Domestic Gas and Electricity (Tariff Cap) Bill

Lindsay Hoyle Excerpts

Wednesday 18th July 2018 Commons Chamber

[The Minister for Energy and Clean Growth (Claire Perry)]

I beg to move, That this House disagrees with Lords amendment 1.

[Mr Deputy Speaker (Sir Lindsay Hoyle)]

With this it will be convenient to take Government amendment (a) in lieu of Lords amendment 1.

[Claire Perry]

As Members will know, the Bill has received very broad and strong cross-party support during its passage through this House. I thank all of those who have spoken, who have worked behind the scenes, who have lobbied and who have voted for a very important piece of legislation. I repeat my thanks to the hon. Member for Leeds West (Rachel Reeves), who is not in her place, for her excellent stewardship of the Business, Energy and Industrial Strategy Committee, which contains Members from all parties, and for her continued support on the Bill. The Committee did some excellent work during the Bill’s pre-legislative scrutiny.

I also extend my thanks to the hon. Member for Southampton, Test (Dr Whitehead) and the Labour Front-Bench team for their extremely constructive approach to this Bill and for helping us to develop an amendment that we will come on to debate in a moment.

First, we must consider the amendment that was made in the other place about what will be done to protect consumers when the price cap comes to an end. That is an extremely important question. As the Government have made clear, the price cap is a temporary intervention to protect consumers on standard variable and default tariffs while other reforms continue apace to bring about the conditions for effective competition in the retail market. I understand the concerns, which have been raised by Members from all parts of the House and by Members in the other place, that there is a risk that some features of the market may remain that will need to be addressed. For instance, as the energy market is reformed, it is absolutely vital that the protection of vulnerable customers in this market is kept under review, and action taken if necessary to afford those customers the protections they need.

There are also concerns about the possible return of practices such as tease and squeeze, which is essentially enticing people onto cheap fixed tariff deals only to move them on to higher tariff deals when the fixed period ends. I agree wholeheartedly that we must seek to end those practices. However, introducing a requirement such as the Lords amendment seeks to do, which essentially commits us to an indefinite price cap, is not the appropriate solution. Instead, the Government propose amendment (a) in lieu of the Lords amendment, which will ensure that Ofgem must conduct a review before the end of the price-cap period into the pricing practices of suppliers and, in particular, identify whether there are categories of customers who are currently paying, or who may in future be at risk of paying, excessive charges for standard variable and default tariffs.

In reviewing the practices of suppliers and identifying whether consumers are paying excessive charges, the regulator must consider whether there are consumers who will be excessively negatively affected when they move from fixed rates to standard variable tariffs—the tease and squeeze problem—and also whether vulnerable customers continue to require protection. If it is the regulator’s view that protections are indeed required, the amendment says that necessary steps must be taken to provide those protections, using a broad set of existing powers under the Gas Act 1986 and the Electricity Act 1989.

It is the Government’s view that amendment (a) therefore futureproofs something that we all care so strongly about in this place—the protection of consumers from excessive charges, particularly on SVT and default rate tariffs—and rightly provides in the Bill the necessary impetus and discretion to the regulator to consider the most appropriate response to those excessive tariffs under its existing powers.