Domestic Gas and Electricity (Tariff Cap) Bill

Richard Graham Excerpts

2nd reading: House of Commons
Tuesday 6th March 2018 Commons Chamber

[Richard Graham (Gloucester) (Con)]

What a pleasure it is to contribute to the debate, because there is so much to respect about the process by which Ministers have guided the Bill forward. It starts, of course, with the crucial truth that many of our constituents feel strongly that their energy bills are not fair. From there, similar solutions were set out in the two largest parties’ manifestos. We had the report from the Competition and Markets Authority, the letter from my hon. Friend the Member for Weston-super-Mare (John Penrose), which I supported very early, and the Business, Energy and Industrial Strategy Committee’s report and pre-legislative scrutiny. Today we have seen an unusual cross-party consensus, echoed among Opposition Members by the hon. Member for Leeds West (Rachel Reeves), the right hon. Member for Birkenhead (Frank Field), the hon. Member for Ynys Môn (Albert Owen), the right hon. Member for Don Valley (Caroline Flint) and the hon. Member for Harrow West (Gareth Thomas), and by all my colleagues on the Government side of the House. This has been a model of how to build support, not least because we all want to do something to help so many of our constituents.

Interestingly, the Bill does not target the most vulnerable, because broadly speaking they are already on fixed or prepayment tariffs, which are already capped. The Bill provides for a temporary, absolute cap for 20 months, starting in time for the winter of 2018-19—I know that it feels as though we are still in the winter of 2017-18—which will affect a slightly different category of our constituents: the 11 million who are on standard variable tariffs, many of whom have been on them for many years, paying roughly £300 more a year than they need to. There are twice as many of our constituents on such tariffs as there are switchers.

I wish we had the data on standard variable tariffs. I believe that the Government’s statutory instrument will make the data available—I hope that the Minister can confirm this—so that we can see what the details actually are in our constituencies. My guess is that in Gloucester, which is part of the huge west midlands energy region, about 25,000 of my constituents are on standard variable tariffs. What we do know from the west midlands energy statistics is that 20% of electricity customers and 34% of gas customers are actually served by their legacy supplier, and have therefore been on a standard variable tariff for a very long time.

I also guess that many of our city’s hard-working residents—we have the fourth highest employment rate of any city in the country—who are on relatively modest salaries, with an average salary of around £25,000, do not have enough time to switch. The Bill will therefore have the greatest impact on hard-working families and individuals, and it will enable them to budget for their family’s biggest cost after council tax. It is to them that the Bill is effectively dedicated.

There is a bit of an urban myth among Opposition Members that nationalisation is the real answer, but that is simply not backed up by history. We know that when energy companies were owned by the state, there were twice as many power cuts as there are now, and we know that energy prices fell after privatisation, only to rise between 2000 and 2008—we know which party was in power then—due to lax control of the regulatory environment.

What is needed today is for the balance of interests between the Government, the regulator, energy companies and customers to work above all for customers—our constituents. The Bill sorts the one major issue for 11 million people—the standard variable tariff—for now, and allows the Government and the regulator to focus on how in the longer term we use innovation, better smart meters, better and easier ability to switch, and a greater use of renewables to ensure that the energy market works as best it can.