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some of those centres myself last week, we will be writing to all | :00:00. | :00:00. | |
suppliers across the country to make sure they are fully aware of their | :00:00. | :00:00. | |
duty of care and to make sure fire safety is of paramount importance | :00:00. | :00:10. | |
for them. They must move on, demand has exceeded supply as is often the | :00:11. | :00:14. | |
case in this place. Urgent question, Doctor Alan Whitehead. Thank you, Mr | :00:15. | :00:24. | |
Speaker. To ask the Secretary of State if you will make a statement | :00:25. | :00:28. | |
on the Government's intention for an energy price cap. The Competition | :00:29. | :00:40. | |
and Markets Authority, following a two year inquiry, found energy | :00:41. | :00:43. | |
customers on standard variable tariffs were paying on average ?1.4 | :00:44. | :00:47. | |
billion a year more than would be the case in a competitive market, | :00:48. | :00:53. | |
that is completely unacceptable. And so my party's manifesto committed to | :00:54. | :00:57. | |
introduce safeguard tariff to extend the price protection currently in | :00:58. | :01:03. | |
place for some vulnerable customers, those on prepayment metres, to more | :01:04. | :01:08. | |
customers on the poorest value tariffs. Ofgem can oppose such a | :01:09. | :01:15. | |
price cap without delay. I wrote on the 21st of June to the chief | :01:16. | :01:19. | |
Executive of Ofgem asking them to use the regulators powers to do | :01:20. | :01:23. | |
that. Today the regulator has replied and announced it will work | :01:24. | :01:27. | |
with consumer groups to take measures including extending the | :01:28. | :01:30. | |
current safeguard tariff for those on prepayment metres to a wider | :01:31. | :01:36. | |
group of consumers and to move urgently to implement these changes. | :01:37. | :01:40. | |
I welcome this initial proposal. It is a step in the right direction, | :01:41. | :01:45. | |
but I will wait to see the actual proposals and to see them turned | :01:46. | :01:50. | |
into action to cut bills. The test of whether the regulators changes go | :01:51. | :01:53. | |
far enough is whether they move sufficiently to eradicate the | :01:54. | :02:00. | |
detriment of consumers that the CMA has identified. I remain prepared to | :02:01. | :02:04. | |
legislate if they do not and I hope such legislation would command wide | :02:05. | :02:13. | |
support across the House. Does the Secretary of State recall during the | :02:14. | :02:15. | |
election has party placed the promise of an overall price cap on | :02:16. | :02:20. | |
energy prices at the centre of their manifesto and does he recall the | :02:21. | :02:24. | |
Prime Minister stating, I am making this promise, if I am re-elected I | :02:25. | :02:29. | |
will take action to end this injustice by placing a cap on unfair | :02:30. | :02:33. | |
energy prices which will protect around 17 million families on | :02:34. | :02:36. | |
standard variable tariffs from being exploited with sudden and | :02:37. | :02:40. | |
unjustified increases in bills. Does he accept the response to his letter | :02:41. | :02:45. | |
on the 21st of June falls short of implementing that promise and | :02:46. | :02:49. | |
although there are welcome suggestions on capping charges for | :02:50. | :02:53. | |
prepayment metres, those measures would only affect 2.5 million | :02:54. | :02:59. | |
customers leaving over 14 million customers completely unprotected | :03:00. | :03:03. | |
from price rises. Can the Minister confirm he didn't in fact ask Ofgem | :03:04. | :03:07. | |
to consider introducing a general price cap in his letter to them, and | :03:08. | :03:19. | |
he -- can he tell the House why not. Does the Secretary of State intends | :03:20. | :03:23. | |
to pass legislation that requires Ofgem to introduce the price cap or | :03:24. | :03:27. | |
is he content to let his firm election promise of a cap for by the | :03:28. | :03:31. | |
wayside? And if he does, what does he have to say to the 17 million | :03:32. | :03:36. | |
people on standard variable tariffs who thought relief from rip-off | :03:37. | :03:39. | |
price rises was on its way and he will now feel completely betrayed by | :03:40. | :03:44. | |
this policy U-turn. I am grateful to the honourable gentleman for his | :03:45. | :03:47. | |
questions and I hope you will see in my response to his initial question | :03:48. | :03:51. | |
I have answered many of the points he made. He will share the view that | :03:52. | :03:56. | |
I do, because I think it is his view as well, that we should act as soon | :03:57. | :04:00. | |
as possible to provide this relief to consumers. To do that, that means | :04:01. | :04:08. | |
Ofgem have to use those powers. They have the powers, they can use them | :04:09. | :04:11. | |
immediately and I have encouraged them to do so. In terms of the | :04:12. | :04:17. | |
letter that I sent that he mentions, he will know I'm sure, having | :04:18. | :04:23. | |
studied the prospective use of these powers, if he was hoping to come | :04:24. | :04:26. | |
into government, that the legislation requires me to ask for | :04:27. | :04:33. | |
advice from Ofgem. That is exactly the terms in which I did so. They | :04:34. | :04:38. | |
have responded to that and what they have said is that they will work | :04:39. | :04:44. | |
with consumer groups to identify how far this protection should go. But I | :04:45. | :04:51. | |
have been very clear that I want to see this detriment, ?1.4 billion a | :04:52. | :04:59. | |
year eradicated. It is a test of the responsiveness of Ofgem that they | :05:00. | :05:03. | |
should use their powers to this end, and I think our constituents for | :05:04. | :05:06. | |
members on whichever side of the House would look to the regulator to | :05:07. | :05:14. | |
make use of the powers they have to protect this unacceptable... To | :05:15. | :05:21. | |
prevent this unacceptable situation continuing. There are 17 million | :05:22. | :05:28. | |
families currently being ripped off on expensive deals, Ofgem's | :05:29. | :05:36. | |
proposals will deal with that most 3 million of them which leaves 14 | :05:37. | :05:41. | |
million still being preyed on by the big six energy firms. What my right | :05:42. | :05:46. | |
honourable friend agree Ofgem's proposals will be a betrayal of | :05:47. | :05:50. | |
those households, and will the distance himself from this big six | :05:51. | :05:54. | |
stitch up and pledge himself to help the millions of households who Ofgem | :05:55. | :05:59. | |
seem set to ignore? My honourable friend has done great work with many | :06:00. | :06:05. | |
members across the House in establishing there is an appetite | :06:06. | :06:07. | |
and a need to tackle this problem that has been going on for too long | :06:08. | :06:12. | |
that the CMA exposed. What Ofgem has said today in response to my letter | :06:13. | :06:19. | |
to them is that they will work with consumer groups and come forward | :06:20. | :06:24. | |
with a range of proposed responses. I will look at them closely, I know | :06:25. | :06:28. | |
he will and I'm sure the select committee will, and I have said very | :06:29. | :06:33. | |
clearly the test of the adequacy of these responses is that they address | :06:34. | :06:36. | |
the clear detriment than has been established by the authorities. This | :06:37. | :06:53. | |
UK Government... Energy was sadly lacking in the green paper published | :06:54. | :07:01. | |
before the election. To just ask the secretary, can he confirm what plans | :07:02. | :07:05. | |
he's got to protect the 14 million people that has not been picked up | :07:06. | :07:11. | |
in the current measured or the 1.4 billion his correctly identified the | :07:12. | :07:14. | |
CMA has highlighted is going to the big companies, how much of that | :07:15. | :07:18. | |
money is going to be returned to consumers with the measures coming | :07:19. | :07:22. | |
forward? And he mentioned considering legislation, what's | :07:23. | :07:29. | |
happening now in deciding the need to act and will he ask Ofgem to | :07:30. | :07:40. | |
determine the true level. It is right that this Government has taken | :07:41. | :07:44. | |
a decision that previous government docked the decades to renew our | :07:45. | :07:54. | |
nuclear power stations, and he will know in Scotland, his own party in | :07:55. | :07:57. | |
Government in Scotland actually agreed to extend the life of nuclear | :07:58. | :08:02. | |
power stations in Scotland. He will also know the impact that our | :08:03. | :08:06. | |
success on renewable energy, specifically offshore wind, hard in | :08:07. | :08:10. | |
Scotland and I've had some very fruitful discussions with colleagues | :08:11. | :08:15. | |
across Scotland, especially in the remote islands about the future | :08:16. | :08:21. | |
possibilities there. In terms of the Ofgem responds to my letter, I have | :08:22. | :08:25. | |
set it out clearly. They said they will work with and consult consumer | :08:26. | :08:30. | |
groups and come with a range of options. That ?1.4 billion detriment | :08:31. | :08:34. | |
has to be eradicated, that will be the test of whether the proposals | :08:35. | :08:40. | |
they come up with are acceptable and I'm sure that the House will want to | :08:41. | :08:42. | |
scrutinise them as much as I. John Redwood. My right honourable | :08:43. | :08:55. | |
friend has inherited a system... Is there anything he can do to bring | :08:56. | :09:03. | |
cheaper energy into the next to bring cheaper bills in the future. | :09:04. | :09:07. | |
We need to make sure that in meeting very important climate change | :09:08. | :09:13. | |
commitments we do so at a cost that is competitive both for consumers | :09:14. | :09:18. | |
and businesses, and that we obtain the industrial benefits that come | :09:19. | :09:23. | |
with having a supply chain in this country. That's exactly why in the | :09:24. | :09:28. | |
industrial strategy Green paper we have a chapter devoted to the future | :09:29. | :09:33. | |
plans to make the most of this clean energy transition in all those | :09:34. | :09:41. | |
respects. The recent report saying wind and solar is going to be the | :09:42. | :09:46. | |
future in terms of low cost energy, but there was a Duke Ellington song | :09:47. | :09:52. | |
called How Long Has This Been Going On? This has been going on too long, | :09:53. | :09:56. | |
exploitation of people who can't afford it paying above the price. | :09:57. | :10:01. | |
Isn't it about time we move from botched privatisation through | :10:02. | :10:05. | |
inadequate regulation to an answer that puts money back in people's | :10:06. | :10:08. | |
pockets rather than takes it out. To the first part of the question, I | :10:09. | :10:17. | |
know of the huge progress made in the employment of renewables and the | :10:18. | :10:21. | |
cost reduction and it's creating jobs across the UK, especially in | :10:22. | :10:25. | |
coastal towns. I had the pleasure of opening up the Siemens wind blade | :10:26. | :10:32. | |
factory in Hull, creating 1000 good jobs. He's right this detriment has | :10:33. | :10:38. | |
been going on too long. That's why the competition markets authority | :10:39. | :10:41. | |
were asked by this government to investigate root and branch the | :10:42. | :10:44. | |
industry and they have identified ?1.4 billion of detriment and I have | :10:45. | :10:48. | |
been clear that detriment has to become returns to the pockets of | :10:49. | :10:56. | |
consumers. Susan Mayne. In my constituency the latest data shows | :10:57. | :11:02. | |
that there are some 2687 households estimated to be in fuel poverty, | :11:03. | :11:08. | |
6.6% of households. What more can be done to identify vulnerable groups | :11:09. | :11:13. | |
and ensure they have the best advice and information about switching | :11:14. | :11:16. | |
tariffs. Just suggesting to go online is not the way forward. It | :11:17. | :11:19. | |
would be helpful to have a better dialogue between the consumer and | :11:20. | :11:24. | |
energy provider. It's one of the features of the energy market that | :11:25. | :11:27. | |
the poorer you are the higher proportion of the income you spend | :11:28. | :11:32. | |
on energy, which is why it is imperative in my view that | :11:33. | :11:34. | |
vulnerable consumers like that should not have to be required to go | :11:35. | :11:40. | |
onto the Internet every few months to check that the tariff they are on | :11:41. | :11:45. | |
hasn't been defaulted to a much higher one. That's the reason for my | :11:46. | :11:52. | |
letter to Ofgem and why I'm looking for their response to be very | :11:53. | :11:57. | |
vigorous. She's absolutely right that part of the wider set of | :11:58. | :12:01. | |
policies is to make it for consumers to know the price of their | :12:02. | :12:07. | |
consumption of energy, which is why smart meters are being introduced to | :12:08. | :12:13. | |
allow greater area for that. Has the Secretary of State seen the analysis | :12:14. | :12:19. | |
and evidence of former regulators who say consumer detriment pointed | :12:20. | :12:24. | |
to in this market was seriously flawed and based on seriously flawed | :12:25. | :12:28. | |
methodology? If he hasn't, will he look at it and report back to the | :12:29. | :12:34. | |
house. I have seen that. I would say it was a two-year enquiry conducted | :12:35. | :12:39. | |
by the competition markets authority. They identified ?1.4 | :12:40. | :12:45. | |
billion, a huge amount of money. I think our constituents know when | :12:46. | :12:52. | |
they see the difference can be up to ?100 per year for a dual fuel bill, | :12:53. | :12:58. | |
they pay by being on the dual fuel tariff. That's a significant amount. | :12:59. | :13:05. | |
The CMA said suppliers have unilateral market power over their | :13:06. | :13:09. | |
customer base and can exploit their position by pricing above the level | :13:10. | :13:14. | |
that can be justified. That can't go on. Steven care. Does my right | :13:15. | :13:24. | |
honourable friend agree with me that it will take more easier switching | :13:25. | :13:28. | |
to encourage a fairer energy market in this country? I think there is a | :13:29. | :13:35. | |
response required from the regulator. It is a regulated | :13:36. | :13:40. | |
industry. The developments of modern markets mean it is possible for | :13:41. | :13:44. | |
suppliers, especially dominant suppliers to identify those | :13:45. | :13:50. | |
customers who are least likely to switch, and they are often among the | :13:51. | :13:56. | |
most vulnerable and use that information to sting is unacceptable | :13:57. | :13:59. | |
and we must use regulation to catch up with it. I think it's time we | :14:00. | :14:04. | |
heard again from the good doctor. David Drew. Mr Speaker, it's my | :14:05. | :14:10. | |
lucky day today. It won't continue I'm sure. I refer to my register in | :14:11. | :14:14. | |
the register of members interests that the Secretary of State must | :14:15. | :14:21. | |
realise, as much as we welcome the attempt to reverse fuel poverty, | :14:22. | :14:25. | |
there is an adverse effect in the fuel wars at the margins that hasn't | :14:26. | :14:29. | |
come forward because of this fairly blunt pricing structure. Will he | :14:30. | :14:33. | |
look into that and make sure we are still seeing a drive forward in | :14:34. | :14:39. | |
terms of renewables. We have seen a big increase in renewables as the | :14:40. | :14:42. | |
price comes down, as his honourable colleague has said. The effects of | :14:43. | :14:52. | |
overcharging is not returned to consumers, it's not about the | :14:53. | :14:55. | |
increased deployment of renewables. It comes in the analysis of the CMA | :14:56. | :14:59. | |
into profits that are higher than they would be in a competitive | :15:00. | :15:04. | |
market, and also a relative inefficiency on the part of | :15:05. | :15:07. | |
suppliers. I don't think the consumer should pay for either of | :15:08. | :15:19. | |
those. Mr Robert Cowell. Many consumers, particularly those on low | :15:20. | :15:23. | |
incomes do not pay energy bills by direct debit. When they do so they | :15:24. | :15:29. | |
get lots of energy charges even when they pay on time. Could this be | :15:30. | :15:34. | |
looked into, people who don't pay energy bills by direct debit should | :15:35. | :15:40. | |
still get a fair energy bill. An excellent point. The poorest 10% of | :15:41. | :15:46. | |
households spend 10% of the household expenditure on energy | :15:47. | :15:48. | |
compared to the richest 10% spending 3%. We need to look particularly at | :15:49. | :15:55. | |
the conditions of those more vulnerable consumers to make sure | :15:56. | :16:01. | |
they are not disadvantaged. He mentioned is one of the ways that is | :16:02. | :16:08. | |
the case. Matt Weston. Are we not tinkering at the edges here and | :16:09. | :16:12. | |
doing a bit of window dressing? Perhaps the Secretary of State would | :16:13. | :16:16. | |
agree with me. We all agree that the energy market appears to be | :16:17. | :16:23. | |
dysfunctional. Perhaps we saw it best earlier this year when there | :16:24. | :16:26. | |
was an increase in tariffs across the board that bore no relation to | :16:27. | :16:29. | |
wholesale prices and everything to do with the exchange rate, | :16:30. | :16:34. | |
particularly with the Euro where most of our domestic companies are | :16:35. | :16:38. | |
based in France and Germany. We see the big six effectively operate as a | :16:39. | :16:43. | |
cartel, not in the interests of the consumer. I'm not sure I would give | :16:44. | :16:47. | |
them the excuse of exchange-rate movements here. The competition | :16:48. | :16:53. | |
markets authority has said suppliers have unilateral market power over | :16:54. | :16:58. | |
this part of their customer base. It's a regulated market. Ofgem have | :16:59. | :17:03. | |
the powers to introduce and extend the price cap. My view is they | :17:04. | :17:09. | |
should use it and use it now. I would like to take the Secretary of | :17:10. | :17:13. | |
State back to the point of switching and ask him if he thinks more needs | :17:14. | :17:18. | |
to be done to make it easier to switch, particularly for those | :17:19. | :17:20. | |
members of our constituencies who are more vulnerable than others. I | :17:21. | :17:26. | |
agree with my honourable friend. There shouldn't be barriers in the | :17:27. | :17:30. | |
way to that. But I don't think it should be necessary to spend every | :17:31. | :17:37. | |
evening on the Internet to be checking whether your bill has gone | :17:38. | :17:40. | |
up by an outrageous margin. If you are loyal to a brand, maybe a | :17:41. | :17:49. | |
trusted brand that people think they would be reasonably treated, I think | :17:50. | :17:52. | |
that's not an unreasonable expectation to have, and I think the | :17:53. | :17:57. | |
regulators should enforce it. Jonathan Edwards. In Wales we | :17:58. | :18:07. | |
produce far more electricity and pay more than the rest of the British | :18:08. | :18:11. | |
state. Over a third of our households are in fuel poverty. | :18:12. | :18:15. | |
Doesn't that suggest Westminster control over fuel policy isn't | :18:16. | :18:20. | |
working? That's one of the reasons this investigation was commissioned | :18:21. | :18:28. | |
and why I asked Ofgem to enact and it will be particularly important to | :18:29. | :18:32. | |
constituents in Wales. Rachel McClane. Will my right honourable | :18:33. | :18:37. | |
friend join me in welcoming Ofgem's proposals to bring in measures to | :18:38. | :18:41. | |
help micro-businesses? I do welcome that. It's right we have talked | :18:42. | :18:46. | |
about household consumers and very small businesses as well. Their | :18:47. | :18:52. | |
energy bill is an important component of the costs. I asked for | :18:53. | :19:01. | |
that is to apply to micro-businesses as well. The usual vested interests | :19:02. | :19:09. | |
of the big six were on the airwaves this morning advising consumers to | :19:10. | :19:14. | |
just switch their energy supplier, but actually, if consumers really | :19:15. | :19:19. | |
want to see a change to this rip off of energy prices, don't they | :19:20. | :19:23. | |
actually have to switch governments? I would say it is this government | :19:24. | :19:29. | |
that has referred the whole industry to the competitions and markets | :19:30. | :19:33. | |
authority. When the Right Honourable member for Doncaster North was | :19:34. | :19:37. | |
energy Secretary, I urged this on him at the time and he rejected it | :19:38. | :19:42. | |
flat. It is this government that has exposed the level of detriment and | :19:43. | :19:47. | |
it is this government that is acting to put a cap in place to prevent | :19:48. | :19:51. | |
this abuse. It didn't happen under Labour. As welcome as a price cap | :19:52. | :19:57. | |
will undoubtedly be, does the Secretary of State agree with me | :19:58. | :20:01. | |
that the real key to bringing down prices for consumers is the | :20:02. | :20:03. | |
liberalisation of the energy market through the digitisation of the | :20:04. | :20:07. | |
energy system, storage in front of and behind the meter and demand side | :20:08. | :20:12. | |
response as well. My honourable friend, who is well-informed about | :20:13. | :20:16. | |
such issues, is right. The opportunity smart meters bring in, | :20:17. | :20:19. | |
people can have more knowledge and control of their energy use and use | :20:20. | :20:23. | |
that to get the best deals available. That's why the roll-out | :20:24. | :20:28. | |
of smart meters is an important part of reforms of the energy market. | :20:29. | :20:33. | |
Doesn't the outcome of the CMA enquiry tell him, as a very | :20:34. | :20:38. | |
reasonable man, that this is the end of the road for this system. Indeed | :20:39. | :20:44. | |
privatisation didn't work, regulation hasn't worked, we have | :20:45. | :20:49. | |
had to had a CMA enquiry. What's needed is a fundamental reappraisal | :20:50. | :20:52. | |
and change to this whole energy edifice. I'm surprised to hear from | :20:53. | :20:59. | |
the honourable gentleman that the implicit support of the programme of | :21:00. | :21:03. | |
nationalisation that his party stood on this sector, I think billions of | :21:04. | :21:07. | |
pounds that would cost, would not be the most important use of our funds. | :21:08. | :21:15. | |
It has been a regulated industry since the time of privatisation many | :21:16. | :21:20. | |
years ago. That regulation needs to function better than it has. Sir | :21:21. | :21:25. | |
Oliver Letwin. I have been listening very carefully to the answers, and | :21:26. | :21:30. | |
am I right to understand he would not be satisfied with a final | :21:31. | :21:35. | |
solution from Ofgem that continued to cross subsidise some customers | :21:36. | :21:42. | |
out of loyalty premium, paid by those, even if not vulnerable, who | :21:43. | :21:49. | |
didn't switch. This is a wake-up call for the industry. Consumers who | :21:50. | :21:53. | |
are known not to switch can be milked to pay for subsidy for other | :21:54. | :22:05. | |
consumers in an un-fairway. The CMA identified unilateral market power | :22:06. | :22:07. | |
enabling them to exploit that position and I think it has to come | :22:08. | :22:13. | |
to an end. Whilst welcoming proposals to make it easier to | :22:14. | :22:19. | |
switch away from poor deals, does my right honourable friend agree Ofgem | :22:20. | :22:23. | |
needs to go much further than it suggested in their letter to him | :22:24. | :22:27. | |
this morning to protect consumers from exploitation? A very clear | :22:28. | :22:37. | |
expectation that I want to see the detriment of the CMA identified be | :22:38. | :22:42. | |
tackled once and for all. They want to speak to consumer groups and I | :22:43. | :22:44. | |
hope those groups will share my honourable friend's analysis. | :22:45. | :22:50. | |
Charles Watling. Will my honourable friend join me in welcoming the | :22:51. | :22:55. | |
acknowledgement that Ofgem had of being able to put a cap in place. | :22:56. | :23:00. | |
Shouldn't we urge Ofgem to use that power fully? My honourable friend is | :23:01. | :23:08. | |
right. The proposal to consult with consumer groups, to go beyond what | :23:09. | :23:12. | |
the CMA's remedies, at least the majority report of the CMA | :23:13. | :23:19. | |
recommended, is welcomed. It's a step in the right direction, but I | :23:20. | :23:23. | |
would like to see them put out in detail and implemented before I am | :23:24. | :23:30. | |
satisfied. As somebody who represents an industrial town, as | :23:31. | :23:34. | |
part of the wider debate on these issues, has my honourable friend had | :23:35. | :23:39. | |
the opportunity to assess what impact nationalising the energy | :23:40. | :23:43. | |
companies would have on energy bills and households? The input of finding | :23:44. | :23:52. | |
the Williams pounds necessary to take into public ownership these | :23:53. | :23:55. | |
industries, I think it would be not only a disaster for public finances, | :23:56. | :24:00. | |
but destroy investor confidence in a whole range of industries that we | :24:01. | :24:01. | |
need to have investment in. Julian Smith. I thought I could be | :24:02. | :24:17. | |
behind someone else. You are not a senior government whip but at least | :24:18. | :24:22. | |
you are a night. LAUGHTER I was a BBC news consumers reporter | :24:23. | :24:27. | |
for five years and I saw the havoc that can be caused by this kind of | :24:28. | :24:35. | |
metering. It can make a payday loan look reasonable, and it needs to | :24:36. | :24:41. | |
heel. We should welcome the proposal from Ofgem to extend the Paris on -- | :24:42. | :24:50. | |
tariff on prepayment meters. My honourable friend is right. It has | :24:51. | :24:57. | |
been the practice of this government to intervene where there are abuses, | :24:58. | :25:00. | |
especially to vulnerable people in the way he describes and that has | :25:01. | :25:04. | |
happened to prepaid meters but it needs to go further. We are grateful | :25:05. | :25:09. | |
to the | :25:10. | :25:10. |