Energy Price Freeze

Toby Perkins Excerpts

Wednesday 6th November 2013 Commons Chamber

[Toby Perkins (Chesterfield) (Lab)]

If there was any doubt about the extent to which the Government have got it wrong, the fact that they think an energy policy needs the approval of the big six before being credible tells us everything we need to know. Will my right hon. Friend confirm which of the energy companies are making the biggest profits, and are they therefore the biggest investors in future infrastructure?

[Caroline Flint]

Centrica, which owns British Gas, has passed on the largest share of profits to its shareholders but made the least amount of investment, but all the companies are making good profits.

What we have not seen is a market that encourages competition to the extent that the energy companies strive to compete with each other on price and to win the support of their customers. That is also what the motion is about, because the fourth myth is that our proposals will somehow undermine competition, but our market reform proposals would increase competition. They would level the playing field and enable independent generators and small suppliers to compete more effectively. Of course, no energy company, big or small, wants us to do something that reduces its profits, but suppliers such as the Co-op recognise that in order to restore trust the people need to see a clean break with the past. Smaller suppliers such as Ecotricity and Ovo, which might not necessarily like our price freeze, nevertheless say that it does not threaten their viability.

The fifth myth is that the problems we see in our energy market today can somehow all be laid at the door of the previous Administration, a Labour Administration who—the House might recall—introduced winter fuel payments, which the current Secretary of State described at the time as a gimmick, insulated over 2 million homes through Warm Front and lifted over 1.5 million people out of fuel poverty. Before Labour came to power, consumers could not even switch electricity supplier. As he knows, the restriction on suppliers also being generators was removed in 1993, under the previous Conservative Government, which led to the vertical integration we have seen over the past two decades. If the Secretary of State wants to compare records, I am happy to have that debate, but I think that the public would be better served if we all engaged in a proper debate on how to reform the market for the future.

The Secretary of State might not agree with our proposals, and that is his choice. He will have to account to the 47,550 bill payers in his constituency if he opposes our price freeze in the Lobby this evening. I believe that the public deserve a proper debate. The motion presents the House with clear proposals to restore people’s faith in the energy market and get them a fairer deal.

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[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

rose—

[Toby Perkins]

rose—

[Mr Davey]

I am going to make some progress. I have given way a lot and will not give way for a while yet.

On Labour’s pool and ring-fencing proposals, the Government contrast the policies of the right hon. Lady with our policies for greater transparency in the financial accounts of the big six and for Ofgem’s wholesale market reform “Secure and Promote”. Interestingly, when I asked her whether she had read that document, she said that she had not—[Interruption.] To be fair, let me correct the record: she did not answer the question. If she has read it, she can come to the Dispatch Box and tell us. She is not coming to the Dispatch Box, so we know that she has not read the document. Let me help the right hon. Lady. It would have been beneficial for the Opposition to have read the documents. They claim that Ofgem is appalling and is not doing any work on competition, but the document shows that it has done so.

Interestingly, the reason for the work is given at the beginning of the document. Ofgem produced the document because it wants to make more competitive markets to help the consumer. The right hon. Lady has not read the document. That is not very good. It is clear from her policies that she has not done so.

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[Mr Davey]

I am going to answer the question. When the hon. Member for Southampton, Test reads this paper, he will know that it is in a series of papers and other papers deal with those issues. The relevant paragraph—it does not deal with netting off, but it deals with the impact of netting off—is on page 7. The right hon. Member for Don Valley should like this, because we have some agreement on the need to make sure there is competition in the wholesale markets. It states:

“It could also encourage business models that reduce the need to trade in the wholesale market, such as vertical integration and long-term contracts. Poor liquidity therefore inhibits competition between incumbent players in the market.”

In other words, we need these proposals so that there is more competition in the forward markets so that new entrants can come in and the prices that the incumbents charge are more transparent—something that the right hon. Lady says that she wants to see.

[Toby Perkins]

I have heard the Secretary of State in this mood before. The last time was when he was defending the pub companies. A few months after he left that job, his party agreed that we were right and that he had been wrong all along. He is a tremendous defender of the vested interest. Can he tell me why any of the thousands of people in Chesterfield who happily signed our petition because they are so concerned about the cost of fuel should have any confidence, listening to him, that because he is doing this job things will be any different in the future? People are struggling, and he just does not have the answers.

[Mr Davey]

The hon. Gentleman cannot have been listening to the debate. It is clear that it is the Government who are standing up to vested interests, because we are bringing in competition against Labour’s big six. The problem for the Opposition is that they created the big six: we are the ones putting pressure on the big six.

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[Anas Sarwar (Glasgow Central) (Lab)]

The Secretary of State spoke for just over 35 minutes. Nothing he said will have given any comfort to my constituents, or to anyone suffering as a result of the energy crisis. Perhaps he should reflect on what he has said and come back with something that will mean a lot more to people struggling with their household bills at this difficult time.

[Toby Perkins]

My hon. Friend will be aware that thousands of people in Chesterfield have signed a petition in favour of the policy we are debating today. After today, rather than send them a long letter, I will send them the Secretary of State’s speech, so they can see exactly what the Liberal Democrats think of the struggles they are facing.

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[Albert Owen]

The Prime Minister has said numerous times on the record—I will find this and send it to the Minister—that his Government are the greenest ever and are putting on extra green levies; when he compares our schemes with the Government’s schemes he boasts that these levies are actually increasing to help on that. That is exactly what the Prime Minister has done, and I am sorry that the Minister does not understand his own Prime Minister—it is complicated at times.

[Toby Perkins]

rose—

[Albert Owen]

I will give way briefly, but I am cutting into my own time.

[Toby Perkins]

This is the quote that my hon. Friend was looking for. The Prime Minister told “The Politics Show”:

“I think green taxes as a whole need to go up”.

[Albert Owen]

There we are. I am sure that the Minister agrees with the Prime Minister on that, and I thank my hon. Friend. Another levy that this Government have introduced unilaterally and which has pushed prices up is the carbon floor price. It is an Osborne levy if ever there was one. Again, the Government boasted in the Budget about how they were using these levies to control companies and push up costs on business. Those who blame Europe should remember that this is in addition to the European emissions trading scheme, and that companies in Britain are paying more because of what this Government have done this year—the levy came into being in April. It is no use their blaming Europe, or previous Governments. They must take responsibility, because all our constituents are paying the price of this Government's energy policy. That is why we are having the debate today.

I want to mention small businesses, because they are suffering more than the domestic customer. Average rises for small businesses, which do not have the luxury of comparison sites on which they can switch easily, have been up to 20%. I hope that the Government—and, indeed, my right hon. Friend the Member for Don Valley (Caroline Flint)—will consider helping those businesses. They cannot absorb the cost, so they pass it on to the customers. That means that we pay for those rises.

I am a member of the Select Committee on Energy and Climate Change and we had a robust discussion with the energy companies last week. Let us be honest. We hear the Government talking about Labour’s big six, and the Prime Minister leads on that. They forget that in 1993, Sir John Major—that Marxist, who has been accused of being a red by many people for wanting to intervene in the market—set up the integrated system we have now and allowed the then big three to dominate the energy market. Let us not take any lessons about how the big six were set up. Flawed privatisation policies and the former Prime Minister’s interventions allowed the companies to be both generators and retailers. That is the situation. I know that it does not sit comfortably with the Conservative party, but it is a fact and I challenge the Minister to say otherwise.

We have talked about green levies and wholesale prices.

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[David Morris (Morecambe and Lunesdale) (Con)]

It is a pleasure to be in your presence while you are in the Chair, Madam Deputy Speaker. This is the first time I have spoken under your guidance.

I want it to be known that I am not standing up for energy companies or anything to do with them. I am standing up for common sense and the consumer. All hon. Members are keen for energy prices to drop. I am proud to support the work of my right hon. Friends the Secretary of State for Energy and Climate Change and the Prime Minister. For the first time in decades, genuine action is being taken to improve our energy market. I really believe that.

The right hon. Member for Don Valley (Caroline Flint), who is not in her place, said a lot about myths. All political parties like to talk about myths, but let us talk about reality. If a potential Prime Minister stands up in the Chamber and says, “I am going to freeze energy prices,” they will send the stock market into disarray. That is what happened. Overnight, £1 billion was wiped off the stock market in energy.

I have two nuclear power stations in my constituency—energy is the largest employer in my constituency. Hon. Members can imagine the horror of my constituents who saw that. They knew immediately that the energy companies would react to safeguard their interests after losing £1 billion, and they hiked energy up by 10%. They then wanted their customers to sign up to a three-year freeze deal, which would completely negate what the Leader of the Opposition wanted to achieve. That is the reality of what happened.

[Toby Perkins]

Is the hon. Gentleman seriously saying that the price freeze offered by a number of companies recently—not any future price freeze—was linked to the Labour party conference? Is he saying that the Labour party conference announcement led to those price freezes? I have not heard anyone else make that case, so is that what the hon. Gentleman is seriously saying?

[David Morris]

I am referring to the announcement in the Chamber—obviously this is a more official domain than the Labour party conference.

The three-year price freeze negated completely the policy. It seemed popular, people are still talking about it, and the press are talking about it with gusto. But the reality is that unless the energy industry is renationalised, that is how the markets will react. Last time there was a similar run, the Leader of the Opposition was Secretary of State for Energy and Climate Change. We had a price fix of three years. If he could not do anything against the markets when he was in power, what makes him think that he can do it now? It is all pie in the sky. In reality, the energy companies will carry on looking after themselves, the consumers will get the hike on the threat of a price freeze, and it will cause pandemonium among consumers, especially in their pockets.

As I have said, my constituency has two nuclear power stations. The announcement by the Leader of the Opposition has the potential—if it has not already—to damage pension funds through the shares in the company.

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[Toby Perkins (Chesterfield) (Lab)]

I am delighted to have the opportunity to speak in such an important debate, because I believe that today we are discussing an issue that goes to the heart of the cost-of-living crisis that my constituents are living through day in, day out. We need urgent action to address the problem and I am pleased that that is exactly what Labour proposes today.

Since the Prime Minister took office, energy bills have risen by almost £300 per family. Of course, we all know that when my right hon. Friend the Member for Doncaster North (Edward Miliband) was Energy Secretary, prices came down. During the debate, I have been saddened but also a little heartened. I am saddened because we have heard from a Government who are making it absolutely clear that they will take no action on one of the key issues facing my constituents. At a time when members of the public are calling so desperately for something to happen and we are hearing a Government who are so very much out of touch defending the status quo, I must admit that I was a little heartened to think that when we go to the next election they will have to look the electorate in the eye on the doorsteps, saying, “We were given the chance to do something, but we turned our backs on you and stood up for the big energy companies.” That heartens me very much in electoral terms, despite my disappointment about the impact on my constituents.

Opposition Members have raised an army of straw men to explain why they cannot take serious action. It is not possible for anyone who is worried about energy prices to hear the speech of the Secretary of State and believe that things would be any different under him in future than they are today or than they were yesterday. He raised the green deal. The number of people assessed for the green deal would fill Old Trafford, but the people who have taken up the green deal would not even fill the Chamber. That is the scale of the failure.

[Gregory Barker]

The hon. Gentleman is absolutely wrong. He confuses the number of people who have taken up green deal finance with the number of people who have had an assessment and installed green deal measures. Once they sit down at their kitchen table, a surprisingly large number of people—thousands and thousands—elect to take all the savings immediately and install the measures.

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[Madam Deputy Speaker (Dawn Primarolo)]

Order. Interventions are brief. I allowed the point to be made, but that really was too long.

[Toby Perkins]

Just like many other Government Members, the more the Minister spoke the less he said. Seven people in the Prime Minister’s constituency benefited from that.

[Chris Ruane]

Six.

[Toby Perkins]

Was it six? I got it wrong. The measure is a pitiful failure and to hold it up as an example of a Government success shows how little the Government know and how little they are doing.

In the few weeks since the Labour conference the Government have been in complete disarray on one of the central cost of living issues that we face. When I listened to the speech by the hon. Member for Morecambe and Lunesdale (David Morris) I was reminded of someone who thought that if we did anything to these powerful energy companies they might end up hurting us in return. Basically, we should just leave them alone, because if we did not they might up put up prices or not increase wages for his constituents. I was reminded of someone who thinks that the way to tackle a bully is not to tell anyone about what they are doing because the bully might get them after school. It was absolutely pitiful, and the hon. Gentleman’s constituents will have heard what he said—I am sure that they will be made aware of it—and they will know that he is someone who absolutely refuses to take their side or stand up to the big six.

When we hear Government Members say that we need to put pressure on the big energy companies while at the same time coming up with a host of risible reasons for not taking action, saying that that would be dangerous, we know that the Conservatives and Liberal Democrats are not the answer to this problem.

Prices are going up because when the wholesale price of energy increases the energy companies pass that on, but when it drops our constituents do not see a fall in their bills. If that sounds familiar to Government Members I would not be surprised, because it is precisely what the Prime Minister said when he was Leader of the Opposition. In Bedford in 2009, when he was still attempting to occupy the centre ground, he said:

“I think we all feel that when gas prices or oil prices go up, they rush to pass the costs onto us and yet when we read in the papers that the oil price has collapsed and the gas prices are coming down, we wait for a very long time before we see anything coming through on our bills”.

I could not agree more, and it is a shame that the Prime Minister does not say now what he did when he was attempting to be elected.

Only last month, Which? estimated that flaws in the market have left consumers paying £3.9 billion a year over the odds since 2010. We have a duty to our constituents to end this great rip-off. One-nation Labour has a long-term vision to do just that—not simply with the energy price freeze but with a suite of measures that will radically transform the market. There are three steps that will make a significant difference, including, first, separating the parts of the business that generate energy from the parts that sell to consumers. My hon. Friend the Member for Southampton, Test (Dr Whitehead) was excellent, as he always is, on the importance of this, setting out its real value. Secondly, we would introduce a simple new tariff structure and make sure that people over 75 always paid the lowest tariff. Thirdly, there would be a measure to abolish Ofgem, which has failed to stand up for consumers, and to replace it from January 2017 with a new energy watchdog with teeth.

The 42,000 households in my constituency cannot wait for those proposals to bear fruit. They need action now. They need a Prime Minister who is not strong on the weak and weak on the strong but who is brave enough to stand up to the energy companies and deliver a price freeze. An incoming Labour Government will legislate with immediate effect to make this happen and will put an average of £120 back into the pockets of every household in Chesterfield. Unfortunately, the response of the Prime Minister and the response that we heard from the Secretary of State was once again to stand up for the wrong people and to take the side of vested interest. It seems that the Conservatives will do anything to prevent the big six from having to reduce their profits.

Instead, the Prime Minister has suddenly turned on the evil of green taxes. As my hon. Friend the Member for Ynys Môn (Albert Owen) reflected earlier, green taxes are so evil that he told “The Politics Show” in 2006:

“I think green taxes as a whole need to go up”.

In 2006 he told “Newsnight” that

“we think green taxes should take a bigger share of overall taxes.”

So evil were these green taxes that his Government introduced 60% of the green levies currently imposed on energy companies. We all remember when the Prime Minister was the Leader of the Opposition and was attempting to present the modern face of Conservatism. He has certainly travelled a long way from “vote blue, go green”. He has shot the husky and simply told people to pull up their hoodie. He is not standing up on behalf of the people in my constituency.

The Prime Minister has not explained how, when he abolishes the green levies, the burden will move to general taxation. Where will the money come from? I do not believe the Government are going to increase taxes. That leaves one of two possibilities. Either it will go on to the deficit, which the Government have so singularly failed to eradicate in the way they promised, or they will reduce the budget for schools, hospitals, roads or other Government Departments. We have had nothing from the Secretary of State or Ministers about how they propose to fund those measures from general taxation. It was interesting that in the Secretary of State’s entire speech, he did not once mention the idea of getting rid of green levies and raising the money from general taxation. That spoke volumes about the extent of the disarray that the Government are in.

The issue is not just the impact on consumers. Labour is very much the party of small business. Our policy of an energy price freeze is an example of that. Annual energy bills for small businesses have gone up by an average of £10,000 since 2010. Small businesses will benefit hugely not just from the price freeze, but from a market that works for consumers. In addition, our plan to cut business rates for small business would mean an average saving of nearly £450 for 1.5 million business properties. These two policies demonstrate to small businesses that it is only Labour that will stand up on their side and cut their costs so that they can reinvest in new jobs and new products. Labour’s policy is good for consumers, good for business and good for the economy. I am proud to say that I will be supporting it and voting for it today.

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[Mrs Hodgson]

Tory Britain—exactly. What are the Government doing for these people? What they need—what we all need—is an energy market that is forced to work in the interests of consumers, not shareholders. But until a Labour Government have the opportunity to make the required changes stated in the motion, they need a Prime Minister with the bottle and the guts to tell the energy companies that enough is enough—that people in 21st-century Britain should be able to have a bath in their own home and to go to bed warm enough to wear just a nightie or a pair of pyjamas, and not to die because of the cold with central heating they cannot afford to use.

[Toby Perkins]

I very much appreciate what my hon. Friend is saying—she is making a very powerful speech. The problem is not that the Prime Minister does not have the courage to stand up to the energy companies; it is that it is not in his make-up to stand up to the energy companies. It is not what he wants to do; it is not what he came into politics to do. He is not in politics to stop the energy companies making profits and to make consumers better off.

[Mrs Hodgson]

Is not the country all the worse for that? Well, I hope that the Prime Minister and his Government sleep warm in their beds at night, because huge numbers of people in the country he governs certainly do not, and will not this winter.

I would like to wrap up my remarks by quoting some extracts from a letter that I received a couple of weeks ago from Mrs Templeton, a constituent of mine from Biddick in Washington. Mrs Templeton wrote:

“I am writing to say how disgusted me and my hubby are about the rise in energy prices…Mr Miliband says he will freeze prices in 2015, but what can be done now?...I cannot believe the country is taking this on the chin...we should fight back…The top people in these companies will not worry about the increase, but believe me, most of the country are afraid of putting their heating on.”

There are millions of Mrs Templetons across the country—people who are sick of their bills keeping on going up but never coming down, sick of seeing energy companies’ profits ballooning while they have to choose between heating and eating, and sick of this Prime Minister doing nothing about it but defend the status quo. If he does not have the strength to fight back on behalf of Mrs Templeton and all those other people across this country, I suggest that he should stand aside and let someone who does do so.