14:04 Caroline Flint (Don Valley) (Lab)

That this House believes that the energy market does not serve the public interest and is in need of urgent reform; notes with concern research by OFGEM showing that average household energy bills have risen, while energy companies’ profit margins have soared; recognises that, with a cold winter forecast and Government support cut, millions of families will struggle to heat their homes; believes that energy tariffs are confusing and unfair, meaning that 80 per cent. of people currently pay more for their energy than they need to, and that consumers who try to switch are often given inaccurate information; further believes that to tackle climate change, build a new low carbon economy and make the UK a world leader in green energy, which will bring new industry and jobs to the UK, people need to know that the energy market is fair; and calls on the Government to investigate mis-selling and ensure consumers are compensated, introduce a simple format to be applied across all tariffs, so that people can compare the full range of energy deals at a glance, increase transparency by requiring energy companies to publish their trading data, reform the energy market to break the dominance of the Big Six by requiring them to sell power into a pool, allowing new businesses to enter the market, increasing competition and driving down energy bills for families and businesses, and demand that energy companies use their profits to help reduce energy bills this winter.

The Secretary of State likes to lecture us about the need to check and switch, but what does his own Energy Minister say? Earlier this year he poured his heart out to the Select Committee on Energy and Climate Change about his struggle to find a cheaper deal. He said:

For a start, we had the most ambitious programme to help people in fuel poverty deal with their bills—the Government are cutting those measures—but we also started discussions across Europe about having Europe-wide legislation to tackle some of those issues by not only giving greater powers to regulators but ensuring more openness and transparency. I will talk about this more later, but I am sad to say that we are seven months overdue in implementing that legislation and putting into statute powers that we can use to control parts of the market. Perhaps the Secretary of State will say something more about why the package that my right hon. Friend the Leader of the Opposition was negotiating when he was Climate Change Secretary has not been implemented.

I am happy to support the Labour Government’s ambitious plans to be at the forefront of supporting renewable energy—and also, I should add, cracking the whip to make the energy companies play their part. Part of the problem is that the energy companies seemed to be on a mission to make us use more energy and pay more, rather than helping us to reduce our energy consumption and therefore pay less. We have nothing to apologise for on that front. What we are talking about today is what is happening this week, as the frost hits, and this winter, when people will face not only high energy bills but higher food prices, and wage freezes in the public and private sectors, in a country where unemployment is going up and people are feeling the squeeze on all fronts.

I thank the hon. Gentleman for calling me his right hon. Friend, but I must challenge him and the Secretary of State over Labour’s record on supporting families coping with their energy needs. I challenge the Secretary of State to deny that the Decent Homes programme, which involved the modernisation of 1.5 million homes, reduced energy consumption. I defy him to say that the code for sustainable homes did not improve the energy efficiency of new properties. I defy him to say that Warm Front did not reduce energy bills for more than 2 million households. I also defy him to say that the car scrappage scheme did not remove hundreds of thousands of old cars from Britain’s roads and replace them with more fuel-efficient vehicles with lower emissions. I challenge him to own up to the House today to the fact that the regulations that his Government are introducing, seven months after they were required, arise from the third energy package agreed by my right hon. Friend the Member for Doncaster North when he was Secretary of State for Energy and Climate Change. Yes, it was Labour that agreed the legal agreement across the European Union to make the gas and electricity markets more competitive, to give new powers to the regulator, to reveal the financial records of the energy giants and to put in place a more competitive market that new suppliers could enter. The role of this Government, 18 months into office, is to delay the process of implementation.

People expect, and deserve, a Government with the courage to stand up to powerful vested interests. This Government cannot even stand up to their own Back Benchers. A survey last year showed that, in spite of the overwhelming scientific consensus, one third of Tory MPs are climate change deniers who doubt the existence of climate change and its link to human activity. As ever, we are particularly grateful to the hon. Member for Mid Bedfordshire (Nadine Dorries) for the expertise that she brings to all matters scientific. On Monday, she solved an issue that has evaded scientists for generations when she told Radio 5:

I note what the right hon. Lady has said about her support for the Climate Change Act 2008, but will she spell out for us what the cost of the renewables obligation has been for electricity consumers in the United Kingdom this year?

What will be the cost if we rely on fossil fuels for ever more? What difficulties would that create, in terms not only of fuel costs but of security of supply? I refer the hon. Gentleman to a report that I believe came from both Ofgem and the Department of Energy and Climate Change last year, which outlined that something less than 5% of the price of bills was connected to investment in renewables. Of course we have to look for a balance, but I am focusing on something that we should all be concerned about. Even the Government have admitted that people are paying too high a price for their bills because these tariffs are sold in a misleading way so that people do not get a decent deal. On top of that, we have only the six big energy giants in the market, which needs to be broken up and radically reformed. That is something we should focus our attention on, along with help to people and businesses to make their homes and businesses more energy-efficient so they can pull down the costs of energy over time. There is no going back, however, to an old system of energy supply; that will not help anyone.

We had something like that, but I am afraid that the present Government have taken it away. If we want to get to the root of the problem, we have to think about radically reforming how the energy market works. We have to create a dynamic and more open energy market that deals with climate change and operates in the interests of the consumer, not the vested interests of the few.

Does my right hon. Friend agree that the Energy and Climate Change Committee, of which I am a member, should be praised for initiating the current inquiries? Already four of the big six have decided to stop doorstep selling, and we need to push that further. The Secretary of State knows that these companies are on the run; now he must put the boot into the big six, and ensure that our customers receive the compensation that they deserve. We need not measly words, but action.

I am sure that we all have stories of our own experience. For instance, the Minister of State, Department of Energy and Climate Change, the hon. Member for Wealden (Charles Hendry), tried to work out what was the best tariff for him, and then gave up on it. Yet people are being blamed for sticking to the same supplier because they too have given up, although some of those whom we represent have more stresses to deal with in life than we have. Spending half the day sorting out an energy bill—if they can devote that much time to it—is just one item in a long list of things with which they are having to cope, and they are not being helped by the policies of this Government.

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15:28 Albert Owen (Ynys Môn) (Lab)

I am a fellow Welshman, but my energy policy is different from that of the hon. Gentleman. Wales is a net exporter of energy because Wylfa nuclear power station, which is in my constituency, generates 30% of Wales’s energy needs. If that was to go, we would be in a difficult situation. However, he is right to point out that some regions of the United Kingdom that generate energy pay more in the retail price for their energy. The energy companies will tell us—I have raised this as a member of the Energy and Climate Change Committee—that that is because of transmission, but those areas, which are often on the periphery of the UK, generate electricity and send it to the national grid, but the consumers in those areas pay more for it. That is totally wrong and something we all need to work together to eliminate in future.

Ofgem has already suggested that we introduce greater accountability, greater transparency and simpler tariffs, and the Secretary of State was wrong about the time scale, because I believe that in the past year the number of tariffs has gone up considerably from 180 to some 400. I am not making a political point, because I know that many people, such as the Minister of State, Department of Energy and Climate Change, the hon. Member for Wealden (Charles Hendry) of whom I am very fond, have phoned up energy company call centres and tried to switch tariffs but found it extremely difficult to do so. They have spoken to people at call centres who, despite representing and working for the companies, do not themselves know the tariffs, so the system really needs to be simplified to ensure that people understand them and can make a choice.

The Secretary of State will remember that I asked him about that when he appeared before the Energy and Climate Change Committee, and I asked the head of Ofgem, too. The head of Ofgem said, “That’s a matter for the Government”, and the Secretary of State said, “It’s a matter for the regulator.” Well, I should like to invite both of them for afternoon tea and to sit them down in a room, because people off-grid are losing out considerably while the Secretary of State and the head of Ofgem have different opinions of their remit.

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15:42 Guy Opperman (Hexham) (Con)

With respect, I would say that the answer is somewhere in between. There cannot be regulation without submissions being made and investigations taking place. It is incumbent upon us not just to get upset about how our constituents are being affected by heating oil prices but to make representations to organisations such as the OFT. We must also invite the Energy and Climate Change Committee to investigate off-grid energy, which I very much hope it will do.

The Minister of State, Department of Energy and Climate Change, my hon. Friend the Member for Wealden (Charles Hendry) is not the only one who has been carrying out research on websites. Let me cite the interesting efforts to prove the hon. Lady’s exact point undertaken by the hon. Member for Brecon and Radnorshire (Roger Williams), who ordered more than 2,000 litres of heating oil at a price of 40p a litre—again, from DCC—and received only some of the delivery, at the outset, at that price. Later that December, when the remainder was delivered, the price was 65p per litre—an increase of 25p per litre. I applaud his efforts in this House to publicise that, and previous efforts to deal with the problem, as well as the work of The Sunday Times.

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15:57 John Healey (Labour)

They are failing consumers in three ways. First, they are out of touch. People simply cannot believe their ears when they hear the Secretary of State say in answer to the question of high energy prices that consumers are to blame for not shopping around. If people are not online, if they are on prepayment meters, if they do not have full bank accounts, and if they are unfortunate enough to call, according to the recent Which? survey, the one in three energy company advisers who do not give accurate information about their charges, they are simply not able to shop around as the Secretary of State suggests. Even the Minister of State, Department of Energy and Climate Change, the hon. Member for Wealden (Charles Hendry) is not able to do so, as in June he told the Energy and Climate Change Committee:

The action needed is clear: we should require energy suppliers to recover a far greater proportion of their costs from the unit rate of energy. To make energy bills clearer and fairer, I propose to the Minister a five-point plan—[Hon. Members: “Hooray!”] They are in vogue at the moment. First, we should abolish variable tariffs for the same energy supply. Secondly, we should require all tariffs to have the same format—a daily standing charge plus a clear cost per unit, including all the discounts. Thirdly, we should restrict standing charges only to cover the costs of the gas and electricity network. Fourthly, we should cover all other costs, including the costs of the Government’s climate change or social policies, through the variable charge, not on a per-customer basis, as is currently the case. Fifthly, to make these changes, we should use Ofgem’s current powers to regulate standing charges, under licensed conditions, plus the energy company obligation.

Those changes would make the system clearer, making it easier for people to compare suppliers’ prices at a glance, and also fairer, so that low-income, low-use households would not have to pay significantly higher prices for the energy that they need. Those changes would be right in practice and right in principle, because climate change and social equity policies are best and most effective when they are more specific and selective in their application rather than having a general application. The costs of climate change should bite more strongly on heavy users, while the cost of supporting poor households should be borne more heavily by higher-using households that earn higher incomes.

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16:23 Sammy Wilson (DUP)

A second cause is lack of investment. Because of that lack of investment and because of the demand that exists, prices are bound to be fairly buoyant anyway, and there is a captive market. A third—I suspect that many people will secretly agree with this, but will not be prepared to say so openly—is the impact of the Government’s climate change policies. When we say that because we want a low-carbon economy we will charge those who use carbon-based fuels in ways that cause carbon dioxide to be released into the atmosphere, and when we say that we will introduce policies to stop that happening, we cannot run away from the fact that such action will have implications for people’s fuel bills throughout the United Kingdom. The facts are clear. This year, simply to deal with the renewables obligations, being forced to purchase electricity from renewable sources has added £1.8 billion to the cost of producing electricity, and by 2020 the cost will be £6 billion a year. According to the Department’s own estimates, domestic consumers will face a 33% increase in the cost of electricity and non-domestic consumers such as industry will face an increase of 43%.

I support the motion, but it makes a rather glib reference to climate change. Many people will feel that they can agree with such sentiments, but behind them is the reality of what will happen to fuel bills: people will pay more for their energy. Denmark, not our country, has the highest costs per unit and the highest fuel bills, and Denmark produces 20% of its electricity from wind power. That is the highest proportion in Europe. The lowest costs are in France, which produces 75% of its energy from nuclear power.

We say that we want 30% of our electricity to be generated by offshore wind by 2030, but that has implications for consumers across the United Kingdom. Regardless of our views on climate change, there ought to be some honesty in this debate. I do not know what the impact on global temperatures might be if we were to decarbonise our economy and reduce our CO 2 emissions, which account for 2% of the world’s CO 2 emissions, by 10% or 20% by 2020, but there will be a price to be paid by each of our constituents, and we ought to make that clear.

In the longer term, we have to be realistic about green policies. I welcome the Chancellor’s remarks that we should not be pursuing policies on decarbonising the economy if they place our economy at a disadvantage compared with others across the world. While the European Union is preaching about reducing carbon emissions, the German Government have a much more realistic view. They are actually investing in 20 coal-fired power stations and in nuclear, because they want to find ways of producing cheap energy. In the long term we have to look at our investment priorities and whether we are following the correct policy. If, in the long term, we wish to invest in that way, we need to consider how we are going to deal with the consequences.

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16:38 Dr Thérèse Coffey (Suffolk Coastal) (Con)

Reference has been made to the Energy and Climate Change Committee’s 2010 report on fuel poverty. One of its recommendations was particularly useful for those buying oil, but unfortunately it was batted off to the Treasury. Many consumers, if they are organised, buy their oil in the summer when prices are lower because of seasonal pricing. A plea has been made that the Secretary of State should speak to the Treasury to see whether there might be an opportunity for pensioners to receive winter fuel payments at different times of the year so that they match outgoings for the purchase of oil.

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16:53 John Robertson (Glasgow North West) (Lab)

Eradicating fuel poverty involves tackling all three of the root causes that I mentioned. I have some sympathy with the energy companies as regards prices rising as a result of the influence of the wholesale energy market. As a member of the Energy and Climate Change Committee, I am fully aware that wholesale prices have risen by 30% this year, but I am also aware that they are lower than a few years ago. According to Bloomberg, in autumn 2008 the wholesale price for our gas hit prices of 70p a therm, compared with 59p a therm today, showing that wholesale gas prices have dropped by 15% since then. Similarly, prices in the wholesale electricity market reached £120 per megawatt-hour in autumn 2008; today, they are £51.20 per megawatt-hour, which is less than half the price back then.

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17:16 Karl Turner (Labour)

The Government’s rhetoric is not good enough. We are most certainly not “all in this together”. It is not enough for the Prime Minister to arrange a publicity stunt with the energy bosses and then tell my constituents to shop around, switch energy supplier, insulate their loft spaces and save. It is dreadfully patronising to those people who have already attempted that but have found navigating the system extremely complicated. Indeed, the Minister of State, Department of Energy and Climate Change, the hon. Member for Wealden (Charles Hendry) experienced that when he attempted to change suppliers.

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17:42 Andrew George (Liberal Democrat)

In debates such as this we always hear from the climate change deniers—the environmental equivalent of deficit deniers. The balance of opinion in peer-reviewed science is clear, however: if we do not address this issue, there will be significant economic costs and impacts for future generations. We must deal with it; we cannot simply close our eyes.

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17:59 David Mowat (Warrington South) (Con)

We missed the opportunity a decade or perhaps two decades ago to embark on a programme of cheap nuclear power in the way that France did, and frankly we are paying the price for that now. However, I believe that both sides of the House voted for the Climate Change Act 2008. It may well be that we need that Act and that it is the only way forward, but we need to be clear about the implications, because whichever way one looks at its requirements, it puts up the cost of energy. That might be right, but putting up the cost of energy in that way increases fuel poverty at the margin, all other things being equal. We talk about CCS, wind power and solar power, all of which cost more than gas and other methods, and it is very important that we fully understand that they do not come cheaply. We need to be very careful, as we legislate more for targets of 80% reductions by a certain date, that we understand what we are doing.

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18:22 Mr Mike Weir (Angus) (SNP)

That brings me back to the energy companies. It is easy to paint them as the unrestrained villains of the piece. However, I do have some sympathy with the position that they find themselves in. They are being told to invest in new capacity, and at the same time they are being attacked on prices. The Ofgem report shows the vast amounts that they are making in profits. I recall one particular occasion when I was on the Energy and Climate Change Committee and we had the big six before us. We pressed them on where they made their profits. They managed to deny simultaneously that they were making profits on generation and that they were making profits on selling energy. That prompts the question: where were the profits are coming from? If we are all in this together in these difficult times, as is claimed, we have to recognise that when family incomes are not rising the energy companies have to make their contribution. We have to take action to force them to reduce prices, because asking them to take action does not seem to be working.

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18:30 Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)

The challenge currently is that the Government are creating uncertainty for investors by playing political games with climate change. The Opposition do not believe that that will grow our economy. Talking down the green economy might sound good to a Conservative party conference, but what does it say to the companies that want to put their money behind carbon capture and storage or those that want to invest in renewables? What does it say to the small business owner who is thinking of providing energy-efficient goods or the manufacturer that is planning to build parts for a new generation of wind farms or solar panels? To them, talking down the green economy says: “Think again.”

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18:43 The Minister of State, Department of Energy and Climate Change (Charles Hendry)

That this House believes that the energy market does not serve the public interest and is in need of urgent reform; notes with concern research by OFGEM showing that average household energy bills have risen, while energy companies’ profit margins have soared; recognises that, with a cold winter forecast and Government support cut, millions of families will struggle to heat their homes; believes that energy tariffs are confusing and unfair, meaning that 80 per cent. of people currently pay more for their energy than they need to, and that consumers who try to switch are often given inaccurate information; further believes that to tackle climate change, build a new low carbon economy and make the UK a world leader in green energy, which will bring new industry and jobs to the UK, people need to know that the energy market is fair; and calls on the Government to investigate mis-selling and ensure consumers are compensated, introduce a simple format to be applied across all tariffs, so that people can compare the full range of energy deals at a glance, increase transparency by requiring energy companies to publish their trading data, reform the energy market to break the dominance of the Big Six by requiring them to sell power into a pool, allowing new businesses to enter the market, increasing competition and driving down energy bills for families and businesses, and demand that energy companies use their profits to help reduce energy bills this winter.

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