Energy Prices and Profits

Debate between Tom Clarke and Christopher Pincher

Wednesday 4th September 2013 Commons Chamber

[Christopher Pincher (Tamworth) (Con)]

At risk of continuing the Select Committee love-in, may I also say that it is a great pleasure to follow the hon. Member for Ynys Môn (Albert Owen)—a fellow member of the Energy and Climate Change Committee? I am pleased to speak in this Opposition debate, which is important to our constituents.

Let me gently chide the right hon. Member for Don Valley (Caroline Flint) on her motion and her speech for revelling in past glories, without recognising the last Labour Government’s errors of omission and commission with respect to energy policy. If we look at energy policy in the long view, its impact on energy prices and the effect of those prices on fuel poverty, we will remember that between 2004 and 2009, fuel poverty effectively trebled as a direct consequence of the energy price increases—largely gas prices, which went up by 42% in the Blair years between 2003 and 2007, and by a whopping 74% by 2009. The Leader of the Opposition, who tabled today’s motion, should be somewhat embarrassed to remember that for some of that time he was Secretary of State for Energy and Climate Change, so that happened partly on his watch, as he watched and saw 2.8 million more people being trapped by the scourge of fuel poverty.

In the first decade of this century, Labour, with laudable intent, spent £25 billion on measures to alleviate fuel poverty, but those measures were swamped by the increase in energy prices—not a description that I chose to use, but one chosen by the Library. Labour’s solution, which was to spend more and more money to try to alleviate fuel poverty, was like sticking a plaster on a gaping wound, or like giving Angiers junior aspirin to a pneumonia patient: it dealt with the symptoms, not with the problem itself.

In line with a feeling of consensus, we certainly need to find some new solutions. There are more, but I shall mention four of them, some already mentioned today. The first is to deal with the complexity of energy bills; we all agree that they are far too complex. Many consumers—possibly the poorest and the least educated —do not feel confident about switching their bills. About 75% of consumers have not switched their energy provider in the past two years, while 55% have not even looked to try. We certainly need to make the bills much simpler, so that consumers become more confident about switching. Tariffs, too, need to be made simpler, and we need to ensure that people are put on the lowest tariff that is best for them. The Energy Bill commits to that, and the Prime Minister is committed to it. I am sure that it will happen.

The hon. Member for Ynys Môn—I would like to call him my hon. Friend—mentioned the difficulties energy companies seem to have in communicating with their consumers. That is true. I am a consumer. Nine months ago, I inherited a supply from RWE npower, but I have still not received a bill. The company has been unable to put me on a direct debit, and it does not call back when it says it will, leading me to wonder what confidence I can have in being able to deal sensibly with that company. We need Ofgem to make sure that these companies deal clearly, transparently and effectively with their customers.

[Mr Tom Clarke]

Will the hon. Gentleman give way?

[Christopher Pincher]

I will, because giving way will earn me an extra minute.

[Mr Clarke]

I hope that my intervention will be helpful.

Some of what the hon. Gentleman has been saying is very relevant. Now that he has referred to the role of the regulator, let me ask him this. At a time when wholesale prices were falling rapidly but that fall in prices was not being passed on to the consumer, the best that Ofgem could say on Hogmanay—which is before new year’s eve—was that if the six companies continued to operate in the same way, they would have jam on their fingers. Does he think that that was enough?

[Christopher Pincher]

I can certainly tell the right hon. Gentleman that the Select Committee is concerned about Ofgem’s performance, and I think that the Government are as well. The Government must ensure that Ofgem acts more effectively to represent consumers.

The fourth way in which I think we can help consumers to pay less and can deal with fuel poverty is by reducing our over-reliance on imported gas and oil, and hence our exposure to the fluctuations in international hydrocarbon prices, which is one of the reasons why bills have gone up like rockets, causing so many consumers so much pain.

There is no easy solution to the problem of developing home-grown energy, much as its proponents may like to think that there is. Wind is not the solution in either the short or the long term, because it is intermittent. In the short term, nuclear is not the answer, because building it takes so long and is so costly. However, we could profit from proper exploration of the 200 trillion cubic feet of shale gas that is buried beneath our feet—some 60 years’ worth of supply according to the current trajectory—to help to reduce our exposure to international prices and the cost that that implies.

In the United States, which I realise is not a perfect mirror image of our country, the shale gas revolution has cut wholesale energy prices in half. Gas in the US now trades at a price five times lower than the price in Europe, and seven times lower than the price in Asia. That is of massive benefit to American industry. It gives it a competitive edge, so it can create more jobs and the people who become employed have the income with which to pay their power bills. It also reduces the cost to hard-pressed consumers. I therefore hope that we will pursue shale gas with a vengeance. I commend the Government for what they have already done in ending the moratorium, increasing the number of licences and—I hope, for only a short period—reducing the tax on start-ups, because this is one way in which we can ensure that energy costs are reduced.

I hope that the Government will take those four points on board, and I look forward to their being addressed by my right hon. Friend the Secretary of State in, probably, a very short time.