Additional Charges for Utility Bills not Paid by Direct Debit (Limits)

Philip Davies Excerpts

Tuesday 11th February 2014 Commons Chamber

[Philip Davies (Shipley) (Con)]

I commend my hon. Friend the Member for Harlow (Robert Halfon) for his campaigning zeal and for bringing to light another issue that has much popular support. He is renowned for such campaigns. I guess that if I am renowned for anything, which probably is not much, it is probably for sticking up for unpopular and unfashionable causes. Hence, I felt that the other side of this particular argument deserved a hearing.

First, I want to look at what is covered in the Bill. The motion refers to utility bills, but my hon. Friend seems to have concentrated on energy companies. I do not think he believes there is an issue in relation to water companies, and he praised telecommunication companies, so I presume the Bill is about energy companies. Looking at the Monopoly board, I cannot think of any other utilities that it could apply to, if it does not apply to water and telecommunications.

My hon. Friend’s motion refers to additional amounts charged for paying by direct debit. As I understand it, however, the difference in amounts is actually a discount for paying by direct debit, rather than an additional charge for paying by alternative methods. This is an important point, because the presumption is that if the gap were narrowed between paying by direct debit and paying by other means, that would inevitably mean that the costs would be levelled down. It is quite possible, however, that if we prevent these discounts, the cost to consumers will be levelled up and nobody will be better off. We will find that people paying by direct debit are made worse off, and I do not think that is particularly helpful to anybody.

The reduction for paying by direct debit is lauded by many people, including the regulator Ofgem, as well as consumer rights champions, such as Martin Lewis of moneysavingexpert.com and Which?, which states:

“The cheapest way to pay for energy is almost always monthly direct debit, as most energy companies offer a discount to those who pay for energy in this way.”

The benefits of direct debit payment are widely accepted. For example, councils in London, including, I think, Islington and Westminster, have offered council tax payers the chance to win £25,000 simply for switching to payment by direct debit. There are good reasons why direct debit payments are encouraged. They help with monthly budgeting, especially in these difficult times, and avoid the need for people to find bigger amounts of money in one go. They reduce the risk of the customer being cut off for non-payment and having to face huge penalties, or even the bailiffs, for not paying their bills on time. They save the provider extra costs incurred administering the payments and the debts that build up on accounts, which ultimately they have to pass on to someone, whether through increased bills or the loss of staff. Paying by direct debit is probably the easiest, quickest and cheapest way for people to pay, and companies and councils should be free to encourage this practice with monetary incentives if they wish to do so.

I think that my hon. Friend’s proposed Bill is unnecessary, because the power is already there to do what he wishes, should the regulator wish to use it. I think he mentioned this briefly. Ofgem writes:

“Ofgem has introduced new rules which prohibit undue discrimination between consumers. One of these rules ensures that terms and conditions for energy supply do not treat any group of customers differently without justification. The other rule requires that any difference in price between payment methods offered by a supplier should reflect the costs they incur for providing that payment method.”

It seems to me, therefore, that we do not need a new law along these lines. He merely needs to ask Ofgem to do its job properly, if he feels it is not already doing that, by enforcing the existing rules. The power is already there; we do not need a new law to do what can already be done.

My hon. Friend talked about people who pay bills promptly and who should not be penalised for not paying by direct debit. I agree wholeheartedly. In the past, some companies, including British Gas, offered their customers a prompt payment discount, no matter how they paid their bill—even if they paid other than through direct debit—but that discount was scrapped because Ofgem insisted on it as part of its retail market review. If he wants to help customers who choose to pay other than by direct debit but who are good customers who pay promptly, he should encourage the regulator to allow companies to reintroduce the prompt payment discount, which many used in the first place. That would be of great help to many of the customers he wishes to target with his Bill.

Many things get on my nerves in this House, but what does so more than most is politicians—I do not include my hon. Friend in this criticism; it is directed at others—who complain about excessive energy bills and talk about fuel poverty and how disgraceful it is that people have to pay so much for their energy, when they are exactly the same people who piled extra costs on to people’s energy bills by passing law after law pursuing some climate change ideology. Most energy bills nowadays contain more than £100 a year simply because of the policy decisions made by the same people who complain that energy bills are too high and should be reduced by about £100. That nerve and hypocrisy is the type of thing that does politics no credit whatsoever and makes my blood boil.

I want lower energy bills. That is why I am proud to have been one of the five MPs who voted against the Climate Change Act 2008 in the previous Parliament. It certainly is not becoming for the Leader of the Opposition to claim to be the friend of people who pay energy bills when he did more than most to bump up energy bills with his Climate Change Act. Funnily enough, the £113 typically added to bills by climate change policies is roughly the same as the average discount given to people paying by direct debit. If we want to reduce everybody’s bills by the £113 that my hon. Friend seeks for people who pay other than by direct debit, the easiest way to do it would be to scrap all this nonsense on climate change—this gesture politics that will not make a blind bit of difference to global temperatures, but which makes a massive difference to people’s energy bills.

On that basis, I commend my hon. Friend for bringing this matter to the attention of the House, but on the whole it is undesirable and certainly unnecessary. I do not intend to divide the House, but I thought it was worth while ensuring that the alternative view was at least heard so that people can make an informed decision about whether, after all of that, they agree with his Bill.

Question put and agreed to.

Ordered,

That Robert Halfon, Tracey Crouch, Jackie Doyle-Price, Charlie Elphicke, Stephen McPartland, Albert Owen, Mark Durkan, Lady Hermon, Mr Elfyn Llwyd, Ian Swales and Henry Smith present the Bill.

Robert Halfon accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 28 February, and to be printed (Bill 173).