Energy Prices

Nia Griffith Excerpts

Wednesday 18th June 2014 Commons Chamber

[Nia Griffith (Llanelli) (Lab)]

We have seen family fuel bills go up by £300 on average since 2010. Families are feeling this increase because wages are not going up, but costs are rising continually. People are saying, “Look at the profits that those companies are making.” In south Wales, many people are served by SWALEC, which is part of SSE. It has made £1.55 billion profit, a 9% increase on last year. Average households across Britain are contributing £96 of their dual fuel bills to the profits of the companies. That is up from £44 on average per household last year. The profit margin is now 7% on dual fuel bills, up from 3% last year.

People are seeing a huge increase in companies’ profits and asking, “How can they can have a 9% increase in their profits whereas we are struggling because we are still on the same wages as we had a couple of years ago or maybe 1% up on what we had?” There are 2.33 million households in fuel poverty. It adds insult to injury when people find out that gas prices are 38% lower than last year on the wholesale market and electricity prices are 23% lower. People ask why they cannot share in that benefit. That is why the motion specifies that the regulator should have the powers to force the companies to pass on those decreases in price. That would bring immediate help and relief to families right across the UK.

On the mythical £50 back that the Government promised by taking the green taxes out of the fuel bill and putting them on to general taxation, we are all paying for that as taxpayers, yet that £50 reduction has not come through. It will be only a maximum of £50 and it is not getting through, so consumers are not having the benefit of that coming off their bills.

Let us look at some of the ways forward with our policies. It is interesting that SSE has said that it will legally separate its household supply business from its generation business, exactly as we have said we want to see. Members on the Government Benches have continually said it is impossible, yet SSE says that it will improve transparency and be a reform that is in the clear interests of customers. That is what one of the energy companies is telling us. It is saying, “Yes, we accept that Labour has a good idea and this ought to be done.”

Some 96% of households are supplied by the big six, which are also responsible for 70% of the generation. When the two are conflated, it is impossible for people to see what has happened or for the market to be fair. That is why market reform is key to what we propose to do. The price freeze that we suggest is an interim measure in order to get the market right. It is not an end in itself. It is about giving people a break so that we can introduce the reforms and get them working so that the market will work better for people and deliver lower prices.

As it happens, SSE has now announced a price freeze. Some cynics might say, “Well, a price freeze at a time when prices are falling is only a moderate step”, but at least it is trying to say that it is possible to look forward to 2016 and impose a freeze. We are saying that these reforms are possible and the energy companies know it, so what we need is the will to make them happen.

We would like the Government to have the will to say, “Look at the way prices have fallen this year. Let’s see if we can get that into people’s pockets for this winter.” That is what people want. We might not have another mild winter next year; it might be a severe one. People would like the opportunity to pay less this year, rather than having to wait for Labour to take over after the general election and impose the price freeze.

Another point I would like to make quickly relates to the sorry state of investment in renewables that we have seen under this Government. Despite what the Secretary of State tried to say at the Dispatch Box, whereas we had £7.2 billion of investment in 2010, it is down to £2.3 billion in 2014, which is a dramatic drop. SSE says that it now has grave doubts about continuing its offshore wind programme. That is because it does not get confidence from the Government and it does not get a feeling that it will be backed. It gets no clear and definitive messages on what the Government want to do on renewable energy. We would like to see a considerably greater and more consistent commitment to the development of renewables, which have a tremendous potential in this country. We should be a world leader on renewables.