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We inherited an energy market that was completely broken and a situation where energy bills were complicated and opaque, but we and the independent energy regulator, Ofgem, have acted. We now have simpler bills, fewer tariffs and increased levels of switching, which is helping huge numbers of people. On the specific point the hon. Gentleman raises, Ofgem, in its retail market review, proposed the policy he refers to and is making sure it goes through, but if he has examples
suggesting that any suppliers are not delivering on that new regulation, he should bring them to the independent regulator’s attention.
We inherited an energy market that was completely broken and a situation where energy bills were complicated and opaque, but we and the independent energy regulator, Ofgem, have acted. We now have simpler bills, fewer tariffs and increased levels of switching, which is helping huge numbers of people. On the specific point the hon. Gentleman raises, Ofgem, in its retail market review, proposed the policy he refers to and is making sure it goes through, but if he has examples
suggesting that any suppliers are not delivering on that new regulation, he should bring them to the independent regulator’s attention.
Over the last five years, one of the biggest problems, particularly for elderly constituents of mine, has been complicated, high-tariff energy bills. On 17 occasions, the Prime Minister has said he would force energy companies by law to put their customers on the lowest energy tariff, but three out of four households are still on energy tariffs that cost on average £180 more than the lowest one. What are the Government going to do about that?
I have a lot of respect for the right hon. Gentleman, who is known for his intellectual abilities and knowledge, but I am afraid that on this occasion they have failed him, and for this reason: we do not use oil to produce electricity—we haven’t for a long time. His point relates to transport. Oil is a substitute for transport fuels. I think he is talking about gas, but the price of gas has not come down by very much. Moreover, the fall in the price of gas was taken account of in the way we produced the levy control framework, which is the support for low-carbon electricity.
I have a lot of respect for the right hon. Gentleman, who is known for his intellectual abilities and knowledge, but I am afraid that on this occasion they have failed him, and for this reason: we do not use oil to produce electricity—we haven’t for a long time. His point relates to transport. Oil is a substitute for transport fuels. I think he is talking about gas, but the price of gas has not come down by very much. Moreover, the fall in the price of gas was taken account of in the way we produced the levy control framework, which is the support for low-carbon electricity.
Does my right hon. Friend agree that the single biggest boost to the British and world economy has been the halving of the oil price, and does it not follow that forcing British industry to use energy that costs twice as much as conventional energy will have a depressive effect on the British economy? Why oh why is he insisting on our moving to wind, which costs twice as much, and this Swansea tidal power, which, according to the Financial Times, will involve a price three times that of conventional fuels for 35 years? Is that not going to depress the British and Welsh economies?
I am surprised that the hon. Gentleman asked that question. He knows that I have read the report, because I have talked to him about it. I have told him in this Chamber that I wanted to respond to it. I thought that the reply had winged its way to him. If it has not, I shall chase it up. Let me say to him and the House that I read his report and thought it was very good.
I am surprised that the hon. Gentleman asked that question. He knows that I have read the report, because I have talked to him about it. I have told him in this Chamber that I wanted to respond to it. I thought that the reply had winged its way to him. If it has not, I shall chase it up. Let me say to him and the House that I read his report and thought it was very good.
The Secretary of State will be well aware that he promised me at the last Question Time that he would come back to me on the report on vulnerable customers that I produced with the Energy and Climate Change Select Committee. Is this going to be another one of the Government’s unfulfilled promises, or will he come forward as soon as possible with a reply to this important report on how to ensure that vulnerable people will be taken care of when they most need help?
I am surprised to hear the hon. Gentleman make that point. There has been a great improvement in bills, which are much simpler now. Furthermore, the energy suppliers must now inform consumers if a lower tariff is available, even if it involves different payment methods. However, if there is an issue I shall be happy to look into it. and the hon. Gentleman should also contact Ofgem.
One of our purposes in setting up and investing in the Big Energy Saving Network was to ensure that vulnerable people could obtain face-to-face advice, and organisations such as citizens advice bureaux, Age Concern and National Energy Action are funded and trained to deliver that advice.
I am surprised to hear the hon. Gentleman make that point. There has been a great improvement in bills, which are much simpler now. Furthermore, the energy suppliers must now inform consumers if a lower tariff is available, even if it involves different payment methods. However, if there is an issue I shall be happy to look into it. and the hon. Gentleman should also contact Ofgem.
One of our purposes in setting up and investing in the Big Energy Saving Network was to ensure that vulnerable people could obtain face-to-face advice, and organisations such as citizens advice bureaux, Age Concern and National Energy Action are funded and trained to deliver that advice.
An elderly constituent recently contacted me about her confusing energy bills. She had to make a payment, but the complicated bill structure meant that she had no idea how the charges had been calculated, causing her some distress. It is obvious that Ofgem’s reforms to make bills simpler, clearer and fairer have not worked. Is it not about time that the Government started to stand up for consumers and treat ordinary people fairly and honestly by ensuring improved transparency in energy bills?
My right hon. Friend is right. The evidence is clear, not just to everyone in this House, but to every voter: if we had implemented Labour’s proposal, people would be paying higher energy bills now.
My right hon. Friend is right. The evidence is clear, not just to everyone in this House, but to every voter: if we had implemented Labour’s proposal, people would be paying higher energy bills now.
Is not the last thing that will help household energy bills a policy that freezes prices at a level above the market, the mere announcement of which—even while the proposers are in opposition—has had a detrimental effect, distorting the markets before the policy is even implemented?
This is a very important issue, and when I considered it last year, I looked at the record of a predecessor of mine as Secretary of State—now the Leader of the Opposition—when wholesale prices fell far faster and further. He did nothing. We have acted all the way. I agree with much of the analysis by Which?, especially on the need to work even harder to make our markets more competitive. The markets we inherited in 2010, with Labour’s big six, needed reform. We have undertaken that reform, and that is why the big six’s market share has fallen so significantly, and why we have backed, unlike Labour, a reference to the independent competition authority, so it can look at the energy market.
This is a very important issue, and when I considered it last year, I looked at the record of a predecessor of mine as Secretary of State—now the Leader of the Opposition—when wholesale prices fell far faster and further. He did nothing. We have acted all the way. I agree with much of the analysis by Which?, especially on the need to work even harder to make our markets more competitive. The markets we inherited in 2010, with Labour’s big six, needed reform. We have undertaken that reform, and that is why the big six’s market share has fallen so significantly, and why we have backed, unlike Labour, a reference to the independent competition authority, so it can look at the energy market.
This week, the consumer body Which? added to the growing body of evidence that energy companies do not pass on reductions in wholesale costs to their consumers. Which? confirmed that cuts to consumer bills should have been larger and made far sooner. Does the Secretary of State regret that he voted as recently as last month not to back Labour’s plan to give the energy regulator the power to cut energy prices when wholesale costs fall?
Of course we all want to see falling prices, not increased profits, and that is one of the reasons why we are increasing competition. It is ironic that Labour is now quoting Ofgem—the regulator it introduced, tried to improve and now wants to abolish. The hon. Lady and her party must come behind our policy of increased competition, must start backing the Competition and Markets Authority reference, and should change their policy in the face of the evidence. They should say that they will abide by the recommendations of the CMA and will stop playing party politics with a very serious issue.
Of course we all want to see falling prices, not increased profits, and that is one of the reasons why we are increasing competition. It is ironic that Labour is now quoting Ofgem—the regulator it introduced, tried to improve and now wants to abolish. The hon. Lady and her party must come behind our policy of increased competition, must start backing the Competition and Markets Authority reference, and should change their policy in the face of the evidence. They should say that they will abide by the recommendations of the CMA and will stop playing party politics with a very serious issue.
As usual, the Secretary of State did not answer the question. Will he explain why Ofgem estimated only last week that profit margins for the big energy companies are set to soar to £114 per household, citing expected future falls in wholesale costs as the reason for the increase? Is that what a functioning, competitive market looks like?
My hon. Friend raises a vital issue and we have indeed been pressing the larger energy firms on this for some time. The good news is that energy prices have not only been frozen over the last
year, but they are now being cut. Moreover, there is now a plethora of lower priced deals out there, especially from the independents, thanks to our policy of promoting competition, encouraging switching, and piling the pressure on the big six with an in-depth investigation of the energy market by the Competition and Markets Authority. I assure my hon. Friend we will continue to fight for the consumer every day.
My hon. Friend raises a vital issue and we have indeed been pressing the larger energy firms on this for some time. The good news is that energy prices have not only been frozen over the last
year, but they are now being cut. Moreover, there is now a plethora of lower priced deals out there, especially from the independents, thanks to our policy of promoting competition, encouraging switching, and piling the pressure on the big six with an in-depth investigation of the energy market by the Competition and Markets Authority. I assure my hon. Friend we will continue to fight for the consumer every day.
What steps he is taking to ensure that energy bills for domestic consumers and business users reflect falling wholesale energy prices.
Some energy suppliers have reduced their prices by 10%, and OVO Energy recently cut its prices by more than 10%. It is a complicated analysis and, working with the Treasury, we have looked at it in some detail. Wholesale gas costs represent about a quarter of the average bill; other costs are also changing and not all of them are going down. This is complicated, but it is right that the independent competition authorities look at this—they are specifically addressing this issue—because if there is any malpractice in the energy markets they will be able to expose it and have the teeth to tackle it.
Some energy suppliers have reduced their prices by 10%, and OVO Energy recently cut its prices by more than 10%. It is a complicated analysis and, working with the Treasury, we have looked at it in some detail. Wholesale gas costs represent about a quarter of the average bill; other costs are also changing and not all of them are going down. This is complicated, but it is right that the independent competition authorities look at this—they are specifically addressing this issue—because if there is any malpractice in the energy markets they will be able to expose it and have the teeth to tackle it.
Recent Which? research shows that energy bills are the main financial worry of two thirds of households, and that while there has been a welcome reduction of about 5% in domestic tariffs this could have been as much as 10% had they mirrored the fall in wholesale costs. What more can the Government do to make sure the big energy companies are more responsive to falls in wholesale prices?
Energy bills remain a worry for many, so we have three main ways of helping households: giving direct financial help, promoting competition and enabling energy efficiency. Our financial help includes the £2.15-billion winter fuel allowance for pensioners, and more than £31 million will be spent this winter on providing assistance to more than 2 million low-income and vulnerable households. Although there remains room for improvement, energy markets are more competitive than they were in 2010, enabling many people to save around £300 a year by switching supplier. Our energy efficiency policies, which provide permanent cuts to bills, have improved the energy efficiency of more than 1 million homes, enabling us to meet our target earlier than expected.
Energy bills remain a worry for many, so we have three main ways of helping households: giving direct financial help, promoting competition and enabling energy efficiency. Our financial help includes the £2.15-billion winter fuel allowance for pensioners, and more than £31 million will be spent this winter on providing assistance to more than 2 million low-income and vulnerable households. Although there remains room for improvement, energy markets are more competitive than they were in 2010, enabling many people to save around £300 a year by switching supplier. Our energy efficiency policies, which provide permanent cuts to bills, have improved the energy efficiency of more than 1 million homes, enabling us to meet our target earlier than expected.
What steps he is taking to help households with their energy bills.
I certainly agree with Which?, which has welcomed the referral of the energy market to the Competition and Markets Authority—something that we have backed. The Leader of the Opposition, when he was doing my job, failed to back such a referral on three occasions. It is vital that the cuts in wholesale costs are passed to consumers, and we are on it.
I certainly agree with Which?, which has welcomed the referral of the energy market to the Competition and Markets Authority—something that we have backed. The Leader of the Opposition, when he was doing my job, failed to back such a referral on three occasions. It is vital that the cuts in wholesale costs are passed to consumers, and we are on it.
There is indeed room for improvement. The Children’s Society tells me that there are 2,200 children in families that are trapped in energy debt in my constituency of Wythenshawe and Sale East, yet Which? says that given the global changes in commodity prices, energy companies could be driving down household bills by £164; does the Minister agree with it?
The problem with the Opposition’s policy is that if we had listened to them and frozen bills, people would now have even higher bills and would be in even more debt. We are not going to listen to the Opposition’s failed energy policy. Our policy has seen bills come down, not just frozen. People can get some of the best deals by switching to the independents that we have encouraged into the market.
The problem with the Opposition’s policy is that if we had listened to them and frozen bills, people would now have even higher bills and would be in even more debt. We are not going to listen to the Opposition’s failed energy policy. Our policy has seen bills come down, not just frozen. People can get some of the best deals by switching to the independents that we have encouraged into the market.
The Children’s Society tells me that there are 3,300 children in families that are in energy debt in my constituency, yet only last week, Ofgem estimated that household bills could be cut by £114 because of the cost of energy. Why will the Secretary of State not give Ofgem the power to cut bills when they are that high?
The hon. Lady raises an important question, because it is vital that consumers can switch with confidence. That is why I am pleased that Ofgem has decided to toughen up the confidence code for the accreditation of switching sites. That will be a big step forward.
The hon. Lady raises an important question, because it is vital that consumers can switch with confidence. That is why I am pleased that Ofgem has decided to toughen up the confidence code for the accreditation of switching sites. That will be a big step forward.
With the news this week that price comparison sites do not always show customers the cheapest offers because they would not get their share, and given that switching is so crucial to the Government, is it not time that we had a non-commercial Government comparison site?
I disagree that the policy is creating failure, but I agree with the hon. Gentleman and other Opposition Members that high energy bills need to be dealt with. The question is what the best way of dealing with them is. We have been dealing with them every single day since I took office by using competition, energy efficiency and direct financial support, and by helping energy-intensive industries. Our policies are working. Frankly, if we had listened to the Opposition, people would be paying higher energy bills.
I disagree that the policy is creating failure, but I agree with the hon. Gentleman and other Opposition Members that high energy bills need to be dealt with. The question is what the best way of dealing with them is. We have been dealing with them every single day since I took office by using competition, energy efficiency and direct financial support, and by helping energy-intensive industries. Our policies are working. Frankly, if we had listened to the Opposition, people would be paying higher energy bills.
The report to which my hon. Friend the Member for Wythenshawe and Sale East (Mike Kane) and my right hon. Friend the Member for Delyn (Mr Hanson) referred shows that 2,300 children in my constituency live in families that have energy debt. Equally, at the other end of the spectrum, many of the high-energy businesses that sustain some of the most valuable jobs in my constituency are struggling because of this policy. What sort of policy is it that creates failure at both ends of the market?
My hon. Friend is right that network costs account for about a fifth of the average household bill. Of course, the Energy and Climate Change Committee, which he chairs, is looking into this issue and has taken evidence on it. We look forward to receiving his report. If one looks at an historical analysis of network costs as a proportion of energy bills, they have been coming down steeply since privatisation. We obviously want Ofgem to continue to bear down on them, and our regulatory regime is one of the strongest in the world.
My hon. Friend is right that network costs account for about a fifth of the average household bill. Of course, the Energy and Climate Change Committee, which he chairs, is looking into this issue and has taken evidence on it. We look forward to receiving his report. If one looks at an historical analysis of network costs as a proportion of energy bills, they have been coming down steeply since privatisation. We obviously want Ofgem to continue to bear down on them, and our regulatory regime is one of the strongest in the world.
Does the Secretary of State agree that transmission and distribution charges account for more than a fifth of many household bills? Will he press Ofgem to bear down more toughly on the charges made by the monopoly transmission company, National Grid, and by near-monopoly distribution companies all over the country?
My hon. Friend is right: a liberal approach is definitely the best. In the spirit of the coalition, we have together managed to bring down energy bills by reducing policy costs by £50, something opposed by Labour. It is often forgotten that because we have liberal markets in Britain, the UK enjoys the lowest domestic gas prices in the EU15.
My hon. Friend is right: a liberal approach is definitely the best. In the spirit of the coalition, we have together managed to bring down energy bills by reducing policy costs by £50, something opposed by Labour. It is often forgotten that because we have liberal markets in Britain, the UK enjoys the lowest domestic gas prices in the EU15.
My right hon. Friend the Secretary of State has already explained the incompetence of a price freeze. Does he agree that the best way to help families is to use the traditional liberal approach of competition to drive down prices?
I am grateful for the hon. Lady’s question, although I do not recognise her figures. Energy efficiency is a top priority for the Government, and I hope that she will welcome the fact that yesterday I laid before Parliament new regulations to require landlords in the private sector to meet minimum energy efficiency standards by 1 April 2018. That will help 1 million tenants in the most energy-inefficient houses in the country.
I am grateful for the hon. Lady’s question, although I do not recognise her figures. Energy efficiency is a top priority for the Government, and I hope that she will welcome the fact that yesterday I laid before Parliament new regulations to require landlords in the private sector to meet minimum energy efficiency standards by 1 April 2018. That will help 1 million tenants in the most energy-inefficient houses in the country.
New research shows an 80% fall in insulation measures for fuel-poor homes under the coalition. While the Secretary of State desperately spins about having helped 1 million households, the facts show that had the Government not weakened their policies, nearly 3 million homes would have been helped by now. When will he make energy efficiency a top infrastructure priority with the funds to match?
What steps he is taking to help households with their energy bills.
What steps he is taking to help households with their energy bills.
Energy bills remain a worry for many, so we have three main ways of helping households: giving direct financial help, promoting competition and enabling energy efficiency. Our financial help includes the £2.15-billion winter fuel allowance for pensioners, and more than £31 million will be spent this winter on providing assistance to more than 2 million low-income and vulnerable households. Although there remains room for improvement, energy markets are more competitive than they were in 2010, enabling many people to save around £300 a year by switching supplier. Our energy efficiency policies, which provide permanent cuts to bills, have improved the energy efficiency of more than 1 million homes, enabling us to meet our target earlier than expected.
What steps he is taking to help households with their energy bills.
What steps he is taking to help households with their energy bills.
Energy bills remain a worry for many, so we have three main ways of helping households: giving direct financial help, promoting competition and enabling energy efficiency. Our financial help includes the £2.15-billion winter fuel allowance for pensioners, and more than £31 million will be spent this winter on providing assistance to more than 2 million low-income and vulnerable households. Although there remains room for improvement, energy markets are more competitive than they were in 2010, enabling many people to save around £300 a year by switching supplier. Our energy efficiency policies, which provide permanent cuts to bills, have improved the energy efficiency of more than 1 million homes, enabling us to meet our target earlier than expected.
What steps he is taking to help households with their energy bills.
What steps he is taking to help households with their energy bills.
Energy bills remain a worry for many, so we have three main ways of helping households: giving direct financial help, promoting competition and enabling energy efficiency. Our financial help includes the £2.15-billion winter fuel allowance for pensioners, and more than £31 million will be spent this winter on providing assistance to more than 2 million low-income and vulnerable households. Although there remains room for improvement, energy markets are more competitive than they were in 2010, enabling many people to save around £300 a year by switching supplier. Our energy efficiency policies, which provide permanent cuts to bills, have improved the energy efficiency of more than 1 million homes, enabling us to meet our target earlier than expected.