Energy Prices and Profits

Lindsay Hoyle Excerpts

Wednesday 4th September 2013 Commons Chamber

[Barry Gardiner]

The Secretary of State knows full well that what he is saying is disingenuous. When Labour created the new electricity trading arrangements, we were moving from two major companies to six. When it created the British electricity trading and transmission arrangements, it expanded the transmission arrangements as well. When it introduced Ofgem, it was introducing a regulator into a competitive situation. He knows full well that in 2007 and 2008, when the Leader of the Opposition was the Secretary of State for Energy and Climate Change, energy prices were going down. It is in the last few years that they have rocketed by 41%. All the accusations that he has just made are phoney and he knows the reality.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. The hon. Gentleman has been in this Chamber long enough to know that he should be asking a question rather than making a speech.

[Mr Davey]

I was not making phoney accusations, but giving the facts and the history. Labour may want to run away from its history, but we will hold it to its record.

Before I talk about the action that I and the Government are taking to help consumers, let me return to Labour’s three-point plan, having already demolished its first proposal to abolish Ofgem. The House might like to note that the abolition of Ofgem is not recommended by the Energy and Climate Change Committee.

Labour’s second proposal is to drop Ofgem’s long-awaited reforms of the wholesale energy market in favour of reintroducing the pool. It was Labour that abolished the pool just over 10 years ago, as my hon. Friend the Member for Sherwood (Mr Spencer) reminded the House, at an estimated cost of £1.4 billion. Labour said that is was not working—wait for it!—in the interests of consumers. Apparently things have changed. However, under the policies that Labour put in place after it abolished the pool, things have not got much better. Labour’s abolition of the pool produced the vertically integrated energy markets that we see today. Independent generators find it tough to get into the wholesale market because of the changes that Labour made. Independent suppliers do not find the wholesale market competitive enough to supply their customers. Electricity prices are therefore likely to be higher than they should be.

The Government and Ofgem want to fix Labour’s mistake. We do not want to reintroduce the pool, because that would be an expensive distraction and would not tackle the real problem, which is liquidity in the forward markets. We are going to tackle that with a well thought through package that is designed to drive competition to help consumers. Ofgem’s “secure and promote” proposals include the idea of a market maker and mandating the six vertically integrated companies—the big six—to publish the prices at which they will buy and sell up to two years in advance. That will help independent suppliers and large power producers.

As Secretary of State, I want to be sure that such reforms by the regulator work and have teeth, so that they drive competition. That was why I introduced into the Energy Bill reserve powers to act should Ofgem’s reforms not work. In other words, whereas Labour wants to go back to a failed policy that it got rid of itself, we are taking the tough measures needed to boost competition and help the consumer.

--- Later in debate ---

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I must reduce the time limit to six minutes to get everybody in.