Energy Price Freeze

Tom Greatrex Excerpts

Wednesday 6th November 2013 Commons Chamber

[Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)]

We have had a good and interesting debate this afternoon, with many speeches from right hon. and hon. Members, particularly those on the Labour Benches, that have highlighted the importance of rising energy prices to many hard-pressed families and struggling businesses.

Let me address the thrust of the lengthy and at times tortured speech made by the Secretary of State. It is a shame that he is no longer in his place, but he explained that he would have to leave and I am sure that the Minister of State, Department of Energy and Climate Change, the right hon. Member for Bexhill and Battle (Gregory Barker), will report back to the Secretary of State the comments made this afternoon. The Secretary of State started by mentioning consensus on the Energy Bill. As the Minister knows—and as his colleague, the Minister of State, Department of Energy and Climate Change, the right hon. Member for Sevenoaks (Michael Fallon), who is now in his place, will recall from his involvement in the final stages of the Energy Bill, after his two predecessors started the process—we scrutinised the Bill and, on balance, supported many of the measures contained in it. However, on Second Reading—the Minister, the right hon. Member for Bexhill and Battle, can check Hansard and pass this on to the Secretary of State; we said it then and again afterwards—my right hon. Friend the Member for Don Valley (Caroline Flint) warned that the Energy Bill

“fails to include direct measures to increase transparency, competition or liquidity or ensure that the energy market is properly regulated and works in the interests of consumers.”—[Official Report, 19 December 2012; Vol. 555, c. 906.]

Both my hon. Friend the Member for Liverpool, Wavertree (Luciana Berger), who spoke in the debate, and I have said that many, many times, and I am sure that the Minister heard it, as did other members of the Energy Bill Committee. This is not new: we have been saying this, and raising aspects of the problem, for at least a year, and raising some aspects for nearly two years. The Secretary of State said that he wanted consensus back. We have consensus on some of the measures in the Energy Bill, but we said at the outset that there were things missing from the Bill. That is what our policies aim to rectify, and if Ministers could get over themselves a little bit they could introduce those reforms, and consumers and other people would be in a much better position.

The hon. Member for Wealden (Charles Hendry), one of the Minister’s predecessors, discussed long-term signals and the importance of securing investment in energy infrastructure. That was the focus of the process called electricity market reform, which became the Energy Bill. There is also an important point about consent. If we expect investment to happen, people who pay energy bills need to know that the market functions effectively and that they can trust their energy supplier. That necessitates changing the retail market to make it clear, fair and transparent.

[Charles Hendry]

In her speech, the right hon. Member for Don Valley (Caroline Flint) was asked two questions. First, she was asked whether she had heard from energy companies saying that they were more likely to invest as a result of Labour policies, but she did not answer. She was also asked if she had heard from anyone saying that they would be less likely to invest, and she would not answer that one. Can the hon. Gentleman answer on her behalf?

[Tom Greatrex]

I can tell the right hon. Gentleman—[Interruption.] Sorry, I can tell the hon. Gentleman—I am promoting him; that is the regard in which I hold him—that in the period immediately after the conference speech by the Leader of the Opposition and since I have had a number of discussions with energy companies, with big suppliers, with small suppliers, with people in the supply chain, and with a whole range of people across the sector, and they have made it clear that they want a situation in which they can be trusted. They want transparency in the market. Indeed, some of the small suppliers that have been prayed in aid in speeches by Government Members have said that the most important thing is to have an open and transparent system in the energy market, which is what our reform is about. Then we will be in a position where we can have a fair debate about these issues and ensure that investment can flow, because people can understand and trust the system that will be in place.

[Gregory Barker]

Will the hon. Gentleman give way?

[Tom Greatrex]

I will not, because I am short of time, and I need to be able to respond to comments from other hon. Members.

My hon. Friend the Member for Glasgow Central (Anas Sarwar) highlighted a reluctance to address these issues and to challenge the fact that they exist in Edinburgh as much as in Whitehall. The hon. Member for Wealden referred to the rather ridiculous claims about blackouts, which were made immediately after the proposals were first outlined, and he will be interested to know that every single energy company that I have since spoken to has dissociated itself from those comments made by the trade body and, indeed, from the comments of the Secretary of State and the Minister on Twitter immediately afterwards. I am sure that he will heed the warning on Twitter that the Prime Minister issued some months ago.

The problem also exists in Edinburgh, where the only person sticking with those comments and repeating the ridiculous comparison with California in 2000 is the Scottish National party energy spokesman in the Scottish Parliament. We will stand up to those issues, because we want a market that works. My hon. Friend and constituency neighbour, the Member for Lanark and Hamilton East (Mr Hood), made an important point about the duties of government and discussed the legacy of the former Prime Minister, Margaret Thatcher. Another aspect of her legacy, Sir John Major, said a couple of weeks ago that if markets did not work and companies behaved badly, Governments stepped in. That is precisely what we are outlining in the policies that we are debating.

Another legacy of John Major was the system where the companies could integrate. Government Members referred to Labour’s big six. The Minister, the right hon. Member for Sevenoaks—I know that he was on a career break at the time, but was a Minister in John Major’s Government and has been around for a considerable time—will know that the first of those acquisitions was Scottish Power acquiring Manweb in 1995. The hon. Member for Warrington South (David Mowat), who is unable to be in his place, could not describe, when challenged, why prices have gone up. My hon. Friend the Member for Blaydon (Mr Anderson) made a related point. That is precisely why we need transparency in the market.

When SSE put up its prices recently, it tried to quantify the cause of the increase. It attributed 4% to wholesale costs, 10% to network costs, 13% to Government policy costs, 8% to VAT, which adds up to 80%, leaving 20%. That additional 20%, which was not in SSE’s press statement but was in the small print and in conversations with the markets afterwards, was to increase its profit margin. That is what is happening in the market, and not just in the case of SSE—npower did something similar. I recommend that Members who want to see just how complicated and opaque the market is read the most recent edition of Private Eye, in the City column, about the structures around Centrica and particularly the trading arm of Centrica and the way in which profits are moved around different parts of what is essentially the same company.

My hon. Friend the Member for Ynys Môn (Albert Owen), a distinguished member of the Select Committee, made the important point about ensuring that off-grid customers are protected. The hon. Member for Wells (Tessa Munt) repeated the comment from First Utility, but she neglected to mention that when interviewed on “You and Yours” a couple of weeks ago, Ian McCaig, the chief executive of First Utility, said that the most important reform needed was openness and transparency in the market. That is exactly the reform that we propose in the motion before the House.

My right hon. Friend the Member for Coatbridge, Chryston and Bellshill (Mr Clarke) has a distinguished record in the House of campaigning for the fuel poor, and indicated how long he has been campaigning. My hon. Friend the Member for Rochdale (Simon Danczuk), as well as mentioning some of the issues that he has encountered in dealing with energy companies, made the important point that the proposed measure would save small businesses £5,500 and medium-sized businesses £32,900 based on their previous bills.

The hon. Member for Angus (Mr Weir) talked about the reviews. He will know that the one announced by the Government is the 18th review since 2001. He spoke about the measures announced at the Scottish National party conference for a separate Scotland to reduce bills by £70 by moving ECO from consumer bills on to the tax bill. He neglected to mention that the pooled support for renewable energy for Scotland, which is paid across the whole of Britain, would not exist in the same form. Scotland has 8% of the population and more than a third of that support, which is spread across all the bill payers in Britain, as he well knows.

The hon. Member for Chippenham (Duncan Hames) asked me a number of questions, first about how the measures would be introduced and whether emergency legislation would be used. I am not sure whether he was present for the speech from my right hon. Friend the Member for Don Valley at the start of the debate. She made it clear that we would introduce specific legislation quickly—he might call it rapid or emergency legislation—to do one simple thing: to enable the Secretary of State for a fixed period to amend the licence conditions to allow the freeze to take place while we make the wider reforms.

[Duncan Hames]

rose—

[Tom Greatrex]

I shall respond to the other points that the hon. Gentleman made during the debate, and I am conscious of time. He referred to the issues for small companies. I say again that every small supplier that I have spoken to in the past few weeks has made it clear that what is needed most of all is an open, fair and transparent market where energy is traded openly and suppliers can compete and get a better share of that market in order to build their customer base. That is what Labour’s reforms would deliver. The price freeze would enable those reforms to be put in place.

My hon. Friend the Member for Southampton, Test (Dr Whitehead) shot a number of ducks and set out cogently and coherently the point of resetting the market. With his expertise and as a member of the Select Committee and the Bill Committee, he will know that we have been talking about these issues for a considerable time, and to suggest that they are something new or emerging today, as the Secretary of State implied, is utter nonsense.

My hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) talked about the impact on health. My hon. Friend the Member for Chesterfield (Toby Perkins) referred to the Prime Minister’s announcement on green levies, The Prime Minister made his announcement. The Energy Minister, who is in his place, told the Environmental Audit Committee a couple of weeks ago that the Government were looking at each of those levies. I asked a parliamentary question on which levies they were looking at and received a response today from the Secretary of State. It stated that they are looking at investment incentives, but not for the renewables obligation, contracts for difference or feed-in tariffs. The Prime Minister said earlier today that they were looking at every subsidy and every levy. There is complete confusion at the heart of the Government about what is and is not in scope for the review. If they are concerned about the impact on confidence and investment, they need to look at the shambles of their own policy over the past couple of weeks.

My hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson) made a heartfelt speech detailing her own experience of growing up in fuel poverty and her concerns about her constituents and others in the same situation. My hon. Friend the Member for Blaydon (Mr Anderson) made a similar case. My hon. Friend the Member for Edinburgh North and Leith (Mark Lazarowicz) also dealt with the reality of the cost of living crisis, of which energy costs are just one aspect. My hon. Friend the Member for Wansbeck (Ian Lavery) talked about the issues facing ordinary people. All those contributions made it clear why we need complete change in the market, and we need a price freeze to enable that change.

The motion before us is about a price freeze, but it is also about ensuring that there is a level playing field for other companies and that companies cannot abuse their position in future. It is about fixing a broken market and standing up for consumers and businesses. It is about making the market fair, clear and transparent in the interests of consumers, industry and the country. I commend the motion to the House.