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Energy Regulations (Consumer Prices)

I congratulate the hon. Member for Twickenham (Dr. Cable) on securing this debate, and other hon. Members on their excellent contributions. A great deal of consensus exists on this issue. Rising energy prices and fuel poverty are a concern for all our constituents. It is essential that we have the right regulatory framework in place to deliver a competitive market and to try to secure the best possible prices for all our citizens. In fairness, we should recognise that Ofgem has provided the UK with one of Europe's most competitive markets. Arguably, we have the fifth cheapest market for electricity and the cheapest for gas. Energy prices for consumers remain lower than before market deregulation. However, we must recognise that international and economic forces and global trends are driving up prices. The question is whether the Government are doing all that they can to help people with those price increases. Serious questions have been asked by hon. Members, and I want to focus on two or three other issues as well. I hope that the Minister will have plenty of time to answer my specific questions. Since 2003, the price of gas has risen by 82 per cent., and the price of electricity by more than 60 per cent. Cost increases are taking their toll on all households, especially those of the elderly and the vulnerable. I make no apology for repeating that point. We have all had letters from constituents raising those issues. I recently received correspondence from a local gentleman in his 60s explaining how, with council tax increases and rising food bills, increases in energy prices are causing a real difficulty. I hope you will forgive me, Miss. Begg, if I read out a couple of sentences from his e-mail. He states:"““I myself cannot pay the gas and electric increases, petrol or council tax increases. I have informed the utility companies that I cannot pay the 27 per cent. increase.””" He goes on:"““So, my food has to suffer and I eat less. I only have one good meal a week. I live on toast and biscuits and chips and the odd cup of tea daily to keep my weekly costs down…The Government are aware, but don't care.””" I fear that there are many others in the same situation. According to some estimates, the number of fuel-poor households has doubled since 2005 alone despite a Government target to eradicate fuel poverty from vulnerable households by 2010. Picking up on an earlier point, will the Minister explain why there has been a cut in the budget for the Warm Front scheme, which is the main mechanism for assisting households in fuel poverty? We have also heard figures relating to fuel poverty deaths. Apparently, in the winter of 2006-07, about 25,000 people over the age of 65 died as a result of cold-related illnesses. Those figures are far in excess of countries on the continent with even more severe weather conditions. The disparity in the figures between those who die in the winter and those who die in the summer is far greater in this country than on the continent. Will the Minister address that issue because it suggests that the Government's strategy and policies are not having the desired effect? Fuel poverty, as we have heard, impedes competition. As many as 2 million customers cannot switch suppliers because they are already in debt to their existing suppliers. In light of that worrying trend, I hope that the Minister will use his winding-up speech to explain how he proposes to meet his target to eradicate fuel poverty and say whether he believes that the time has come for Ofgem to have a specific mandate to ensure that fuel poverty is driven down, which has been touched on by a number of hon. Members. We have also touched on social tariffs. I do not wish to re-explore the debate about social tariffs, but they could be part of the solution. Some suppliers are keen to develop them. Indeed, there have already been calls for the Secretary of State to take powers to direct suppliers to provide social tariffs. I would welcome the Minister's response and opinion on that. We have heard about Ofgem's future role. It could have an important role to play in promoting sustainable development and reducing our national carbon footprint. As the Minister will be aware, the Sustainable Development Commission has made five key recommendations about Ofgem's responsibilities, including changing the current market arrangements to make it easier for small and low-carbon generators and suppliers to compete—a point touched on by the hon. Member for Twickenham. It would be useful to know whether the Minister has considered the options proposed by the commission and what views he has been able to form. One of the commission's recommendations was for consumers to have better information through smart metering and billing to help them to make decisions about energy consumption. The Government have been slow off the mark in that area. I suggest that they have committed themselves to the technologically inferior electricity display device over the smart meter, despite industry consensus that EDDs may be a waste of time and money and will not help to deliver favourable reductions in fuel poverty. The beauty of smart meters, as I understand them, is that they offer the opportunity for varied and innovative tariffs that will encourage those on tight budgets to use electrical appliances such as washing machines in off-peak hours. EDDs, however, simply tell people how much electricity they are using and perhaps dissuade them from using their appliances at all. In addition, EDDs work only for electricity, not gas, despite gas being the main heat source for most UK households—the figure that we heard was 69 or 70 per cent. of all households. The use of smart meters in all homes would lead to the removal from use of often expensive pre-payment meters, which statistics suggest are a much more expensive way of using energy. Many of the customers who use pre-payment meters are fuel poor and in debt to energy companies. Smart meters would also allow many people who are currently prevented from moving supplier to take advantage of market liberalisation. Will the Minister explain why he decided to opt for EDDs over smart meters? What beneficial effects are they likely to have on fuel poverty? Finally, I want to touch on how to ensure true competitiveness in the UK market—the point that I raised with the hon. Member for Twickenham. In assessing competitiveness, we must consider not only the UK market, but the wider European context. I have posed the question in this debate already about the EU treaty, which fails to usher in a truly competitive EU market. Liberal Democrat Members and Government Back-Benchers must ask why the treaty is not ushering in a more competitive market. For example, the phrase ““free competition”” was apparently removed from the draft treaty at the behest of the French. Some of our continental allies appear to take a far less liberal approach to these matters than we do, and the consequence not only for British business but for British consumers is very serious. Whereas 20 million British consumers use French or German gas suppliers, none in France or Germany uses UK ones, so we have to consider the issue in a European context. For evidence of the different attitude taken by our neighbours, we need look no further than France's €70 billion merger of energy giants Gaz de France—already Europe's largest natural gas operator—and Suez to create what will become the world's fourth-largest energy company, with the French Government keeping a one-third share of the new company. That is, as I have suggested, economic nationalism on the march. The French Prime Minister has gone on the radio and said, ““We have control. We control strategy.”” That is creating national champions and that cannot be good for competition. The merger was approved by the European Commission in 2006, subject to conditions, but how different that approach is from our national experience of breaking up monopolies and not consolidating national champions. Meanwhile, European watchdogs have been busy probing continental energy firms over claims of anti-competitive practices, but many of the results have proved inconclusive. There does not seem to be the political will to sort that problem out. I suggest to all hon. Members that if we are truly serious about trying to help our citizens in achieving or gaining the best possible prices, we have to grasp that nettle and try to ensure greater competition across Europe as a whole. I ask every hon. Member to examine the EU treaty carefully, because it falls well short of trying to introduce a more competitive market across Europe as a whole. One is not looking for favours or anything like that, but one does want far greater competition and this EU treaty is not delivering it. The treaty shies away from bringing in a more truly competitive market. Will the Minister say what the Government will do to try to put that right? What pressure will the Government bring to bear with their European counterparts in bringing into effect a much more liberalised energy market on the continent? We are failing to do that at the moment. I do not intend to say much more because I want to leave the Minister plenty of time to respond to the points that we have all raised, but I ask him in all earnestness and honesty to address the concerns that we have raised, particularly with regard to smart meters, Ofgem's future remit and how we can best create a truly competitive European market.