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Energy Bill

My Lords, we have today and at earlier stages of the Bill gone into the whole area of what constitutes the job of Ofgem. Distinguishing between where government policy stands and where Ofgem’s responsibilities lie is a very difficult problem. Since Ofgem was established, and reinforced by various subsequent Acts over the past eight to 10 years, its basic primary duty has not changed. Wearing my hat as chair of Consumer Focus, I cannot credibly argue that the needs of consumers should not be the primary duty, but there has to be greater subtlety and nuancing with regard to the way in which consumer needs are met within that primary duty. It needs to be made explicit that future consumers are included in that as well as current consumers. The way to protect current and future consumers and advance their interests is not necessarily solely through maximising competition in the way in which it has been defined hitherto. I say immediately that for consumers it is generally better to have more competition than less, but there is also a trade-off between competition now and competition in the future. Given the overriding importance of climate change, there will also be trade-offs between environmental objectives and social objectives, which relate to different types of consumer. I complained earlier that we had not had time to discuss fuel poverty in depth. You would expect the combination of government policy and the regulator’s responsibilities and priorities to address fuel poverty more explicitly and more clearly. I do not think that either of the relevant two amendments, extraordinarily fluently spoken to though they were—I found them convincing before I started to think further about the matter—achieves this. That is partly due to the history of the matter. I am sure that the noble Lord, Lord Mogg, may query this, but I think that the directions and guidance adopted by successive Secretaries of State in relation to Ofgem and its predecessors have tended not to have the effect that was claimed for them when the various Secretaries of State introduced them. That is partly because of the primacy of the primary objective and partly because of Ofgem’s strength in focusing on what it sees as its primary objective, and using all its multitudinous resources—they probably provide more information on the energy markets than is provided by any other institution in the land—to pursue that primary objective. I cannot think of any directions or guidance issued in relation to an environmental agenda that have significantly altered Ofgem’s focus. That is even more true as regards the social agenda. I might have had slightly more sympathy with the amendments of the noble Lord, Lord Jenkin, had he included a third element on reducing fuel poverty. For the reasons I have given, I do not think that the present combination of powers of the Secretary of State and primary duty of Ofgem works, but neither do I think that intervening at a rather late stage in the Bill to propose new definitions on what guidance and directions to Ofgem should achieve will resolve the situation. We need a broader discussion on what we expect the regulator to achieve, the boundaries of his responsibilities and the appropriate interfaces between government policy and the regulator in a new era in which climate change, fuel prices and social deprivation are more important in some ways than delivering the lowest average price to today’s consumer. Because these are such huge issues we ought not to try to bolt them on to this Bill at this point. Given that the newly established department takes in the economic dimensions of the energy industry, the security issue, the social issue of fuel poverty and, probably most importantly, the climate change issue, I appeal to the Minister to consider that now is the time for new thinking. Although I do not think that we shall get this right in the two or three weeks that remain of this parliamentary Session, it needs to be pretty high on the agenda of the new Secretary of State and his able colleague, the Minister. I would rather consider these amendments in that context than vote for or against them now.