Energy Market Reform

Marcus Jones Excerpts

Wednesday 24th October 2012 Commons Chamber

[Caroline Flint]

It was a very bad decision by the Treasury to refuse to attend the Committee. We know how important energy policy is for DECC, but it is also a cross-cutting issue for Government. Decisions and influence from the Treasury, and also the Department for Business, Innovation and Skills, for that matter, are essential to the perception of how our energy policy is being developed. That decision was a great shame, but I am afraid that it is just another example of a lack of joined-up government, which is to the detriment of such an important policy area.

We also learned that the Government have been working on the proposals for months and that we should expect them to feature prominently in the forthcoming Energy Bill, but there is no mention of them at all in the draft Bill, the White Paper, the technical updates or the impact assessments. Perhaps the only real thing that we learned last week was that when it comes to energy bills this Government are not just out of touch, but completely clueless.

[Mr Marcus Jones (Nuneaton) (Con)]

Will the right hon. Lady give way?

[Caroline Flint]

I will give way shortly; I have taken two interventions already.

Such is the complete and utter confusion in Government, the Energy Bill has now attained near mythical status. Ministers talk as though it is the answer to every problem and the solution to every ill in Britain’s dysfunctional energy market. The Minister told the House last week that

“we will use the Energy Bill to get people lower tariffs.”—[Official Report, 18 October 2012; Vol. 551, c. 489.]

Why is it that the draft Bill, which has been in preparation for two years, contains nothing to reform the way in which energy is bought and sold, or to make the energy market more competitive; nothing to open up the market or open up the books of the energy giants so that we can work out the true cost of energy; nothing on demand reduction to help families and businesses cut their energy use; nothing to protect vulnerable customers or stop everyone else being ripped off; and, whatever the Prime Minister claims, nothing to simplify tariffs or make it easier for people to switch, or anything remotely close to what he promised last week? If the Government are as concerned about energy bills as they claim to be, why does their flagship Energy Bill do absolutely nothing to help people struggling to make ends meet?

Over the past two years, we have had countless White Papers, consultations, updates and even a draft Bill, but not once have we seen anything that recognises the need for urgent reform, that challenges the prices and practices of the big companies, or that lives up to its name and genuinely reforms the energy market. The House will forgive me if I am a little sceptical of this Government’s sudden conversion to the cause of reforming this market, to make it more competitive, more transparent and fairer for consumers. I am afraid that, on the evidence so far, this is a Government who back business as usual in an energy market that is not working.

[Mr Marcus Jones]

I thank the right hon. Lady for giving way. A back to the future-type approach to energy pooling has already been proven to have failed. Will she explain why her party is now pursuing energy pooling so vigorously when the Blair Government with whom she served were opposed to the policy on the basis of the cost to the consumer?

[Caroline Flint]

We went into the last general election with a manifesto commitment to introduce a pool. That put our cards on the table. According to the Government’s own statistics, 1.7 million people were brought out of poverty during our time in government.

--- Later in debate ---

[Mr Marcus Jones (Nuneaton) (Con)]

I welcome today’s debate, because energy is one of the most important issues for my constituents. The pressure on the cost of living over the past four or five years has been relentless, with petrol and diesel prices going up almost weekly, food prices going up in the same fashion and energy bills soaring. Over that time, people’s incomes have not increased anywhere near in line with those increased costs and salaries in both the public and private sectors have been pretty much static.

Despite the rhetoric we have started to hear from the Opposition, the Government have made moves to try to help with the cost of living. We all know that had the Opposition been in power, petrol and diesel would have been 10p a litre dearer at the pumps. We all know that the Government have frozen council tax for the third year in succession, in stark contrast to Labour, which doubled council tax during its 13 years in government. My constituents who commute using Nuneaton station will also be heartened that regulated rail fares are to be capped this year.

Much of the problem with energy prices stems from energy generation issues and the energy market. We all know that the wholesale cost of oil and gas accounts for half the cost of energy. Given Labour’s inertia, inactivity and lack of enthusiasm about energy generation during its 13 years in government, it seems opportunistic for Labour Members to put forward this motion.

I welcome the fact that the Government are working hard to incentivise low-carbon energy, and I hope that the Minister will provide some reassurance about the energy mix and confirm that clean coal will be a firm part of that mix. Many of my constituents work at Daw Mill colliery—one of the largest deep producing coal mines in the country. I am sure that my constituents will be very interested to hear the Minister’s comments.

[Barry Gardiner]

The hon. Gentleman quite rightly said that wholesale electricity prices are based on the wholesale price of gas, but will he explain why a company such as EDF, which supplies electricity to its customers yet generates from nuclear, should benefit in exactly the same way from the higher price of gas, which of course it does not pay?

[Mr Jones]

The hon. Gentleman’s comments are interesting. I am a firm supporter of nuclear energy—he might not be, but it is absolutely necessary. This Government are trying to incentivise companies to make sure that nuclear is a firm part of the energy mix and that we are not switching off the lights.

[Ian Lavery (Wansbeck) (Lab)]

The hon. Gentleman mentions Daw Mill colliery in his constituency. It faces closure, yet it has thousands of tonnes of reserves—it has one of the biggest reserves in the country. What do the Government intend to do to save those jobs and exploit those reserves?

[Mr Jones]

I thank the hon. Gentleman for raising that point, as this Government have been helpful and have followed the situation at Daw Mill very carefully to try to help it have a future. I am aware that positive negotiations are going on between the work force, the unions and the company to try to secure its future after many years of poor management, which left the colliery without the necessary work being done on the coal faces to help the company sustain an operation employing 800 workers. There are challenges there, but I am confident that the interested parties can come to a deal. I assure the hon. Gentleman that my hon. Friend the Member for North Warwickshire (Dan Byles) and me, as constituency MPs, and the Minister responsible for energy have spent a lot of time trying to help.

Let me move on to discuss another important part of our future energy policy—shale gas. Notwithstanding the environmental impacts and assessments that need to be done, I very much feel that shale gas has a real future. In coming years, it will help to create sufficient energy supplies and contribute to energy security, as well as helping to bring people’s bills down, as it has in the United States.

The energy market itself is an important matter. The right hon. Member for Don Valley (Caroline Flint) came up with a gem—or probably what I would call an “off-gem”—when she admitted that Labour had created the problem by reducing the number of energy providers from 15 to six. She now expects the current Government to sort it out, which is quite interesting and seems to be a recurring theme: this Government having to sort out the inadequacies and the mess left by Labour.

I went on to a price comparison website this morning to find out the position if I chose to move energy suppliers. Under the dual fuel section, I clicked on to E-ON and noticed that I could change to any one of 52 tariffs. For example, there was the E-ON fixed price 5, E-ON fixed two-year Tesco clubcard points, Age UK one-year fixed, not to mention the other 49 different tariffs of different descriptions. There is a real issue of transparency; people need to know what they are signing up to and what else is available to them. I welcome the Prime Minister’s announcement that the Energy Bill, or part of it, will be used to encourage energy suppliers to take responsibility for letting people know the lowest tariff and for trying to move people on to it.

The cost of living is another important point, and I shall particularly mention the mortgage market. People finish a fixed deal with a mortgage lender and are put on to a standard variable rate, which might not be the best rate, or are not told that a better rate could be achieved. People who do not always look at these things are paying more than they need to. We definitely need to consider this issue across the piece.

We need to ensure more consumer choice for energy. We have more competition and more transparency in the market. I am heartened by Ofgem’s proposals to pare down all complex, multi-tier tariffs and limit energy companies to a smaller number of core tariffs. I think that will help people better to understand what they are signing up to and what they can go on to. We must also ensure that people know that they are getting value for money. We know all the trouble and hassle that swapping providers can cause; we know that it puts people off, so we need to make it as simple as possible to swap providers.

In my remaining minutes, I want to highlight consumption as a major issue. We must keep working hard, and I know that the Government are trying to reduce people’s energy consumption. I am sure that the green deal will make it easier for people to make home improvements that reduce their energy consumption. Many people who have worked and are working hard might not have the necessary capital sum available, might not qualify for benefits and might not be able to get other incentives, payments or grants to improve their property, but the green deal will give them the opportunity to help themselves to reduce their bills.

We need a balanced, open and honest debate on this issue. We need to make sure we do all we can to reduce the cost of living across the piece for all our constituents in these hard-pressed times. What we certainly need to do through this debate—and, I hope, through the Energy Bill—is to put in place a framework that will ensure that we have long-term energy security, enabling our constituents to reduce their bills in the coming years.