Energy Price Freeze

Debate between Tom Clarke and Lord Dodds of Duncairn

Wednesday 6th November 2013 Commons Chamber

[Mr Clarke]

As always, my hon. Friend makes a valid point. I know that he represents Coventry South, but as he comes from Coatbridge, I am not surprised at the logic that he introduces to the debate.

I support the motion before the House. I do not believe that some of the ideas that we have heard from Government Members, including from the Secretary of State, about tinkering around the edges, transferring green taxes to general taxation and other measures that have been mentioned for over a decade would necessarily work. We heard yet again about switching. Well, I hope it works this time. On previous occasions the experience of my constituents has been that no sooner did they switch to one company than that company put up its prices. There was therefore very little point in them taking that advice. I question whether switching will work now.

Given the seriousness of the problems, there is a call for transparency. The veil of secrecy that exists in the energy industries is wholly unacceptable in the modern world, with the massive profits of energy companies and increasing fuel poverty. The energy markets are utterly broken. Surely we as a Parliament are not prepared to accept that without protest, and why should our constituents do so?

In the Government’s response to today’s debate a great deal of faith was placed in the regulators, but I do not share it—not for one second. In the debate that I mentioned at the start of my speech I had quite a lot to say about the regulators.

[Mr Nigel Dodds (Belfast North) (DUP)]

Rural areas and places such as Northern Ireland are heavily dependent on home heating oil, which means that energy bills are 50% higher on average than even the high bills that people in Great Britain are suffering, but there is no regulation of that sector of the energy market. Does the right hon. Gentleman agree that something needs to be done to help those families who are particularly hard hit by very high energy bills?

[Mr Clarke]

The right hon. Gentleman makes an excellent and very valid point.

That part of the motion relating to the regulator is very important. I do not believe that Ofgem has done the job it was expected to do, no matter who set it up. I have met Ofgem, written to it and listened to what it had to say. It responded to one of our representations on 1 January 2007, the day after Hogmanay—Scots Members will understand what I mean—by issuing a press release stating that if the energy companies, the big six, continued what they had been doing, in its view they would have “jam on their fingers”. Given the figures on hypothermia even then—I will mention those later if I have time—it should have spoken much more strongly.

We are entitled to ensure that the public are no longer duped about the actual cost of energy. I would have expected that to be the role of a proactive regulator. For example, the four major companies that have raised prices blamed wholesale prices, green levies and network costs for the latest bill increases of between £100 and £150, which have led to an average bill of £1,400 a year. In 2010 npower’s electricity wholesale prices fell by 13%, but that was not passed on to the consumer, and the average wholesale price fell by 4% in 2011 and rose by less than 2% in 2012, yet the company increased retail prices by 5.1%, 7.2% and 9.1% respectively in those years, and E.ON and EDF behaved likewise. More recently, wholesale energy prices rose by 1.7%, but consumers are facing an increase in their bills of 11.1%.

How can that possibly be justified? How can it be said that the market is working and that if we leave it alone things will work out? I do not know about the word “cartel”, but I know that there appears to be a measure of collusion, and certainly a measure of delivering price demands to customers that cannot be defended. I do not believe that Ofgem is best placed to act in our interests.

I support the commitment to a price freeze and think that it is very welcome. It is right that my right hon. and hon. Friends on the Front Bench should demand action now. I accept that it will take time to sort things out. If we have not done it in the 10 years to which I have referred—we certainly have not—then 20 months is not a very long time to have the kind of open debate and consultation about energy that I believe the British people are entitled to expect. I also congratulate North Lanarkshire council on its commitment to its house insulation programme.

I realise that many of these things are happening because of the austerity that exists in Britain today. Nevertheless, unless we have an energy strategy that is fair about prices, the environment, markets and proper regulation, our people will suffer. I do not believe that it is in the interests of right hon. and hon. Member, to allow such a situation to develop or beyond the wit of this Parliament, and indeed this Government, to do something about it now.