Energy Price Freeze

Mark Lazarowicz Excerpts

Wednesday 6th November 2013 Commons Chamber

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

I am glad for the opportunity to make a few comments in this debate. As for all colleagues—at least on the Opposition Benches—who have spoken, the issue of rising energy prices comes up every week in my surgeries and public meetings. It is utterly complacent for the Secretary of State to lecture us about rising disposable incomes, as if that were the solution to the problem and energy prices did not really matter. He should try and tell that to people who, on top of rising energy prices, have been forced to accept a drop in hours, a wage freeze or rising housing costs, which is the reality for millions up and down this country.

To date, the Government’s measures have not worked, as they have implicitly recognised, because if they were working, why would the Prime Minister have announced, on the hoof, his two major changes in energy prices? Last year, came the promise to put everyone on the cheapest tariff, which then became a promise to simplify tariffs, from which millions of energy customers will not benefit; then, this year, came the sudden review of green levies, which has now become simply the transfer of some energy efficiency measures into general taxation, or so it would appear.

The Government’s policies have not worked to date because they rely on claimed features of the energy market that, by themselves, have not and cannot bring about the required level of market reform and apply downward pressure on energy prices. First, as my hon. Friends have said, the Government are relying on competition, but as even the Secretary of State would seem to accept, competition is not bringing down prices. After all, given that the prices charged by the major energy companies all seem to rise at roughly the same time and at roughly the same rate, we may be excused for being sceptical about competition. We now seem to be relying on switching, but after three and a half years in power, the Government have realised that it is not as easy to switch as they suggested, so they are going to introduce measures to make it easier.

[Mr Tom Clarke]

I regret that I did not have time to refer to small businesses in my speech. Does my hon. Friend agree that small businesses do not welcome being asked to switch, in addition to all the other bureaucracy they have to deal with?

[Mark Lazarowicz]

That is a good point. One problem with relying on switching is that the Government’s measures do not tackle the problem of people switching and then finding it does not bring the expected advantages and so deciding to switch again. I have experience in my constituency of people who are tied into a year’s contract that they cannot get out of. Conservative Members gave the House examples of people making wonderful savings by switching, but I wonder whether those consumers will still find switching to be advantageous in a year’s time. I accept that switching is important, but it is ridiculous to suggest that it is a panacea, as the Government seem to be doing.

The Government are also relying on simpler tariffs to solve the problems. Unfortunately, the simplification is proving to be of much less benefit than first promised. Many customers are now worse off because of the simplification measures. I have highlighted the impact of the way in which Ofgem encouraged a return to the use of a standing charge—in order, it said, to simplify the charging system. This has resulted in many customers with low energy usage, who are often on low incomes, facing sometimes substantial increases. To be fair to the Minister of State, Department of Energy and Climate Change, the right hon. Member for Bexhill and Battle (Gregory Barker), he agreed to meet me when I raised this issue, and we were due to meet today. The meeting had to be postponed because of this debate, but I shall certainly press him on this issue in due course.

The Government know that their policies are not making an impact on energy prices, and that is why the Secretary of State and the Government as a whole have been running round like headless chickens trying to come up with a response to the clear set of policies outlined by my right hon. Friend the Member for Doncaster North (Edward Miliband), the party leader, and by my right hon. Friend the Member for Don Valley (Caroline Flint) at the Dispatch Box today.

The Government appear to be relying for a solution on the transfer of some of the cost of energy efficiency measures to general taxation, which will have some limited impact on energy bills. A move in that direction might have some theoretical merit, although we would all want to see how it would be worked out in practice and, above all, how it would be paid for. As my right hon. Friend the Member for Oldham West and Royton (Mr Meacher) has just pointed out, however, none of these measures would have been put forward by the Government, were it not for the plans announced by Labour.

The Government’s proposed measures will have only a limited impact. They, and the similar measures that the Scottish National party have proposed for Scotland if it were to be independent, also suffer from a big weakness—namely, that transferring the cost to general taxation would let the energy companies off the hook. That would lessen the pressure on them to keep prices down. It would also create the risk that the limited saving to customers would gradually be eaten up by price rises imposed by the companies to take up the slack—unless such measures were accompanied by Labour’s price freeze or a similar measure to prevent the companies from taking advantage of the price cut.

Labour’s proposals for an energy price freeze are clear, coherent and comprehensive. They would make a real difference to consumers, households and businesses up and down the country, and that is why I support the motion. I hope that some Government Members will join us in the Lobby, but that seems unlikely, given that so many of them appear to regard this issue as so unimportant that they have not even taken part in the debate. Their constituents will certainly not hold them in high regard for being absent from a debate on such an important issue.