Scottish Power, E.ON and EDF—refused to pass on the full £50 reduction to customers on fixed-price deals. In January 2014, the Government said that if the energy companies failed to pass on the savings of the changes to the green levies, that would not be acceptable. Indeed, the right hon. Member for Bexhill and Battle (Gregory Barker) told the BBC’s “You and Yours” programme that he was unaware that some suppliers were not passing on the reduction and that this “would not be acceptable”.

Despite that, the Government have taken no action to force energy companies to pass on those savings to customers on fixed-price deals, with an estimated 3.8 million households missing out on the Prime Minister’s promised £50 saving as a result. Furthermore, the Government’s own figures show that the energy companies should be cutting their prices even further, after the big six saved more money than first thought from the reductions in green levies. In their response to the consultation on the future of the energy company obligation, the Government admitted that the changes to the scheme were likely to mean that the energy companies would make more money. In fact, their document, “The Future of the Energy Company Obligation: Government response to the 5 March 2014 consultation”, says:

“ECO companies are likely now to be in a position to make greater savings than they had originally projected in December.”

However, rather than setting out concrete plans for how they would recoup those savings, the Government merely invited the energy companies to let them know.

Let us look at another area. Under this Government, fuel poverty is most definitely getting worse. The latest annual poverty statistics report shows that the number of households in fuel poverty is projected to increase to 2.33 million in 2014, while the average fuel poverty gap—the difference between people’s bills and what they can afford—has grown to £480 in 2014.

There are a number of areas, which I have highlighted, that show where the Government could now be taking action far more stridently. The argument being made by Labour Members is about having a power of revocation as a final threat or market check. As I have always said—and as I am sure many of my Labour colleagues believe too—the market makes a fantastic servant, but a terrible master. At the moment, the market, in whatever dimension and by whatever name—I would probably hazard the description “oligopolistic”, rather than “free market”—is behaving in an oligopolistic manner and needs to be held to account far more appropriately.

I remind hon. Members that Labour is making that argument, while those on the Government Benches are arguing for the status quo. Indeed, I would be interested to know whether any Government Members would be prepared to engage in a similar debate—not just in this House, but on the doorsteps in their constituencies—because I imagine that if their average constituent was told about the content of the argument they have been making, they would look at them far more sceptically at the next general election.