Energy Policy and Living Standards

Mark Reckless Excerpts

Wednesday 10th December 2014 Westminster Hall

[Robert Halfon (Harlow) (Con)]

Thank you, Dr McCrea; I will speak for three minutes or so. I am very grateful to the hon. Member for Clacton (Douglas Carswell) for giving me permission to make a speech, and I congratulate him on securing this important debate. I will focus on different areas, but I do think that the Government have done good things—in particular, providing a rebate to every domestic electricity customer and reducing bills by £130 for 2 million of the poorest households through the warm home discount. And of course the hon. Gentleman will know about the huge fuel duty freeze that the Government have pledged to maintain across the Parliament, so that the price of fuel is 20p lower in tax terms.

As I said, I will concentrate on a number of areas. The first is the difference in the cost of energy depending on which payment method a customer uses. I have worked with the hon. Member for Ynys Môn (Albert Owen) on this issue. Earlier this year, I conducted a cross-party campaign, with the support of more than 100 MPs, against the practice by energy companies of charging customers extortionate amounts for not paying by direct debit. My right hon. Friend the Prime Minister ordered an investigation into that, but all that Ofgem has said to me is that although there were some anomalies, such as the £390 extra that Spark Energy customers were paying, those cases were exceptional. However, Department of Energy and Climate Change figures show that the average person who does not pay by direct debit pays £114 more each year. That is just not good enough.

One elderly lady in my constituency of Harlow, who always paid on time via the post office, received a letter saying that she would have to start paying an extra £63 a year if she did not start paying by direct debit. That is unacceptable. Charges such as that are excessive and harm the most vulnerable in our society, particularly the 2 million people who do not have proper banking facilities, which makes payment by direct debit almost impossible. I hope that my right hon. Friend the Minister will clarify what the Government are trying to do on that.

Secondly, there is a problem, which has been raised, regarding prepayment meters. The cost of using those is often significantly higher than of using any other method. Traditionally, that was justifiable: companies had to pay people to go and empty the meters of coins. But there are now prepayment cards. Those who use prepayment meters are charged extra even though they are the least able to afford it. That needs to be looked at urgently.

Thirdly, there are other ways in which energy bills are increased, often through no fault of the consumer. The example has been mentioned of the 4 million households who are off the gas grid and will never be able to get the best deals as they cannot get a dual-fuel discount. It would be helpful if standard criteria could be introduced across suppliers to allow families with children clearer guidance as to whether they will qualify for the warm home discount.

Finally, I believe that the only way in which the situation can be improved is not by imposing an energy price freeze, which will only hike prices up in the long term, but by scrapping the existing regulator and creating an energy version of Which?, a consumer regulator that stands up for the customers, not the energy companies, and that has real teeth. As pointed out in The Sun newspaper today and as mentioned by the hon. Gentleman, The Sun is running a campaign for fuel companies to cut their prices following a significant fall in the international price of oil. I have previously handed a petition to the Office of Fair Trading with FairFuelUK calling for an inquiry into the rocket and feather effect, but there has never been a full inquiry.

In conclusion, stopping the premium on non-payment by direct debit, action on additional and hidden costs and turning Ofgem into a genuine consumer body would make a huge difference to residents of Harlow, and to energy bills and the cost of living for millions of people across the country.

[Mark Reckless (Rochester and Strood) (UKIP)]

rose—

[Dr William McCrea (in the Chair)]

One hon. Gentleman is standing, but convention demands that a Member has the permission not only of the Member who has secured the debate, which is Mr Carswell, but of the Minister, and he needs time to respond, so is the Minister willing to give a couple of minutes to the hon. Gentleman?

--- Later in debate ---

[Mark Reckless (Rochester and Strood) (UKIP)]

Thank you, Dr McCrea; I am grateful to the Minister. I congratulate my hon. Friend the Member for Clacton (Douglas Carswell) on securing this debate on energy policy and living standards. This is a key issue for our party, and I think that this is the first debate that we have secured in the Commons.

Energy costs are being driven up through a levy control framework that shows the cost rising from £2.3 billion in 2012 to £9.8 billion in 2020. Much of that money is going on offshore wind. Rather than trying to develop leading, cutting-edge technologies, or some of the areas that have been improving in cost-efficiency such as solar, we are seeing the roll-out of absolutely masses—almost half the world’s production—of offshore energy, which costs about three times the market energy price. That is an absolutely extraordinary imposition on our constituents.

At the same time, we are bringing in a capacity market that even Mr Huhne, who was the Energy Secretary, did not want to see. At least he was an economist and realised, as I would have thought the Minister would also recognise, that as soon as a capacity market is announced, people will not build capacity until they start qualifying for the subsidy. That subsidy now seems to be available to almost everyone, rather than just those who have capacity that can be switched on reliably and immediately. That is going to be yet another imposition that drives up costs for our consumers.

Perhaps the most significant cost is what is happening to coal. The European Union is shutting down coal plants, including Kingsnorth in my constituency. Demolition of Kingsnorth has just commenced under the large combustion plant directive, and various pieces of successor legislation are even worse. The Government did not apply for a derogation that could have got us through a period in which there was a particular crunch in our energy demand. Why did not the Government at least try to obtain such a derogation? The Government, not the EU, are banning the construction of new coal-fired plant. E.ON, which owns Kingsnorth, would have liked to build a new supercritical plant, which would have provided much more efficient energy production, but the Government have banned it because of the emissions performance standard, I believe. Such projects are going ahead in Germany and other countries, but we are unilaterally driving up costs for our consumers, reducing the competitiveness of our industry and holding our country back.

[The Minister of State, Department of Energy and Climate Change (Matthew Hancock)]

I congratulate the hon. Member for Clacton (Douglas Carswell) on securing the debate and on choosing energy as the subject for his first Westminster Hall debate in his new iteration in this Parliament. My central response to his argument is that it is important to look at the facts and have a rational debate about the matter. Central to his big-picture hypothesis was the argument that energy costs have been rising since the early 2000s, before which they had gradually declined. He went on to say that wholesale costs were falling as a proportion of the total cost. However, the wholesale price has risen sharply during that period, and the wholesale price—the amount that is beyond the control of any Government—is a central driver of energy costs. Without acknowledging that core fact, it is difficult to have a rational debate on the subject, which I think we would all value.

[Mark Reckless]

The Minister says that the price is beyond the control of any Government, but Saudi Arabia has had quite a big impact on price by not increasing its oil production, and the US has done likewise by allowing and facilitating exploration for shale gas and oil, which we have held back so badly in this country.

[Matthew Hancock]

Nobody has direct control over wholesale costs, although I entirely take the point that Government policy that has an impact on the supply of energy, particularly hydrocarbon energy, can have an impact on price. I share the hon. Gentleman’s enthusiasm for shale, and the Government’s proposals will ensure that exploration for shale gas can happen as long as it is done carefully and within a regulatory framework that ensures that it is safe. I hope that he, his colleague the hon. Member for Clacton and all colleagues in his new party will support the local extraction of shale gas; his view is not shared by members of his party across the country. I welcome the support of the new establishment party for shale gas.

It is absolutely essential to ensure that we have security of supply at the lowest possible cost, while living within our international climate obligations. Perhaps there is a point of difference, because the risk of climate change is real and must be taken seriously, but the question is how we deliver on that in the lowest-cost way. On that, I think that the hon. Member for Clacton and I share some analysis. For instance, ensuring that taxes remain as low as possible is an important element of the Government’s programme. Even with the incredible deficit that we inherited, we have managed to keep petrol and diesel prices 20p lower than they would have otherwise have been. I pay tribute to my hon. Friend the Member for Harlow (Robert Halfon) for the work he has done on that, which is widely recognised. As oil prices fall, I support him in the call for those reductions to be passed on to the motorist at the pump now, not later. The work that he has done, including on the front page of today’s Sun, is an important contribution to this debate.