Domestic Gas and Electricity (Tariff Cap) Bill

Lord Carlile of Berriew Excerpts

2nd reading (Hansard): House of Lords
Tuesday 22nd May 2018 Lords Chamber

[Lord Carlile of Berriew (CB)]

My Lords, it is a pleasure to see that the noble Lord, Lord Young of Norwood Green, has arrived lately in his place. I am sure that he will acknowledge, however, that his recent arrival means that it is appropriate that I should speak now.

I start by declaring a relevant but past interest, having spent eight years as the chair of the Competition Appeal Tribunal. In that context, we used to debate on a very regular basis the difference between judicial review, which was not the standard by which the tribunal was making its judgment—the same applies now—and the merits-based appeal, which is the standard by which the tribunal reaches its decisions. I will have a little more to say about that later without, I hope, repeating what has already been said.

I support the principle of this Bill, subject to suitable scrutiny procedures being in place on a merits assessment. I take the points made by the noble Lord, Lord Redesdale, who said that this was plainly a politically motivated Bill, which was designed to give advantage to the Government. I am sure that the noble Lord would agree that most Bills have a political motivation. The Government are sending out a hostage to fortune, because the people will be expecting their power bills not to rise, in real terms, as a result of this Bill. If the Government let the public down in that regard, the voters will, no doubt, make their judgments on a very visible, tangible issue.

Consumers have been faced with substantial increases in energy prices. I suspect that the price increases announced last week may have had the consequences of the Bill partly in mind. The proportionality that energy costs have to average earnings is an important measure of the economic relationship between the state and its citizens. This applies especially to those who are responsible for the upbringing and care of families and to the elderly—the cohort so nobly represented in your Lordships’ House. Fuel poverty is not only a sign of a poorly organised country, it is also a basic and justifiable cause of political discontent.

The public’s dissatisfaction with energy companies is compounded by their poor performance. It happens that, last Saturday morning, I noticed in my inbox an email from npower, the company that supplies gas and electricity to my home. It set out very clearly—because it has to—that I could save a few hundred pounds a year if I moved on to another tariff. Later that day, thinking that I could save myself that money, I went on to the npower website. I got one of those responses that reads something like: “Oops; there seems to be something wrong with our website”. I left it for an hour or two and tried again, and “Oops” appeared. In the early evening, I tried again and “Oops” appeared, so I left it. On Sunday, I went to the npower website and no “Oops” message appeared. It was possible for me to go on to a site which told me clearly that I could save a few hundred pounds a year on my gas and electricity combined. I looked very carefully for the button that said something like: “Do it now”, but there was no such button, though it was well within its power to produce one. I then embarked on a parlour game, or obstacle course, depending on the view you take, and eventually, after having two cups of tea while trying to get through the exercise, I was, thankfully, able to reduce my energy costs by a few hundred pounds. However, if I had not been determined, bloody-minded and reasonably good at dealing with computers, I may well not have been able to do that.

Those very cohorts which I mentioned earlier are not being given the opportunity by the energy companies to reduce their prices as easily as possible. That means that those companies are canny about what they can do. They will take every point at their disposal, and that brings me directly to the appeal process. I said earlier that I have relevant experience, through being a member of the Competition Appeal Tribunal. The existing appeal regime enables parties to challenge decisions of sector-specific regulators, in front of a specialist body—in this instance, the CMA—and, as the noble Lord, Lord Hunt, said, this is part of the existing regulatory model in the UK. For example, as chairman of the Competition Appeal Tribunal, I dealt with Oftel and the ability to port your number when you change from one supplier to another. What had been done was not wholly unreasonable, but it was not right on the merits, so we provided a ruling that meant that you can port your number. People have been able to do that ever since, and it has become easier.

We were able to consider things as mundane as bus prices in the city of Cardiff because unfair competition was taking place. Again, we considered the matter on its merits, not by looking at points of law but by looking at when buses arrived and where the competition was on the street at the time of the arrival of those buses. That is what a merits-based appeal system achieves. Indeed, the established system is central to driving better regulatory decisions and thus the level of legal and regulatory certainty upon which all industry stakeholders depend. That is a long-winded way of saying that if there is a merits-based appeal and a decision, people know what they have to do.

Judicial review is not the appropriate standard for legal challenge to a decision that has significant consequences for competition and consumers. I suggest to the Minister that an appeal right to the Competition and Markets Authority could be inserted in the Bill by an amendment such as that alluded to by the noble and learned Lord, Lord Mackay of Clashfern, to ensure the appropriate checks and balances for price control while not delaying or frustrating the process in any way.

I do not intend to repeat everything said so cogently by the noble Lord, Lord Hunt of Wirral—I agreed with every word he said on this issue. I just wanted to add this to try to simplify matters a little. If judicial review principles are applied, the court could hold that the decision was rational but wrong, and therefore it would stand. If the CMA principles are applied, the CMA could hold that the decision was reasonably reached but wrong and therefore would not stand but would be replaced by the correct decision. Stated in that way, I believe that the proposition is unanswerable other than by allowing an appeal to the CMA.

[Lord Berkeley of Knighton (CB)]

My Lords, before the noble Lord sits down, may I ask him a quick question? I was deeply saddened to hear of his travails in trying to move his tariffs. Would he believe me if I told him that that was a relatively “short ride in a fast machine” compared to the three months and counting I have spent trying to achieve the same thing?

[Lord Carlile of Berriew]

I absolutely accept that, because two or three years ago I changed my provider, and it took me about three months to achieve.