Energy Prices

Mike Weir Excerpts

Wednesday 11th January 2012 Commons Chamber

[Caroline Flint]

No, I will not give way to the hon. Gentleman again.

The bigger issue is how we carry out a root-and-branch reform of the energy market for the future.

[Mr Mike Weir (Angus) (SNP)]

I thank the shadow Secretary of State for giving way, and she is making a very good point. Rather than asking EDF why it is reducing the price by 5%, should we not be asking why it is doing so two months after putting it up by 15%?

[Caroline Flint]

It was actually 15.4%, but I do not want to be churlish. I am pleased that the prices have come down, but part of what we are seeing from the energy companies is due to the fact that they are starting to smart from the criticism levelled at them. The problem is getting worse and, as I have said, complaints have gone up and prices, which went up steadily over the past few years, have soared in the past year. We are not the establishment—the Government are, they are in the driving seat and they have the tools to do something about it. I only wish they would.

We must ask the fundamental questions, and the fundamental problem in defining whether prices are reasonable and fair and considering the other pressures on those prices is the fact that we are hampered by the lack of transparency in the market. The energy companies that generate energy sell it on to themselves and then on to customers. If the few big dominant firms were forced to sell the power they generate to any retailer, companies such as supermarkets and other independent retailers—like Good Energy, which came top of the poll for customer service in the Which? report—could play more of a role in the market. There would then be more competition and the upward pressure on prices would be eased.

Times are tough, we all know that, and we know that it means difficult decisions must be made. When times are tough, fairness is our first priority but, unfortunately, for the Government fairness is the first casualty. Millions of families and pensioners across the country are struggling with their energy bills and a cost of living crisis, but the Government are so out of touch that they are making things worse rather than better. They are cutting the help people get with their energy bills and scaling back on energy efficiency. By failing to stand up to the energy companies, they are letting down the public. We know that people need real help now and a more responsible and competitive energy market for the future. For those reasons, I commend the motion to the House.

--- Later in debate ---

[Mr Weir]

Following up on the Secretary of State’s answer to the hon. Member for Wells (Tessa Munt), I note that Ofgem stated in its briefing for the debate:

“The number of gas and electricity customers paying by prepayment meters has increased compared to the same quarter in 2010, by 6% and 4% respectively”.

Those are worrying statistics indicating that people are moving to prepayment meters and falling through the gaps despite the Government’s attempt to contact them and get them on to cheaper tariffs.

[Chris Huhne]

I agree with the hon. Gentleman. Sadly, during tough times people tend to fall behind with energy bills and so can be moved on to prepayment meters. One of the things that it is very important the Department does is try to ensure that those who no longer need to be on prepayment meters, from a credit point of view, are moved back so that they pay more directly and can take advantage of those schemes.

--- Later in debate ---

[Mr Mike Weir (Angus) (SNP)]

In the brief time available I just want to make a few comments. Rising energy prices are obviously causing huge problems for many families. Every 5% rise puts a further 46,000 households into fuel poverty. It is not a completely grim picture. For once, there is some good news in Scotland. The Scottish house condition survey, which measures fuel poverty, published in November, shows a reduction in the number of homes in fuel poverty in 2010, although, like the rest of the UK, the figure remains far too high. The current average dual fuel bill is now £1,345 a year, an increase of almost 50% over the past four years. Today, EDF trumpeted the decision to reduce gas prices by 5%, but that comes on top of an increase only a couple a months ago of 15.4%.

There are other related issues. I raised with the Secretary of State in an intervention the issue of prepayment meters. There is great concern about the huge increase in the number of people moving over to prepayment meters—presumably, people who are unable to meet their energy bills—and there is a real danger of self-disconnection when that happens. We do not always know when some of these people are doing this. That is a real worry and we need to do something about it.

The mantra of switching simply does not work. The energy companies appear to be doing a “follow my lead” on rising prices; I very much doubt whether that will necessarily occur when prices start to go down.

I note that Labour’s motion suggests that we should

“require energy companies to provide the lowest tariff to over 75s”.

That, in itself, is a good idea, but the problem is that it will work only if the tariffs are lower; there is no point putting people on the lowest tariff if all the tariffs are high, which tends to be the position at the moment. At the Scottish Government’s energy summit last November, Scotland’s six largest energy providers pledged to help vulnerable customers transfer to their most efficient tariff, so there has been some movement on this issue and it should be encouraged. However, the previous system of higher winter fuel allowances for elderly people is a much better option, because it reduces the amount they have to pay out, irrespective of what bill they are on, and I am slightly disappointed that Labour seems to be moving away from that approach.

I wish to make the point about off-grid customers, of whom my constituency has many and about which other hon. Members have spoken. I have previously raised this prospect, but the Government should consider, at the very least, making the winter fuel payment earlier to vulnerable people who are off-grid, as that would allow them to fill up their tanks in the summer or early autumn, when the price tends to be lower, although it is not always. That is a no-cost and positive option, so I urge the Minister at least to consider it again.