Energy Policy and Living Standards

Robert Halfon Excerpts

Wednesday 10th December 2014 Westminster Hall

[Robert Halfon (Harlow) (Con)]

rose—

[Dr William McCrea (in the Chair)]

We will now hear a short intervention by Robert Halfon.

[Robert Halfon]

On a point of order, Dr McCrea. I have permission from the hon. Member for Clacton (Douglas Carswell) to make a short speech in this debate. Can I just confirm that that is the case?

[Dr William McCrea (in the Chair)]

Yes, you have permission to make a speech, but it needs to be short, because we have to give the Minister time to respond.

[Robert Halfon (Harlow) (Con)]

Thank you, Dr McCrea; I will speak for three minutes or so. I am very grateful to the hon. Member for Clacton (Douglas Carswell) for giving me permission to make a speech, and I congratulate him on securing this important debate. I will focus on different areas, but I do think that the Government have done good things—in particular, providing a rebate to every domestic electricity customer and reducing bills by £130 for 2 million of the poorest households through the warm home discount. And of course the hon. Gentleman will know about the huge fuel duty freeze that the Government have pledged to maintain across the Parliament, so that the price of fuel is 20p lower in tax terms.

As I said, I will concentrate on a number of areas. The first is the difference in the cost of energy depending on which payment method a customer uses. I have worked with the hon. Member for Ynys Môn (Albert Owen) on this issue. Earlier this year, I conducted a cross-party campaign, with the support of more than 100 MPs, against the practice by energy companies of charging customers extortionate amounts for not paying by direct debit. My right hon. Friend the Prime Minister ordered an investigation into that, but all that Ofgem has said to me is that although there were some anomalies, such as the £390 extra that Spark Energy customers were paying, those cases were exceptional. However, Department of Energy and Climate Change figures show that the average person who does not pay by direct debit pays £114 more each year. That is just not good enough.

One elderly lady in my constituency of Harlow, who always paid on time via the post office, received a letter saying that she would have to start paying an extra £63 a year if she did not start paying by direct debit. That is unacceptable. Charges such as that are excessive and harm the most vulnerable in our society, particularly the 2 million people who do not have proper banking facilities, which makes payment by direct debit almost impossible. I hope that my right hon. Friend the Minister will clarify what the Government are trying to do on that.

Secondly, there is a problem, which has been raised, regarding prepayment meters. The cost of using those is often significantly higher than of using any other method. Traditionally, that was justifiable: companies had to pay people to go and empty the meters of coins. But there are now prepayment cards. Those who use prepayment meters are charged extra even though they are the least able to afford it. That needs to be looked at urgently.

Thirdly, there are other ways in which energy bills are increased, often through no fault of the consumer. The example has been mentioned of the 4 million households who are off the gas grid and will never be able to get the best deals as they cannot get a dual-fuel discount. It would be helpful if standard criteria could be introduced across suppliers to allow families with children clearer guidance as to whether they will qualify for the warm home discount.

Finally, I believe that the only way in which the situation can be improved is not by imposing an energy price freeze, which will only hike prices up in the long term, but by scrapping the existing regulator and creating an energy version of Which?, a consumer regulator that stands up for the customers, not the energy companies, and that has real teeth. As pointed out in The Sun newspaper today and as mentioned by the hon. Gentleman, The Sun is running a campaign for fuel companies to cut their prices following a significant fall in the international price of oil. I have previously handed a petition to the Office of Fair Trading with FairFuelUK calling for an inquiry into the rocket and feather effect, but there has never been a full inquiry.

In conclusion, stopping the premium on non-payment by direct debit, action on additional and hidden costs and turning Ofgem into a genuine consumer body would make a huge difference to residents of Harlow, and to energy bills and the cost of living for millions of people across the country.

[Mark Reckless (Rochester and Strood) (UKIP)]

rose—

--- Later in debate ---

[Matthew Hancock]

I have no doubt that the massive expansion of the extraction of shale gas in America has had a downward impact on gas prices. Allied to that is the fact that America did not have many export terminals—it is now building them—which meant that it had a relatively closed market. We are working hard to get shale gas extraction going in the UK, where I think that it has huge potential. The Infrastructure Bill, which is currently before the House, proposes changes to make it easier to get shale gas out of the ground in a carefully regulated and safe way. I welcome the hon. Gentleman’s support for that.

The capacity mechanism and the changes to make our energy system more driven by competition are designed to ensure that we get that security of supply as well as the cheapest possible cost. That is best done through a market mechanism, but the market must have a strong framework around it, because we must ensure continuity of supply in order to keep the lights on.

[Robert Halfon]

Will the Minister make a brief comment about the continued problem of the big energy companies charging a premium to vulnerable people who do not pay by direct debit?

[Matthew Hancock]

That is something that I am actively looking into, and I look forward to working with my hon. Friend to take it forward.