Energy Prices

Robert Halfon Excerpts

Wednesday 14th January 2015 Commons Chamber

[Charlie Elphicke (Dover) (Con)]

rose—

[Robert Halfon (Harlow) (Con)]

rose—

[Caroline Flint]

I will give way shortly.

Before I set out my case, let me deal head-on with one issue raised by the Minister for Business and Enterprise, the right hon. Member for West Suffolk (Matthew Hancock). He claims that the energy companies are refusing to pass on reductions in wholesale costs because of the prospect of an energy price freeze. Let me first thank him for the vote of confidence in our prospects at the election and tell him he is right about one thing. I absolutely believe there will be a Labour Government in May and we will freeze energy prices until 2017.

The substance of what that Minister says, like so much he comes out with, bears no connection to reality for one simple reason. From the day we announced our price freeze, which, as I have said many times, would stop suppliers increasing their prices without preventing them from cutting them, we have been clear that the price freeze—[Interruption.] If Conservative Back Benchers wait and listen to what I have to say, I will provide the evidence of my words as they appeared in Hansard.

From the day we announced the price freeze, we have been clear that it goes hand in hand with our reforms of the energy market and the creation of a tough new regulator with the power to cut prices when costs fall. That is what the Green Paper we published in November 2013 says—at paragraph 2.25, for those hon. Members who have not yet found the time to read it. Let me remind Members of my exact words in a debate on energy prices in April last year, when I said that

“the Government should…intervene to require all suppliers to freeze their prices. As we have said many times before, that would not prevent companies from cutting prices, but it would stop them from increasing them.”—[Official Report, 2 April 2014; Vol. 578, c. 892.]

What could be clearer than that? I said the same in June last year, too, when I urged the House to back a motion to give the regulator the power to cut prices when costs fall, which Government Members defeated. Therefore, none of the energy companies and no hon. Members should be in any doubt about what we will do.

Yes, we will freeze prices until 2017, so that bills can fall, not rise, and we will also give the regulator the power to cut prices. Let me remind the House that the purpose of our price freeze is not just to give us time to reform the energy market for the future, but—crucially—to compensate consumers for the fall in wholesale prices in 2009, which was never passed back to them. If anyone is labouring under the illusion that the price freeze is, or will be, an excuse for not cutting prices to reflect falls in wholesale costs, let me disabuse them of that idea today.

[Robert Halfon]

Under this Government, fuel duty was not just frozen but cut, and the fuel escalator was got rid of. That means that in tax terms, the average motorist is better off by 20p every time they fill up the family car, amounting to hundreds of pounds a year. Given that this debate is about energy prices, why did the right hon. Lady and her party vote against all those measures?

[Caroline Flint]

On the average energy bill, gas and electricity have gone up by about £260 since 2010. I shall say a little more about who has been hardest hit by that. If we look at the poorest people in our communities, we find that their price rises have gone up substantially more. On every occasion since I was given this job by my right hon. Friend the Leader of the Opposition, I have consistently raised concerns, as I think the hon. Gentleman will appreciate, not only about wholesale cost falls not being passed on, but about the sharp practices going on in the sector, which need to be attended to.

--- Later in debate ---

[Caroline Flint]

Labour Members certainly agree with that, as do others, including the CBI. Energy should be a managed market. It is different from other things that we may buy, because it is essential to life. It keeps our homes warm, it keeps the lights on, and it keeps our hospitals and our businesses going. In this area it is absolutely clear, and I would have thought there would be some agreement from those on the Government Benches about this, because they have welcomed the CMA review. Why would they welcome a review if they thought everything was hunky-dory? Clearly there is something wrong in the way this market has been working, and that is why we have risen to the challenge to do something about it.

[Robert Halfon]

The right hon. Lady is being extraordinarily generous in giving way to me. She said that the energy companies are only reducing prices to new customers, but under the Government’s regulations they have to offer the cheapest tariff. I know that because I regularly get letters from EDF, my energy provider, not only offering me a cheaper tariff but informing me of the cheaper tariffs on offer from other companies.

[Caroline Flint]

The hon. Gentleman has on a number of occasions stood up for consumers where he has concerns about how the energy sector is working. I say this to him: the energy companies have been asked to inform their customers of the cheapest tariff, which is okay, but the truth is that we have the enormous problem of the inherited legacy post-privatisation of a very sticky customer base. That is demonstrated by the fact that the number of people switching is falling, not increasing.

Let me give the hon. Gentleman an example of another practice that is happening at the moment. It is called white labels, and it is where an energy company—one of the big six—offers through another organisation, maybe a supermarket or another company, a cheaper tariff to people who decide to be customers of that organisation, when it is the energy company providing the staff in the call centres and doing the training behind it, but they do not let their existing customers know what is going on. That is a good example of how they get around the offer they should be making to their existing customers to reflect wholesale cost falls for everyone, not just those whose business they want to acquire.

--- Later in debate ---

[Mr Davey]

The hon. Lady refers to oil prices but we are talking about gas and electricity prices. Oil prices relate mainly to transport—to petrol and diesel. However, assuming that she meant gas and electricity prices, thanks to competition, some of these price falls are coming through, and I want to give the House more detail about that.

Consumers can get the benefits not just of lower wholesale prices; many can get even greater savings, often more than double the savings from lower wholesale prices. Again, however, we need to do more to help consumers know that they can cut their energy bills today.

[Robert Halfon]

I am grateful to my right hon. Friend for what he is saying, and for the fact that the Government have taken £50 off energy bills. Further to the point that was made earlier, will he look at the issue of direct debits? The millions of people who do not pay by direct debit face a premium on their energy bills. I know the Government are looking at this, but it seems incredibly unjust and they could address it in order to help keep bills down.

[Mr Davey]

We have indeed looked at this issue, as my hon. Friend says, and tried to make sure that any differences relate only to the costs associated with the payment method, and that there is no exploitation.