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Energy Regulations (Consumer Prices)

I congratulate the hon. Member for Twickenham (Dr. Cable) on the measured and thoughtful way in which he introduced the debate. I hope that I shall have time to respond to some of his key points. We heard a very fine speech from my right hon. Friend the Member for Coatbridge, Chryston and Bellshill (Mr. Clarke), who has been a long-term advocate of doing more for the fuel-poor. My hon. Friend the Member for Selby (Mr. Grogan) made an important speech. We also heard some important Front-Bench contributions. I was impressed that the hon. Member for Brecon and Radnorshire (Mr. Williams) is so diligent that he even continues his research when in an establishment that he called ““The Old Cognac””. The price of an old cognac would be more than a new cognac, so I hope that that helps with some of the energy costs involved. I congratulate his nation on a remarkable comeback in the rugby over the weekend. I hope that the hon. Member for Billericay (Mr. Baron) will forgive me if I do not go too far down the European treaty road, because I vaguely recall that in the main Chamber we have spent a few hours debating that issue; indeed, we debated the energy aspects only the other day. However, I will say something about market liberalisation. I do not think that he is a supporter of the European treaty, but at one stage he almost seemed to be calling for more European powers to override national policies when it comes to energy nationalism. I am not sure whether that is a new Conservative party policy. We are all concerned about rising energy costs, particularly as they affect vulnerable people such as the frail elderly and poorer families with children. It is important that we are as clear as we can be about the evidence base, and the hon. Member for Twickenham was very measured in his introduction. Wholesale price rises in the past year have hit hard. Wholesale gas forward prices—the prices that our supply companies have themselves to pay—have increased by 50 per cent. for gas and 85 per cent. for coal since January 2007, so in just a year there has been a dramatic increase in wholesale prices. I am advised that wholesale prices tend to make up about 50 per cent. and 45 per cent. of retail prices for domestic gas and electricity customers respectively. Wholesale prices make up roughly 70 per cent. and 90 per cent. of prices for average-sized industrial gas and electricity consumers. UK gas prices are of course linked to continental prices because of interconnectors, increasingly so, because of the importance of liquefied natural gas, the price of which is strongly influenced by the price of oil. Fossil fuel prices have been on an upward trend in the past 12 months, pushed by global supply and demand pressures, which we all understand. The European Commission's third package of legislation on the internal market and action by the EU competition authorities aims to develop transparent, better- functioning EU gas markets. In response in particular to the hon. Member for Billericay, but also to the hon. Member for Twickenham, we can proudly say that the UK has been in the lead of the charge for greater market liberalisation in Europe. That is central to the concept of the single market. We are working hard on the matter and I am pleased that commissioners are now taking it very seriously. I shall not say too much about the emissions trading scheme but, in response to the hon. Member for Billericay, we will see far higher rates in phase 3 of the scheme—very high rates—of auctioning of the allowances. We back that as a policy.