Nia Griffith
Main Page: Nia Griffith (Labour - Llanelli)(10 years, 3 months ago)
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Nia Griffith (Llanelli) (Lab)
I rise to speak in this very important debate because people are telling me time and again just how worried they are about this coming winter. We were very lucky last year because it was a mild winter, but obviously that does not happen every year and people are really worried that, yet again, prices will go up this autumn by 8% or 9%.
Over the past four years, there have been horrific price rises in this country. Of the world’s major industrial countries, our electricity price rises of 23.5% are second only to Ireland’s. We are also in the top few for gas, with horrific rises of nearly 34%. That is coming out of the budgets of people who are not earning more, because wages have scarcely risen. This is a very serious issue for many households, and anything we can do to stop the energy companies ripping people off has to be welcome.
I would like to see a cross-party consensus whereby when a good idea is suggested by one side of the House, the other side can adopt it. There is no shame in doing so. Good ideas can push forward and strengthen legislation so that these companies, which have been getting away with things for far too long, can be brought to book.
The problem is that competition is not working effectively, because it is so very difficult to switch. I come from an area—south Wales—where it is particularly difficult to do so. The options are very limited and a significantly smaller number of people are switching. There are huge difficulties, not only in terms of accessing information, particularly for the large numbers of people, especially older customers who do not have access to the internet, but in terms of which tariffs are actually available and their confusing nature.
It says something when Which? magazine tells us that 75% of consumers are actually on the most expensive tariff. What does that say about how the energy companies are working? It tells us that they are working very well for their shareholders and for making profits, but it is the consumer who is missing out. That 75% of consumers are paying the highest tariffs does not seem in any way to be a fair deal for consumers.
We must tackle these absolutely greedy energy companies. Let us be honest about it. What happens when they are fined? They have apparently been fined on 31 occasions, with fines amounting to some £90 million, but who has paid that £90 million? It just comes back to the consumer. We do not notice that energy companies’ profits are going down; in fact, their excessive profits are announced in the press year on year.
Consumers are feeling extremely hard done by, particularly when they are trying very hard to cut down their energy consumption. It seems that the energy companies want to take the same amount of money off them year after year, even if they cut back their consumption, and that particularly affects low energy users.
Energy companies try all sorts of ways of imposing costs on people. For example, there is a move to a higher standing charge. That is the charge we have to pay, regardless of whether we use any energy, simply for our home to be supplied. Astonishingly, SSE does not give any discount for taking both gas and electricity from it, whereas some companies do.
My reading of the increase in the standing charge is that the energy companies fear our getting into government and imposing an energy price freeze. The increase is a way of trying to get out of having to lower prices, because the standing charge will remain. We need to be aware that whenever we try to regulate companies, they look for every loophole—every possible way of mis-selling, using misrepresentation, hiking prices and inventing charges—to try to circumvent the rules.
We need a really tough regulator with a really tough ultimate sanction. As my hon. Friend the Member for Ogmore (Huw Irranca-Davies) said, if we have only yellow cards and no red cards, with energy companies going back to a clean slate every time they behave badly, there is absolutely no motivation for them to stop doing so. All they will do is to try everything they can to bend the rules every time, because that is in the interests of their making profits. Doing so will not affect their shareholders, because any fines they are given are simply put back into hiked prices. It is therefore essential to have a way to strike off such companies, as would happen in any other profession that a company was continually bringing into disrepute.
Far too many things have happened, such as the whole issue of incorrect billing. Companies have taken lots of money from people through direct debits without advising them that because their consumption has gone down, they could pay less. We have seen energy companies raking it in and banking huge amounts of cash, but only when a very savvy consumer challenges them about their direct debit do they do anything about it. We have seen all sorts of inappropriate ways of billing—making it very difficult for people to read bills and to understand exactly what is being charged for—and of mis-selling. Disadvantaged groups, such as those on prepayment meters, have very often not been able to benefit.
It is quite extraordinary that we were told that £50 would be taken off the bill of every consumer, with costs falling on general taxation rather than a green levy on the energy companies, only for us to find out that the energy companies have absolutely got away with it. Four of them have not even attempted to pass the £50 to their fixed tariff consumers—in fact, they refused to do so—and the Government have never chased that up. Wonderful statements were made by the former Minister, the right hon. Member for Bexhill and Battle (Gregory Barker), and the Prime Minister about this not being acceptable, but nothing has actually been done about it.
Many people have not had the £50 back, but all of them who are taxpayers have contributed to general taxation, from which the shortfall is supposed to be made up. The energy companies are therefore laughing all the way to the bank. Unless we have the ultimate sanction of the power to revoke a licence—saying, “You can no longer have that customer base or business”—I suspect that energy companies will continue, as they have done over the past few years, to make the consumer pay in this, that or the other way.
The energy companies often tell us that they need to charge lots of money because they are investing in new ways of generating electricity. However, we have not seen them rushing to build power stations, so that is all a bit of a smokescreen. Another important reform we are proposing is the separation of supply businesses and generating businesses, which will make such matters much more transparent. It will make it much more difficult for companies supplying the consumer to pretend that they are somehow raking in vast profits in order to invest when such investments are not taking place.
That is why we want to give the regulator real teeth—the extra power to revoke licences. Then if companies break the rules, they will not just be able to pay the fines and carry on, but may be struck off and not allowed to supply consumers.
We need much greater transparency in the whole market so that people are much clearer about where their money is going. We are proposing that if we win the general election next year, we will freeze energy prices until January 2017 for both ordinary households and businesses. It will save households perhaps £120, and save businesses an average of perhaps £5,000. During the energy freeze, it will be very important to reform the energy market. We want to break up the energy companies to increase transparency and to separate supply businesses from generation businesses, with a company having separate licences for each task.
We will build a structure that allows the regulator to revoke licences for specific tasks. The obvious case, which is referred to in our motion, is the power to revoke an energy company’s licence to supply consumers if it repeatedly breaches the courtesies and standards we expect them to offer those consumers. We also require a much simpler tariff structure. That is another way of saying, “This is what we anticipate or expect consumers to be able to enjoy”, and if supply companies do not comply with a simple tariff structure, the regulator will have the power to revoke their licence.
It is extremely important to implement the series of measures that will protect the consumer. We have said it is important for the regulator to force companies to lower prices when wholesale costs fall. Time and again, people see something on television about wholesale costs falling, and they are very angry that their bill does not fall. They feel very strongly about it.
The Prime Minister said he would make sure that companies reduced prices when costs fell, but he has never done so. He said that in opposition, but once in government he never made it happen. It is pretty clear to us that we therefore need greater powers than those that exist. One way in which we can strengthen the regulator is by allowing it to revoke licences. If a company decided not to pass on any falls in wholesale prices that we were lucky enough to have, the regulator could then revoke its licence.
The other important area that we want a strong new regulator to deal with concerns off-grid issues, which are prevalent in rural areas, particularly where new estates have been built and a supplier has a monopoly over a group of houses. It is difficult to break out of such contracts. It is important that the regulator has the power not just to tackle off-grid issues, but to revoke the licences of off-grid suppliers.
We want to be absolutely certain that the regulator has every single tool in the toolbox that it needs to deal with the abuses that energy companies impose on consumers. Of course, that has to be managed properly. As my right hon. Friend the shadow Secretary of State said, there has to be a proper procedure. There would be an appeals procedure, a notice period and protection for consumers to make certain that everybody was transferred to an adequate supplier before a company ceased to supply their energy. Those things really do matter. There are models, to which other hon. Members have referred, such as those in the United States where such powers work.
This is an additional power that we think is very important. It is clear that without it, energy companies have got away with hiking prices, mis-selling, misrepresentation and ripping off the consumer. We want to see an end to that. We want the regulator to have a proper footing that enables it to say, in no uncertain terms, “I have the ultimate power. I can simply stop you trading. You are warned that any further breaches that damage the consumer in any way will not be acceptable.” That, we hope, would have the effect of bringing the companies to heel and getting a much better deal for consumers.
Several hon. Members