Energy Prices

Lord McCrea of Magherafelt and Cookstown Excerpts

Wednesday 18th June 2014 Commons Chamber

[Chris Heaton-Harris (Daventry) (Con)]

It is a pleasure to follow the hon. Member for Angus (Mr Weir).

I often ponder on what could possibly be worse than an Energy Department being run by a Liberal Democrat. The answer has been made clear to me today: the worst possible outcome could be an Energy Department run by a Labour politician who would happily enact policies that would put everyone’s energy bills up in the long term and push more people into fuel poverty. Let me explain how that will happen, first by examining the economics behind an energy price freeze and then by examining the Opposition’s form and policy in this area.

The debate provides an excellent opportunity for us to demonstrate yet again that price controls are not an effective means of achieving improving standards of living, as they go against any notion of economic common sense. In fact, at a time when the Government should be focusing on providing incentives for improvement in the quality and quantity of energy provision, imposing price controls would achieve exactly the opposite effect, leading to a shortage of energy as consumers who want it at the artificially lowered price cannot gain access to a supply adequate to cater for their needs.

Price controls are Government restrictions on how much can be charged for the good or service in question in the market. In this case, the Opposition propose a price ceiling that would prevent gas and electricity prices from exceeding a maximum price decided by some fantastic new regulator. From an economic standpoint, the proposed price control would be problematic, as it would distort the price mechanism’s ability to allocate resources to the highest-valued uses. In unhampered markets, prices work to co-ordinate supply and demand and ration existing resources relatively —I would say very—efficiently. By manipulating the market price, controls such as those proposed by the Opposition distort that process, and result in both direct and indirect perverse repercussions.

[Dr William McCrea (South Antrim) (DUP)]

Notwithstanding all that the Government profess to have done to end fuel poverty, Northern Ireland still has the highest level of fuel poverty in the United Kingdom. How would the hon. Gentleman and his party suggest that my constituents solve their fuel poverty problems?

[Chris Heaton-Harris]

I shall say something about fuel poverty later in my speech, but I believe that a huge majority of Northern Ireland fuel customers are off grid, and that solutions are currently being sought.