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3.57 pm

John Healey (Wentworth and Dearne) (Lab): It is a pleasure to follow the hon. Member for Hexham (Guy Opperman), who pointed out some important flaws in a market that should be fully competitive but at present does not best serve consumers.

People will be pleased to hear the Secretary of State backing the Labour motion but greatly disappointed that he has little to say that will give them any comfort or relief from the high and rising pressure of energy bills.

I want to talk about and draw some conclusions from the experience of a constituent who came to see me: Mr Terry Tomes of Denman road in Wath upon Dearne. Mr Tomes is on disability living allowance. He had a prepayment meter to try to control the costs of his energy bills, but he found himself with a debt to npower for gas and electricity of nearly £100. He was in such desperation about that that despite it being mid-winter, he had stopped using the gas entirely. I draw two conclusions from Mr Tomes’s experience: first, this is a system that requires much clearer and fairer pricing and regulation for consumers; and, secondly, the regulator, the energy companies and, above all, the Government are failing consumers across the country.

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:

“I went on line to compare my tariffs and I was so confused by the options that I decided to stick where I was”.

The Government are out of touch—that is the first way in which they are failing consumers.

Ian Lavery: To put a bit of humility into the debate and to cut across party politics, the fact of the matter is that fuel poverty is on the increase. Last year, 36,700 pensioners died because of cold-related problems. That is 13 per hour. Does not that fly in the face of the austerity measures? Older people cannot access the right tariffs and they cannot pay their bills. How are they expected to pay their bills? How are they expected to look at different tariffs and access all the information that Government Members have talked about? Is it not right that we focus on those people as a matter of urgency to try to reduce the number of elderly pensioners who die because of fuel poverty?

John Healey: My hon. Friend is absolutely right when he says that, for many, high energy prices mean a choice between eating and heating, and, in some cases, a choice between life and death, particularly in a harsh winter.

The second way in which the Government are failing is that they are scrapping some of the important Labour schemes to make homes warmer and bills lower, particularly

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the Warm Front scheme. You will know as well as I do from your experience in the Treasury, Madam Deputy Speaker, that over a decade, the Warm Front scheme helped more than 2 million households with their bills and insulation—it helped to make their homes greener, warmer and cheaper to run. This year and next year, that scheme will have a third of the budget that it had under the previous Labour Government. From 2013, it will be scrapped altogether.

In my constituency of Wentworth and Dearne, more than 3,000 households have benefited from that scheme in recent years, including pensioners, disabled people and young working families. One of my most recent visits was to Nicola Savage and her partner, Dan, who have two young kids. They had problems heating their home in Swinton, but the Warm Front scheme helped to replace an old back boiler with a new condensing unit. As Nicola told me at the time, “This makes a huge difference to us. When you switch it on, the house gets warm quickly and it stays warm.”

Andrew George: I believe that the previous Government were well intentioned with regard to the Warm Front scheme, but when I visited my constituents who benefited from it—there is no question that they benefited—I found that most of them paid twice as much as they should have done. I do not know who pocketed the benefit of that system, but my constituents could have paid half the price to a local supplier. The scheme was certainly not fit for purpose.

John Healey: I do not know whether there is anything peculiar about the contractors and suppliers in St Ives, but that is not the general experience or track record of the scheme throughout the country, and it is not the experience of most hon. Members on both sides of the House.

Sarah Newton: Will the right hon. Gentleman give way?

John Healey: I will not give way for the moment.

The third way in which the Government are failing is that they are letting consumers down by allowing the huge hike in energy costs and bills, which are up 20% in the past year, as we have heard. In six months, there has been an increase of £175. The Secretary of State, who knows the cost of speeding, is not in the Chamber at the moment, but for his benefit, £175 is the price of about three speeding tickets. Every time a family in this country switches on the heating or the lights, the Government are letting them down—and those with the lowest incomes and the poorest households are being let down the most.

Mr Tomes, who could afford £10 a week on his gas, found that he was paying £3 a week just for the gas debt charge, which was taken directly through the meter. The average cost for using the gas each week was £2.30, but the standing charge was £3.31. In other words, he was paying more for his standing charge than for the gas that he used. Why is the system penalising the poorest and benefiting the better-off? Why is it failing those whose consumer power is weakest while reinforcing the market position and choices of those who have money and confidence and can get online? In particular, why is it penalising low users of energy while rewarding higher users? Why are low users, such as Mr Tomes, paying more and losing out more?

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The answer is that all the major energy companies have a two-charge system. They justify it by saying that one charge covers the fixed costs of supply while the other covers the variable costs. That means that every major energy company either has a standing charge plus a unit rate or a higher-tier tariff up to a certain threshold and then a lower-tier second tariff beyond that. As a result, the less energy used, the greater the part of the bill that goes to the standing charge, fixed part or higher-tariff component of the costs, which means that low-use households pay more for each unit of energy that they use. Which? has calculated that low-use households pay 23% more for their gas and 15% more for their electricity, and of course low-use households generally tend to be low-income households as well. The system is therefore socially and environmentally regressive. Its reform is well overdue, and it is time for the Government and the regulator to act.

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.

Ultimately, people do not have the choice not to consume energy. As a service in a full-scale market, energy is a special case. That places a special responsibility on the Government to do more to protect consumers, who must have the energy that we all depend on.

4.11 pm

James Morris (Halesowen and Rowley Regis) (Con): It is a pleasure to follow the right hon. Member for Wentworth and Dearne (John Healey), who made a powerful case on behalf of his constituents and made some valuable points.

This is an important debate, because as I know from talking to my constituents in the west midlands, people are genuinely concerned about rising utility bills. As other hon. Members have pointed out, including the Secretary of State, fuel poverty urgently needs to be

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addressed. The west midlands as a region has the greatest proportion of people in fuel poverty in England, at 22.5% of the population or some 500,000 people. Around 20% of my constituents—7,500 people—could be defined as being in fuel poverty. This issue therefore needs to be tackled urgently. It has been around for a while: it has not suddenly emerged in the last 18 months, although I accept that genuine spikes in fuel prices have made the situation more difficult.

The Government need to respond—and they are responding—with a mix of policies. Both short-term and long-term policies need to be deployed to tackle the entrenched problem of fuel poverty and the situation that we face. However, there is no silver bullet, as it were, that could be fired to solve some of the difficult problems that we face from rising fuel prices. I know that hon. Members on both sides of the House have made some valid points; I am bucking the fashion by not having a five-point plan—because a number of the issues are interlinked. We live in a society where our houses lose energy very rapidly—something about our housing stock is weak in that regard—which is why I am supportive of the Government’s initiatives in the green deal, which I believe offers a comprehensive solution to improving energy efficiency. The green deal will also have the side benefit of potentially providing important jobs in the area of the black country that I represent. I know, having talked to many local organisations and people in the Rowley Regis area, that there is particular enthusiasm for the green deal. We need to tackle energy loss in our housing stock.

I also welcome other initiatives that came out of the summit that was held earlier in the week. The big six energy companies have a responsibility to communicate information to their customers in a much more targeted way, so I welcome the announcement that they are to write to the 4 million most vulnerable energy consumers about the opportunities that are available for home insulation. That strikes me as a fundamental responsibility, and the big six need to concentrate on the way in which they communicate basic information to some of the most vulnerable in our communities.

Just as we need to tackle the problem of energy loss in our housing stock, we also need to focus on unnecessary energy use. This is not about going around lecturing people on how they should heat their homes, but I know that the Government are committed to introducing smart meters, which will make a fundamental difference. This is a long-term project, but, as I have said, we need short-term and long-term measures to address these questions. Smart meters will introduce a major change in the way in which people consume energy, and they will certainly help them to have a clearer idea of their family or individual energy use.

The Secretary of State and others have also raised the broader strategic point that we face major issues of energy security in Britain today. The fact has been well documented that Britain is very vulnerable to energy price shocks, and our dependency on imported gas and oil has given rise to energy security issues. This is a macro question, and it is imperative that we diversify our energy sources. Hon. Members have talked about the use of nuclear power, as well as other forms of low-carbon energy and renewables, over the next 10 to 20 years. This is critical; we are not going to solve the problems affecting our most vulnerable residents and

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consumers unless we are clear about dealing with the diversity of our energy supply and the problems of energy security. Those factors are critical to the debate.

Other hon. Members have mentioned tariff complexity. This brings us back to the responsibilities of the big six energy companies. The market is too complicated. There are too many tariffs and it is confusing for consumers. I agree with the right hon. Member for Wentworth and Dearne that those who suffer most from this tariff complexity are the most vulnerable of our residents.

Laura Sandys: May I add that it is not only the most vulnerable people in society who do not understand the tariffs? In fact, very few people understand them. A fundamental problem is the idea of a unit. I do not know what a unit is. I do not know whether my hon. Friend knows what a unit is. We must start using language such as “an hour’s use of a bulb”, or some other form of consumer language. Companies need to be much less old fashioned, and much better at consumer communication. They need to communicate the value of the units and what we are paying for them.

James Morris: My hon. Friend makes an important point. The energy companies need to simplify the tariffs, but as she says, the language used to communicate also needs to change. The big six have a responsibility for communicating information in a way that is comprehensible and does not distort consumer choice. That is a fundamental issue. Ofgem has a responsibility here and the Government need to ensure that they keep the pressure on it continuously to monitor how information is distributed within this market to ensure that it is a truly competitive one. Ofgem must be on top of this, constantly monitoring to ensure that we get simplification both of the tariffs and of the information sent to consumers.

In the short term, as other hon. Members have mentioned, it is critical during the lead-up to this winter to maintain the winter fuel and cold weather payments, and to implement the warm home discount. Those are important short-term measures to maintain the situation and ensure that our most vulnerable residents are not put under pressure as they seek to heat their homes during what might be a very difficult winter.

Mr Nigel Dodds (Belfast North) (DUP): The hon. Gentleman is making a considered speech, dealing with all the elements involved in this complex issue and specifically mentioning winter fuel allowances. On behalf of all our constituents, especially the vulnerable elderly, does he think it is good enough for the Government to say, “Because Labour was going to cut the winter fuel allowances for the over-80s and the under-80s, we are simply following suit”? Do we not owe it to our vulnerable elderly people at this time to ensure that those winter fuel allowances continue at their previous level?

James Morris: The right hon. Gentleman makes a good point, but the Government had to make some decisions about spending and they matched what the previous Government had proposed for the winter fuel allowance. I think that was a fair and reasonable decision.

Sarah Newton: On that point, many more pensioners will benefit as a result of the warm home payment. Is it not a huge problem for pensioner households that many

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elderly people do not really understand all the benefits to which they are entitled. Year after year, Age UK runs campaigns to demonstrate how many millions of people are not collecting all the benefits to which they are entitled. If they did, their household incomes would improve and they would have more money. It is important that in talking specifically about winter benefits, we should remind our constituents to make sure that they claim all their benefits. They should go down to their citizens advice bureau, Age UK or the local Age Concern and get a benefit check so that they receive all the money to which they are entitled.

James Morris: My hon. Friend makes an important point about the collection of benefits available. There is an issue about pensioners and other groups not knowing which benefits are available.

The Government are taking some short-term measures, but it is important to note that they need to take long-term measures because this problem will not be solved by a single silver bullet. The Government are going in the right direction. This debate has provided a useful airing of views across the House about how we tackle this important problem.

Several hon. Members rose

Madam Deputy Speaker (Dawn Primarolo): Order. Before I call the next speaker, I remind the House that the convention is that interventions should be short. Also, when addressing the House, a Member is supposed to address all of it, including the Speaker in the Chair, and not turn away so that the Speaker cannot attract the Member’s attention should it be necessary to do so.

4.23 pm

Sammy Wilson (East Antrim) (DUP): I am pleased to take part in what I believe is a timely debate. There is general concern about the size of the energy bills that are hitting people right across the country. This is happening in the context of rising profits for the energy companies, while—despite what the global warmists are saying—we are increasingly having cold winters, which mean an increase in people’s energy bills.

As I have said, the debate is timely because there is a general feeling that the Government may not be giving these matters the priority that they deserve. When a Secretary of State dismisses the problem by saying, “Well, phone around and find out what the alternative costs are”, when energy companies are given a slap on the wrist but there is no real outcome, and when we are told, “Just grin and bear it, because some of this has to be done to save the world”, it is understandable that people should detect a degree of complacency.

This is a particular issue for us in Northern Ireland. First, the profits of Northern Ireland Electricity have risen by 68% over the past year, which is commensurate with the increases in the profits of the big energy companies in Great Britain. Secondly, energy prices in Northern Ireland are about 14% higher than the average in Great Britain. Thirdly, fuel poverty in Northern Ireland is well in excess of the average in the rest of the United Kingdom, affecting 43.7% of households in comparison with the UK average of 21%.

Jim Shannon: My constituents spend 10% of their incomes on fuel, and 44% of them are experiencing fuel poverty. Strangford has the second highest level of fuel

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poverty in Northern Ireland. Does my hon. Friend agree that the Government’s decision to reduce the winter allowance will have an unfair impact on people in Northern Ireland, as against the rest of the United Kingdom?

Sammy Wilson: Yes, and I shall say more about that later.

Part of the problem is a direct result of Government policies that have an impact on households and businesses throughout the United Kingdom. About 50% of those who are in fuel poverty in Northern Ireland are over 60, but just as worrying is the fact that 27% of those who will find it difficult to pay their fuel bills—who will be, as we loosely term it, in fuel poverty—are in work. They are going out every day to do their business, and their wages are so low that they still find it difficult to pay. That is another reason for my belief that the debate is timely and will resonate throughout the United Kingdom.

I will not repeat all the many causes of the problem that have already been mentioned today, but I think it worth drawing attention to the way in which large energy companies have used the prices of raw materials to raise the prices that they charge consumers, and the fact that—as a number of Members have observed—there is not the same flexibility when prices fall. That is one of the reasons for the level of profits that companies are experiencing. As many Members have pointed out, in the short term some of those profits could be used to deal with the problems.

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.

Mr Robin Walker (Worcester) (Con): Does the hon. Gentleman agree that the fact that France has the lowest energy costs serves to highlight that Governments

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of all colours have been short-sighted in not investing in new nuclear before, and that we ought to be going ahead with new nuclear now?

Sammy Wilson: I absolutely agree. I have consistently supported that, and back home have received some criticism for doing so, as people ask, “Are you therefore saying we should have a nuclear power station in Northern Ireland?” If it produces cheap electricity and deals with some of the problems people in my constituency face, of course I am happy to support that—although whether there are sufficient economies of scale in the Northern Ireland market to support a nuclear power station is another matter.

I agree with the hon. Gentleman about the short-sightedness of previous Governments, and I welcome the Secretary of State’s U-turn. Although he tried to cover that up today, he has clearly performed a U-turn on this issue. When he was in opposition he opposed nuclear energy, but now that he is in government he supports it, although he adds about 100 caveats to that support—the conversion process may take a little longer than we expected.

Reference has been made to the possibility of huge shale gas finds in Lancashire. The relative costs of electricity generation are as follows: 2.2p per kW for gas-fired electricity as against 7.2p per kW for offshore wind farms. Offshore wind is therefore three and a half times more expensive.

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 CO2 emissions, which account for 2% of the world’s CO2 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.

Dr William McCrea (South Antrim) (DUP): Does my hon. Friend agree that the increase in fuel prices will lead to many of our elderly and disabled people, who need heating most of all, not being able to afford it?

Sammy Wilson: Now that I have had my say on this particular part of the motion, I want to discuss some of the ways we can deal with the situation. We need to consider three periods. There are things we can do in the short term. Hon. Members have asked why pressure is not being put on the big energy companies to ensure that some of the windfall profits—I do not care what we call them, but we are talking about the increased profits—are redistributed in the form of lower prices. I understand that these companies have to make profits. If we want investment in the infrastructure for the future, there is no point saying that we want to strip profits from the companies that are going to have to make that investment. The question is whether those profits are excessive and whether, at this particular time, some of those profits should be going back to consumers. That could be in the form of price reductions, greater transparency about what is available or any of the suggestions that have been made, but the issue must be dealt with.

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The second issue to address is that of winter fuel payments, which was raised by my right hon. Friend the Member for Belfast North (Mr Dodds). Those payments have been reduced and it is not good enough for the Government to say, “We’re following the same policy as the party that used to be the party of government.” As I pointed out, part of this problem has been caused by Government policy and so it is essential that we find some way to help the most vulnerable. Of course it is going to cost money but this issue needs to be addressed.

In the medium term, we must examine how we help people to reduce their energy bills. That could be through what we in Northern Ireland call the warm homes scheme, but what the rest of the United Kingdom calls the Warm Front scheme. The warm homes scheme was introduced by my right hon. Friend and it has gone from strength to strength. It has taken a lot of households out of fuel poverty, although I take the point made by the hon. Member for Glasgow North West (John Robertson), which is that it does not matter how much is spent on some homes as there will not be a significant reduction in the energy people use so fuel poverty will remain. The warm homes scheme in Northern Ireland has not just been a way of dealing with the social problem of fuel poverty; it is labour-intensive and so has been a useful scheme in creating local employment—it has a high local multiplier effect—at a time when we are looking for opportunities.

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.

4.38 pm

Dr Thérèse Coffey (Suffolk Coastal) (Con): It is always a pleasure to speak in these debates. The usual faces are here—the people who regularly show up when we discuss fuel poverty in Westminster Hall—and it is a pleasure to be debating with them.

I was intrigued by the shadow Secretary of State’s reference to meerkats. I always think of them as cute, cuddly animals that cover the ground quickly, which may be an appropriate description of the Secretary of State. My dog’s favourite toy is a meerkat, as was seen at last week’s Westminster dog of the year show. The right hon. Member for Don Valley (Caroline Flint) later asked what we are going to do about the situation. Given the fantastic adverts—dare I say it?—we are going to stand up for the consumer; anybody who watches “Meerkat Manor” will know that meerkats stand up and look around. I am not going to be overly critical of what the previous Government did, although

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it is a bit of a cheek to ask what this Government are doing given that no nuclear power stations had started being built under them.

We need to be constructive because this issue is very important for our constituents. That is the key point that we need to unite behind, and I am pleased that there will not be a Division on the motion.

I want to tackle something that came up in my exchanges with the hon. Member for Ynys Môn (Albert Owen), who is no longer in his place. I know that he is an absolutely fantastic champion on behalf of those in fuel poverty—especially for off-gas-grid households. I am not suggesting that the energy companies should be encouraged to make excessive profits; I think we should be critical friends to them, but we do have to be friends to them because this country needs £100 billion to be spent on energy infrastructure over the next 10 years, and it is absolutely right that that will come partly from the profits that those companies will make. I understand that, in effect, consumers are the people who make the profits for the companies, but, like anything else, if it comes in tax, it still comes from consumers—from our constituents. Let us not kid ourselves that we do not ultimately have to pay, together, for the infrastructure that our country desperately needs.

I welcome the contributions that were made by my hon. Friend the Member for Hexham (Guy Opperman), who also is no longer in his place. He, too, has been a doughty champion for off-gas-grid households. Earlier today, the hon. Member for North West Durham (Pat Glass) and I were at a briefing about the Office of Fair Trading report that I have here. It is quite a weighty document, but it is double-sided, so the OFT was trying to be friendly to the environment. Members should read the report because, although the press notice did not make it sound very exciting, when one digs into it, one finds quite a lot that will prove very useful.

The hon. Member for North West Durham had an exchange with my hon. Friend the Member for Hexham about another issue that has been raised today—the OFT and how people were quoted one price and then expected to pay another. I am pleased to report that Carmarthenshire county council has successfully prosecuted a supplier for that practice. If we believe that that is happening in our areas, we must make sure that our county councils or city councils take full advantage of that ruling and ensure that they go after the suppliers that behave inappropriately towards our constituents at their most difficult time of need.

Let me mention some of the other contributions that have been made, including that of the right hon. Member for Wentworth and Dearne (John Healey) and the interventions from my hon. Friends the Members for Truro and Falmouth (Sarah Newton) and for Halesowen and Rowley Regis (James Morris). It is important that we make sure that our constituents are fully aware of the opportunities to seek advice on these matters. I thought that the criticism made of the Prime Minister and the Secretary of State was a bit of a shame because I feel that there has been a genuine attempt to say to people, “There is information out there and there is an opportunity to switch, and we are going to try to make it easier to do so.” They will encourage people to do that. People do not need to pay a standing charge if they wish to receive gas from companies. If one is a low user, it makes sense not to want to pay that.

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I was at a dinner last night with the hon. Member for Ellesmere Port and Neston (Andrew Miller) and we were talking about energy challenges for the next 30 years. People from the royal academies were saying that it was ridiculous that the pricing and tariff systems seem to incentivise greater use rather than less.

To return to being a critical friend of the energy companies, there is one practice that I know that my hon. Friend the Member for Battersea (Jane Ellison) would have intervened on me to make a point about if she were here, so I shall do it for her. I am talking about the practice whereby people pay so much a month by standing order or direct debit. I happen to know about this because I end up dealing with this situation for my mother—this might embarrass her. I work out that she somehow seems to be £400 in credit even though there is no way she is ever going to consume that much, but the company keeps taking the same sum each month if not increasing it. So I have to make the phone call once or twice a year and a big cheque comes back.

I experienced similar behaviour when I spoke on the phone with a very pleasant customer service adviser who was trying to persuade me that, for no particular reason, I would double the amount of gas that I would use in the next year. However, I was able to convince her that if she did not leave my standing order as it was, I would change supplier. We all know that that argument encourages companies to listen a bit more. I put out a call today to energy companies to be friendly to their consumers and to work on these issues. I say to them, “Do not use your consumers’ direct debits or standing orders as cheap ways of borrowing, but help people to make sure that they are paying what they need to.” I am not saying that people should be given false prices so that they end up with a huge bill at the end of the year. Energy companies need to make sure that the scheme works as it should, so that MPs do not have to keep writing to the companies to ensure that such practices are not tolerated.

Jim Shannon: In my constituency, and I suspect in many constituencies across the whole United Kingdom, elderly people come to me and ask, “Should it be oil? Should it be electric? Should it be coal?” Does the hon. Lady share my concern that there should be no penalty for those who want to transfer from one energy source to another? If after a year, or perhaps 18 months or two years, they want to transfer back, there should also not be a penalty from the energy company.

Dr Coffey: I thank the hon. Gentleman for that intervention. The reason I am hesitating is that I probably need to think about it a bit more. There is undoubtedly a significant capital cost for switching between fuel sources. If one has a coal boiler and switches to a gas or oil boiler, there is a significant capital cost to that. I am not clear what is being done at present, but energy modelling should make it possible to model the prices and understand the impact.

Jim Shannon: I thank the hon. Lady for her generosity in allowing me to intervene again. An example would be gas from different companies—we have two gas companies in Northern Ireland, and there are different electricity companies. The change should not be so costly. Sometimes unnecessary penalties are included.

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Dr Coffey: In that case, I misunderstood the hon. Gentleman’s original intervention. He makes a fair point. In discussions with the OFT we particularly focused on off-gas grid households and the terms and conditions that people sign up to unwittingly. Various regulations protect consumers from unfair trade contracts, but those can be complicated. There should be as few barriers to switching as possible. I hope the Government’s actions earlier in the week will lead to that in Northern Ireland, as well as in Suffolk.

The House has heard more today about off-gas grid than it has for a while, but it is fair to say that those who do not have access to mains gas have considerably higher costs than they would if they had access to it. The percentage in fuel poverty is even worse. The hon. Member for St Ives (Andrew George) referred to that in the context of Cornwall. According to the latest statistics that I saw, 23% of oil consumers are in fuel poverty, as opposed to 10% of those on mains gas and 13% of those on electricity. There are other heating sources, including liquefied petroleum gas.

Let me complete my comments on heating oil. The OFT study found that the market has been generally competitive. I know that came as rather a surprise to some Members, especially the statistic that 97% of households that are affected have access to four or more suppliers. The OFT said that it would share that information with us so that we can make it as widely known to our constituents as possible.

One aspect that the report did not cover but which we can help with relates to intelligent consumers. That is where buying groups come into their own. There are several such groups around the country. I commend one village in my constituency, Boyton, which has a scheme that covers every single household. People in every household are made aware of the scheme when they move in. That is a little better than my own village, where there are several buying schemes, but my landlady forgot to include me in the one over the summer, so I will have to shell out next month. It is important that villages and parishes can reach out to their neighbours and make sure that they are fully aware and take full advantage of the opportunities.

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.

I also inadvertently misled the hon. Member for Strangford (Jim Shannon) when I said that electricity companies automatically give a dual fuel discount to those people without access to gas. That is what I had been told by one of the big six energy companies. It turns out that only two of the big six do that, EDF Energy and E.ON, so that is something else that the other companies could do.

Another important consideration relating to off-gas-grid households is that many of the things the previous Government rightly did to focus on updating equipment meant that a lot of the money for Warm Front was

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directed at houses that had gas. In a way that makes sense; if significant energy reductions can be achieved by focusing on certain households, that is a good use of money. Anyone who wants a return would see that as a good use of capital. However, it meant that, in effect, many households missed out. We all know that older housing stock is much more difficult to treat, which is why I have made the plea before, and will make it again, that the Government should ensure that they do not forget rural households when trying to ensure that we all benefit from energy efficiency measures.

I have been using my iPad in the Chamber today in order to contribute to the debate. I have been able to check that rolls of Wickes ultraseal premium draught excluder—other DIY suppliers are available—cost a grand total of £3.49. I will take advantage of that this weekend, because I used it last year to provide extra seals for doors and windows in my house and I saw my consumption of gas fall by 18%. For £3.49, that is quite a good return. I encourage anyone and everyone to use the cheapest and simplest measures, such as draught excluders and the closing of doors, in older properties. I am not being patronising or saying that people must sit in front of one little heater; I am simply saying that there are some simple things we can do to ensure that we use less energy and that there are cheap and low-cost solutions.

I agree fundamentally with something that the hon. Member for Ynys Môn mentioned earlier. I feel very strongly that Ofgem should take ownership of all gas consumers. The Office of Fair Trading has done a good job with its inquiry, but people have to go to their trading standards officer and go down all sorts of other complicated routes.

I have just realised that I am out of time and must sit down.

Madam Deputy Speaker (Dawn Primarolo): Exactly. I remind Members that the wind-ups are due to start at 6.30 pm and that a large number of Members still wish to speak. It is not compulsory to take the full 12 minutes or necessary to take interventions. Please bear in mind the number of Members who wish to speak.

4.53 pm

John Robertson (Glasgow North West) (Lab): I will try not to use the whole 12 minutes available, as in many ways my contribution will be a repeat of a speech I gave in an Adjournment debate not long ago. I have listened intently to all Members who have spoken, particularly the hon. Member for East Antrim (Sammy Wilson), who said that he wanted honesty in the debate. Having heard history being reinvented and regurgitated so many times by Members on both sides of the House, I think that honesty is sometimes the first thing that goes out of the window.

I declare an interest as chair of the all-party group on nuclear energy. Interestingly, Labour Members used to raise the issue of nuclear energy much more often than the then Opposition, who ran away and hid every time the word “nuclear” came up. I am sure that the hon. Member for Angus (Mr Weir) will say, “And I wish it had just stayed that way.”

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I can tell the Secretary of State, who unsurprisingly is not in his place, that doing nothing and giving up on things is just not an option for people. My predecessor in representing my constituency, the late Donald Dewar, once said:

“Cynicism, together with unrealistic expectation, are the two great bugbears of politics.”

Those words were ringing in my ears when I heard about the energy summit at Downing street. The cynicism is to think that there is nothing we can do to regulate prices, and the unrealistic expectation is the Secretary of State’s thought that asking those in fuel poverty to use less energy is a solution to the situation; it obviously is not.

The average household has seen energy costs rise by about £300 in the past year, and Ofgem announced last week that the profit margin for energy companies has risen to £125 per customer, from £15 in June. With 13,500 pensioner households in my constituency alone—it has one of the highest concentrations of pensioners in Europe—and with the highest number of single women pensioners in the entire country, according to the Library, Members will understand why this issue is of grave importance to me as a local MP, and why I raise it today as I have on other occasions. As Members can imagine, my constituency surgeries are currently dominated by this issue.

According to official figures, 65% of single pensioner households and about half of small pensioner households in Scotland were classified as poor in 2009, making them more likely than any other type of household to be affected by rising energy prices.

When I was first elected in 2000, four out of five single pensioner households in Scotland lived on an annual income of £15,000 or less; today that figure is 60%— admittedly lower than the percentage when I was elected, but the level is still unacceptable. According to Scottish Government figures, almost one quarter of single pensioner households and one fifth of smaller pensioner households in Scotland are deemed to be in extreme fuel poverty, which means that they spend more than 20% of their disposable income on heating their homes. In addition, in Scotland 8% of pensioners live in absolute poverty and one in 10 over-65s are classified as materially deprived. Members will therefore understand why I keep telling people that we are on the verge of a fuel poverty crisis.

What causes fuel poverty? There are three root causes: low incomes, poor housing and, most of all, high energy prices.

Nick Smith (Blaenau Gwent) (Lab): My constituency is 1,200 feet above sea level, its winters can be bitter, and the latest figures show that it has 40 excess winter deaths every year. Does my hon. Friend agree that the Government have failed to stop the super-profits of some energy companies, and do not have a coherent plan to help families with their fuel bills this year?

John Robertson: I thank my hon. Friend for his intervention, and I will come on to the points that he makes, but to answer his last point, I sometimes wonder whether the Government are helping the energy companies make those obscene profits, rather than stopping them.

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David Mowat (Warrington South) (Con): I hear the hon. Gentleman’s comment on super-profits, but perhaps he will tell the House which way he voted on the windfall tax proposed on this side of the House on those same energy companies. They are making a 60% return on capital employed in a medium-sized field in the North sea, while the people whom he criticises today in the retail sector are making much less. Which way did he vote, and why has he changed his mind?

John Robertson: The hon. Gentleman is talking about a completely different area. I will talk about windfall taxes later, but suffice it to say that that proposal would have stifled what we were trying to do at the time. The hon. Gentleman thought that that was a good idea, but that is because he was on his side of the House and I was on my side of the House.

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.

As a result, there is great suspicion by many, including Ofgem, that the big six have not been passing on wholesale market price reductions. Surprise, surprise! As far as I am concerned, these are anti-competitive acts, especially towards smaller energy companies. Chapter II of the Competition Act 1998 prohibits the abuse of dominant position in a market by one or more undertakings which may affect the trade within the UK. According to the competition law guidelines,

“Conduct may be abusive when, through the effects of conduct on the competitive process, it adversely affects consumers directly (for example, through the prices charged) or indirectly (for example, conduct which reduces the intensity of existing competition or of potential competition). A dominant undertaking is under special responsibility not to allow its conduct to impair undistorted competition.”

I have previously accused the big six of acting like a cartel on many occasions. That is supported by the nature of the recent price rises, whereby tacit collusion appears to be taking place as the big six followed one by one in raising prices at a similar rate, following a price leader. Overall, it is debatable whether that accusation would be upheld in a court of law, but it is a fair political point to make.

The Government have not pursued every angle on energy prices, especially as one of their current positions is to say that pensioners in Glasgow and the rest of Scotland should use less gas and electricity this winter. According to the findings of the Hills fuel poverty review, which is out today, 2,700 people will die in England and Wales as a result of this year’s energy price rises by the big six energy companies. Should these people really take the advice of the Prime Minister and his Secretary of State to use less energy? I am sure that the Minister will have a copy of the review, and I

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suggest that he study it. The fact that so many people will lose their lives as a result of energy price rises means that we have to consider this seriously. I do not make that as a political point but as a point about human beings.

Ian Lavery: It was said earlier that probably 36,000 people died last year as a result of cold-related illness. My hon. Friend said that 2,700 people will die because of the price increases. Is that in addition to the 36,000?

John Robertson: Yes. According to the Hills report, that will happen because of the increases. My right hon. Friend the Member for Wentworth and Dearne (John Healey) said that that means that in every constituency in the country, four people will die for that reason. That bears thinking about.

I would like VAT on utility bills to be zero-rated, but as far as I am aware there is an EU law against that. It is a matter for next week’s debate—perhaps it will be raised by Conservative Members—which I will probably ignore of course. I should like the Government to reverse the cut in the winter fuel payment. We heard earlier that they were going to maintain the level established by the previous Government. However, the previous Government had a record of consolidating the money at the end of the financial year, and we will never know whether they would have consolidated the £100 level because we did not win the election, unfortunately. As a result, elderly people in this country are now suffering.

Early-day motion 2279, which I signed last night, asks the Secretary of State, or Ofgem at the very least, openly to consider imposing a financial penalty on energy suppliers for anti-competitive behaviour in the energy market—or at least to remind energy companies of their social and competitive responsibilities and the consequences if they forget them. At times it feels as though Ofgem and the Government offer too many carrots and not enough sticks to the big six. Ofgem can impose a maximum financial penalty of 10% of an energy company’s turnover if it is seen to act anti-competitively. I suggest that it has been proven that that is happening. However, in its 11 years of existence, Ofgem has not once levied the maximum fine on an energy company.

If such a fine was imposed, the money could be collected by the Treasury and put in the Consolidated Fund, and the Prime Minister could tell his Chancellor to redistribute it to the hard-pressed customers in our constituencies this winter. How much would a 10% financial penalty raise? According to the Library, using the revenue figures for 2009-10, we could raise £9.5 billion from just three of the big six, with £2.4 billion coming from British Gas alone. Alternatively, a collective penalty levied on the total sales of gas and electricity to the domestic sector, which were £27 billion in 2010, would raise £2.7 billion. Clearly, money could be raised to help people this winter not through a windfall tax, but by using the enforcement powers that are already there. However, there needs to be the political will to do that, and to ensure that our irregular regulator is doing all it can.

Furthermore, I strongly suspect that behind these price rises we will find that the companies have grossly failed to stockpile energy reserves and to hedge adequately against future price rises. There may be a number of

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reasons for that, but I think that one is ineptitude. I also think that the answer lies in the fact that they have no incentive to do so.

I try to represent my constituents at all times. There is a group of people in my constituency who cannot access the internet in any way. Glasgow has the lowest uptake of internet access of any city in the country. We also know that very few elderly people are connected to the internet. Therefore, despite the calls from the Secretary of State and the Prime Minister for people to go and find something cheaper, those people are left with what they have got, particularly those who live in houses made of concrete blocks that cannot have cavity wall insulation or any other energy efficiency measures installed. There are 400 tariffs for them to choose between, if they can understand them. The Minister could not, and I am not surprised. Left to their own devices, those people will have either to continue as they are or to switch the heating off. Consequently, 2,700 people in England and Wales will be added to the statistics, including people in my constituency.

5.8 pm

Steve Baker (Wycombe) (Con): I am sure that all Members are here today for the same reason: our constituents are struggling with the excruciating price of fuel. I will explore three practical points that might help, if the Government will allow me. The first relates to supply and the other two to upward price distortions that I believe could be removed or alleviated.

Shale gas has been mentioned and I will not go over the same ground. It seems that we have vast, abundant and cheap sources of gas in this country. We should be going through a shale gas revolution. I was glad that the Secretary of State spoke relatively warmly of the resource earlier, but I noticed that he moved quickly on to carbon capture and storage. I would like to bring to the House’s attention an article in The Wall Street Journal today entitled, “EU Weighs Pullback on Cutting Emissions”, which has the subtitle, “Commission’s Energy Department Urges EU to Reconsider Energy Transition Absent a Broader Emissions Deal”. I hope that the Secretary of State will not crucify the British people upon a cross of carbon, because if we can have a shale gas revolution I certainly hope we will. The imperative to produce cheap energy is clear, and many Members have set out the case with great talent and passion.

Sammy Wilson: I hope that the hon. Gentleman noticed that the Secretary of State talked about the capital cost that carbon capture and storage would add to a power station that had to use it. He talked about a figure of £1 billion plus the running costs afterwards, which would add significantly to the costs of producing energy from gas.

Steve Baker: I am very grateful to the hon. Gentleman. It seems that these days we throw billions around casually, but those are enormous sums of money.

I turn, then, to more billions that are being thrown around. I have learned from Matthew Sinclair’s “Let Them Eat Carbon” that the EU emissions trading scheme is costing European consumers €15.5 billion a year and British consumers €2.2 billion a year. It seems to me that if we are truly concerned about what the poor and

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the strivers are paying for energy, we should look extremely carefully at such distortions to market prices. I note that because the carbon price collapsed under the EU ETS, we are now looking at a carbon floor price of £30 a tonne. Having tried to introduce a particular market-based mechanism and found that it does not work, we are now introducing a particular piece of price fixing. I am not at all convinced that that is a good idea.

Traditionally, Governments have interfered to pick winners, but it seems that at the moment they might be interfering to pick losers. I note that under feed-in tariffs, onshore wind receives £45 per megawatt-hour, whereas solar panels receive £400 per megawatt-hour. I am not sure those prices are a good use of taxpayers’ money, or of the system of feed-in tariffs, in the context of the shale gas resources that exist. I might go so far as to say that we seem to be entering some kind of Hegelian dialectic, in which on one hand we agonise over the price of energy and on the other hand we implement Government policies that seem deliberately to elevate energy prices, in the hope that some synthesis will emerge.

Dr Whitehead: Before the hon. Gentleman gets completely carried away with the shale gas paradise, does he not understand that it is an unconventional gas supply and therefore very expensive to extract? Does he also understand that Deutsche Bank, in its recent review of energy prices, stated that unconventional gas supplies in Europe would have no discernible effect on future gas supplies, because of increasing demand across European and north American markets as a whole?

Steve Baker: I think perhaps the hon. Gentleman and I will have to put our researchers in a room and have them fight it out, because my information is that the Deutsche Bank report has stated that a quarter of UK households could be driven into fuel poverty by being priced out of the market; that the most effective policy to bring energy costs down would be to abandon our unilateral renewables obligation, which would save 15% on costs; and that shale gas utilisation would save a further 15%.

David Mowat: It is not true to say that shale gas is more expensive than conventional gas. In the US, gas prices are now 50% of those on the European hub. That is a huge and unprecedented thing to have happened, and it is why the US is about to become a net exporter of gas. It has decoupled gas and oil prices due to shale gas. I am not saying that we can do that easily, but it has happened in the US, and it is wrong to say that shale gas is more expensive than other methods.

Steve Baker: I am grateful, and with that I will perhaps move past shale gas. My point was that there are enormous, abundant resources of shale gas. Of course there are problems, but as an engineer I just see problems to be solved and risks to be mitigated. I think we should get on with it. We must also remember the points that I touched on about the price distortions that we are deliberately introducing into the market, including the subsidising of large corporations through surplus permits to emit, which have a market value. Such distortions in the market tend to push prices up.

Of course, prices are expressed in money, and I wish to move on to my favourite subject—the distortions that have been introduced to the market through the

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financial system. I have a wonderful chart before me that prices crude oil from a base figure of 100 in 1945. It shows that the oil price has only been high and volatile since 1971. The two lines—one is US dollars and one is gold grams—are coincident until 1971, but once we came off Bretton Woods and the dollar was decoupled from gold, oil prices were suddenly high and volatile. I showed the chart to an EU energy regulator and he was astonished because all the main events in the history of crude oil prices are simply missing from the price in gold.

Let me move on to the chart that shows crude oil simply priced in gold and blown up. We can see that oil in gold is cheaper now than it was in 1950 and that the oscillations have been pretty much around the same mean. I have other charts relating to gold and they show that gas prices are cheaper today in gold than they were in 1994.

It seems to me that if we are serious about energy prices, we ought to be asking serious questions about the value of money. Right now, one of the biggest problems we face is that “Helicopter Ben” Bernanke is printing dollars and distorting energy prices worldwide. That brings us back to the imperative that has been discussed: people will be in fuel poverty, choosing between heating and eating.

I ask the Government to consider how we can deliver a shale gas revolution. I want them to consider along with the EU Commission whether we should continue aggressive green policies in isolation. I want them to consider those policies and whether it is sensible to keep pushing up prices. Finally, I want them at least to consider some of the monetary effects on energy prices that, in my view, are now crucifying us all.

5.16 pm

Karl Turner (Kingston upon Hull East) (Lab): I am pleased to have managed to catch your eye, Mr Deputy Speaker, to be called to speak in this important debate. In the UK, 6.4 million homes are in fuel poverty and that number continues to rise. That is the number of households spending 10% or more of their income on their energy bills.

There are two key factors: energy prices and household incomes. Fuel prices continue to rise at astronomical rates and Government policies have left families in this country seriously squeezed. At the same time, the six most dominant energy firms, which, as I understand it, control 99% of the market, have seen their profits increase to £125 per person. That is absolutely scandalous. The figure has increased from £15 to £125 since June, so no wonder our constituents are seriously concerned about those companies taking them for a ride. My own father—who is a constituent of mine—calls it daylight robbery. Given what my hon. Friend the Member for Glasgow North West (John Robertson) has said, I think that is worse than daylight robbery. It goes beyond robbery with violence and is tantamount, to me, to corporate manslaughter. It is estimated that 2,700 people will die this year as a result of the increase in fuel prices. That is an absolute disgrace.

It is important to recognise that, in the last quarter alone, such profits equate to billions of pounds. It shocks me to hear the Secretary of State defend the energy companies, saying that they are not the Salvation

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Army. Is it not time that we looked at this carefully? People are deciding between eating and turning the central heating on, so it is perhaps time for a little philanthropy from those companies.

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.

The Government could call for an investigation into allegations of mis-selling, but they have not done so. Consumers who have been ripped off by companies should be properly compensated. In my view, that is the type of thing that the Secretary of State should have said when he addressed the House from the Dispatch Box. The Government should tell energy companies to use their soaring profits to help families and businesses with crippling energy bills.

We need a mandatory social tariff. Energy suppliers should be forced to charge less to their most vulnerable customers, and I am confused as to why the Prime Minister did not ask for that in his energy summit. The Government need to stand up to the powerful vested interests in the energy industry, and to provide help, rather than patronising people. They are out of touch. Cutting support for the most vulnerable is absolutely appalling, which brings me on to the winter fuel allowance.

The Prime Minister’s decision to cut the winter fuel allowance will affect thousands of pensioners, including many hundreds in my constituency—[ Interruption. ] The Minister says something from a sedentary position that I cannot quite make out, but I wish he would listen and allow me to make the points that I want to make, because if he did so, he would learn something about real people in my constituency, who are suffering quite severely.

The Minister of State, Department of Energy and Climate Change (Charles Hendry): I am grateful to the hon. Gentleman for giving way. The reality is that the allowance was introduced by the previous Government on a temporary basis. For the year after the election, no money whatever was allocated to it. The allowance was a temporary measure, and this Government have continued the policy of the Labour Government. We have not cut it; that is what the previous Government planned to do.

Karl Turner: That is absolute nonsense. This Government are running the country, and winter fuel payments have been cut by £50 for over-60s and by £100 for over-80s.

Mr Jim Cunningham (Coventry South) (Lab): Once again, the Minister has given an alibi. If the previous Labour Government planned what he says they did, he could change it. It is very simple.

Karl Turner: That was my point—the Government are in charge.

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Labour’s Warm Front grant has helped more than 2 million vulnerable households in England since its inception in June 2000, but this Government are phasing it out completely.

Dr Thérèse Coffey: Will the hon. Gentleman give way?

Karl Turner: Not at the moment.

As I have said, household income is a key factor in fuel poverty, but the Government’s economic record on that makes grim reading. Unemployment in Kingston upon Hull East is currently about 11.5% and it looks set to increase. The Chancellor’s mistake with the VAT increase costs the average family £450 a year and a pensioner couple £250 a year, which is on top of the ever-increasing cost of energy. In addition, food inflation is at 6.2%.

Energy prices and the greed of the big six is forcing households throughout the country into fuel poverty. Their greed is akin to the greed of the bankers. A profit margin of £125 per person when families are facing a choice between a decent meal and a warm home is utterly irresponsible. The energy companies have been increasing their profits substantially while preying on people who have no choice but to buy from one of the big six.

The Prime Minister’s energy summit represented a demonstrable failure to act. All we heard from the Government on Monday was their intention to write to those who are struggling, encouraging them to switch to a new deal. It is patronising to suggest that many have not already done this. According to the Government, if energy bills are too high, the customer is to blame. It is absolutely shameful. The Government desperately need to get a grip of these companies and take some positive action. I welcome the fact that Government Members will be supporting the Opposition motion today, but as my right hon. Friend the Member for Don Valley (Caroline Flint), the shadow Secretary of State, has said, people need warm homes, not warm words, from this Tory-led Government.

5.25 pm

Damian Hinds (East Hampshire) (Con): I am grateful for this opportunity to make what I intend will be a brief contribution to this important debate. It is timely because, as so many hon. Members have said, this is a matter of the first importance to so many of our constituents and many of the most vulnerable households. Again as has been said, many are making a choice between heating and eating. However, as the Financial Times pointed out last week, on trends that we have seen, it would not be too long before the average household is at risk of falling into fuel poverty. I know that Members on both sides of the House want to get to grips with this problem, so it does not have to be a party political issue. I am afraid, though, that in her opening remarks, the right hon. Member for Don Valley (Caroline Flint) made it so.

There is much merit in the Opposition day motion, and the Government Front Bench team have said that they will not be opposing it. I do not suppose that it would be in order for me to suggest amendments at

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this stage, but long as the motion is, I think that it would benefit from the insertion of seven words. The first line reads:

“this House believes that the energy market does not serve the public interest”.

I would suggest inserting after “energy market” the words: “that we, the Labour party, presided over”. The Government took office after a Government who allowed extensive fuel poverty to persist, who failed to get to grips with the complexity in the market, who had no green deal and who were well off the pace on nuclear power, and all that time of course the now Leader of the Opposition had more than a passing association with energy policy. By contrast, the coalition Government have come in with bold plans to address all those issues.

There are important community-based initiatives, such as oil clubs, which have been mentioned once or twice, and organisations such as Greening Petersfield and Greening Alton and Holybourne, in my constituency, which are working with some of the most vulnerable people to take sensible, simple measures to better insulate their homes and to save money. Although there are many aspects to this debate, I want to talk briefly about just two: first, the implication of the green deal for the prices that, in particular, the most vulnerable people are paying and the need to ensure that they share in the benefits of the green deal; and, secondly, the need to tackle market complexity.

I welcome the green deal hugely. It is an innovative approach to this practical issue and could contribute to employment and growth—it is investment in the truest sense of the word. However, we need a few reassurances, particularly on how small businesses will share in the work and on how the quality of workmanship will be guaranteed. Specific to energy prices, however, I hope that the Minister will say something about how the green deal will work for people on pre-payment meters and about how the interest rate regime will ensure that those households and consumers considered the “highest risks” will not be effectively priced-out of the benefits arising from the green deal.

Luciana Berger: We fully support the green deal, which we piloted when Labour was in government in the pay-as-you-save scheme. I share the hon. Gentleman’s concerns about pre-payment meters and interest rates, which were two points that we laboured in the Committee stage of the Energy Bill, sadly without getting answers. I know that I should be making a short intervention, but I would like to return to his point about the community element. We sought in Committee to secure lower administration charges for those smaller businesses, community projects, social enterprises, charities and co-operatives that want to take part in the green deal, but the Government rejected our amendments. Will the hon. Gentleman ask them to reconsider that?

Damian Hinds: The fact that the hon. Lady made those points does not make them bad points, and there will be further detail to come. Things do not necessarily have to be on the face of the legislation. As the green deal is introduced, I am sure that ensuring that the most vulnerable households share the benefits will be high on Ministers’ list of priorities.

The second point that I want to cover briefly is about complexity in the market. We know that there are hundreds of tariffs on the market—one of which, slightly

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inexplicably, involves getting a free football shirt. In some ways, complexity in the energy market is a reflection of increasing complexity in consumer markets in general. Those visiting the Sainsbury’s wine aisle now need to take a Hewlett Packard scientific calculator to work out the best deal, whereas those looking for a savings account or a credit card deal need to spend quite a long time working out the best deal in the first place and, more importantly, need to be sharp and ensure that they cancel it at the right time to get the savings. Things are becoming harder for consumers, but they are especially difficult with energy because it is that much less tangible and has that much more complexity to it.

Justin Tomlinson (North Swindon) (Con): I congratulate my hon. Friend on making an excellent speech. On empowering consumers, one of the challenges is that most people are incentivised to switch accounts when their prices are hiked, only to find a few weeks later that their new supplier has also hiked its prices. Does he agree that one solution would be to block price rises for new customers for the first six months after signing up to a new tariff?

Damian Hinds: My understanding of the recent Ofgem announcement is that there is some provision for ensuring that what it calls innovative price tariffs must have a fixed element to them—funnily enough, I was just coming to more or less that very point. I welcome Ofgem’s new requirement for a single, simple tariff per payment type, but we need to ensure that that does not beguile us. I used to work in the hotel business, and anyone who has ever stayed in a hotel might be familiar with the rack rate. That is the price pinned on the back of the door, which is nominally a perfect reference price that people can use to compare hotels. The problem is that hardly anybody pays the rack rate; rather, all the competition centres on the other rates. That does not mean that such rates are a bad thing, but we would not necessarily be able to say that we had thereby solved the problem.

When it comes to solving the problem, we have to remember that the comparison websites—all the puns about meerkats and Go Compare were getting a bit much earlier—are commercial enterprises. Although they allow people to compare, the click-through payments that they receive mean that they have an incentive for screen biasing. The Consumer Focus code and accreditation are welcome, but that is not quite the same thing as ensuring that comparison sites operate absolutely perfectly in the public interest. I hope that it might be possible to consider a new model of comparison websites to sit alongside those that already exist, which would be broadly modelled on a website called Lenders Compared. I do not know how many hon. Members are familiar with Lenders Compared—probably not that many—but it was set up as a result of the Competition Commission investigation into high-cost lending and enables consumers to compare the cost of various home credit operators and others.

Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op): I am listening carefully to what the hon. Gentleman is saying, some of which I agree with, but I wonder whether he will take up the point that my hon. Friend the Member for Glasgow North West (John Robertson) made about many people on low incomes, particularly those with disabilities, not having access to websites.

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I met a constituent this week with a visual impairment who is finding it extremely difficult to get information that he can access easily.

Damian Hinds: The hon. Lady is absolutely spot-on; indeed, I was just coming to that point. There are organisations and individuals who assist people with such matters, and a simple comparison mechanism could be very useful for them, too.

I raised the question of how many hon. Members had heard of a website called Lenders Compared. I suspect that the answer is not many, which illustrates a problem. It is all very well having a pure comparison website, but if no one has heard of it and no one looks at it, it is not doing its job. Such sites therefore need some marketing spend behind them. I suggest that Ministers might have a discussion with the industry about creating such a service, to be funded by the industry itself. People might ask why the industry would want to do that, as it would cost it money, but I think we might be surprised at how much it might be willing to consider, if not fully welcome, such a proposal, because of the pay-per-click marketing fees that it would save as a result of that tranche of its business going through such a site. So, that is my suggestion du jour for Ministers. I am grateful to you for calling me to speak, Mr Deputy Speaker.

Several hon. Members rose

Mr Deputy Speaker (Mr Nigel Evans): Order. I am going to try to fit in as many speakers as I can. I am therefore reducing the time limit to eight minutes, with the usual extra time for interventions.

5.35 pm

Pat Glass (North West Durham) (Lab): Thank you for calling me to speak in this important debate, Mr Deputy Speaker. This subject is of huge interest to the energy-consuming public, and these are matters of real fear and anxiety to many of them. We should remember that many of these British companies that are making big—even obscene—profits right now are the same utility companies, energy companies and communications companies that used to be owned by the British people. Whatever artificial market situation successive Governments put in place to try to manage those companies’ profits and markets, they continue to operate as a virtual oligopoly. There are few suppliers in the market, and entry into that market is virtually impossible. Those suppliers’ actions therefore have a disproportionately negative impact on prices.

The bottom line is that those companies were nationalised for a good reason—namely, to stop them using their strategic position to drive up prices. Ironically, we now find that our most strategic energy, water and communications companies are foreign-owned and are demonstrably using their position to drive up huge profits for a small number of senior staff and shareholders. We have moved from a position in which all of us owned and benefited from those companies to one in which only a small number benefit massively while the rest of us lose out big style.

I am not suggesting that we should renationalise those companies, but the present situation is clearly not working for the consumers of this country. It needs

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urgent reform. I am really pleased that the Government are supporting the Opposition’s motion today, including the part that calls on them to

“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”.

To me, that means breaking up the big six, and I hope that that will be the Government’s policy. I also hope that the Opposition will hold them to account on that.

It is the greed of those energy companies that has brought about this situation. This year, they have fallen over themselves to announce big increases. British Gas went first, increasing its gas prices by 18% and its electricity prices by 16%, but that was quickly followed by similar increases from Scottish Power and the other four. This might not be a cartel as we know it, operating in smoke-filled rooms, but it appears to be a cartel that operates by watching Sky News to see who is going to go first before rushing in with similar price increases. To me, that is still a cartel, and it is the British consumer who is losing out.

British Gas defends its massive price increases and blames us, the customers. It tells us that we are not paying enough to reflect the increased cost of gas and electricity on the wholesale markets, and that that will depress its profits for the first half of this year. Not surprisingly, organisations such as Consumer Focus and Which? disagree with that, telling us that wholesale costs have actually gone down and are still about one third lower than their 2008 peak, yet the energy companies’ profits have risen substantially over the same period. So, costs on the wholesale market have gone down, and energy profits have gone up. For example, British Gas has had a 44% increase in its gas profits and a 21% increase in its electricity profits. Last year, British Gas’s residential business—not its whole business; just the residential part—made £740 million profit. I am not against companies making a profit, and I believe that everyone is worthy of their hire, but that is obsessive, and it is the poorest people in this country who are paying most.

All that leaves British energy consumers facing massive increases in the cost of energy at a time when wages are being frozen, food prices are rising, petrol and diesel prices are soaring and travel costs are ever increasing. About 9 million households in Britain face an average dual fuel increase of £190 a year. We were told last week that the energy companies made £120 profit from the average family on a dual fuel deal, increasing from £15 in June this year. That is nearly a 700% increase for the average family.

The Prime Minister’s response, therefore, is disappointing to say the least. He had the energy companies in on Monday, but instead of showing them the instruments of torture, he seems to have introduced them to the tea and coffee-making facilities. It is just not good enough. We desperately need the Prime Minister to start taking these people on. It was an opportunity wasted.

Nic Dakin (Scunthorpe) (Lab): My hon. Friend is making a powerful argument to show how these massive energy cost rises are having an impact on the individual consumer. Does she agree that there is also a negative

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impact on British business, particularly on high-energy-using British manufacturing businesses, so it is yet another struggle for them in these difficult times?

Pat Glass: I agree, and it is not just businesses either; it is schools and colleges, too, that are being driven hard by these increases.

The Energy Secretary’s response has been equally disappointing. He has given us a White Paper on reform of the electricity market, but in my view, it is big on complicated legal mechanisms while saying nothing or very little about the impact of these increases on households. He has given us a list of his meetings with small providers and he has launched yet another Ofgem review into energy prices—the 18th such review so far. Personally, I do not find that impressive; I think the Energy Secretary should be doing more.

Finally, we are moving towards another winter and the nights are drawing in with temperatures beginning to drop. My constituents are telling me in my surgeries—not just now and again, but every time—that they are having to choose between putting the gas on or feeding the kids. Frankly, in the sixth biggest economy in the world, nobody should have to make that choice. I am pleased that the Government are supporting the Opposition motion, but they need to get a grip on this problem—and fast.

5.42 pm

Andrew George (St Ives) (LD): It is a pleasure to follow the hon. Member for North West Durham (Pat Glass) in the light of how this debate has developed and evolved. She has made a constructive and considered contribution to a debate that is going to conclude with a clear consensus, whereby this Parliament can move forward and encourage the Government to do a great deal more.

Ian Lavery rose

Andrew George: I do not think I have said anything yet, but I am happy to give way.

Ian Lavery: I thank the hon. Gentleman for giving way. Is he as surprised as I am that Government Members are supporting the Opposition motion when it is highly critical of many aspects of energy prices and Government policies?

Andrew George: No, I am not at all surprised that the Government have decided that, on balance, looking at the motion—it could, of course, be tinkered with—it says a lot of the right things. We need to start coalescing around the issue to move it forward effectively in the interests of the nation. My concern is that we started this debate in the customary and traditional manner of a yah-boo pantomime. There is a sense that we are obliged to endure the opening of Opposition day debates in that way, so I am pleased that we seem to have moved on from the traditional type of exchanges—when we hear the trading of “It’s your fault” followed by “No, it’s yours”, which takes us nowhere and certainly does not impress the country as a whole—and identified areas on which we can agree. That is what the country wants us to do. Rather than wasting our energy—if Members will excuse the pun—on the yah-boo pantomime, we should build on the constructive speeches made by

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Members in all parts of the House today. Given that there is a great deal of agreement among us, we must ask what it is that we all agree we can do.

I accept that my right hon. Friend the Secretary of State is a self-declared ambassador for the sharp-elbowed middle classes who will be scrutinising their bills, understanding what they mean, and chopping and changing on a regular basis, but the fact is that 60% of the population do not do that. Although it was rightly said at the energy summit that there should be a more transparent and effective way in which consumers could become informed and make informed choices, the fact is that many people lead busy lives, cannot penetrate the opacity of the bills with which they are presented, and do not understand how choices can be made.

I may not be a member of the sharp-elbowed middle classes, but I am so busy doing my job that I know more about my constituents’ finances and bills than about my own. I never get around to dealing with these issues, and I would not recommend anyone to follow any of the financial decisions that I make about my own life. I am sure that many other Members have the same problem.

The right hon. Member for Wentworth and Dearne (John Healey) referred to a five-point plan. Usually three is about as much as we can count up to in the Chamber, but five is very helpful. He spoke of the need for greater transparency, and the possibility of regulating standing charges. I think that that idea should be thrown into the melting pot, and I hope that the Government will consider it.

Others, including the hon. Member for Ynys Môn (Albert Owen), suggested that, given the profiteering of the big six, a windfall tax should be introduced. We know that we cannot opt, as a country, for a Soviet-style state-owned energy system—and there is no appetite for that in any part of the House—but the fact is that, although the system will of course continue to be in private hands, we need to do something about the profiteering. The idea of introducing a windfall tax, or threatening to introduce one if the energy companies do not start demonstrating that they are prepared to provide a genuine and a better service rather than simply putting money into the pockets of their shareholders, might also be thrown into the melting pot. We need to do more to incentivise fuel efficiency, which is not something that energy companies favour at present. They want to sell their energy and do not necessarily want people to conserve it, and we need regulations that will encourage that to happen.

Earlier, I mentioned rising block tariffs, which exist peripatetically more or less throughout the industry. I hope that the Government will think about those, because they plainly disincentivise fuel efficiency in the domestic market. Many other Members have mentioned key meters and pre-payment arrangements, and we should also consider special groups such as park home owners. The hon. Members for Ynys Môn and for Hexham (Guy Opperman), among others, made telling references to off-grid energy and, in particular, to the LPG market.

We should not ignore a minority group, namely the rural poor, and in particular the fuel-poor in rural areas. We should bear in mind that 29% of households with oil-fired central heating are in fuel poverty. It is clear from the position in my constituency—it includes the Isles of Scilly, which means adding a further 20% to the LPG costs—that many people are struggling to pay

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their fuel bills in rural as well as urban areas. The Office of Fair Trading report is of course welcome. It suggests that most customers now sign two-year exclusive contracts with their supplier. That is the maximum time allowed following the Competition Commission investigation. Under those contracts, the supplier usually retains ownership of the tank, which makes it hard to switch supplier if prices rise. The Government must keep an eye on that.

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.

I understand that the Government will make an announcement on the renewables obligation certificates review shortly. I hope we get a significant degree of parity between Scotland and the countries south of Hadrian’s wall in respect of ROCs. In my constituency, we have the first commercial-scale wave hub in the country, and I give the previous Government great credit for having invested in it. Although it is based just outside my constituency, the wave hub itself lies within it. It is important that we have measures that encourage such initiatives, so I hope that we have a favourable outcome to the ROCs review.

This has been a constructive debate, and I hope we can take the key issues forward constructively with all parties engaged.

5.51 pm

Alex Cunningham (Stockton North) (Lab): This debate covers the important topics of rising energy prices and their effects. The combination of a sharp rise in energy prices and an economic downturn has resulted in families already feeling the pinch. The coming winter is predicted to be the coldest on record, yet there is no substantive action from the Government. We must challenge that, or many more people will suffer.

I am proud of Labour’s record in office on energy issues, and especially on fuel poverty. We ensured that support was focused on the most vulnerable groups. The winter fuel payments were introduced by Labour, and they have helped more than 12.7 million people in 9.2 million households to keep their homes warm. Warm Front was the Government scheme for the fuel poor, and it has helped more than 2 million vulnerable households across England since its inception in 2000. I was very disappointed to learn that the current Government are phasing that programme out, thus ending 30 years of Government-funded programmes. The north-east led the way in many of those endeavours. There were tremendous schemes in my area, Stockton-on-Tees, as well as in Redcar in Cleveland, and in Newcastle and Gateshead. However, as the hon. Member for Hexham (Guy Opperman) said earlier, fuel poverty levels are still high in our region.

Labour also started the process of energy market reform, which would have opened up the market to new entrants, thus increasing competition and thereby giving consumers greater choice. To ensure that that was not merely an empty gesture, we wanted to back it up with tough legislation to protect consumers from the vested interests of the big six energy companies. However, it

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seems that this Tory-led Government are showing their true colours. They are siding with big business over ordinary people by failing to take on the big six at the very time the country needs them to take decisive action in order to stop many ordinary families plunging into fuel poverty and debt.

Perhaps the Government are ready for action, however. I, too, am delighted that they have decided to accept our motion. It recognises that the forecast of a cold winter and the cuts in Government support will lead to millions of people struggling to heat their homes. The Government accept that tonight, and I hope they are going to do something about it. More importantly, their acceptance of the motion means they agree that we need to break up the dominance of the big six by requiring them to sell power into a pool to allow new entrants into the market. Does the Minister plan to announce tonight that the Government will compel the big six to pool their energy, thus driving down prices?

What are the Government’s plans? We need to see people get help with their energy bills—this is such a basic need—so that they are not pushed into financial hardship. I wish to concentrate my remarks on fuel poverty. Lower bills are always the answer. The best way to reduce fuel poverty is to put money in people’s pockets, but this is not just about excessive energy prices; it is also about more fundamental issues, such as the poor-quality heating and insulation in too much of the country’s housing stock, and low household income.

I know that the energy suppliers have a responsibility to play a substantial part in helping to eradicate fuel poverty through meeting the cost of energy-efficiency measures, but the Government have a tremendous role to play too. Under the last Labour Government, we saw tremendous success for the Warm Front programme and initiatives such as the warm zones, with which I was personally involved. Millions of homes benefited from the schemes, with well-insulated homes and efficient boilers saving individual households hundreds of pounds a year. There was an extra dividend of better health, thanks to people living in warm, dry homes. I well remember taking executives of the then Lattice Board, the parent company of my employer, Transco, now part of the National Grid Company, to visit houses in Thornaby on Tees, in my neighbouring constituency. One resident invited the executives to feel the wall and said, “Its warm, isn’t it? It used to be stone cold.” We had a warm zone fan there.

Sadly, the Tory-led Government have not seen fit to build effectively on what was achieved under Labour, when the number of people in fuel poverty tumbled from more than 5 million to slightly over 1 million. Since then, the price rises, some of them justified but others doubtful, have meant that that figure has rocketed upwards and we are back to having the disgraceful number we inherited from the Tories in 1997. Yes, we had success, with people in my local Stockton-on-Tees borough council area faring better than most, but still some of the hardest to heat homes with solid walls remain cold, with families and individuals unable to afford their energy bills even before the recent hikes in prices. According to statistics from the Department for Communities and Local Government, more than 1.3 million

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children are estimated to be living in the coldest, worst-insulated homes. That is truly shameful in 21st century Britain.

The energy companies have obligations to consumers and manage them in different ways, with mixed success, often through no fault of the companies themselves. Many of the schemes require further investment or match funding by the local authority, and failure on its part to find such funding means that the very schemes to improve people’s homes and cut their fuel bills simply cannot go ahead. That will occur more in the future as the Government’s huge cuts to local authorities restrict their ability to invest in this vital work.

We need to see a change in the Government’s proposals to make homes more energy-efficient. We must ensure that the resources the energy companies are compelled to spend on these measures are properly targeted at those in greatest need in the homes hardest to heat, without there being a need for councils, or perhaps housing associations, to find match funding they simply do not have. Energy companies do work hard to try to meet their obligations and some achieve the necessary credits, doing so more efficiently than others by taking advantage of their massive size and buying power. We can all understand their taking that advantage, but perhaps it is time to look at a way in which each company would be responsible for a financial commitment to energy-efficiency schemes, rather than meeting specific energy targets. This is perhaps a personal view, but is there not a case for companies to pay a fixed levy, based on turnover and profitability, directly into an independently managed fund, which would ensure that all that hard cash finds its way to the households that need it most and that we get the best value for money?

MPs should be under no illusion: many ordinary families and pensioners in Britain are facing incredibly tough times at the moment. The toxic combination of rising unemployment, rising food and fuel prices, the increase in VAT and the freezing of wages leads to ordinary people facing a huge struggle just to make ends meet. The cost of a typical dual fuel bill has increased by 48% since 2007, meaning that energy bills are now one of the single biggest outlays a household faces. The latest fuel poverty statistics show that 5.5 million households in the UK cannot afford to heat their homes adequately. It is time to change. The bills need to be cut now and the big six need to become many more.

5.59 pm

David Mowat (Warrington South) (Con): I will speak as briefly as I can about three issues: unconventional gas, fuel poverty, and what we should be doing about the big six—or, perhaps more pertinently, what we should not be doing.

First, I do that think that unconventional gas is a panacea, but the Government need to take it a little more seriously than they have up to now. There has been a lot of discussion about wholesale gas prices rising and getting bigger and bigger, but that is not wholly true. It is true in Europe but it is not true across the world. In the US, the Henry Hub market for wholesale gas is now 50% of the level that it is in Europe. If we were purchasing gas at that price here, we could cut all fuel bills by one third immediately. That has been achieved by a remarkable technical innovation to do with fracturing and horizontal drilling, which is probably the most

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significant change in the energy industry in the past two decades. It has not happened here yet and there is some way to go before we can say that it will happen here, but both the industry lobby and, frankly, the green lobby are very suspicious of unconventional gas. In my view, that is why the Government need to take it seriously. The US has been able to generate more energy from gas than from coal, and that has a massive impact on its carbon emissions. The quickest way for anybody to reduce carbon emissions is to replace coal with gas as soon as possible. I would like to see that point taken more seriously, and it is not true that gas prices are increasing everywhere worldwide—they are not.

Secondly, we have heard a lot about fuel poverty and there have been some very powerful speeches, particularly from Opposition Members, on this issue. I have heard the figure that 2,700 deaths are the result of fuel poverty each year. That is a terrible statistic and is one that we all need to take seriously.

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.

Finally, I want to talk about the big six. As has rightly been said—I heard it said recently—most of those companies are now foreign owned. The other thing about the big six is that we require them to spend £200 billion in our country in the next 15 years. They can choose whether they do that or not, but if they do not, we will face a bigger problem here than fuel poverty: the lights will go out. Coal stations will be coming off stream in the next three or four years and nuclear is coming to the end of its life. We face a very serious issue here in a way that no other country in Europe does and, as far as I can see, the only way we can deal with that is through massive investment—some of which, perhaps unfortunately, is going to have to come from those people, who are, as has rightly been said, a cartel in some ways. I have heard language today about them; indeed, I think I heard an Opposition Member accuse them of criminal behaviour and of being a cartel that had rigged the market and that should be fined 10% of turnover, which would cost them £10 billion. It is a terrible thing to accuse directors of criminal behaviour. We have no evidence of that and it is not true. We have an oligopoly and we have to manage it.

Luciana Berger: Four of the big six energy companies have admitted that they had been involved in doorstep selling practices that they have now had to stop because they were wrong. They were mis-selling packages on the doorstep which meant that people were paying more for their energy.

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David Mowat: Is it the position of the Opposition Front-Bench team that the big six should be fined 10% of turnover? That was the point made from the Opposition Back Benches.

We have also heard words such as “obscene greed”. We have to make the market more competitive, and I agree with the motion that it is right that to get new entrants coming in and to make the market more transparent. It is clearly right that we make it much easier to switch between suppliers. I hope the Government make progress on that as quickly as they can.

Eight months ago Government Members voted for a windfall tax on energy companies, including one of the big six. That proposal, which was opposed by almost all Opposition Members, has resulted in fuel prices coming down for motorists, which is part of the mix. I find it a little difficult to take that the Opposition opposed that windfall tax on people who are making more money in terms of return on capital employed than the big six, and now the Opposition say that we are being light on the industry.

Mr Deputy Speaker (Mr Nigel Evans): Order. We have three remaining speakers. The winding-up speeches will start at 6.30, so speeches of just under eight minutes, including interventions, should get everybody in.

6.6 pm

Chris Evans (Islwyn) (Lab/Co-op): I will try to keep my comments short. I have listened to the debate and I am seriously concerned. We seem to talking about tinkering with a market that has failed. Let us be straight about it. We are told that for the next 10 years we will be faced with volatile energy prices. Consumers are being ripped off. When privatisation was first mooted in the Chamber nearly 30 years ago, I do not believe that anybody on either side of the argument would have envisaged that we would be faced with the madness of six energy companies holding us to ransom, punitively putting up prices, while the Government stand idly by.

Yesterday I read an article about Centrica, which owns British Gas. Centrica has paid out almost £145 million in shareholder dividends, yet the average dual fuel customer will pay £1,317. I am not singling out British Gas for criticism because, in June and September, all the big six increased their energy prices. All of them are bringing misery and pain to the consumer. When I talk about misery and pain, I understand what it means. I have people coming to see me and saying that last winter, which was the coldest on record, they were sitting in their living rooms with their duffel coats on and going to bed at 8 o’clock at night, fearful that when the utility bill drops on their doorstep, they will not be able to pay it.

Fuel poverty has affected the most vulnerable in society, but it seems that we are at the tipping point where anybody on an average household income could be in fuel poverty. I think of the pensioners living in my constituency, many of them former miners with industrial diseases, who have to keep their houses a little warmer than other people do because of the diseases they suffer from. They are feeling the pain. When I read statistics that tell me that, between 2003 and 2009 in my constituency, Islwyn, there were 41 excess winter deaths, and right across my country, Wales, there were 1,700 winter deaths, I think to myself, “Why, in the

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21st century, are people dying of the cold?” It is like something that we would read in Dickens, yet it is happening now.

What do we get? We get the Prime Minister, in response, inviting the big six energy companies to tea and biscuits at Downing street. Yes, I am sure that a day-long energy summit will fix a cataclysmic failure of the market, which has seen the emergence of a legal cartel, for want of a better word.

Jonathan Lord (Woking) (Con): Is it not the case that over the past 10 years only 50,000-odd customers have been serviced by independent suppliers because the previous Government had so much red tape and regulation in the market? That is why we have the big six and why others are unable to get in.

Chris Evans: I do not agree, and I am sorry but I do not think that that adds to the debate at all. We have to deal with the here and now. The simple fact is that people’s lives are at risk because of the profiteering of six energy companies. That is where we are now and it has nothing to do with the past 10 years. People are dying because of a cartel of companies that put profit above people.

What do we do now? We have a problem in this country. The Secretary of State says, “Oh, it’s like buying a £20 toaster, or a £40 toaster.” It is not like that. If I want to buy a television, I can walk into Currys and the retailer will charge me depending on whether I want an LCD television or a plasma screen. It is not like that in the energy market. Electricity is electricity; there is no luxury version and everyone needs it. How do the electricity companies create competition? They do so by creating tariffs. In some cases there are more than 100 different tariffs. Which? magazine has reported that a trained accountant could not understand his own energy bill. What hope do elderly customers or vulnerable families have when trying to work out their energy bills?

We are faced with problems of energy security. It seems to me that we have three options. One option is a windfall tax on the energy companies. It is all very well saying that we should tax the energy companies to the hilt until the pips squeak, to use the words of a former Labour Chancellor, but that would only be a short-term solution to the problem. Judging by how the energy companies are acting at the moment, I fear that they would probably pass the costs of such a tax on to the customer.

The second option, and probably the best one, is to get more entrants into the market. I would like to see energy being sold in banks, in supermarkets, or by any lifestyle company, but the problem is that the barriers to entry are so huge that they cannot get involved. There is an absolute monopoly on the power stations, which are owned by the big six. They can charge whatever they want.

What can the Government do? They have an option. They could create a central electricity body, just as Ofgem suggested in its Project Discovery report, which would mean that there would be a single energy supplier. It could be set up not as a nationalised company, as under the old rules, but as a co-operative, with profits being pumped back into the system to improve

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infrastructure. These are ideas that we may have to talk about, because eventually we will have to come here and talk about our energy needs, but what can we do in the short term?

One major problem is that Ofgem has no teeth. I do not believe that the big six are particularly worried by warnings from the Competition Commission or inquiries by MPs and Select Committees. They do not care. There have been more than 18 such inquiries since 2001, and what has happened? Energy prices have still increased year on year. We must do something now. Let us give Ofgem real teeth and real powers to punish those energy companies.

I end by saying that we face something extremely serious, and we must pay it serious consideration and ask serious questions. For so many people, such as those in my constituency, it really is a matter of life or death.

6.14 pm

Dr Alan Whitehead (Southampton, Test) (Lab): What the public want to know, in the context of this debate and elsewhere, is why energy prices keep going up, and why we have the so-called rocket and feathers effect, whereby prices go up when wholesale energy prices go up, but they do not appear to come down when wholesale prices come down. The truth is that, in terms of our knowledge of how these things work, it is difficult to find out why—for the reason, among others, that the market is now so un-transparent and, as my hon. Friend the Member for Islwyn (Chris Evans) just outlined, so concentrated in so few hands.

It is true that the price of wholesale gas has varied over several years between about 70p and 15p a therm, but nevertheless the overall trend is up. Indeed, a recent Deutsche Bank report suggested that notwithstanding shale gas, gas prices will probably double by about 2014. It is true that wholesale prices are going up, but the increase does not bear close relation to the energy company price rises that we have seen. That is the central problem. Some 46% of our generation is by gas, the price has increased by 90% over the past 10 years, and other prices follow gas as the market maker.

All that is based on trading in an energy market that was set up 10 years ago, with 20-odd wholesalers, 20-odd retailers and little vertical integration between them. It was also established at a time of privatisation, when those companies inherited a market in which we were self-sufficient in gas and had a substantial capacity margin in electricity generation plant. Neither is now the case.

Furthermore, the market was created carbon-blind; its purpose was simply to keep trading prices down when there was no vertical integration. It did so for a while, but now we are in entirely different territory. Indeed, six large companies control 99% of the retail market and about 60% of generation, and they have some grid and transmission assets as well.

The power of such vertical integration means that the market that was created 10 years ago simply no longer works. The long-term deals that the companies set up account for almost all energy company trading, they are mostly bilateral and totally un-transparent, and energy companies trade with themselves, so it is difficult to see where the pricing goes and whether it is fair to the consumer.

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More and more, the big six also hedge their arrangements on price variables, so they all mirror each other, and the result of a price increase by one is that, inevitably, other companies put up their prices, too. Increasingly, therefore, there is effectively—even if not deliberately—a cartel-type price arrangement.

As for new entrants, they are almost all retail-only, and they have to buy their power from the big six. It is a bit like encouraging corner shops to set up, knowing that they will have to get their stock by shopping at Tesco and then somehow compete with Tesco on price.

There are also still positive Government disincentives for new entrants. Small retailers, for example, are exempt from the recently increased obligation payments for up to 125,000 dual fuel customers. Above that level, however, not only is the company obligated for all levy payments, but all customers are then eligible. In other words, their 125,001st customer costs them £7 million, and on that basis no small niche company in their right mind right now will seek to exceed 125,000 customers. It is a straightforward lock-out disincentive.

Monday’s energy summit did not deal with any of those issues. We were exhorted to switch, which is a good idea, but in those circumstances, and for the reasons that I have outlined, it is of only marginal utility. Logically, one cannot keep switching and saving what is claimed—and anyway, some 80% of customers simply do not switch, leaving the big six energy companies with a huge pool of resources to draw upon in order to outcompete those small entrants on retail tariffs.

As we have heard, tariffs are hopelessly confusing. It would not be beyond the wit of the regulator or the Government to introduce mandatory simple tariffs—a standing charge and a tariff per unit used. I personally favour introducing rising block tariffs, which make lower usage levels even less expensive.

Insulation was dealt with at the summit, where it was stated that 4 million people were to get letters saying that they could get insulation free—on the basis that support from the public finances for insulation measures will disappear in 2013, after which there will be the green deal, which will provide the same insulation, but in exchange for a permanent charge on the property. I am not sure that many members of the public would automatically see that as the good deal that some people suggest.

We must deal with the market. The Government have confirmed that electricity market reform proposals are coming forward, but those proposals do not deal with the way that the market actually works. The Government put all sorts of bells and whistles on the back of the proposals—contracts for difference instead of the renewables obligation, capacity payments and so on—but they do not address the central issue of whether the market works for the future, how transparent it is, and whether other ways of trading would be more fit for purpose in this century.

We need a pool system of 100% auctions on all markets, or a single-buyer stakeholder pool. That will ensure transparency and a level playing field for new entrants and, if coupled with an obligation, will ensure an orderly dispatch of energy between wholesaler and retailer. That is not addressed in electricity market reform, but it is addressed in the Opposition’s motion. It is good to see that the Government have apparently

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signed up to the idea that there should be a pool, so I anticipate that they will shortly make amendments to the White Paper on electricity market reform in order to bring about a pool as the centrepiece of a new electricity market system.

We need aggressive policies on energy efficiency and insulation. We currently have no idea how the green deal will work. No funding has been identified, and it may not be available in very large quantities for the energy company obligation. On that basis, there is no real prospect of achieving the levels of insulation that we need, combating fuel poverty or pushing down bills.

Environmental measures do not account for a large proportion of bills. Indeed, last year the previous 6% level fell. The Government are stuck in a dilemma. They want the big six to undertake most of the investment of up to £200 billion in new plant and grid renewal that we will need, but unless those companies make big profits they are unlikely to undertake that investment. However, several of the companies are over-borrowed in any case. We need different sources of money to ensure the reality of a transparent and investable future.

Mr Deputy Speaker (Mr Nigel Evans): Order. The wind-ups are to start no later than 6.30 pm.

6.22 pm

Mr Mike Weir (Angus) (SNP): In his opening salvo against the Labour party, the Secretary of State rightly condemned the previous Government’s decision to close the Peterhead carbon capture project. Inexplicably, he went on thereafter to pull the plug on the Longannet project, which drives a coach and horses through energy and industrial policy. We have been told for months, if not years, about the prospect of carbon capture and storage producing an export potential, but that will now be lost. After Peterhead was not proceeded with, we lost the lead on gas carbon capture and storage, and the same will happen with the Longannet project. That is a daft decision that will come back to haunt this Government.

Fuel poverty is affecting more and more of our people. A total of 770,000 homes in Scotland are in fuel poverty, and for every 5% rise in energy prices, a further 46,000 move into that situation. The last energy price rise was nearly 20%, which shows the effect that those rises have. That is an utter scandal in an energy-rich nation such as Scotland. Last week Ofgem said that the profit margin for energy firms had risen to £125 per customer per year—up from £15 in June—with the average dual fuel bill now £1,345 per year. And that cannot be considered in isolation. Just as energy bills are rising, so is the cost of road fuel, food and other essentials. This week’s inflation figures are a grim reminder of the pressures on family budgets at a time when wages are static, at best. In June I received a written answer about energy price inflation, which showed that in four of the last five years the rise in domestic energy prices had outstripped the rate of inflation, whether we use the retail prices index or the consumer prices index—and that was before the recent round of price hikes.

Last week we had the energy summit. I fully understand the need for energy efficiency, and I support it, but we must be honest and accept that the current rate of price rises far outstrips the ability of the average family to reduce their bills through greater energy efficiency. At best, energy efficiency might mitigate some of the rise.

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I will cite my own experience in this area. I pay for my gas by direct debit. I took measures to reduce energy consumption and managed to reduce my gas usage substantially, yet I still found that the gas company wished to increase my direct debit payment. I suspect that many families will face the same situation. I urge Ministers to watch their language when talking about the effect of energy efficiency measures, because the claims that they reduce bills may well turn out to be hollow, and put people off taking the necessary measures. A little honesty would not go amiss.

A similar situation exists with regard to switching. Much has been made of the reduction in the number of people switching. I do not find that particularly surprising, because the pool of potential switchers is bound to be reducing. Again, Ministers have to be much more honest about the effect of switching. It seems to me that unless one is on a particularly bad tariff or using a pre-payment meter, the benefit of switching will not be great. Call me cynical, but I also wonder about the apparent follow-my-leader strategy of the energy companies on price rises. Switching when one’s company raises its prices might just mean that one’s price rise is slightly delayed, until the new company gets around to doing the same. There is also evidence that many of those who switch end up on a worse deal. In that respect, I welcome the promise of more transparency. That is urgently needed on pricing and tariffs.

Another outcome of the summit was that the 8 million quarterly credit customers were written to, telling them of alternative payment methods. That is all very well, but the truth is that many of them will not want to change, because in difficult financial times many people juggle their bills, delaying the payment of one bill in favour of paying a more pressing one. Such people may not want to pay by direct debit, because they would have no control over when the money left their account.

I strongly support the effort to increase insulation, with the proviso that I have already mentioned about being more up-front about the benefits.

Although many of the factors affecting fuel poverty and energy prices are outwith their control, the Scottish Government are pushing forward with efforts to tackle this problem. As well as holding discussions with the energy companies, they have introduced an energy assistance package worth £33 million, which has helped 150,000 people on low incomes to reduce their energy bills. One in six Scottish homes have been visited for a home energy check, and almost 18,000 installations have been made. The scheme has been extended to help the most vulnerable. In addition to helping pensioners, the scheme now includes the disabled, families with young and disabled children, those with severe disabilities and the terminally ill. It is to be extended next month to people on carer’s allowance, which could benefit up to another 7,000 households. Next year the £50 million warm home fund will also be in operation to give additional help to the fuel poor.

That is in stark contrast to what the coalition Government are doing. In his comprehensive spending review, the Chancellor announced cuts of more than two thirds to Warm Front, and over the next three years, responsibility for the assistance package will pass from the Government to the energy companies.

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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.

In closing, may I ask whoever is winding up for the Opposition to explain one point about energy being pooled? I can understand it in the case of electricity, but I am less sure about how it would work in the case of gas, particularly as so much of our gas is now imported, much of it in the form of liquid petroleum gas. I cannot see how that can possibly be pooled for the benefit of gas customers.

6.30 pm

Luciana Berger (Liverpool, Wavertree) (Lab/Co-op): I am pleased to have the chance to close this afternoon’s Opposition day debate.

This year, millions of households across our country will face a cold, hard winter. In 12 months energy bills have risen by a fifth, whereas energy companies’ profits have increased by 700% in the past few months alone. Across the country, people are struggling to keep their homes warm and the lights on, as their spending power has been squeezed. As we have heard today from many Members on both sides of the House, people are having to choose whether to heat or eat.

After hours of debate today, it is clear that the Government are not taking the action we need to make bills simpler and prices fairer. The debate has shown that there is a real choice between a Government who would rather stand alongside the big energy companies than stand up for the hard-working majority, who cut support for our constituents when they need help most, who walk away when families are struggling with higher food prices and gas bills and worrying about their jobs and their children’s futures; and a Labour Opposition who are prepared to make the tough choices, stand up to the powerful vested interests of the closed energy industry, provide real help to people this winter, and take action to reform how our energy market works for the long term.

We heard in the contributions of my hon. Friends the Members for Ynys Môn (Albert Owen), for Kingston upon Hull East (Karl Turner), for North West Durham (Pat Glass), for Stockton North (Alex Cunningham) and for Islwyn (Chris Evans) how families and small businesses in their constituencies are finding it very difficult to make ends meet. My hon. Friend the Member for Scunthorpe (Nic Dakin) highlighted in his intervention the challenge of energy-intensive industries.

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Businesses and households have been hit hard by the highest level of inflation ever, crippled by the Government’s rise in VAT and squeezed by energy bill increases. It cannot be right that almost a quarter of all British households now spend 10% or more of their disposable income just to keep warm. Many Members, including the hon. Members for Hexham (Guy Opperman) and for Suffolk Coastal (Dr Coffey), also identified the additional cost challenges faced by customers who live off the grid.

My right hon. Friend the Member for Wentworth and Dearne (John Healey) and my hon. Friend the Member for Glasgow North West (John Robertson) highlighted the real problem of the withdrawal of Government support. The Government are replacing the social tariffs, which provided support for vulnerable consumers, with the warm home discount, from which just one in 20 pensioners will benefit. They are leaving a gaping hole by reducing the Warm Front scheme to a third of its size but putting nothing in its place to support vulnerable people this winter, and they are reducing the winter fuel allowance by up to £100, despite promising before the election not to do so.

My hon. Friends the Members for Kingston upon Hull East and for Glasgow North West made the point that according to the interim Hills fuel poverty review, which was released earlier today, there will be 2,700 winter deaths this year as a result of fuel price increases, which is a staggering four people for each of our constituencies. This is a life-or-death issue that transcends political divides.

The hon. Member for St Ives (Andrew George) talked about the wave hub and the need to encourage renewable generation, and he is hoping for a positive outcome from the ROC review. We are, too. We share the view that if we reform the market and invest now in low-carbon energy generation, we can secure our future energy supply while creating thousands of new jobs. We know that 80% of people currently pay too much for their energy, but who does the Secretary of State blame for that? The energy companies? The bewildering array of more than 400 complex tariffs? No, he blames us, the consumers, for not switching supplier.

Mr Dave Watts (St Helens North) (Lab): Is my hon. Friend aware that even when people switch, many of them find they are paying more for their tariff than they did before?

Luciana Berger: I thank my hon. Friend for his intervention and I shall cover that point in just a few moments.

There has been an issue with doorstep selling, which four out of the six energy companies have had to stop because it has been proven that people were mis-sold packages and were paying more than double what they were before. We know from last week’s Which? report that a third of people are not offered the best advice from their energy suppliers when they call them for advice about which tariff to switch to.

On Monday, we heard and saw all the news about the energy summit and thought that that was a great opportunity. The Government could have done something tangible to help, but all we got was more of the same. We were told to shop around, ring this number and look at that website. I looked at the DECC website to see what the exact outcome of the summit was, and it tells us:

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“This winter suppliers will place a cheaper tariff signpost message on the front page of bills, encouraging customers to call their supplier or visit a website to find out if they could be saving money on their energy bills.”

We already know that many people do not have access to the internet or to websites and cannot benefit from cheaper tariffs because they do not have access to a bank account or because they are unable to secure direct debits, an issue that specifically affects pensioners. We already know that that approach does not work, but the energy summit had no outcome on simpler tariffs, improving trust, reforming the market or increasing competition. It showed an out-of-touch Government wedded to an out-of-date orthodoxy at the expense of everyone else.

In her opening speech, my right hon. Friend the Member for Don Valley (Caroline Flint) set out a very clear plan to limit energy cost increases and to support struggling households.

Chris Huhne: The hon. Lady mentions the clear plan from the right hon. Member for Don Valley (Caroline Flint), but will she clarify for the benefit of the House whether it is now Labour policy to break up the big six, as the leader of the Labour party suggested, or to have a Competition Commission referral? May we have some clarification?

Luciana Berger: The Leader of the Opposition has said that we are seeking to break the dominance of the big six. He has not explicitly said that he wants to break them up—[ Interruption. ]

Mr Speaker: Order. We must have interventions from the Dispatch Box. It is no good the Secretary of State chuntering from a sedentary position in the faint expectation of being heard.

Luciana Berger: The point of the debate is that we are trying to get action from the Government now, this winter. We have not seen anything from the Government that will help my constituents and those of all hon. Members. Anyway, as I shall say later, we are very grateful for the Government’s support for our motion.

First, we believe that we need an immediate investigation into mis-selling by energy companies and compensation for consumers who have been ripped off. For too many years, cold-call doorstep sales have led to hundreds of thousands of people paying more for their energy after switching to a worse deal. As I said only a moment ago, the news that four of the big six have ended that abusive practice is welcome, but questions remain about selling methods. We want an immediate investigation with proper sanctions to restore trust. The Secretary of State said before that there will be compensation for anyone ripped off in the future, but we are concerned about the thousands of people who have already been affected.

Secondly, the energy companies should use their ballooning profits to help families and businesses struggling to make ends meet by cutting their bills now. Last week, Ofgem published research showing that the average dual fuel bill is now a mammoth £1,345 per household, but at the same time energy companies have seen their profits soar, with their margin now standing at a whopping £125 per customer, up £110 in just four months. It is

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wrong that energy companies are raising their profits by 700% when consumers are being told that bill increases are unavoidable.

Thirdly, the Opposition believe that we need transparency, meaning that companies need to be clear and open about how much it costs them to buy their energy. Only then can customers be clear that they are getting a fair deal.

Fourthly, we want simple tariffs. We need tariffs that are fair to consumers, but that are also easy to understand and compare. Something is wrong when 70% of consumers say that they find the number of tariffs on offer confusing. A daily standing charge covering the cost of delivering energy to people’s houses and a unit price so that people can see clearly how much they are paying would mean an end to confusing charges, making it easier for them to compare suppliers’ prices properly.

Finally and most importantly, we need reform of our energy market, which for too long has been dominated by a handful of companies. At one time that seemed to be working, but no longer. It is clear that those vested interests are looking after themselves handsomely, while their customers struggle. As Ofgem has shown, and as many Members said this afternoon, as soon as the wholesale price goes up, so do people’s bills; but when wholesale prices come down, bills do not follow.

The market is broken and we need to fix it. We want all generators to sell all their power on a long-term market to any supplier. By reforming the market in that way and by opening it up, new entrants can join, increasing competition and lowering bills.

We also need action on securing our future energy supply, which means taking tough decisions now. Investing in low-carbon energy generation will create thousands of new jobs and drive our economy. However, under this Government, sadly, we are going backwards.

Dr Thérèse Coffey: I hear a lot of talk about the energy companies and recognise that we want to be critical friends. Does the hon. Lady think that they are producers or predators?

Luciana Berger: The point is that we want responsible business, which is what this debate is all about.

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.”

We have a choice: we can be a leader or a follower. The jobs, investment and prosperity can come here, or they can go elsewhere. We want Britain to be a world leader, but for that to happen, we need a Government who get it. We have seen today that this Government do not get it.