Energy Prices

Luciana Berger Excerpts

Wednesday 11th January 2012 Commons Chamber

[Chris Huhne]

I am grateful to my hon. Friend for the concern about prepayment meters. It is one thing that we have been looking at closely. Thankfully, people on prepayment meters are not paying more than was previously the case, and that is a step forward. I am sure there is more work to be done and we are looking at it closely.

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

The hon. Member for Wells (Tessa Munt) raised the issue of people on prepayment meters. There are two other key issues concerning people. One million households across the UK do not have access to a bank account so they cannot have direct debits; likewise, there are those who do not have access to the internet—the digital divide.

Further to the point that the Secretary of State made about the energy companies that are writing to their customers, I received one of those letters asking me to go on to direct debit. I called my energy company, E.on. It wanted to put me on to a monthly payment, which would have cost me at least a third more and I would have had to wait until May before I could reassess the situation. So even when energy companies are writing to their customers, myself included, they are not offering consumers the best deal. I cannot move on to direct debit because the company wants to charge me more than I pay already.

[Chris Huhne]

I can only recommend that the hon. Lady look at switching energy supplier to see whether she can find a better deal. We know from Ofgem that people can save substantial sums of money by doing that—£200 a year. Her particular case is obviously regrettable.

--- Later in debate ---

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

I am pleased to respond to this very important debate. At the start of the debate, my right hon. Friend the Member for Don Valley (Caroline Flint) reminded the House of the last time we debated rising energy prices—in October, just three months ago. In that debate, the Government supported our motion calling on them to investigate mis-selling, simplify tariffs, improve the transparency of trading data, reform the energy market to increase competition and drive down bills, and to demand that energy companies use their profits to help with bills this winter.

Since then, the Government have failed to deliver on every one of those promises. No action has been taken to address the chronic lack of trust between energy companies and their customers. There has been no action to increase transparency and competition and no action to help with the soaring cost of bills. Today, we have heard in speeches of Members from across the House about the consequences of the Government’s failure. They have told us about constituents who have been let down and who are struggling to keep warm this winter. Families and pensioners are facing a cost-of-living crisis. They are being squeezed by huge increases in prices at a time when their incomes are decreasing in real terms. In the latest round of price increases, electricity has gone up by 10% and gas has gone up by more than 17%, and that has come on top of high fuel prices and food inflation at 6.2% as well as the Government’s VAT rise, which is costing the typical pensioner around £275 a year.

Several hon. Members have talked about unfairness. My hon. Friends the Members for Ynys Môn (Albert Owen) and for North West Durham (Pat Glass) raised the issue of the 2 million customers who are off-grid, which is a specific issue in their constituencies. Those households suffer specifically from the monopolistic situations in their area and do not have choices about electricity and gas when such services are not available to them.

The hon. Member for Norwich South (Simon Wright) rightly talked about people who do not have access to the internet as a means of identifying the cheapest deals. A number of Members talked about the scandal of prepayment meters and the high costs incurred for those customers.

My hon. Friend the Member for Brent North (Barry Gardiner), my right hon. Friend the Member for Coatbridge, Chryston and Bellshill (Mr Clarke) and my hon. Friend the Member for Glasgow North West (John Robertson) all highlighted that at a time when their constituents are being squeezed by record rises in their bills, energy companies are seeing record rises in their profits. It cannot be right that while the cost of a typical dual fuel bill now stands at more than £1,300, thereby making energy bills one of the biggest costs that households face, the profits of the big six, which supply 99% of our households, have risen to more than £100 per customer.

The Government are exacerbating the situation by making the wrong choices for Britain’s bill payers. They are wrong to withdraw support from the most vulnerable consumers when they need it most. They are cutting winter fuel payments by £50 for the over-60s and by £100 for the over-80s despite having promised before the general election not to do so. They are also running down the successful Warm Front scheme before they scrap it completely next year. That scheme was introduced by Labour and has helped more than 2 million households to save money by improving their homes’ heating systems and energy efficiency.

Ministers are quick to lecture consumers about the importance of energy efficiency, yet at a time of soaring energy costs they are cutting help for those who are trying to install those vital measures, be it insulation or more affordable and energy-efficient heating systems. In 2009-10, during the last year of the Labour Government, over 200,000 homes received new heating and insulation under the Warm Front scheme. By November last year, fewer than 15,000 households received such help—a staggering reduction of 85%. The hon. Member for Truro and Falmouth (Sarah Newton) must be receiving the majority of the Warm Front support in her constituency.

It shows just how out of touch this Government are that, when they should be supporting those who are trying to do the right thing, they are instead making it more difficult. They are wrong, too, because as well as scrapping existing successful schemes, they have introduced new programmes which are not delivering. I am pleased to see the hon. Member for Elmet and Rothwell (Alec Shelbrooke) back in his place. He did not know the difference between the warm home discount and winter fuel allowance. It is a shame that he was not able to stay for the debate, because he might have learned about it.

The new warm home discount is failing to help those in fuel poverty. We warned the Government that the scheme was too narrowly focused and would not deliver the support needed. It seems that those warnings went unheeded. Research by Save the Children, which came out last week, highlighted the huge shortfall in funding provided by energy companies for the schemes, which means that only 25,000 of the 800,000 households eligible for the warm home discount will get help this winter. That is just 3% and it is not good enough.

When pensioners and low-income families are struggling to make ends meet, it is time the Government got tough with the energy companies. We would provide real help now by making the energy companies ensure that all vulnerable pensioners and low-income families with children at risk of fuel poverty who receive cold-weather payments automatically receive the warm home discount. When in government we took action to help consumers, thanks to measures such as Warm Front and the winter fuel allowance, which the Government are now cutting. The number of households in fuel poverty fell by 1 million. Of course we would have liked to have reduced that even further, but now fuel poverty is rising and things are getting worse, not better, as a direct result of the decisions being made by this Government.

At the same time as cutting support, the Government’s plans for the new schemes, the green deal and the energy company obligation, will not deliver either. We have just heard that at a meeting in the other place, the Energy Minister there said that the regulations for the green deal would be delayed. We wait to hear how long that delay will be.

The Minister of State, the hon. Member for Bexhill and Battle (Gregory Barker), told the House in 2010 that the green deal would be the game-changer for fuel poverty, but his figures revealed that only 350,000 to 550,000 households would be lifted out of fuel poverty by 2020. These are derisory ambitions. His plans mean that the Government will be gifting three times as much subsidy to households that can already afford to improve their homes, compared with those in fuel poverty who cannot even afford to keep theirs warm. To echo my hon. Friend the Member for Brent North, why, when money is tight, is the Minister not prioritising support for those who need help most?

We have seen a clear choice emerge in this afternoon’s debate. On the one hand, there is an out of touch, out of date Government unable to stand up for hard-working consumers—out of touch because when energy bills are rising, millions are struggling to keep warm and fuel poverty is rising, their only answer is to cut support and tell consumers to shop around. Although it is refreshing to hear from the hon. Member for Ipswich (Ben Gummer) that he believes that the energy market is broken, the Government are out of date because they are wedded to an orthodoxy which for too long has allowed utility companies to do what they please at the expense of their customers. On the other hand, the Labour Opposition have plans to deliver fairness in tough times, to provide real support for struggling households this winter, even when Government have less to spend, and to take on the vested interests, reforming the energy market so that it benefits the many and not just the few.

We heard throughout the debate how the huge rises in gas and electricity prices mean that bills are one of the biggest costs that households face. The Government lecture consumers, telling them that it is possible to save up to £200 on an annual bill by shopping around. In some cases that might be true, but Ministers are out of touch if they think that it is easy for consumers. We have heard from many about the 400 different tariffs. It is those who need help most, Britain’s pensioners, who are losing out from the Government’s failure to force companies to introduce simpler tariffs. Research by Ofgem has shown that elderly customers are much less likely to investigate cheaper tariffs or switch suppliers, compared with the average consumer. It is crucial that at times like these, when money is tight and people right across the country are struggling to get by, the Government do everything they can to help them.

Yesterday my right hon. Friend the Leader of the Opposition showed that Labour will deliver fairness for elderly people struggling with soaring fuel bills as well as taking action to cut the deficit. The plan he set out in today’s motion would cut gas and electricity bills for up to 4 million elderly pensioners, not by spending more money, but by getting energy firms to show greater responsibility towards their most vulnerable customers. We want energy companies to move their customers who are over 75 automatically to the cheapest tariff they offer for gas and electricity.

As well as taking action to protect the most vulnerable in our society, we must ensure that everyone benefits from fairness and responsibility in our energy market, so we would go further by introducing real reform to increase competition and drive down prices. For too long the market has been dominated by a handful of companies. Today’s debate has shown once again that the market is broken and that we need to fix it. I hope that the House will vote for action today and I urge Members to support the motion.