Energy Company Charges

Mark Lazarowicz Excerpts

Tuesday 4th February 2014 Commons Chamber

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

It is a pleasure to follow the hon. Member for Strangford (Jim Shannon), who made a very powerful speech. I join other hon. Members in congratulating the hon. Member for Harlow (Robert Halfon) and his colleagues on tabling the motion. It has support from all parts of the House, and I am alarmed not to see my name on it. I must have missed the motion for some reason, but I certainly support it fully. I hope that my speech will make up for my name not being on the list of its supporters on the Order Paper.

The issue of people who do not pay by direct debit sometimes having to pay substantially more is one example of how low energy users—mostly people who are poor and vulnerable, but not always, because people sometimes choose a lifestyle involving low energy use or are fortunate enough not to use a lot of energy—by and large end up paying more than high energy users. That starts from tariffs: we all know that, with some exceptions, tariffs for people who consume more energy are cheaper, while those who use less have higher ones.

The extra cost for those not paying by direct debit is such an example, and hon. Members have spoken at length about the issues that that raises. Like them, I certainly find it hard to believe that in the vast majority of cases the extra charge levelled on those not paying by direct debit accurately reflects the extra costs to the companies. I rather doubt that it does, but there might be a case if the direct debit discount was a fair reflection of the extra cost that would otherwise fall on companies from people not paying by direct debit. However, the amount and variety of charges indicate that they are certainly more than can in any sense be justified.

As hon. Members have mentioned, it is wonderful for suppliers to get people on to direct debits because, as we all know, the likelihood that they will move or even think about switching is much less than that of those who are forced into thinking about how much they pay every quarter.

Colleagues have commented on prepayment meters. The hon. Member for Redcar (Ian Swales), who is not in his place, pointed out that we are not talking about the past situation in which, given the way cash was kept and all the rest of it, prepayment meters involved a major operation. It is now in no sense justifiable for prepayment meter customers to have to pay so much more than other customers, as we all know they do.

I want to mention the higher standing charges that have come about as a result of the Government’s policies on simplifying tariffs. The hon. Member for Braintree (Mr Newmark), who is not in his place, said that the Government have started the process of addressing the issue by simplifying tariffs, but the fact is that Ofgem’s recommendation that companies should effectively have higher standing charges is a result of its attempt to put into practice the Prime Minister’s hastily thought-out policies. In the vast majority of cases, the standing charge is higher than it used to be and the price per unit of energy is lower. I am sure that all Members have had cases of customers who are on low incomes and are low energy users experiencing massive increases in their energy bills. Ofgem says that companies can offer zero standing charges if they want to, but not many have done so. There is clearly something very wrong with the way that the market is operating and in how the market changes have operated.

This issue does not affect just people on low incomes. I saw one example of somebody who spent quite a bit of money on introducing renewable energy and energy efficiency measures. They reduced their energy usage drastically, only to find that their energy bill went up by almost 600% because such a heavy standing charge was levied on a daily basis. That is another example of how those who are low energy users for various reasons suffer because of the way in which the system operates.

Many of the issues that Members have raised today are not new. The hon. Member for Harlow has performed a valuable service to the House by highlighting the surcharge for non-direct debit payers. However, many of the issues that have been raised today have been brought to the attention of the Government and the regulators time and again. I have raised the issue of standing charges for months. There has been some movement, but not a great deal.

In the past few weeks, the Government have seen motions passed in Back-Bench business debates, but have then ignored them. Given that today’s motion has support from across the House, I hope that the Government will give a positive indication of the action that they will take on the issues that have been raised. Over the past few winter months, some of the lowest earners and some of the most vulnerable people in our country have yet again suffered because of the bias against them in the energy pricing system. We want to see action for those people and, at the very least, we want to see action before next winter.