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I realise that it is of no comfort to my hon. Friend to hear the legal niceties of an obviously distressing and frustrating constituency case. So what is to be done?
Clearly Michelle and her son cannot be left to languish without heating, hot water and fuel for cooking. There is no legal redress, but perhaps common sense and a little humanity ought to be exercised. Some energy companies have a trust fund that can be used in exceptional cases. Regrettably, Scottish Power does not, but perhaps, having heard my hon. Friend’s pleas today, the company will review its position.
Prepayment meters have been a matter of concern to Labour Members for some time. As prepayment meters are more expensive to buy and to service than ordinary meters and require an infrastructure to support them, customers using them have faced higher costs. That is why, in the Budget, my right hon. Friend the Chancellor made it clear that the Government were prepared to consult on using their statutory powers with a view to reducing the differentials between different forms of payment.
Last week, Ofgem reported on its probe into gas and electricity markets, which included examination of prepayment charges and differentials. It found that the premium charged to prepayment meter customers is, on average, justified. None the less, the premium paid by prepayment customers varied between suppliers, between regions and between levels of energy use, and, on average, it had increased from about £80 at the beginning of 2005 to £125 at the beginning of 2008. Ofgem’s broad conclusion was that premiums at the lower end of the consumption range, which were about £80, had a sound justification, whereas those at the higher end, which were about £170, did not. Between now and 1 December, Ofgem will consult on the findings of its probe, including those on prepayment meters.
As he announced in his statement yesterday, my right hon. Friend the Secretary of State for Energy and Climate Change has met representatives of the six large domestic energy suppliers. He has made it clear that where there are problems, the Government expect rapid explanations and actions to remedy them. He will meet the companies again later this month to see what they have done. If the companies do not take satisfactory action, the Government will consult on legislation to deal with any unfair price differentials. I have to say that Scottish Power’s prepayment charge is less than its standard cash quarterly tariff. Of course, Michelle does not know that because she does not have a prepayment meter.
The fact is that we need greater fairness in electricity and gas prices, and my right hon. Friend the Secretary of State has made clear the Government’s determination to tackle those inequalities. There is undoubtedly pressure on consumers, and, as my hon. Friend the Member for Mitcham and Morden has said, there may be many people facing similar problems, so I should like to set out what consumers might do if they get into difficulties. First, they need to talk to the supplier. I hope that they would get an appropriate response. There might be a trust fund available for emergencies; some companies have such a fund. People should get advice by calling Consumer Direct; they will be put through to Consumer
Focus, which deals with such issues. Alternatively, they can contact a citizens advice bureau or other debt advice agencies.
People on benefits should certainly talk to the Department for Work and Pensions and the supplier about using Fuel Direct to recover debt owed to the supplier. Consumers should also consider switching supplier. Consumer Focus’s website gives details of tariffs for all main suppliers, based on low, medium and high use of gas or electricity. It also provides links to price comparison websites and can send out fact sheets for those who do not have computers.
This debate has rightly focused on disconnection and prepayment meters, but the Government have an interest in trying to help all consumers to reduce the cost of their energy, no matter how they pay, so in September we announced a package of measures known as the home energy saving programme, which is designed to help households to reduce their energy costs, year in, year out, with the added benefit of reducing our CO2 emissions. The largest element of the package was an additional £560 million under the suppliers’ carbon emissions reduction target to fund free or subsidised improvements such as loft and cavity wall insulation. Some 11 million elderly and low-income households will qualify for those measures at no cost to themselves. We believe that the element in question could benefit 2 million households.
In addition, gas and electricity suppliers and electricity generators will contribute a further £350 million to a new community energy saving programme. The Warm Front scheme also continues, with increased funds. It offers not just energy efficiency measures but benefit checks that help to produce, on average, an additional £1,400 per household per year. Winter fuel payments have been increased from £200 to £250 this winter for all pensioners, and to £400 for over-80s households. Our Act on CO2 campaign is currently advertising nationally to inform people about the support available. It is continuing its efforts to encourage people to compare the deals available from suppliers, to pay by direct debit and to take advantage of money-off deals on energy efficient products. For the record, its telephone number is 0800 512 012.
I am grateful to my hon. Friend the Member for Mitcham and Morden for securing the debate, and I hope that a solution to her constituent’s problems can be found as a consequence of it. I take very seriously the points that she made today, and I would like her to keep me informed of the company’s response, following this debate. I will, of course, be willing to assist her in any representations that she wishes to make.
In these difficult times, all of us in Government, Parliament and industry need to be proactive, to give maximum help to the most vulnerable, and to ensure that our energy supply costs are fair and transparent. Let me assure the House that my colleagues in the new Department of Energy and Climate Change will energetically pursue that agenda.
Adjourned accordingly at two minutes to Three o’clock.
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