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Order read for resuming adjourned debate on Question [13 June], That the Bill be read a Second Time.

Hon. Members: Object.

Debate to be resumed on Friday 24 October.


Order read for resuming adjourned debate on Question [22 February], That the Bill be read a Second Time.

Hon. Members: Object.

Debate to be resumed on Tuesday 21 October.


Order for Second Reading read.

Hon. Members: Object.

To be read a Second time on Tuesday 21 October.

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Order read for resuming adjourned debate on Question [16 May], That the Bill be read a Second Time.

Hon. Members: Object.

Debate to be resumed on Tuesday 21 October.


Order for Second Reading read.

Hon. Members: Object.

To be read a Second time on Friday 24 October.


Order for Second Reading read.

Hon. Members: Object.

To be read a Second time on Friday 24 October.


Order for Second Reading read.

Hon. Members: Object.

To be read a Second time on Friday 31 October.


Order for Second Reading read.

Hon. Members: Object.

To be read a Second time on Friday 31 October.


Order for Second Reading read.

Hon. Members: Object.

To be read a Second time on Friday 24 October.

Mr. Andrew Dismore (Hendon) (Lab): On a point of order, Mr. Deputy Speaker. Is there any way of recording it in Hansard that Conservative Members yet again objected to the Crown Employment (Nationality) Bill, thus ensuring that it has made no progress for the sixth year running?

Mr. Deputy Speaker (Sir Alan Haselhurst): Not beyond what the hon. Gentleman has put on the record.

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Gas Supplies

Motion made, and Question proposed, That this House do now adjourn. —[Mr. Blizzard.]

2.34 pm

Siobhain McDonagh (Mitcham and Morden) (Lab): It is not often that I ask for an Adjournment debate, but a few weeks ago I met someone at my weekly advice surgery and something about her story really got to me. I almost could not believe that a big business, and especially a big power supplier, could treat her as it had and not realise that anything was wrong.

My constituent, Michelle, told me that she and her six-year-old son, Jayden, had been left without hot water, cooking and heating for four and a half months. She told me that she had fallen behind on her gas and had been cut off. At no time did she disguise the fact that she had arrears. She said that she had spoken to her supplier on numerous occasions to try to get on a lower tariff and make affordable monthly payments, or even go on a prepayment meter—all to no avail. She said that she had told her supplier that she had a six-year-old son, but that the person she spoke to had said that that would not make any difference, as they could help only if he was under four. She told me that ever since she had been cut off, she had faced problem after problem and felt as though she was being held to ransom over impossible demands.

Michelle’s gas supplier is Scottish Power. The more I have dealt with that company in this case, the more I can believe what she has told me. Like other hon. Members, I take up dozens and dozens of new cases each week, writing and speaking to companies and public bodies alike. I do not always agree with the outcome, but I usually feel that I am dealing with reasonable people. Scottish Power might be a perfectly nice company, but something about my dealings with it has not felt quite straight. If I were to apply for an Adjournment debate every time I thought that a constituent had got less than they deserved, I would be here every week. But I want to single out Scottish Power for special attention. The information it has given me has been inconsistent and contradictory, and at root I just do not think that it is bothered about my constituent. Nor does it think that I can do anything to affect it.

I have initiated this debate because I am worried that Scottish Power might be treating other people unreasonably. I want Michelle and Jayden to be able to cook again, and to be warm this winter. I just do not think that Scottish Power is all that fussed. I do not pretend for a moment that Michelle has been one of the company’s best customers. She certainly fell behind with her payments, and it has been a vicious circle for her for three years. But the price has been going up, and she is on benefits. It has not been easy, and she has got into a mess. Her history with Scottish Power has been far from straightforward.

Scottish Power took over her supply in March 2005, when she was obviously a customer it thought worth attracting. It said that she could pay a direct debit of £35 a month, but within six months it said that she had to increase her direct debit by 30 per cent. to £45. It is not possible to tell whether it lured her in with a low introductory rate and then decided to start taking more and more, but a 30 per cent. increase in the first six
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months seems rather high. We should remember that this was before the huge price rises of the last year or two. Nor was it necessary. Michelle’s bill said that in that first six months she had actually overpaid, by £81.38, but still Scottish Power pressed ahead and increased her direct debit. This was the point at which Michelle started to fall behind.

Michelle called Scottish Power to say that she could not afford £45 a month, and asked to stop her direct debit. Scottish Power did not get any further information at this point, or find out if she had children or was on benefits. They just let her be, no doubt happy to add the monthly penalty to the bill of customers who cannot pay by direct debit these days. It did nothing for another five months until, in February 2006, it sent out a reminder, took Michelle off any discounts she might have once had, and gave her case to the collections team.

When I first raised this case with Scottish Power, it insisted that it had been unable to talk to Michelle, and that it did not know anything about her circumstances. But I received a new account on Wednesday, and it admitted that since Michelle first got into difficulties when the company increased her direct debit, she had rung it on many occasions. On at least three occasions, she offered to set up a direct debit that she could afford, every time for more than the £35 a month she was originally told would be enough. Scottish Power said no. By now, the tariff that she was being charged for her gas and electricity became less and less generous, and so a vicious cycle developed. From the moment Scottish Power increased her direct debit beyond her ability to pay—while Michelle was still in credit, remember—the die was cast. The gap between the amount she could afford and the amount she was charged widened until, almost inevitably, Scottish Power cut her off.

Let us look at the tariffs again in more detail. Michelle’s original tariff was £35 a month. Scottish Power put that up to £45 a month, from which point things got worse: because she could not pay that amount, her charges increased month after month. According to the latest documentation, which Scottish Power sent me on Wednesday, between April and July 2006 Michelle’s bill for her gas and electricity averaged £50 a month. From July to October 2006, it went up to nearly £70 a month. In the next three months, it went up to £110 a month. Her next meter reading was amended, and the bill went up to £320 in just one month. In the next two months, she was charged an astonishing £150 a month, and so it went on.

How is such a thing possible? Michelle and Jayden live in a small, two-bedroom housing association flat. Last week, Scottish Power told me that she was being charged an average of £75 a month and I thought, “Wow, that’s a lot for a small home like hers”. I thought she must be on a really horrible tariff, but the new information from Scottish Power shows that her bill went up to more than £100 a month.

If I do nothing else today, I want to complain about how those who can least afford to pay a bill always seem to be on the least generous tariff. Why are those who are most likely to get in trouble always charged the most? As I said in the topical debate yesterday, the Government must do even more to stop the disproportionate charges
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levied on people with low incomes. I was pleased that my right hon. Friend the Secretary of State is committed to doing more for people who use prepayment meters. Most people on prepayment meters are the least well-off. It is well known that people who pay by prepayment meters are penalised heavily.

According to Ofgem, people with prepayment meters pay £125 more than people who pay by direct debit, but, ironically for people such as Michelle and Jayden, they can be a useful solution. For people in such a bad position, a monthly payment coming out of their bank account is too much of a worry, and pay-as-you-go can be a helpful arrangement. Michelle has been asking Scottish Power to install a meter, so that she does not lose her heating, cooking and hot water again, but Scottish Power has refused. The company says that it is an infrastructure issue and that a meter can be installed only by the infrastructure provider, Southern Gas Networks, and the meter provider, National Grid Metering.

Apparently, Michelle and Jayden must have extra pipework installed in order to have a prepayment meter and it will cost £350 plus the cost of a CORGI engineer, who is also needed for the job to be done. However, it is not the big utility company that will have to pay all that money. Michelle and Jayden have to pick up the bill. How can that possibly be? How can they be expected to pay hundreds of pounds when they cannot afford even a single month’s charge? The utility companies are not only charging our least affluent constituents the highest tariffs, but trying to get them to pay hundreds of pounds for the privilege of having a prepayment meter that most hon. Members would consider a rip-off if we had to have one.

I asked whether Scottish Power has a charitable arm, or a social responsibility fund, but it replied, “Not for things like this”. So, Michelle cannot even have a prepayment meter. What is worse is that she cannot have her standard meter back either, because Scottish Power will not let her have it unless she agrees to pay a direct debit of £136 a month—£101 more than the amount she was originally paying. That is an increase of nearly 300 per cent. in three years. It is just staggering to see such a price rise for someone on benefits, with a young son.

I am not sure how Scottish Power expects my constituents to get back on the level. They are in a Catch-22 situation. They cannot afford the bill so they cannot have a standard meter, and they cannot afford the charges to install a prepayment meter. As the public affairs man from Scottish Power says, without any sense of how satirical he is being:

The company seems to have made up its mind. There is no compassion and no sense of responsibility for the position of my constituent.

The company says that it could not do anything because it did not know that Michelle was on benefits and it did not know that she had a child. I am not sure that I believe that; as I said, Michelle told me that she had spoken to an adviser and they had said they could help only if her son was four. Nor am I sure how hard Scottish Power tried to find out whether Michelle was on benefits or whether she had a child. The company said that it had not been able to get through to her, but
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every time I ring her she picks up straight away, even though her mobile says “Number withheld”.

Michelle has always been very open with me about her situation, so I do not understand how Scottish Power could not have known her circumstances. From my experience of the company, I can easily believe that it would not have bothered, or had the common sense, to ask her—perhaps because it could charge her more if it did not know. Whatever the reason, the Government should insist that utility companies find out whether anyone in arrears has children or is on benefits. When companies find that out—as in this case—the Government should ensure that they change their approach.

Scottish Power would rather have Michelle and Jayden pay hundreds of pounds they clearly do not have and carry on without cooking, heating or hot water. The best the company can offer is to say that as Michelle is on benefits she might be eligible for Fuel Direct, whereby the Department for Work and Pensions deducts payments directly from benefits to pay off arrears. However, as Scottish Power has repeatedly stressed, that would result only in her accruing further debt. Things can only get worse.

As I said in the topical debate yesterday, it is not fair. Keeping a family without hot water, heating or cooked food for four and a half months and trying to charge them £500 for a new meter when they cannot even afford £45 is not right. I hope that my hon. Friend the Minister will listen to this story and come to the same conclusion. The utility companies are very well off and cases such as this are very rare, but there is a degree of responsibility. Utility companies spend an enormous amount on public relations. Scottish Power is part of a group that made profits of €200 million last year. It talks a lot about corporate social responsibility, and for all I know its record may be better than most, but corporate responsibility is about more than fuzzy words and glossy leaflets sent to people such as us and other key stakeholders; it is about people such as Michelle and six-year-old Jayden.

It is time that the utility companies learned real social responsibility. I hope this debate helps them to move in that direction.

2.47 pm

The Parliamentary Under-Secretary of State for Energy and Climate Change (Joan Ruddock): I am grateful to my hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh) for raising this very important constituency case and highlighting the wider issues that are of universal concern.

I express my sympathy for my hon. Friend’s constituent, Michelle, and the situation in which she finds herself. Although we all have a responsibility to pay our bills, there is no doubt that rising prices can overwhelm people’s ability to pay and to organise their family finances. That is why a supplier’s ability to disconnect a customer is strictly circumscribed, and rightly so. It should be a weapon of last resort that no one would wish to use.

We expect our energy companies to have in place effective debt prevention policies, which should be rooted in good management and good communications. Such policies would require companies to be particularly sensitive and proactive at a time of unprecedented price
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rises. Most companies alive to the difficulties brought by higher prices have a social tariff enabling certain groups of low income people to benefit from lower charges. It is surprising that no such tariff is offered by Scottish Power, although the company has told me that it expects to have one in place by the end of the year.

Disconnections are governed by a range of rules in the supply licences under which energy companies operate. Before disconnecting a customer, suppliers have to follow a series of steps—as my hon. Friend suggested—which include giving the customer time to pay, offering alternative payment methods and ensuring that the customer is able to meet any payment arrangements for recovering the debt.

Most problems that stem from customer indebtedness are resolved well before court action and disconnection. As my hon. Friend said, a prepayment meter, which allows the customer to pay for ongoing gas or electricity use and at the same time gradually pay off accumulated debt, is a common way of avoiding disconnection. I shall say more about prepayment later. Specific arrangements, in place since 2004, to which all the large gas and electricity suppliers subscribe, govern the treatment of genuinely vulnerable customers, and are designed to ensure that, as far as is practicable, no vulnerable customer is disconnected. The arrangements include a cross-industry definition of vulnerability and a safety net of measures integrated into suppliers’ debt management processes. Furthermore, customers threatened with disconnection can get assistance from the statutory consumer body, Consumer Focus, whose Glasgow office deals with problems facing vulnerable customers and with all threats of disconnection.

I do not want to—I cannot—enter into a discussion of the merits or demerits of the case my hon. Friend raises, but what is obvious is that none of the mechanisms that are in place worked, and I assume that none of the advice services was accessed. As a consequence, we have a vulnerable family disconnected and no apparent means of solving the problem.

Let me explain what is expected of companies. As an alternative to disconnection and loss of supply, the customer should be offered a prepayment meter, which, as my hon. Friend points out, allows close control over expenditure for the customer and the recovery of debts for the company. However, where a supplier calibrates a prepayment meter installed to recover debt, it must, under the terms of its supply licence, take into account the customer’s ability to pay. It is clear that, in Michelle’s case, that could have been difficult. She would have been well advised to discuss the matter with the Benefits Agency, with a view to agreeing a Fuel Direct payment, because such payments are limited.

As my hon. Friend has explained, however, the reason no prepayment meter was connected arose from the necessity to provide new pipework to the meter. As I understand it, and as she said, I think, the gas infrastructure company, Southern Gas Networks, has confirmed that the pipework is not the responsibility of the gas supplier but that of the customer or landlord. As such, I am sorry to tell her that there is indeed no obligation on Scottish Power to fund the work—indeed, if it did, it would be entitled to reclaim the money from the customer.

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