Alongside rising fuel prices and a depressed economy, many bus operators have had no option but to raise fares, cut services or both. What have the Government

11 Jan 2012 : Column 242

done to help bus users, many of whom are among the least well-off in society? They have cut transport funding to local councils by 28%, a loss of £95 million in 2011-12 alone. They have changed the way in which the concessionary fares scheme is funded, taking a further £223 million away from local authorities in the past year, and they have decided to cut the bus service operators grant, the fuel rebate to bus companies, by 20% from April.

If we add those changes together, we find that the result is devastating. Fares are going up, one in five supported bus services has been scrapped and the Campaign for Better Transport has collected examples of more than 1,100 bus services that have already been lost in the English regions. Whole communities have been left isolated without access to public transport, and almost three quarters of local authorities have been forced to cut or to review school transport provision.

Older people, who are protected from fare rises, having benefited enormously from the free bus pass introduced by the previous Labour Government, are finding additional restrictions on when they can travel and, particularly in rural areas, that the service they relied on has disappeared. The Prime Minister may have promised to keep the free bus pass, but it is of little use if people have no local bus to travel on.

Time and again we see this Government choosing to implement policies that have a disproportionate impact on the very people who most need to be protected in harsh economic times: older people and disabled people, who often do not have the choice to use a car; and the unemployed, who are already paying the price of this Government's economic failure. Some 64% of those seeking work do not have a access to a car, so they rely on buses to get to interviews and jobs. As my hon. Friend the Member for Lewisham East (Heidi Alexander) said, how will they access job opportunities or stay in work without public transport and how can work pay if travel to work is not affordable?

We heard about young people, 72% of whom rely on buses to get to college and to give them independence. They are already struggling without their education maintenance allowance, or are facing a threefold increase in tuition fees, so it is little wonder that colleges report a fall in admissions, and that the UK Youth Parliament made cheaper, fairer and more accessible public transport its No. 1 issue for 2012.

For the one in 10 people in rural areas who do not have access to a private car, a bus is essential to get to the nearest shop, doctor or post office—not that car users have done much better. For all the Government’s talk of fuel stabilisers in opposition, one of their first acts was to increase VAT to 20%—immediately putting petrol prices up by 3p a litre and adding an extra £1.35 to the cost of filling up the average car.

The Government claim that those changes are all in the name of deficit reduction and that there is no alternative. That is not so. What is required is the determination to stand up to vested interests and to powerful lobby groups. We have already set out how we would ease the pressure on households from the rising costs of transport—not by increasing spending, but by banning private train companies from averaging out the cap on fare rises. That would mean a maximum increase of inflation plus 1% this year, not increases of up to 11%.

11 Jan 2012 : Column 243

My hon. Friend the Member for Garston and Halewood (Maria Eagle) also set out how we are considering other options to ensure that passengers are protected from unfair pricing, including a single definition of peak and off-peak; a right to the cheapest ticket; a right to a single price for the same ticket; a more flexible way of changing one’s travel plans; and a right to a discount when a rail replacement bus service is put on.

Labour’s policy review is looking at all options for reforming the structure of Britain’s rail industry. We need root-and-branch reform of its costly fragmented structure, and we need a better deal for taxpayers and passengers. We also want to devolve more transport responsibilities, so that more decisions are made locally by integrated transport authorities with powers to deliver local bus services in a way that best suits each community, ensuring that the needs of local people are met and that fares are affordable. For young people who are aged 16 to 18 and in education, we want to see a concessionary fares scheme delivered by the major bus companies in return for the subsidies that they have received.

In the transport spending review, the Government recognised:

“Transport provides the crucial links that allow people and businesses to prosper”.

Well, people and businesses are suffering as a result of their poor decisions. Yesterday, we, like the hon. Member for Fylde (Mark Menzies), welcomed the good news about High Speed 2 and the Government’s commitment to long-term investment in our infrastructure, but they must face up to the here and now. They need to listen to passengers and start taking action to tackle the quiet crisis facing people the length and breadth of this country.

4.19 pm

The Minister of State, Department for Transport (Mrs Theresa Villiers): Time is too short to refer to every contribution to today’s debate, but I welcome all those that have been made.

The hon. Member for Glasgow South (Mr Harris) criticised a fares system that he presided over as rail Minister. My hon. Friend the Member for Wimbledon (Stephen Hammond), along with many others, pointed out that RPI plus 1 and above-inflation fare increases were introduced under the Labour Government and did not start under the coalition.

The hon. Member for Pontypridd (Owen Smith) commented on the Government’s continuation of a major investment programme and called for a simpler ticketing system. My hon. Friend the Member for Cambridge (Dr Huppert) also welcomed our commitment to a programme of rail improvements that is probably the biggest since the Victorian era. He welcomed the fact that we had been able to prioritise it despite the deficit because of the difficult decisions that we have made in other areas. My hon. Friend the Member for Milton Keynes South (Iain Stewart) welcomed the progress on East West Rail and made some important points about how fares operate.

The hon. Member for Bolton West (Julie Hilling) made a moving speech about the hardship that her constituents are feeling. As for buses, we are of course doing all that we can within the constraints of the fiscal straitjacket created by the deficit that we were left by

11 Jan 2012 : Column 244

Labour. Within those constraints we are of course striving to help those who are facing hardship with the cost of living.

My hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard) pointed out the impracticalities of having a single uniform peak throughout the country and that the Opposition transport team appear not to have read the speeches made by their leader or the shadow Chancellor. I particularly liked my hon. Friend’s reference to the game of policy Twister that they have unfortunately had to play today.

The hon. Member for Lewisham East (Heidi Alexander) commented on the concern about the effect of inflation and fare rises. That is exactly the concern that the Chancellor responded to in his autumn statement in putting the limit on the average rise in national rail, tube and bus fares at RPI plus 1. That help for people struggling with the cost of living was welcomed by my hon. Friends the Members for Fylde (Mark Menzies), for Cambridge and for Milton Keynes South. We ought to pay tribute to the Secretary of State for her role in that. We were able to do that at the same time as delivering a major investment programme only because of savings made elsewhere in government to tackle the deficit—the kind of spending reductions that Labour has consistently opposed.

Mr Tom Harris: “Many families are feeling the pinch because of stratospheric fare increases—racing ahead of inflation—inflicted by the Department.”—[Official Report, 24 July 2007; Vol. 463, c. 691.] Those are not my words, but those of the Minister in this House. Can she point out any improvements that have been made since then?

Mrs Villiers: The former rail Minister has made my point for me. The Opposition must be suffering from collective amnesia if they think that this problem suddenly appeared in May 2010 when the coalition took over. In 2006, a Labour-dominated Select Committee described the Labour Government as “breathtakingly complacent” on value for money in fares. The truth is that concern about rail fares has been growing for years, as my hon. Friends the Members for Bexleyheath and Crayford (Mr Evennett), for St Albans (Mrs Main) and for Milton Keynes South have said.

A major reason for the increases is that under Labour the cost of running the railways spiralled and hard-pressed passengers and taxpayers were left to foot the bill. It is fair that passengers contribute to the cost of running the railways and to the massive programme of upgrades that we are taking forward, but neither fare payers nor taxpayers should have to pay for industry inefficiency. This Government understand how vital it is to get the cost of running the railways down and to tackle the legacy of inefficiency that we inherited from Labour. That is the long-term, sustainable solution to delivering better value for money for taxpayers and fare payers.

Lilian Greenwood: The point that we are seeking to make is that when the Government say that fares will go up by inflation plus 1%, that is what they should go up by, not by up to 11%, which is what many people face this year as a result of the Government’s decisions.

11 Jan 2012 : Column 245

Mrs Villiers: The hon. Lady need not worry as I will come on to the fares basket in a moment. Before I do, it is crucial to say that we are determined to deliver our goal of ending the era of above-inflation fare rises. The only long-term, sustainable solution to delivering better value for money for taxpayers and fare payers is to get the cost of running the railways down, not the short-term, uncosted, poorly thought-through proposals that we have heard from the hon. Member for Garston and Halewood (Maria Eagle) this afternoon.

We have started reform already, with the reform of the franchising system and our commitment to further electrification to reduce costs. We are also determined to see the rail industry working together better, with a strong shared incentive to reduce costs and deliver better outcomes for passengers.

Another key plank of getting the cost of the railways down is making working practices on the railways more efficient. When Labour was in charge, pay in the rail sector rose more than twice as fast as it did in the economy more widely. Difficult decisions may lie ahead, and I do not believe Labour is capable of taking those decisions where the interests of the unions conflict with the goal of getting better value for money for passengers.

Mr Tom Harris: Will the Minister give way?

Mrs Villiers: No.

Labour failed to deal with the problem in government, and its heavy dependence on union funding would make it utterly incapable of dealing with it if the country were unwise enough to return a Labour Government. If the Opposition were really serious about getting better value for money for passengers, they would not be making glib announcements in the House; they would be remonstrating with their friends in the rail unions about a responsible approach to pay, from the boardroom to the platform.

I turn now to the fares basket and the flat cap on prices. Frankly, the shadow Secretary of State was in all sorts of trouble on the matter. The claim made by her and the Leader of the Opposition that the suspension of the cap was an ongoing policy, representing a dramatic change of heart by Lord Adonis, is simply not borne out by the facts of what Lord Adonis did in government.

Mr Harris: Will the Minister give way?

Mrs Villiers: No. The hon. Gentleman did not do anything about the flat cap in his entire time as a rail Minister, so I will not take his intervention on the matter.

Lord Adonis inserted in the franchise contracts a one-year suspension of the flat cap. That conflicts with what the shadow Secretary of State said today.

Mr Harris: I promise it is the last time, but will the Minister give way?

Mrs Villiers: No.

More important, the shadow Secretary of State has given us no indication of just how much it would cost to repeal the fares basket provision. Amazingly, she did not even seem to understand that it would have a cost. I can assure her that it would. She has given no credible

11 Jan 2012 : Column 246

explanation of how Labour would pay for the change, and whether it would come from higher fares, higher taxes, cuts in services, the cancelling of extra carriages or upgrades or more borrowing.

Just one day after the Leader of the Opposition finally acknowledged that dealing with Labour’s deficit means that there is no more money left to spend and said that the Opposition would take a more responsible approach, the shadow Secretary of State stood at the Dispatch Box making spending commitment after spending commitment on rail fares, concessionary bus travel, local government funding, school transport, VAT—the list goes on and on. She and the shadow Minister, the hon. Member for Nottingham South (Lilian Greenwood), made several billion pounds of commitments today.

The truth is that when it comes to the cost of living and the economy, Labour just does not get it. It must be just about the only political party in the world arguing that the way to get out of a debt crisis is by borrowing more money. Whether it is a credit card bill or the international gilts market, that simply does not work. There is no way that interest rates could have stayed at today’s low levels without the action that we have taken to deal with the deficit and avert the crisis enveloping other European countries with public finance positions almost as bad as ours.

In government, Labour brought this country to the brink of bankruptcy, leaving Britain with one of the biggest structural deficits in the developed world. Today’s debate demonstrates that, contrary to what the Leader of the Opposition said, Labour has learned nothing in opposition. The biggest threat to the cost of living in this country is the spiralling interest rates that we would get if we gave way to the demands that Labour makes every single day in the House for more and more spending.

It is clear that if Labour had won the last election—thankfully it did not—it would have utterly failed to take the tough decisions needed to get the deficit under control. That would have had disastrous consequences for the cost of living for millions of families right across the nation. I urge the House to reject the motion.

Question put.

The House divided:

Ayes 251, Noes 319.

Division No. 420]

[4.29 pm


Abbott, Ms Diane

Abrahams, Debbie

Ainsworth, rh Mr Bob

Alexander, rh Mr Douglas

Alexander, Heidi

Ali, Rushanara

Allen, Mr Graham

Anderson, Mr David

Ashworth, Jonathan

Austin, Ian

Bailey, Mr Adrian

Bain, Mr William

Balls, rh Ed

Banks, Gordon

Bayley, Hugh

Beckett, rh Margaret

Begg, Dame Anne

Bell, Sir Stuart

Benn, rh Hilary

Benton, Mr Joe

Berger, Luciana

Betts, Mr Clive

Blackman-Woods, Roberta

Blears, rh Hazel

Blenkinsop, Tom

Blomfield, Paul

Blunkett, rh Mr David

Bradshaw, rh Mr Ben

Brennan, Kevin

Brown, rh Mr Gordon

Brown, Lyn

Brown, rh Mr Nicholas

Brown, Mr Russell

Bryant, Chris

Buck, Ms Karen

Burden, Richard

Burnham, rh Andy

Byrne, rh Mr Liam

Campbell, Mr Alan

Campbell, Mr Ronnie

Caton, Martin

Chapman, Mrs Jenny

Clark, Katy

Clarke, rh Mr Tom

Clwyd, rh Ann

Coaker, Vernon

Coffey, Ann

Connarty, Michael

Cooper, Rosie

Cooper, rh Yvette

Corbyn, Jeremy

Crausby, Mr David

Creagh, Mary

Creasy, Stella

Cruddas, Jon

Cryer, John

Cunningham, Alex

Cunningham, Mr Jim

Cunningham, Tony

Curran, Margaret

Dakin, Nic

Danczuk, Simon

Darling, rh Mr Alistair

David, Mr Wayne

Davies, Geraint

De Piero, Gloria

Denham, rh Mr John

Dobbin, Jim

Dobson, rh Frank

Docherty, Thomas

Dodds, rh Mr Nigel

Donaldson, rh Mr Jeffrey M.

Donohoe, Mr Brian H.

Doran, Mr Frank

Dowd, Jim

Doyle, Gemma

Dromey, Jack

Dugher, Michael

Durkan, Mark

Eagle, Ms Angela

Eagle, Maria

Edwards, Jonathan

Efford, Clive

Elliott, Julie

Ellman, Mrs Louise

Esterson, Bill

Evans, Chris

Farrelly, Paul

Fitzpatrick, Jim

Flello, Robert

Flint, rh Caroline

Flynn, Paul

Francis, Dr Hywel

Gapes, Mike

Gardiner, Barry

Gilmore, Sheila

Glass, Pat

Glindon, Mrs Mary

Godsiff, Mr Roger

Goggins, rh Paul

Goodman, Helen

Greatrex, Tom

Green, Kate

Greenwood, Lilian

Griffith, Nia

Gwynne, Andrew

Hain, rh Mr Peter

Hamilton, Mr David

Hamilton, Fabian

Hanson, rh Mr David

Harman, rh Ms Harriet

Harris, Mr Tom

Healey, rh John

Hepburn, Mr Stephen

Heyes, David

Hillier, Meg

Hilling, Julie

Hodge, rh Margaret

Hodgson, Mrs Sharon

Hoey, Kate

Hood, Mr Jim

Hopkins, Kelvin

Hosie, Stewart

Howarth, rh Mr George

Hunt, Tristram

Irranca-Davies, Huw

Jackson, Glenda

James, Mrs Siân C.

Jamieson, Cathy

Jarvis, Dan

Johnson, rh Alan

Johnson, Diana

Jones, Graham

Jones, Helen

Jones, Susan Elan

Jowell, rh Tessa

Joyce, Eric

Kaufman, rh Sir Gerald

Keeley, Barbara

Kendall, Liz

Khan, rh Sadiq

Lammy, rh Mr David

Lavery, Ian

Lazarowicz, Mark

Leslie, Chris

Lewis, Mr Ivan

Lloyd, Tony

Llwyd, rh Mr Elfyn

Long, Naomi

Love, Mr Andrew

Lucas, Caroline

Lucas, Ian

MacNeil, Mr Angus Brendan

MacShane, rh Mr Denis

Mactaggart, Fiona

Mahmood, Shabana

Malhotra, Seema

Mann, John

Marsden, Mr Gordon

McCabe, Steve

McCarthy, Kerry

McClymont, Gregg

McCrea, Dr William

McDonagh, Siobhain

McDonnell, Dr Alasdair

McDonnell, John

McFadden, rh Mr Pat

McGovern, Jim

McGuire, rh Mrs Anne

McKechin, Ann

McKenzie, Mr Iain

McKinnell, Catherine

Meacher, rh Mr Michael

Mearns, Ian

Michael, rh Alun

Miliband, rh David

Miliband, rh Edward

Mitchell, Austin

Morden, Jessica

Morrice, Graeme


Morris, Grahame M.


Mudie, Mr George

Munn, Meg

Murphy, rh Mr Jim

Murphy, rh Paul

Murray, Ian

Nandy, Lisa

O'Donnell, Fiona

Onwurah, Chi

Owen, Albert

Pearce, Teresa

Perkins, Toby

Pound, Stephen

Qureshi, Yasmin

Raynsford, rh Mr Nick

Reeves, Rachel

Reynolds, Emma

Reynolds, Jonathan

Riordan, Mrs Linda

Robertson, Angus

Robertson, John

Rotheram, Steve

Roy, Mr Frank

Roy, Lindsay

Ruane, Chris

Ruddock, rh Dame Joan

Sarwar, Anas

Seabeck, Alison

Shannon, Jim

Sharma, Mr Virendra

Sheerman, Mr Barry

Sheridan, Jim

Shuker, Gavin

Simpson, David

Skinner, Mr Dennis

Slaughter, Mr Andy

Smith, rh Mr Andrew

Smith, Angela

Smith, Owen

Spellar, rh Mr John

Straw, rh Mr Jack

Stringer, Graham

Stuart, Ms Gisela

Sutcliffe, Mr Gerry

Tami, Mark

Thomas, Mr Gareth

Thornberry, Emily

Timms, rh Stephen

Trickett, Jon

Turner, Karl

Twigg, Derek

Twigg, Stephen

Umunna, Mr Chuka

Vaz, rh Keith

Vaz, Valerie

Walley, Joan

Watson, Mr Tom

Watts, Mr Dave

Weir, Mr Mike

Whiteford, Dr Eilidh

Whitehead, Dr Alan

Wicks, rh Malcolm

Williams, Hywel

Williamson, Chris

Wilson, Phil

Winnick, Mr David

Winterton, rh Ms Rosie

Woodcock, John

Woodward, rh Mr Shaun

Wright, David

Wright, Mr Iain

Tellers for the Ayes:

Mark Hendrick and

Yvonne Fovargue


Adams, Nigel

Afriyie, Adam

Aldous, Peter

Alexander, rh Danny

Amess, Mr David

Andrew, Stuart

Bacon, Mr Richard

Baker, Steve

Baldry, Tony

Baldwin, Harriett

Barker, Gregory

Baron, Mr John

Barwell, Gavin

Bebb, Guto

Beith, rh Sir Alan

Bellingham, Mr Henry

Benyon, Richard

Beresford, Sir Paul

Berry, Jake

Birtwistle, Gordon

Blackman, Bob

Blackwood, Nicola

Blunt, Mr Crispin

Boles, Nick

Bone, Mr Peter

Bottomley, Sir Peter

Bradley, Karen

Brady, Mr Graham

Brake, rh Tom

Bray, Angie

Brine, Steve

Brokenshire, James

Brooke, Annette

Browne, Mr Jeremy

Bruce, Fiona

Bruce, rh Malcolm

Buckland, Mr Robert

Burley, Mr Aidan

Burns, Conor

Burns, rh Mr Simon

Burrowes, Mr David

Burstow, Paul

Burt, Alistair

Burt, Lorely

Byles, Dan

Cairns, Alun

Campbell, rh Sir Menzies

Carmichael, rh Mr Alistair

Carswell, Mr Douglas

Cash, Mr William

Chishti, Rehman

Clappison, Mr James

Clark, rh Greg

Clarke, rh Mr Kenneth

Clifton-Brown, Geoffrey

Coffey, Dr Thérèse

Collins, Damian

Colvile, Oliver

Crabb, Stephen

Crockart, Mike

Crouch, Tracey

Davey, Mr Edward

Davies, David T. C.


Davies, Glyn

Davies, Philip

Davis, rh Mr David

de Bois, Nick

Dinenage, Caroline

Djanogly, Mr Jonathan

Dorrell, rh Mr Stephen

Dorries, Nadine

Doyle-Price, Jackie

Drax, Richard

Duddridge, James

Duncan, rh Mr Alan

Duncan Smith, rh Mr Iain

Dunne, Mr Philip

Ellis, Michael

Ellison, Jane

Ellwood, Mr Tobias

Elphicke, Charlie

Eustice, George

Evans, Graham

Evans, Jonathan

Evennett, Mr David

Fabricant, Michael

Fallon, Michael

Farron, Tim

Featherstone, Lynne

Field, Mark

Foster, rh Mr Don

Fox, rh Dr Liam

Francois, rh Mr Mark

Freeman, George

Freer, Mike

Fullbrook, Lorraine

Fuller, Richard

Gale, Sir Roger

Garnier, Mr Edward

Garnier, Mark

Gauke, Mr David

George, Andrew

Gibb, Mr Nick

Gilbert, Stephen

Gillan, rh Mrs Cheryl

Glen, John

Goldsmith, Zac

Goodwill, Mr Robert

Gove, rh Michael

Graham, Richard

Grant, Mrs Helen

Gray, Mr James

Grayling, rh Chris

Green, Damian

Greening, rh Justine

Grieve, rh Mr Dominic

Griffiths, Andrew

Gummer, Ben

Gyimah, Mr Sam

Hague, rh Mr William

Halfon, Robert

Hames, Duncan

Hammond, rh Mr Philip

Hammond, Stephen

Hancock, Matthew

Hands, Greg

Harper, Mr Mark

Harris, Rebecca

Hart, Simon

Harvey, Nick

Haselhurst, rh Sir Alan

Heald, Oliver

Heaton-Harris, Chris

Hemming, John

Henderson, Gordon

Hendry, Charles

Herbert, rh Nick

Hinds, Damian

Hoban, Mr Mark

Hollingbery, George

Hollobone, Mr Philip

Holloway, Mr Adam

Hopkins, Kris

Horwood, Martin

Howell, John

Hughes, rh Simon

Huhne, rh Chris

Huppert, Dr Julian

Hurd, Mr Nick

Jackson, Mr Stewart

James, Margot

Javid, Sajid

Jenkin, Mr Bernard

Johnson, Gareth

Johnson, Joseph

Jones, Andrew

Jones, Mr David

Jones, Mr Marcus

Kawczynski, Daniel

Kelly, Chris

Kirby, Simon

Knight, rh Mr Greg

Kwarteng, Kwasi

Lamb, Norman

Lancaster, Mark

Lansley, rh Mr Andrew

Latham, Pauline

Laws, rh Mr David

Leadsom, Andrea

Lee, Jessica

Lee, Dr Phillip

Leech, Mr John

Lefroy, Jeremy

Leigh, Mr Edward

Leslie, Charlotte

Letwin, rh Mr Oliver

Lewis, Brandon

Lewis, Dr Julian

Lidington, rh Mr David

Lloyd, Stephen

Lopresti, Jack

Lord, Jonathan

Loughton, Tim

Luff, Peter

Lumley, Karen

Macleod, Mary

Main, Mrs Anne

Maude, rh Mr Francis

Maynard, Paul

McCartney, Jason

McCartney, Karl

McIntosh, Miss Anne

McLoughlin, rh Mr Patrick

McPartland, Stephen

McVey, Esther

Mensch, Louise

Menzies, Mark

Mercer, Patrick

Metcalfe, Stephen

Miller, Maria

Mills, Nigel

Milton, Anne

Moore, rh Michael

Morgan, Nicky

Morris, Anne Marie

Morris, David

Morris, James

Mosley, Stephen

Mowat, David

Mulholland, Greg

Mundell, rh David

Munt, Tessa

Murray, Sheryll

Murrison, Dr Andrew

Neill, Robert

Newmark, Mr Brooks

Newton, Sarah

Nokes, Caroline

Norman, Jesse

Nuttall, Mr David

O'Brien, Mr Stephen

Offord, Mr Matthew

Ollerenshaw, Eric

Opperman, Guy

Ottaway, Richard

Parish, Neil

Patel, Priti

Paterson, rh Mr Owen

Pawsey, Mark

Penrose, John

Percy, Andrew

Perry, Claire

Phillips, Stephen

Pickles, rh Mr Eric

Poulter, Dr Daniel

Prisk, Mr Mark

Pritchard, Mark

Pugh, John

Raab, Mr Dominic

Randall, rh Mr John

Reckless, Mark

Redwood, rh Mr John

Rees-Mogg, Jacob

Reevell, Simon

Reid, Mr Alan

Rifkind, rh Sir Malcolm

Robathan, rh Mr Andrew

Robertson, Mr Laurence

Rogerson, Dan

Rosindell, Andrew

Rudd, Amber

Ruffley, Mr David

Rutley, David

Sanders, Mr Adrian

Sandys, Laura

Scott, Mr Lee

Selous, Andrew

Shapps, rh Grant

Sharma, Alok

Shelbrooke, Alec

Shepherd, Mr Richard

Simmonds, Mark

Simpson, Mr Keith

Skidmore, Chris

Smith, Miss Chloe

Smith, Henry

Smith, Julian

Soames, rh Nicholas

Soubry, Anna

Spelman, rh Mrs Caroline

Spencer, Mr Mark

Stephenson, Andrew

Stevenson, John

Stewart, Bob

Stewart, Iain

Stewart, Rory

Streeter, Mr Gary

Stride, Mel

Stuart, Mr Graham

Stunell, Andrew

Sturdy, Julian

Swales, Ian

Swayne, rh Mr Desmond

Swinson, Jo

Syms, Mr Robert

Tapsell, rh Sir Peter

Teather, Sarah

Thurso, John

Timpson, Mr Edward

Tomlinson, Justin

Tredinnick, David

Truss, Elizabeth

Turner, Mr Andrew

Tyrie, Mr Andrew

Uppal, Paul

Vara, Mr Shailesh

Vickers, Martin

Villiers, rh Mrs Theresa

Walker, Mr Charles

Walker, Mr Robin

Wallace, Mr Ben

Watkinson, Angela

Weatherley, Mike

Webb, Steve

Wharton, James

Wheeler, Heather

White, Chris

Whittaker, Craig

Whittingdale, Mr John

Wiggin, Bill

Willetts, rh Mr David

Williams, Mr Mark

Williams, Stephen

Williamson, Gavin

Willott, Jenny

Wilson, Mr Rob

Wright, Simon

Young, rh Sir George

Zahawi, Nadhim

Tellers for the Noes:

Mark Hunter and

Jeremy Wright

Question accordingly negatived.

11 Jan 2012 : Column 247

11 Jan 2012 : Column 248

11 Jan 2012 : Column 249

11 Jan 2012 : Column 250

11 Jan 2012 : Column 251

Energy Prices

[Relevant documents: The Fourth Report from the Energy and Climate Change Committee on Electricity Market Reform, HC 742, and the Government’s response thereto (Sixth Special Report, HC 1448), and the Sixth Report from the Committee on Ofgem’s Retail Market Review, HC 1046, and the Government’s response thereto (Eighth Special Report, HC 1544.]

4.44 pm

Caroline Flint (Don Valley) (Lab): I beg to move,

That this House believes that soaring energy bills are driving up inflation, contributing to a cost of living crisis afflicting millions of families, and that the energy market is not serving the public interest; notes the motion passed by this House on 19 October 2011 calling on the Government to investigate mis-selling, simplify tariffs, increase transparency of trading data, require energy companies to use their profits to help with bills this winter and reform the energy market to increase competition and drive down energy bills; regrets that since then the Government has failed to deliver on any of these measures; further notes that consumer efforts to control their energy bills have been undermined by cuts to the Feed-in Tariff and Warm Front scheme, and that there are serious concerns about whether the Green Deal will be taken up by, and work for, consumers; notes that over 90 per cent. of eligible families will not receive the Warm Homes Discount in 2012; calls on the Government to require energy companies to provide the lowest tariff to over 75s and use their profits to ensure that all families eligible for Cold Weather Payments receive the Warm Homes Discount; and further calls on the Government to reform the energy market to make it competitive and responsible, to cut VAT on home improvements to 5 per cent. for 12 months and to ensure that the Green Deal is offered on fair terms to consumers which will deliver real savings in energy bills.

May I wish you a happy new year, Mr Deputy Speaker?

Less than three months ago, the Opposition warned that soaring energy bills were driving up inflation, squeezing household budgets and contributing to the cost of living crisis afflicting millions of families. We warned, too, that trust in the energy sector had fallen to dangerously low levels as people grew sick and tired of the energy companies’ sharp practices. We set out a clear plan to provide real help now, as well as to reform the way in which our energy market works. We called on the Government to investigate the scandal of mis-selling, and to ensure that people were properly compensated. We also urged them to simplify tariffs, in order to put an end to the disgrace of four out of five families paying more for their energy than they needed to. We asked for more transparency on energy companies’ trading data, so that the public could see for themselves how much the companies were paying for their energy, as well as how much they were charging for it. We argued for a radical overhaul of the way in which our energy market was structured, to break the dominance of the big six and increase competition in order to drive down bills for families and businesses. We also called on the Government to make the energy companies use their record profits to help people with their bills this winter.

The Government did something unusual—so unusual that the Government Whip on the Front Bench at the time seemed surprised by it. They backed our motion. They agreed to support our plans. Indeed, commenting on the Labour motion, the Secretary of State said that

“there is nothing we disagree with”.

11 Jan 2012 : Column 252

He went on to say that

“sympathy from the sidelines is not enough. It is our responsibility to do everything we can to help.”—[Official Report, 19 October 2011; Vol. 533, c. 944.]

Today, however, the scale of the Government’s failure is clear. More families are in fuel poverty and struggling to heat their homes. Consumer Focus says that a quarter of all households in England and Wales—5.7 million in all—are now in fuel poverty. National Energy Action fears that the figure could be as high as 6.6 million. These are levels not seen since the dog days of the last Conservative Government. The number of households in debt to their electricity and gas suppliers is up, too, but energy companies’ profit margins are still in excess of £100 per customer per year.

Alok Sharma (Reading West) (Con): It is all very well for the right hon. Lady to lecture the Government, but in the last six years of the Labour Government, the number of households in fuel poverty rose by 2.8 million. Is she proud of that record?

Caroline Flint: I am proud of the fact that, by the time we left government, there were 1 million fewer people in fuel poverty. That included 500,000 in the most vulnerable households. The fact is that we took measures to tackle fuel poverty. Is there more to do? Yes. But what is happening now is that the figures are going up and, as I will demonstrate, this Government are not helping; they are hurting.

Confidence in the energy companies is at a near record low. Less than half of the public are satisfied with their energy supplier, yet energy company bosses have awarded themselves huge pay rises and bumper bonuses totalling millions of pounds. Complaints to the energy companies have soared, often over dodgy tariffs or incorrect billing or meter readings. There have been 4 million complaints in the past year alone, and the figure has gone up by 26% in the last three months. Today’s Which? report shows that one in five customers who have had problems with their energy supplier did not even make a complaint, and that nine out of 10 complaints are unresolved and never make it to the energy ombudsman. As much as £4 million in compensation is going unclaimed. There are real concerns about whether the watchdogs, the consumer groups, and organisations such as the energy ombudsman and Ofgem have the powers that they need to protect the public. We need to think clearly about the kind of infrastructure that is needed to ensure that those organisations do their job.

Time and again, we see a Government who are not just out of touch but completely unable to stand up to vested interests in the energy industry. Far from doing everything they can to help, this Government are making things worse, not better, for millions of hard-working families. Their failing economic policies mean that the average family faces the worst squeeze on income since records began in the 1950s, with families and children hardest hit.

What, then, are the Government doing to help people? What have they done for pensioners forced to choose this winter between heating their homes and having a hot meal? They have cut the winter fuel allowance, despite promising not to. We have been honest that under a future Labour Government that might be

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something that we cannot reverse, but let us be clear about the facts. Before the election, we warned that the Conservatives wanted to cut the winter fuel allowance. In response, the Prime Minister said:

“We would keep the winter fuel allowance. Let me take this opportunity to say very clearly, to any pensioner who is watching this or reading any of these reports, I know that you are getting letters from the Labour party saying the Conservatives would cut the winter fuel allowance…Those statements from Labour are quite simply lies.”

Our 12.7 million pensioners now know that we were not lying.

The Government, however, have tried to change the story. Now they like to say that the decision had already been taken by the last Government. Even today, the Prime Minister repeated that allegation. It is simply not true. When Labour left office, the decision had not yet been taken. It was perfectly within the Government’s power to continue with the extra payment, as Labour Chancellors had in previous years, but they chose not to. This Government took the decision in last year’s Budget—and they should take responsibility for it.

Several hon. Members rose

Caroline Flint: The difference between Labour Members and Government Members is that we do not just give up; we look to find other ways to help pensioners with their fuel bills. Nobody should have to pay more for their energy bills than they need to. This is especially important for pensioners over 75 who are more susceptible to the cold and least able to take advantage of online deals. That is why my right hon. Friend the Leader of the Opposition announced yesterday that, to start with, we would ensure that all pensioners over 75 got the lowest tariff on offer, saving them up to £200 a year—on the Government’s figures, not ours. There might be less money around, but for those 4 million pensioners, Labour can still deliver fairness in these tough times—not by spending more money, but by saying to the big six energy companies that, at a time when people are struggling yet they are enjoying strong profits, they must act in a way that is responsible and fair to the public.

Andrew Percy (Brigg and Goole) (Con): Does the shadow Secretary of State agree that whatever the situation with the winter fuel allowance, one thing that would have put a lot more money into pensioners’ pockets is the restoration of the link between pensions and earnings—something Labour promised in 1997. They failed to deliver that yet we delivered in our first Budget, which will bring about a record rise in pensions this year?

Caroline Flint: One of the first actions taken by the Labour Government after winning in 1997 was to look at the situation of the poorest pensioners in our country, many of whom were women who had never been able to earn enough to have a second pension. We had priorities in respect of what we were going to achieve—pension credit, the winter fuel payment, other support through the Warm Front scheme: we did more for pensioners than any Government for generations. What is happening is that we are now going backwards, not forwards.

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Mr Dave Watts (St Helens North) (Lab): Does my right hon. Friend agree that it is not what people say, but what they do? The last Labour Government took pensioners and families out of poverty, while introducing help and assistance for fuel costs. This Government have cut fuel cost assistance and are putting more people into poverty. Is that not the difference—not what we say, but what we do?

Caroline Flint: My hon. Friend is absolutely right: actions speak louder than words. The actions going on at the moment mean that the number of people in fuel poverty is going up and there is less support coming forward to help the most vulnerable. We are heading for a car crash when the Warm Front scheme ends and we wait to see whether the green deal will happen in a way that will help people. I shall say a little more about that later, and I am sure my hon. Friends will want to make some points about it in their contributions.

Let us talk about helping low-income families with their energy bills. The Secretary of State likes to boast about the warm home discount scheme. He says it is a statutory scheme and that Labour had only voluntary agreements—never mind that those voluntary agreements secured £375 million to help almost 1.6 million households with their energy bills over three years. What the Secretary of State forgets to say is that the present scheme exists only because Labour legislated for it when we were in office. When the present Government decided to take it on, we warned that, on the basis of their plans, they could exclude hundreds of thousands of people from the help that they needed.

In Committee, my hon. Friend the Member for Liverpool, Wavertree (Luciana Berger) said

“there are concerns about the make-up of the broader group and the discretion given to energy companies to fund it.”

She asked for assurances

“that the Government will evaluate how effective the discretionary nature of the broader group will be and, if necessary, take steps to expand the core group if households are falling through the gap”.—[Official Report, Third Delegated Legislation Committee, 28 March 2011; c. 6.]

The Government did not heed those warnings, and, as research by Save the Children revealed last week, only 3% of families who are eligible for help from the warm home discount scheme will receive the support to which they are entitled this year.

The Secretary of State may try to tell us that more people will be helped as the scheme develops, but those families need help now, not in three or four years’ time. This is not about spending more money or adding to customers’ bills; it is about standing up to vested interests in the sector, and telling them that they have a responsibility to their customers and to the public.

The Government are not only cutting help for people in need, however. They are also hitting families who want to do their bit—who want to do the right thing, to have more control over their energy bills, and to make their homes more energy-efficient. The Government’s disastrous and chaotic cuts in the feed-in tariff for solar power will be back in court on Friday. In defence of their plans, Ministers have been forced to resort to ever more outlandish claims about how much it is costing the public. First it was £26 a year, then it was £40, then it was £80. The actual figure—what it is really costing consumers—is just 21p per household per year, compared

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with average bills in excess of £1,300. What the Government do not seem to understand is that one of the reasons why so many people, especially pensioners, chose to install solar was the fact that it enabled them to control their energy use and cut their bills.

Guy Opperman (Hexham) (Con): Today the Select Committee on Energy and Climate Change heard some of my constituents give evidence on the issue of off-grid energy. May I ask a simple question? Is the Opposition’s policy to regulate it—yes or no?

Caroline Flint: We have had a number of debates on the subject. One of the problems with off-grid energy is that some of the schemes that the Government are coming up with do not help the people who are affected by it. I shall say more about that later in the context of the green deal. There are real questions about who will be excluded, but we are talking today about energy prices, and about what we can do to make the market more competitive and responsible.

I look forward greatly to learning what the Select Committee has discussed in relation to off-grid energy, and will think about some of its recommendations. We will make up our own minds about what we should do, but I acknowledge that there is a problem. During the three months for which I have had my present job, it has arisen many times in debates. I also acknowledge that there are insulation problems for many people in rural communities whose homes have solid walls. I am afraid that I cannot give the hon. Gentleman chapter and verse today, but he can be reassured that the issue is on my radar.

Barry Gardiner (Brent North) (Lab): The witnesses who gave evidence to the Select Committee made it clear that the statutory protections that exist under the licences for mains gas or electricity supply do not exist for off-grid gas customers, who are the vulnerable customers. Will my right hon. Friend at least consider committing the Opposition to regulation if the code of practice that the industry is seeking to introduce on a voluntary basis is inadequate to secure such protections for those customers?

Caroline Flint: I feel that the time has come for us to take stock of our position. The first line of the motion refers to an energy sector that works in the public interest. That does mean that we can still support competition, and I think there should be more competition in the sector. For all types of energy—on-grid and off-grid—it is time that we had another look at what is happening in the market. For me, energy is not like buying a phone or a car; rather, it is essential to life, and therefore a higher order of accountability is required. I will be very happy to look at the issues raised by the Committee. Select Committees are useful for the Opposition as well as the Government. I will be very happy to talk to my hon. Friend and to the hon. Member for Hexham (Guy Opperman) and to see what the Select Committee comes up with, but I think the time for standing by has passed.

Robert Flello (Stoke-on-Trent South) (Lab): In Blurton in my constituency, there was the fantastic sight of houses having photovoltaic panels erected on their roofs, but the project that E.ON had with Stoke-on-Trent city council covering thousands of houses across the city has now been cut short. E.ON said to me that it understands why the Government were looking at the

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issues of feed-in tariffs and the cost, but it cannot understand why it was given six weeks to complete projects that were going to take five weeks to bring in.

Caroline Flint: It is always very helpful to hear of real examples. We have listened to many smaller businesses in this sector of course, but even the big six energy companies have concerns about the way the Government have gone about changing the rules on solar. Sadly, about 100,000 social homes may not get solar in the future because of these changes. We all agree that the tariff should come down, but, aside from that point, if the Government’s plans go ahead, people will only be able to have solar if their home is a category C residence in terms of efficiency, and therefore about nine out of 10 homes in England will no longer have the option of having solar even under the changed rules and tariff. This is another example of bad management of a project that was clearly popular among the public and that has created jobs—the sector is one of the few that has experienced growth.

In the long run, we know that the most sustainable way for people to cut their bills is for them to use less energy.

“Energy efficiency is a no-brainer because it makes homes warmer and cheaper to run.”

Those are not my words; they are the words of the Secretary of State from back in September, but what has actually happened on his watch? The number of families getting help to insulate their homes or make them more energy efficient has plummeted.

Let us take the month of April as a point of comparison. In April 2010, the month before the general election, more than 15,000 households got insulation measures through Warm Front. In April 2011, just six households got insulation through Warm Front—not 6,000, 600 or even 60, but just six. The Minister of State, the hon. Member for Bexhill and Battle (Gregory Barker), has said that this year he expects 50,000 households to get help with insulation through Warm Front, but so far fewer than 15,000 properties have been helped—not even a third of what the Minister promised. On the current trend, fewer than 20,000 households will get help with insulation this year, a fall of more than 90% on what we delivered in our last year in office.

The Minister of State, Department of Energy and Climate Change (Gregory Barker): Unfortunately, the right hon. Lady is making completely the wrong point. Warm Front does not deliver insulation; it introduces heating systems for people who do not have heating systems. Insulation is primarily the responsibility of CERT, the carbon emissions reduction target, and CESP, the community energy saving programme. Warm Front is not primarily an insulation programme. Perhaps she would like to try again.

Caroline Flint: Well, I have to say that some of my constituents have had help with things such as boilers, heating and also insulation.

Robert Flello: I am deeply troubled by the Minister’s intervention. If he visits my constituency, I will take him to houses that have had loft insulation put in through the Warm Front scheme, and to properties that

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have had replacement boiler systems fitted, not systems fitted for the first time. That is not the point he made a moment ago, as he will see if he checks


Caroline Flint: The truth is that the Government are not on the same planet as most of the rest of us.

What the Minister did not answer is why the number of homes being fitted with insulation went down from 15,000 to six within a year. That is the question the Government should answer today. Let us be clear: when Warm Front is finally abolished next year, this will be the first Administration since the 1970s not to have a Government-funded energy efficiency programme in place. That is disgraceful. But, it is okay, because they say, “Don’t worry, we’ve got the green deal.” However, real questions have to be addressed about whether the green deal will be offered on fair terms and will actually deliver real energy bill savings, and whether it will really work for the public.

Let us start with the interest rates. Time and again, Ministers have been asked what sort of finance will be available to households interested in taking up the green deal. Time and again, they have failed to provide a straight answer. The reality is that if the level of interest is too high, given all the other pressures that families face at the moment, they will just not be interested in taking it up. Polling conducted by the Great British Refurb Campaign found that only 7% of home owners would be interested in taking up the green deal if the interest rate was 6% or more. However, we are hearing that the rate could be as high as 8% or 10%, so I ask the Secretary of State again today whether he can assure us that the green deal will be offered on fair terms and at a fair rate to the public.

In the autumn statement, the Chancellor also announced £200 million to provide incentives for the green deal. We still do not know what that money will be spent on or how it will encourage take-up. Most important of all, the fundamental idea behind the green deal—the “golden rule”, as the Government like to call it—is that the savings from better energy efficiency should cover the costs of the green deal. That is the promise being made to the public, but on looking at the small print, it is clear that the golden rule is not so golden after all. There is no guarantee that bills will not be higher after the green deal. If there is no guarantee, there is a real concern about the potential for mis-selling. The danger of what might happen out there is obvious: people will say, “We’re a Government-backed scheme—we promise you this”, but down the road they will not deliver. This measure will not balance out the costs that people are having to pay. In the light of stories about people not saving money or unwittingly inheriting higher energy bills after buying a green deal property, any credibility the scheme had will be shot to pieces.

Tessa Munt (Wells) (LD): Will the right hon. Lady consider the fact that after a green deal installation, people might find themselves in a home that is at least warm, even if their bill is the same? They might not have saved any money, but they will for the first time be warm in their homes.

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Caroline Flint: The warmth issue is not really part of the equation. The question of what this measure should mean has been discussed in Committee. The “golden rule” is about people saving money. With all due respect to the hon. Lady, the problem is that the scheme should be far further forward than it is. We already know from what has happened with solar that a number of businesses doubt whether they are going to enter the field to work within the green deal. For example, those involved in insulation are worried about the measure’s impact on the work they do, an issue I will say a little more about later.

So many questions have been left unanswered, and any Government scheme that allows anyone to go out and say that they are Government-backed has to stand up to scrutiny. We have to make sure, first, that the public are not priced out of taking part, but we must also ensure that they do not become the victims of cowboys involved in the scheme.

Several hon. Members rose

Caroline Flint: I am going to make a bit of progress. The Department of Energy and Climate Change website actually states:

“The Warm Front scheme provides heating and insulation improvements to households on certain income-related benefits”,

and it goes on to refer to grants for loft insulation and draught-proofing—I rest my case.

Perhaps the Government will also respond to firms, such as those I have met, undertaking cavity wall insulation, which provide a sensible, professional product under the carbon emissions reduction target—CERT—scheme. Some 6 million homes have cavity walls without insulation, and 10 million lofts do not have insulation. That provides enough work for a whole industry to do—work that is good both for the public and for the environment. However, I understand that, under Government proposals, if this work is to be undertaken under the green deal, a full assessment of the property will have to be made—the householder’s lifestyle and behaviour will be included in this. The assessment sounds as if it will have to be paid for by the consumer, yet the work that they wish to have done may be blindingly obvious. I hope that the Government will ensure that the public and businesses are still able to improve the energy-efficiency of homes without being forced through a bureaucratic and unnecessarily costly process.

With the end of the Warm Front scheme, and of the community energy saving programme and CERT, what will happen to families in fuel poverty, or in hard-to-treat homes, for whom the green deal might not be suitable? The Government’s solution is the energy company obligation—ECO—but only a quarter of the money from ECO will help households in fuel poverty; the rest will go to able-to-pay households. So the Government’s promise that ECO will do more to tackle fuel poverty than either CERT or the Warm Front scheme just does not stack up. In what way is ECO’s £325 million a year for fuel-poor homes greater than last year’s Warm Front budget of £370 million or the CERT spending of nearly £600 million on priority groups?

We know that as well as coming up with policies, even in these tough times, to help families with spiralling energy bills now, we must also reform the energy industry to secure a new bargain in the future. I have said it

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before and I am going to say it again: to start with we have to deal with the sheer number and complexity of tariffs on offer. We have 400 tariffs, with about 70 new ones in the past year. They are confusing and unfair, and they must be reformed. At his infamous energy summit in the autumn, the Secretary of State implored people to switch. Perhaps he could tell us today exactly how many people took his advice and switched, and how much they have saved. The problem is not that people are not shopping around enough; the real problem is that there are too many tariffs on offer, that they are too complicated to understand and that even when people do switch, they do not always get a better deal.

Mr Watts: Does my right hon. Friend agree that it is clear that the energy companies have made the tariff system as complicated as they can? Is it not a fact that even when people do switch and take the Prime Minister’s advice, they often find that they get a worse deal than the one they started with?

Caroline Flint: I am afraid that that is the case. I have met a number of the energy companies over the past few months and they are obviously hurting as a result of the public criticism being directed their way. However, when we examine today’s Which? report, we find that 4 million people complained in the past year and that the number of complaints rose by 26% in the past three months, so something is seriously not right. The real problem is that there are too many tariffs on offer. Having more than 400 tariffs is not about competition or choice, and it does not serve the public interest; it serves only the interests of the energy companies. So we need, as we have said before, a simple new tariff structure that is clearer and fairer, and that will help all customers to get a better deal. I know that consultations are going on at the moment, but the Government really need to step up the pressure. We should not be unable to knock a few heads together, and we need to do that sooner rather than later. We must keep the pressure on as that is the only way to make the companies change. The Which? report has highlighted the terrible situation with bills that were overestimated or incorrect as well as the mis-selling that went on in the past. We need a proper investigation and proper compensation for people who have been ripped off. Only then will we start to rebuild trust in our energy companies.

As well as a more responsive energy industry, we need a more competitive energy market. The energy market is dominated by just six firms that supply more than 99% of electricity and gas. Today we heard that EDF will cut its gas prices by 5%, but the public will ask why energy companies are still so quick to put up people’s bills when wholesale prices go up but slow to bring them down when they fall as well as when the other big energy companies will follow suit.

David Mowat (Warrington South) (Con): I have in front of me a copy from the EU website of the gas prices for every country in Europe and it would appear that the UK has the fourth lowest gas price of the 27. What is the right hon. Lady’s analysis of why that has happened?

Caroline Flint: First, that is not about the point I was making, but is the hon. Gentleman defending the way in which prices have soared in the past year? Is he

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defending the companies’ atrocious record in dealing with people’s complaints? I would not stand in his shoes and make that case. The truth is that prices need to be transparent and we need to know how they are arrived at. It is quite clear—it has been proved by an Ofgem report and the Secretary of State might back me up on this point—that there is evidence that when prices go up the bills go up far quicker than they come down when prices fall.

David Mowat: Will the right hon. Lady give way on that point?

Caroline Flint: No, I will not give way to the hon. Gentleman again.

The bigger issue is how we carry out a root-and-branch reform of the energy market for the future.

Mr Mike Weir (Angus) (SNP): I thank the shadow Secretary of State for giving way, and she is making a very good point. Rather than asking EDF why it is reducing the price by 5%, should we not be asking why it is doing so two months after putting it up by 15%?

Caroline Flint: It was actually 15.4%, but I do not want to be churlish. I am pleased that the prices have come down, but part of what we are seeing from the energy companies is due to the fact that they are starting to smart from the criticism levelled at them. The problem is getting worse and, as I have said, complaints have gone up and prices, which went up steadily over the past few years, have soared in the past year. We are not the establishment—the Government are, they are in the driving seat and they have the tools to do something about it. I only wish they would.

We must ask the fundamental questions, and the fundamental problem in defining whether prices are reasonable and fair and considering the other pressures on those prices is the fact that we are hampered by the lack of transparency in the market. The energy companies that generate energy sell it on to themselves and then on to customers. If the few big dominant firms were forced to sell the power they generate to any retailer, companies such as supermarkets and other independent retailers—like Good Energy, which came top of the poll for customer service in the Which? report—could play more of a role in the market. There would then be more competition and the upward pressure on prices would be eased.

Times are tough, we all know that, and we know that it means difficult decisions must be made. When times are tough, fairness is our first priority but, unfortunately, for the Government fairness is the first casualty. Millions of families and pensioners across the country are struggling with their energy bills and a cost of living crisis, but the Government are so out of touch that they are making things worse rather than better. They are cutting the help people get with their energy bills and scaling back on energy efficiency. By failing to stand up to the energy companies, they are letting down the public. We know that people need real help now and a more responsible and competitive energy market for the future. For those reasons, I commend the motion to the House.

Several hon. Members rose

Mr Deputy Speaker (Mr Nigel Evans): Order. The wind-ups will start at about 6.40 pm. As hon. Members can see from the clock, we do not have a lot of time for

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the debate so if people could have in their mind a five-minute limit and aim to make a four-minute speech we will be able to accommodate more Members. Brevity has to be the order of the day.

5.20 pm

The Secretary of State for Energy and Climate Change (Chris Huhne): Thank you, Mr Deputy Speaker. I shall try to take on board your injunction for brevity.

Last year, we saw a big energy price rise, which came on top of increasing petrol and food costs. With the cost of gas imports now falling, I welcome today’s announcement from EDF, which has responded to the smaller companies leading the way such as Co-op and Ovo by joining them in cutting domestic gas prices. Some of the big energy suppliers were quick to pass on rising costs last year and it is only right that they should now pass on cost reductions to hard-pressed householders as quickly as possible. I urge the remaining five large energy suppliers to follow suit and give consumers some respite this winter. If suppliers do not reduce prices, consumers can send them a clear message by voting with their feet and taking their business elsewhere.

Mr Watts: On that point, has the Secretary of State contacted those energy companies and made it absolutely clear that if they do not drop their prices, he will take action to force them to do so?

Chris Huhne: I have been very rapid in my reaction to the EDF announcement and I have been pressing the energy companies and saying that they need to act to inform their customers about the cheapest tariffs.

The House last debated this topic in October, when I said that simply expressing concern and sympathy for those who are struggling to pay their bills is not enough. It is our responsibility to do everything we can to help. The clear steps we have taken to increase competition are working and it is right that energy companies should feel the pressure to keep bills down. We are not complacent and I can report that the action I promised then to help people with their bills is taking place now.

Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab): In the objectives that the right hon. Gentleman has set for himself and no doubt for the Government he makes the point about keeping energy prices down. Is he satisfied that Ofgem, the regulator, is exercising the powers that it has? Are those powers insufficient?

Chris Huhne: I am grateful to the right hon. Gentleman for raising that issue, which I shall address in greater detail. Ofgem is working closely with us on this and I think it is tackling many of these issues. I will give further detail on that.

Following the consumer energy summit, at which my right hon. Friend the Prime Minister and I brought energy suppliers, consumer groups and Ofgem together, we have been working together to make sure that consumers know about the help that is available and about how they can cut their energy bills this winter. In October the Government launched the “Check, switch, insulate to save” campaign on the Directgov website, and next week Citizens Advice is co-ordinating a big energy week

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campaign. Big energy week is designed to connect consumers who are struggling to cope with energy bills with the support available to help them to reduce their energy costs and maximise their income. More than 100 events will take place across the country, reaching out to people who might not know about those schemes.

In December, Ofgem published for consultation radical proposals to require suppliers to simplify their tariffs and billing information so that consumers can compare suppliers’ deals much more easily. Currently, as the right hon. Member for Don Valley (Caroline Flint) has pointed out, more than 400 different tariffs are available. Frankly, this leads to confusion rather than to greater choice. I suggest that is part of the reason why the switching of rates in the UK has declined over time. Ofgem’s proposals should help consumers to identify more easily the best deal for them. I support Ofgem’s work in this area and will continue to work with it to boost the transparency of bills and competition in the energy market.

It should be quick and easy to switch supplier. As part of our implementation of the EU third energy package in November, we have cut to just three weeks the time it takes to switch. Citizens Advice and Ofgem have received the highest level of funding yet from suppliers for the energy best deal campaign, which helps vulnerable consumers to shop around for the best available deal. Even without changing supplier, millions of households could save just by switching tariffs or payment method.

As agreed at our consumer energy summit, suppliers are placing messages on the front page of all bills to encourage consumers to phone them or visit a website to find out if they could be saving money. They are also writing to about 8 million customers who pay on receipt of their bill to tell them that they could save up to £100 a year if they move to direct debit payment. Nearly all these letters have now been delivered.

Tessa Munt: Has my right hon. Friend made any progress in sorting out the situation faced by people who have prepayment meters and therefore do not receive a bill? It is difficult for them to establish what they are paying over any period, and the most vulnerable customers are often in that situation.

Chris Huhne: I am grateful to my hon. Friend for the concern about prepayment meters. It is one thing that we have been looking at closely. Thankfully, people on prepayment meters are not paying more than was previously the case, and that is a step forward. I am sure there is more work to be done and we are looking at it closely.

Luciana Berger (Liverpool, Wavertree) (Lab/Co-op): The hon. Member for Wells (Tessa Munt) raised the issue of people on prepayment meters. There are two other key issues concerning people. One million households across the UK do not have access to a bank account so they cannot have direct debits; likewise, there are those who do not have access to the internet—the digital divide.

Further to the point that the Secretary of State made about the energy companies that are writing to their customers, I received one of those letters asking me to go on to direct debit. I called my energy company, E.on. It wanted to put me on to a monthly payment, which would have cost me at least a third more and I would

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have had to wait until May before I could reassess the situation. So even when energy companies are writing to their customers, myself included, they are not offering consumers the best deal. I cannot move on to direct debit because the company wants to charge me more than I pay already.

Chris Huhne: I can only recommend that the hon. Lady look at switching energy supplier to see whether she can find a better deal. We know from Ofgem that people can save substantial sums of money by doing that—£200 a year. Her particular case is obviously regrettable.

Barry Gardiner: The Secretary of State rightly talked about the simplification of tariff structures. Will he give a commitment to the House to look carefully at the possibility of enforcing a rising block structure? In an era of rising energy costs, it seems inequitable that the highest per unit cost should be paid for the first tranche, which of course the poorest families have to use. We should be applying the “polluter pays” principle, which means that as we use more energy, we pay more per unit for it. Please will the right hon. Gentleman look at that?

Chris Huhne: The hon. Gentleman makes a good point. One of the first things I did on becoming Secretary of State was to ask for a serious look at the issue. It is unfortunately much more complicated than one might suppose at first glance, not least because there is such an enormous variation in energy use in different income groups. For example, among the poorest people measured by income, the variation in energy use, off the top of my head, was as much as a multiple of six. There could be dramatically different effects from a rising block tariff, which do not correspond neatly to what the hon. Gentleman and I would want.

We want the companies to take more account of the wholesale market. Up like a rocket and down like a feather—that was the old days, and it must end. I agree with the right hon. Member for Don Valley in her points on that, although I note that Ofgem did not find evidence that that was the case. We are helping, through greater competition, to get the consumer the best deal and we have done a great deal to defend the consumer interest over the past 20 months—rather more, I would say, than the right hon. Lady’s Government did in 13 years.

Caroline Flint: Will the right hon. Gentleman answer my question? How many consumers have switched since the energy summit?

Chris Huhne: I will let the right hon. Lady know the information as soon as we have it. When it is available, I will write to her.

It is important to get the message across that households can save money not only by switching supplier, but by using less energy. Insulating lofts and walls can cut energy bills. The six largest energy suppliers all offer free or cut-price insulation, yet many households still have not taken up the offer. That is why the Government are writing to 4 million of the most vulnerable energy customers to tell them that they are eligible for free or heavily discounted loft or cavity wall insulation, and I am pleased to say that the initiative has been funded by suppliers.

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Mr Weir: Following up on the Secretary of State’s answer to the hon. Member for Wells (Tessa Munt), I note that Ofgem stated in its briefing for the debate:

“The number of gas and electricity customers paying by prepayment meters has increased compared to the same quarter in 2010, by 6% and 4% respectively”.

Those are worrying statistics indicating that people are moving to prepayment meters and falling through the gaps despite the Government’s attempt to contact them and get them on to cheaper tariffs.

Chris Huhne: I agree with the hon. Gentleman. Sadly, during tough times people tend to fall behind with energy bills and so can be moved on to prepayment meters. One of the things that it is very important the Department does is try to ensure that those who no longer need to be on prepayment meters, from a credit point of view, are moved back so that they pay more directly and can take advantage of those schemes.

Bob Stewart (Beckenham) (Con): If the Government are writing to so many vulnerable people, can we not make it as simple as possible? When we start talking about the elderly shopping around, why can we not just say, “Here are two or three very good deals that will work for you”, and then use that to ensure that energy providers bring their prices down? We should say to energy providers, “We are going to recommend this, so you had better bring your prices down.” That is what we need. We want to keep it as simple as possible.

Chris Huhne: I entirely agree with my hon. Friend on the need to continue the whole process of clarifying energy bills and making them simpler so that they are absolutely transparent and people find it easier to switch. That applies to all age groups. Compared with those of us in our 50s, those in their 60s and 70s—the silver surfers—actually do more on the internet, so we should not underestimate the ability for that to happen.

My hon. Friend might be interested to know that the letters the Government are sending out direct customers to a dedicated independent helpline as part of our programme to ensure that an extra 3.5 million homes are properly insulated by the end of 2012, and later this year we will be rolling out the green deal to help even more households save money through energy efficiency. We are ensuring that extra support is available this winter for the most vulnerable households. We are requiring energy companies to provide help to around 2 million low-income households through the warm homes discount, at a cost of £250 million for 2011-12, which is 40% more in cash terms than last year under the voluntary arrangements operated by the previous Government.

The right hon. Member for Don Valley made much of our apparent meanness on this exercise, but I do not see how the Government can be accused of being mean to those in the most vulnerable groups when it comes to energy bills when we are increasing the warm home discount by 40%. The scheme will help around 600,000 of the poorest pensioners with a core group discount of £120 this winter. We are spending £110 million on heating and insulation for low-income and vulnerable households living in energy-inefficient housing through the Warm Front scheme. We will also provide winter

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fuel payments to pensioners and cold weather payments to some households in areas that have extended periods of very cold weather.

Robert Flello: Many of the houses in my constituency and others were built without cavities. Often people take the opportunity to insulate their roofs and loft spaces but cannot do more because there are no more cavities to fill. What will the Secretary of State do about that?

Chris Huhne: The hon. Gentleman’s constituency is clearly a perfect place for the green deal, because the ECO subsidy will in part subsidise solid-wall homes with solid-wall insulation. That will be a very substantial step forward for many people who have not been in a position to benefit from energy efficiency because they have not had cavities to fill. A very large number of people in housing built before the first world war, and in more recent housing built quickly after the second world war, are in that position, and this measure will help.

Chris Heaton-Harris (Daventry) (Con): There was a ten-minute rule Bill yesterday on park homes. Will they benefit from the green deal?

Chris Huhne: Park homes will be eligible for the green deal. We in the ministerial team are very keen to ensure that park homes, which are often the Cinderella of the housing stock, are looked after, and we are trying our best to ensure that they are eligible for the full array of measures that are available elsewhere.

The new energy company obligation, alongside the green deal, will include support not just for solid-wall insulation, which I mentioned to the hon. Member for Stoke-on-Trent South (Robert Flello), but provide “affordable warmth” to low-income and vulnerable households, through heating and insulation measures. That is the direct replacement for the Warm Front scheme, so the right hon. Lady’s charge that we are the first Government not to pay for help through public expenditure is disingenuous, because there will be help, but it will be delivered in a different way through the ECO subsidy, and with greater targeting and, I believe, greater help.

Those policies will make a difference this winter and next, but, as I said in October when I addressed the House on this topic, we also need to take the right long-term decisions so that energy does not become unaffordable. We must keep the lights on in the cheapest, cleanest way to ensure that households get the best deal in the long term. Over the next 10 years, we need £110 billion of investment in power plants and another £90 billion of investment in energy infrastructure to avoid the risk of blackouts. We must invest now not only to improve our energy efficiency, so that we do not need to produce as much energy to keep warm, but to reduce our dependence on fossil fuels in the long term, so that we do not have to rely on ever-more expensive imports.

Alec Shelbrooke (Elmet and Rothwell) (Con): I wonder whether we are in the position we are in today because of the previous Administration’s inability to take the decisions needed to ensure that we had a firm energy future.

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Chris Huhne: My hon. Friend is absolutely right. The story of energy policy under the previous Government is one of stopping and starting, and of failing for many years to face up to the need to deal with the problem of renewing our energy infrastructure. But we are not dithering or delaying any longer: we in this Government are biting the bullet. We are determined to proceed with what is necessary to ensure that we have clean, green and secure energy for our nation.

Our proposals to reform the electricity market will deliver the best deal for Britain and for consumers, ensuring secure, low-carbon electricity supplies, and providing green jobs.

Malcolm Wicks (Croydon North) (Lab): This is not the point that I was going to make, but I recall the Labour Government making the difficult decision on nuclear so convincingly that even the Liberal Democrats are now in support.

On the long-term issue, however, what is missing from this debate is the global dimension, although the Secretary of State has touched on it. Given that world energy demand is going to increase by 30-odd% in the coming years, with consequences for pricing, has the Department made any forecast of the implications for British energy prices and costs over the next 10 or 15 years?

Chris Huhne: I very happily exempt the right hon. Gentleman from my strictures about the previous Government’s policy, because when he was in the post of Energy Minister he certainly took some tough decisions, but sadly the record over the 13 years is not one of which Labour Members can be proud.

On energy prices, the right hon. Gentleman is absolutely right, and we have of course produced a forecast in the annual energy statement. Like all forecasts, it gets more uncertain the further out it goes, but it does point to a rise over time in oil and gas prices worldwide because of increased demand from, in particular, the far east. One of the current environment’s most striking features, about which there ought to be much greater public awareness and debate, is the sharp recovery in oil, gas and other commodity prices, despite continued relatively slow growth in Europe, the United States and Japan. This is the first time that that has happened in the post-war period. That shows the influence that the rapid growth and catch-up in the far east will have on world commodity prices.

Guy Opperman: I merely reiterate the point that with 24% of the north-east in fuel poverty, the situation in relation to heating oil and liquefied petroleum gas for off-grid customers is clearly unsatisfactory. Does the Secretary of State accept that and what specifically does he intend to do about it?

Chris Huhne: My hon. Friend makes a good and important point. People who are off-grid have traditionally had to deal with substantially higher costs than those who are on grid, and that continues to be the case. The case for regulating off-grid is weak, because as long as the market is competitive, it ought to deliver a reasonable result for consumers. I was surprised, as were other members of the ministerial team, that when we asked the Office of Fair Trading to look at the market, it was

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given a clean bill of health on competition grounds. We need to continue to watch this situation and we are very much on the case. With the renewable heat incentive and the green deal, it will be important that people who are off-grid think about other options rather than being reliant on heating oil, such as ground source heat pumps and biomass, which can already be cheaper than on-grid options.

Graham Stringer (Blackley and Broughton) (Lab): The Secretary of State correctly points out that all projections on future energy prices show an upward trend. There is a debate about how much of that is down to renewables. One interesting difference between the UK and European market and the United States market is that there has been a decoupling of the gas price from the oil price in the north American market because of the intense use of shale gas that has been developed. What will the right hon. Gentleman do to develop shale gas in Lancashire and elsewhere in this country to change the projections so that the price of gas goes down?

Chris Huhne: I am grateful to the hon. Gentleman for his question. Shale gas is potentially an exciting development that could bring enormous prosperity to the parts of the country where it has been found, such as Lancashire. Provided that all the environmental safeguards are properly in place, it presents the opportunity to reduce the cost of gas. Of course, for the same calorific value, gas is about half as polluting in carbon terms as coal. Used with carbon capture and storage, it may be a long-term source of electricity generation. We are looking closely at this issue. We have been in contact with Cuadrilla, the energy company that has been involved in exploration in Lancashire. I hope that we will be able to make progress. Crucially, we must learn the lessons from the mistakes that were made in the United States. I do not want to see water tables contaminated; nor do I want the industry to be exempted from the provisions for clean water, which is what happened in the United States. There will be a different regulatory environment. In that context, I am sure that we can see success.

As so many people want to speak, I will curtail the remarks that I was going to make about our work with Ofgem. I will simply say again that we are considering giving Ofgem powers to order companies to provide redress to consumers who lose out as a result of a company’s regulatory breach. As a result of our implementation of the EU’s third energy package, companies are no longer able to block action by the energy regulator, Ofgem, by forcing it to seek a second opinion from the Competition Commission. We are determined to be on the side of the consumer in ensuring that the market is as competitive as we can make it.

We are doing everything that we can to help households with their energy bills this winter. On tariffs, bills and insulation, we are making it easier for people to save money and energy. We are taking action to help the most vulnerable households cope with rising bills and inefficient properties, and from the green deal to the reform of the electricity market we are making the right long-term decisions to ensure warm homes and affordable, secure energy for the future.

Several hon. Members rose

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Mr Deputy Speaker (Mr Nigel Evans): Order. Please keep in mind the need for brevity, as we have less than an hour before the wind-ups.

5.44 pm

Albert Owen (Ynys Môn) (Lab): It is always a pleasure to follow the Secretary of State. I, too, welcome the debate, and I congratulate my right hon. Friend the Member for Don Valley (Caroline Flint) on calling it and on keeping up the pressure on the energy companies, which is very important. As she said, the Government agreed to a motion in October calling for investigation of mis-selling, the simplification of tariffs and improved transparency, and for energy companies to use their profits to help with bills. We have not seen a lot of action yet on the points in that motion, but I acknowledge that there has been some progress, which can be laid at the door of the regulator, which has been more proactive, and of the consumer groups. I pay tribute to Consumer Focus, Citizens Advice and Which?, which have highlighted many of the issues involved. The House and politicians from all parties can also take credit, because we have embarrassed many of the energy companies into taking action. I welcome today’s 5% price reduction, but I agree with other Members that it does not in any way make up for the previous double-digit rises.

Although we have had a mild winter—[Interruption.] I know that there are exceptions, such as the wind in Scotland, but compared with last year we have had a mild winter. However, that does not disguise the fact that there will be huge rises in the bills that people receive in January.

I wish to concentrate my remarks on those who are not on the gas grid. I make no apologies for doing so again and again. They are not a fringe group but some 2 million households in Britain alone, which does not include Northern Ireland, where 80% are off-grid. Those families do not get the same protection as those who are on-grid when it comes to simple matters such as help with prices. I make a direct plea to the Government to help those people. I cannot overstate that case. They ruled out social tariffs for those off the grid, I believe in June 2010, and I ask them to reconsider that.

The Energy and Climate Change Committee is undertaking a mini-inquiry into fuel poverty and off-grid gas, and we heard evidence today from the Office of Fair Trading. Unlike the Secretary of State, I was not surprised that the OFT came to the conclusions that it did, because it has a very narrow remit. The people who undertook the inquiry did not look at the matter in enough detail to conclude what we all know—that people off the grid have been ripped off in many ways.

It is not enough to refer the matter to the Competition Commission. The problem of higher prices is real, but anecdotal evidence that we have received from consumer action groups such as the one from the constituency of the hon. Member for Hexham (Guy Opperman) that gave evidence today, and from the constituents who write to us, suggests that people off the grid are being treated unfairly. There might be four companies in an area providing fuel, but they are all selling at very high prices.

Fuel poverty in off-grid areas is going up. I have some figures from Consumer Focus that I will share with the House. Some 28% of fuel-poor customers in England,

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34% in Scotland and 37% in Wales are not connected to the grid. To be fair to the Minister of State, the hon. Member for Wealden (Charles Hendry), he has met Members representing off-grid customers since the last debate. I urge him to give Ofgem the responsibility to treat customers who are off the grid equally. As I said, there are 2 million such households, and they deserve the same treatment and the same protection as those who are on the grid.

I urge the Secretary of State to consider radically extending the gas mains. The renewable heat incentive may be a good thing, but it is a long way in the future. We could create jobs in construction and help to alleviate fuel poverty if we extended the gas mains to off-grid areas. They include not just isolated areas but those very close to the original gas mains that supply towns and cities. Such an extension could be done relatively quickly and would be real action, which is what our constituents demand.

5.49 pm

Alec Shelbrooke (Elmet and Rothwell) (Con): The motion’s opening line states:

“That this House believes that soaring energy bills are driving up inflation”.

No one can argue with that. There has been a massive increase in energy bills, and before we continue with the debate, we should assess the reasons for that. All the independent financial analysts recognise that there has been a double-digit inflationary rise in energy bills, and that has spread to the economy. We live in a dangerous world, where there is much instability. The European Union recently approved sanctions on oil exports from Iran. All that has a knock-on effect on energy prices in this country. It is important, when setting the scene for the debate, to understand why energy prices have increased and that the Government can do something, but not everything.

In the summer I was in the United States when Michele Bachmann amusingly commented that she would reduce the price of fuel back to $2 a gallon. Perhaps that is why she has polled only 5% in the primaries—one simply cannot say, “We’ll reduce it back”: that flies in the face of dealing with the world crisis. There has been discussion for many years—certainly when I was at school, but it is now coming to the fore—about whether we have reached peak oil. Whether we have or not does not matter because the markets believe that we have reached that position.

There has been a 30% increase in energy demand in the recent past. As the Secretary of State pointed out, there are forecasts, but the further into the future they go, the more unreliable they are.

Mr Mark Spencer (Sherwood) (Con): Yesterday, the Leader of the Opposition said that the previous Administration had not made enough progress, and he was Energy Secretary at the time. Is my hon. Friend as relieved as I am that we now have a ministerial team that is taking action to deliver real change, not only on lowering prices but on securing our energy future?

Alec Shelbrooke: I am most grateful for that intervention. Half the problem with such motions is that they ignore the facts that I outlined in my opening remarks and

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simply state that everything is the fault of the existing Government. Many people feel that the Labour party likes to be in perpetual opposition—my constituents certainly feel that, and I see nothing to disprove the theory. The right hon. Member for Don Valley (Caroline Flint) was very clear about the reforms that she wants to make, so why was she not clear when she was in government only two years ago? Perhaps the comment about window dressing goes a lot further than we thought.

Of course, we are trying to move forward in our proposals for energy consumption in this country, and the Secretary of State is right to say that we have bitten the bullet on how to generate energy. Let us be honest: we are in a coalition and we know that the Liberal Democrats had views on nuclear power. They held a perfectly acceptable view in their manifesto, and I greatly respect the work that the hon. Member for Wells (Tessa Munt) has done throughout her life as a member of CND—they were her beliefs, but we had to move forward.

Tessa Munt: They still are my beliefs.

Alec Shelbrooke: Quite right—the hon. Lady corrects me from a sedentary position. However, we had to bite the bullet and make decisions to secure this country’s energy future. All those things have a knock-on effect. The Labour Government’s dithering, delay and unwillingness to make those decisions because of the fright their Back Benchers gave them have been shown up massively by the two parties that came together to run the country after the mess left by the last lot, with one coalition partner making a decision that it did not want to take, but realising that it was right for the country. That is what is important: what is right for the country.

The right hon. Member for Don Valley said much about the Government cutting the winter fuel allowance for 2 million pensioners; there was a lot of “We told you so.” Later in her speech, however, the right hon. Lady said that the proposed legislation was initiated by the Labour Government and we have picked up on it. She cannot have it both ways. Labour was quite clear in its manifesto and previous decisions that it would do exactly the same thing on the winter fuel allowance. In these austere times, it is the Government who are resisting the populist pressure, coming perhaps from some of the more right-wing media, to means-test the winter fuel allowance, and we are ensuring that it is all there. The tax bribes that Labour was giving out at the last election were seen through, which is why it suffered the worst defeat since 1918.

I have already outlined the need for a coherent policy on energy futures, which will help to bring prices down. The situation with the feed-in tariffs is difficult, but we need to ensure that progress is made. We have done many other things to help people with their pensions, including introducing the triple lock, and ensuring that pensioners this year will receive the highest cash settlement that they have received in the last 100 years—it is huge.

There is every chance that the Opposition motion would lead to more borrowing, less tax, and disaster. When people cannot pay their bills, it is because of the economic incompetence of the Labour party.

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5.56 pm

John Robertson (Glasgow North West) (Lab): I shall try to talk to the subject that we are here to discuss, unlike the hon. Member for Elmet and Rothwell (Alec Shelbrooke).

Last year, the average household saw energy costs rise by about £300 and Ofgem announced last October that the profit for energy companies had risen to £125 per customer per year, from £15 in June. My contention is not that the cost of energy is rising, but that the big six do not have a great track record of passing on wholesale decreases as quickly as increases.

Today’s wholesale energy prices are lower than they were a few years ago—and lower than they were only a few months ago. According to Bloomberg, the wholesale price for gas in autumn 2008 hit over 70p a therm. If we compare that with 59p per therm last October, we see that wholesale gas prices have actually dropped 15% since then. Similarly, prices in the wholesale electricity market reached £120 per megawatt-hour in autumn 2008. Today, they are just over £50 per megawatt-hour—less than half the price back then. But gas prices have dropped by only 15% and electricity prices by only 11% since last May’s peak. According to Bloomberg, in December natural gas futures declined by 30% compared with 2011. Today, energy companies can buy their gas for 53p per therm, some 9% cheaper than even last October.

The reason for this is sadly apparent. European demand is going down as the continent is moving towards a downturn and productivity is declining. This may be why EDF announced today a 5% cut, but—as my right hon. Friend the Member for Don Valley (Caroline Flint) pointed out—the company raised its gas prices last year by 15.4% while future gas derivative prices were falling, and while current market prices are down on previous years.

As a result, there is great suspicion among many, including Ofgem, that the big six have not been passing on wholesale market price reductions, not only last year but this year. These are clear acts of anti-competiveness in themselves, especially towards smaller energy companies, let alone customers and small businesses. For example, section 2 of the Competition Act 1998 prohibits the abuse of a dominant position in a market by one or more undertakings which may affect trade within the UK. I will quote competition law guidelines again as it seems that the Secretary of State did not hear me the last time I did so. They state:

“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 potential competition). A dominant undertaking is under a special responsibility not to allow its conduct to impair undistorted competition.”

I strongly suspect that one reason behind the price rises is probably that the companies have grossly failed to stockpile their energy reserves to hedge adequately against future prices. That could explain why, when future prices have fallen by almost a third, the companies are not passing on the reduction. There may be numerous reasons for that—one reason is probably ineptitude—but I feel that the main answer lies more in the lack of any incentive to pass on substantial price falls.

David Mowat: Will the hon. Gentleman give way?

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John Robertson: I will not give way. There are a lot of people wanting to speak.

My constituents are grossly disadvantaged. The Secretary of State talked about going on the internet, but the low internet uptake in Glasgow—we have one of the lowest uptakes—will not allow that to happen for my constituents. However, I was pleased to hear that he has taken on board the point about severe housing, which is what we have. Efficiency savings cannot be made in concrete housing blocks. In fact, all my constituents seem to do is pay to heat up the concrete blocks in the winter and cool them down in the summer. I therefore look forward to hearing more from the Minister. I hope he will look at the prices, go back to the companies, give Ofgem the teeth that it needs and ensure that the fines that should be imposed on the companies in question are indeed imposed.

6.1 pm

Simon Wright (Norwich South) (LD): In October we saw the launch of the “Check, switch, insulate to save” campaign. There is a clear need to raise awareness of what people can do today to reduce their bills. Many people can go online, check around for better deals and switch suppliers or change to a cheaper tariff, but three in every five consumers say that, in fact, they have never switched supplier. There are perhaps a number of reasons why not, one of which is that there remains a digital divide, which means that the information is not as easily or quickly available to all. What is more, many of the best deals are for online-only web accounts. Many households could save around £100 immediately by simply moving to an online account, but this is little help to those who have not embraced the internet, which in many cases also includes poorer households. Those who are not online include more than half the UK’s over-65 population.

Other households tend to avoid doing too much of their business online, because they have poor quality internet access where they live. I strongly welcome the Government’s investment in better broadband for Norfolk. Better communication links will allow more people to search online for the cheapest services and, as a result, become more powerful consumers. However, even with 100% broadband coverage, many households will still not connect to the internet. It is therefore vital that every effort be made to ensure that support is available for offline consumers to ensure that everyone can access the cheapest tariffs, not just the internet-savvy. I welcome the work that citizens advice bureaux and Ofgem are doing to help.

Bob Stewart: Is that not the very point that we were making earlier? Citizens advice bureaux and the Department, in sending out these letters, should advise vulnerable people exactly what they think is best for them. That should make it as simple as possible for very vulnerable people, and that is our duty.

Simon Wright: That is a very good point, and I thank the hon. Gentleman for making it, but given the sometimes huge price differential between online and offline accounts, I hope that Ministers can work with Ofgem and the suppliers to seek to narrow the gap.

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In recent years, competition for new customers seems to have been increasingly focused on price comparison websites. That has meant that those who use such tools can find massive discounts for web-only accounts, while the majority, who do not, end up paying more. To improve competition, we need simpler tariffs. Over 70% of consumers tested in Ofgem’s market research said that they would be more likely to switch if tariffs were made clearer. With a bewildering 400 or so tariffs available, only 44% of people in Ofgem’s research were able to select the cheapest tariff, even under a simplified form of the current arrangements.

We also need tariffs to be structured in a way that encourages energy conservation. A system of rising block tariffs—which was mentioned earlier—where customers pay less for the initial blocks of consumption and a rising amount for subsequent blocks, would provide an additional financial motivation for households to consider energy conservation. Low energy users would be rewarded for their efforts. At present, intensive energy users pay proportionately less.

I recognise that there are concerns about the unintended impacts that such a system could have on households that necessarily consume high amounts of energy, such as those of people with long-term health conditions who need to keep their house at a higher temperature. Perhaps we could consider other forms of social tariffs for such households, and examine whether extra support could be made available for housing insulation improvements, possibly through the green deal and through energy company observation. I know that Professor Hills’s fuel poverty review will consider tariff structures in its final report, and I hope that energy conservation will be seen as an important part of that work.

I also want to mention smart meters, which could play a massively important role for consumers. Every household should have one by the end of this decade. As well as encouraging more efficient energy use and allowing for more precise billing, these meters will provide consumers with billing information on what they are paying for, at the touch of a button. There is great potential for people to use that information to ensure that they are getting a good deal. For households to get the maximum benefit, consideration must be given to how best to inform, engage, and motivate consumers to use their meters to the best effect. The consumer engagement strategy, which I hope to see being developed and implemented during this year, will have a vital role to play in that regard.

Simplifying and reforming tariffs and improving transparency are all necessary short-term steps required to increase competition. There are a few encouraging signs of competition in what is, overall, a difficult market for consumers. Today’s announcement by EDF of a reduction in its customers’ gas bills in response to the falling cost of imported gas, following similar moves by smaller suppliers such as Ovo and the Co-op, will be welcomed by many of my constituents. Last year, however, rising costs were passed on to customers very quickly, and I now want to see—on behalf of all my constituents—action being taken by the other big five energy suppliers to reduce their prices. Whether or not they do so will be an indicator of how competitive the market is for consumers. If suppliers do not reduce prices, how many of their

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customers will go elsewhere? Promoting competition now is vital, and I welcome the emphasis that Ministers, working with Ofgem, have given to this issue.

Today’s debate is important. The issues are not simple, but the public rightly expect Ministers to intervene, and I welcome the progress that has been made in recent months. We are heading in the right direction, and I urge Ministers to continue.

6.7 pm

Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab): My objective today is, as it has been in similar debates under the previous Government and this one, to speak up for my constituents who are getting a very raw deal from the energy suppliers. Energy companies are renowned for using fluctuations in wholesale prices as an excuse for unacceptably high domestic energy bills. The issue affects every household in my constituency, particularly those of pensioners and families on low incomes with young children, and it causes financial misery to consumers.

I have written to Ofgem, and met representatives of the organisation. I have sought to remind it of its duty to consumers. Likewise, I have been in touch with the Office of Fair Trading, which has a duty to ensure that a cartel is not operating against the public interest. I remain to be convinced about that. The problem that we are discussing today will not simply go away, and my activity will continue until pressure is brought to bear on energy suppliers to reduce the inflated prices that are being unfairly charged to all households.

As I travel round my constituency, I find that the issue uppermost in the minds of my constituents is the rocketing price of gas and electricity. The price of both has gone up substantially, leaving those consumers helpless or in debt from dealing with the problem. Food inflation is up by 6.2%. Electricity prices have risen by 10%, and gas prices are up by as much as 17.4%.

I was hoping that during this debate we might be spared the fool’s bargain solution of asking the public to switch providers. By heavens, we have heard that so often. This has not, is not and never will be the solution. I have a sense that the Government know, deep down, that what I am saying is perfectly true.

There is no need for extensive research into the domestic energy supply industry. The man and woman in the street are absolutely convinced that energy companies are simply leapfrogging one after another when it comes to increases. An unregulated energy market that allows consumer prices to soar while wholesale prices are decreasing is unjust, irresponsible and is hitting the poorest households hardest. The rip-off continues unabated, and I think we are right to challenge it today.

Let me issue this challenge to the Minister: can he name any other product or commodity that has risen in price so steeply not just during the last year, but during the last decade? This explains why energy prices have, frankly, become a national scandal. I am in constant touch with ordinary decent people in my constituency who are struggling against extraordinary energy price increases. Consumers need energy to keep themselves warm and to cook meals, and they need hot water. Wholesale price fluctuations have largely been blamed on the energy supply from the continent, but there is a healthy scepticism about this rationale. I am not against

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companies making a profit. What I am against are the profits of energy companies rocketing while consumers are facing human misery.

Clearly, we need to ask whether competition is working as it should. Are companies becoming too comfortable in this small sector in which the price-setter, British Gas seems more keen to keep its prices up than to keep its customers? I am not especially concerned with the profits that those companies are making—obscene though I believe them to be. Nor am I concerned about whether they should face competition inquiries or fines, because fines will be of no use whatever to low-income families in my constituency. My concern is that those people should get a fairer deal—no less and no more than that.

The previous Government made huge strides to combat fuel poverty through the winter fuel payment and other measures such as pension credit. The tragedy is that those efforts are being completely undermined and devalued by the scandalous energy prices that consumers are being—

Mr Deputy Speaker (Mr Nigel Evans): Order.

6.12 pm

Ben Gummer (Ipswich) (Con): It is always a great pleasure and honour to follow the right hon. Member for Coatbridge, Chryston and Bellshill (Mr Clarke), whose defence of his constituents is always reasonable and valiant. I think he is right to this extent—that appealing to people to switch supplier will not be the entire cure for problems in the energy market. The reason for that is that the energy market is broken, so competition will not work entirely. It can work to a certain extent, but not entirely, if the market cannot deliver what the consumer wants.

To understand how to fix the market, we have to look at the history of the market and why it went wrong. If we look at energy prices, we find that they have moved since the privatisation of the late ’80s. They fell consistently beneath the retail prices index every year from the late ’80s and the early 2000s. They did so over a longer period than at any time since records of energy prices began. Then, from the mid-2000s they levelled out, and from 2005 to 2007 they increased further than RPI until 2010 when the last Government left office.

I am fully aware that this is often not a moment to talk about the previous Government’s record, but they had a fundamental hand to play in the reasons why we are in the position we are in now. It is also incumbent on us to point out that much of the responsibility lies with the man whose name stands at the head of the motion who seeks to lead the British public as Prime Minister after the next election. He is responsible for the complete lack of action taken to do anything about the broken energy market, which has caused the problems from which our constituents, including those of the right hon. Member for Coatbridge, Chryston and Bellshill, suffer today.

In a debate earlier in the Session, the right hon. Member for Don Valley (Caroline Flint)—who is now shouting from a sedentary position—said that reform of the electricity market was

“what my right hon. Friend the Member for Doncaster North (Edward Miliband) has been calling for ever since he was Energy Secretary, including now, as leader of the Labour party.”—[Official Report, 19 October 2011; Vol. 533, c. 931.]

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A Secretary of State does not call for a reform of the energy market, or of the electricity market. The right hon. Gentleman’s purpose should have been to do something about the situation, but far from doing something about it—or even calling for something to be done about it—he issued the following warning to the then Opposition Front-Bench team during a 2009 debate on the Energy Bill:

“I have to say that the alarmism... is of no help at all.”—[Official Report, 7 December 2009; Vol. 502, c. 43.]

It was not alarmism, however. We understood that the market was broken, and we understood that fundamental changes were needed. That is why we are introducing the changes that need to be made now that we are in power.

My first problem with the proposals in the motion is that they do not have the agreement of even small energy providers, who say that the right hon. Lady’s pooling mechanism would not work.

Caroline Flint: How do you know?

Ben Gummer: I can tell the right hon. Lady, in answer to her sedentary question, that even the small providers have put that on record.

Secondly, the right hon. Lady alluded to a series of reforms that she believes would combat fuel poverty. That suggested that the last Government’s attempts had somehow been successful, or would be successful were they to be continued. In that earlier debate, the right hon. Lady also said:

“we had the most ambitious programme to help people in fuel poverty deal with their bills”. —[Official Report, 19 October 2011; Vol. 533, c. 932.]

Let me remind her of that policy. Between 2000 and 2008 the last Government spent £20 billion on abatement of fuel costs, and what happened to fuel poverty during that period? It increased by 333%. That was indeed ambitious. It was ambitious to the extent that for every household the Labour party put into fuel poverty, the taxpayer paid £5,700. The taxpayer paid £5,700 to reduce a household to fuel poverty, yet Labour Members have had the cynicism to come to the House and claim that their policies would work again, and that the brave and principled position of Her Majesty’s Government is somehow misguided. It is a hypocrisy which lays bare a party that has no ideas of its own, and is reduced to attacking its own record.

6.17 pm

Pat Glass (North West Durham) (Lab): I have spoken in every energy debate in the House since my election. That is because my constituency is largely rural and is in the north-east, and because 25% of my constituents are living in fuel poverty. Many of them are on low incomes, there is high unemployment in the constituency—it has doubled in the last 12 months—and we have an ageing population. Any suggestion of an increase in fuel costs always causes real fear and anxiety in constituencies such as mine.

I listened carefully to what the Secretary of State had to say. While apparently guiding us carefully through the complexities of the energy industry, he seemed to me to be doing so from the point of view of the chief executive of an energy company, and I found that

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incredibly disappointing. I thought it was complacent in the extreme, and I believe that my constituents would be rightly angered by it. The Secretary of State spoke of dithering and delay in the last Government, but in the two years in which I have been in the House, I have witnessed a master class in dithering and delay. We need to get on with doing something about the present situation.

In my brief speech, I want to raise two issues. As a past student of economics, I want to discuss the artificial economy created by successive Governments in the energy industry, and I also want to return to the issue of off-grid and heating oil prices.

Successive Governments have created and modified the artificial market in the industry, but that artificial market has failed to establish safeguards that would prevent companies from manipulating the market in order to achieve massive profits at the expense of the consumer and at virtually no risk to themselves. It has failed to prevent an oligopoly in which these companies can operate with impunity. We now have few suppliers in the market and entry into the market is almost impossible, and the actions of those few suppliers have a disproportionate and negative impact on consumer prices.

Most of our strategic energy companies are also now foreign-owned. I sat through the previous debate on transport, and I heard the shadow Secretary of State tell us how the rail industry is being gradually renationalised and returned to Government ownership, but, unfortunately, not British-Government ownership; foreign companies and Governments now own our rail industry, and the same is happening in our energy industry.

On off-grid and off-gas, I was stunned by the Secretary of State’s remark that the Office of Fair Trading report gave a clean bill of health to the industry. It is clear to me that he has not read that report. I accept that the report said there was no monopoly in heating oil, but I think that is because its remit was far too narrow so the investigation was too limited.

Guy Opperman: I am the hon. Lady’s constituency neighbour and we share a great deal of common ground on the issue of off-grid problems. So far as my constituents are concerned, there is no genuine competition and fairness of pricing in respect of off-grid, so from their point of view the report by the OFT, which was only a market study, is manifestly insufficient and not right. Do her constituents convey the same concerns?

Pat Glass: Yes, exactly the same issues are raised in my constituency surgeries. The OFT accepted that in some parts of the country there are fewer than three suppliers, but in practice even though there may be three advertised suppliers, sometimes only one company is prepared to deliver. That is certainly the case in parts of my constituency, and I am sure that is also the case elsewhere. That may not be a monopoly in the view of the OFT, but for my constituents it is definitely a monopoly. Some of my constituents were faced with increases of almost 100% in heating oil prices in the run-up to Christmas last year, and only one company was prepared to deliver. I call that a monopoly. I urge the Government, and my party’s Front-Bench team, to look again at the regulation of this sector.

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I am pleased that the Prime Minister seems recently to have woken up to the public’s anger about irresponsible capitalism. We have a culture in which obscene profits are made and consumers are suffering as a result. However, I do not believe that the Prime Minister is serious about this; rather, I think it is just focus-group rhetoric. If he is really serious about doing something about irresponsible capitalism, the energy industry in this country is a good place to start.

6.23 pm

Sarah Newton (Truro and Falmouth) (Con): I simply do not accept the criticism we have heard this afternoon from the Opposition that the Government are sitting on their hands and letting people die in their homes this winter. In the few minutes available to me, I shall demonstrate that, as Opposition Members have said, actions do, indeed, speak louder than words, and I shall describe a fraction of the things that are being done in my constituency to tackle fuel poverty now, as we speak.

Cornwall council and the council of the Isles of Scilly have led a successful bid to the Department of Health for more than £140,000 for a campaign called “Warm homes, healthy people”. It is estimated that each year about 300 people in Cornwall die as a result of living in cold homes, which is, of course, 300 too many. Partners in this campaign include the NHS in Cornwall and the Isles of Scilly, Age UK, Community Energy Plus, the citizens advice bureaux, Cornwall Voluntary Sector Forum, Truro Homeless Action Group, the home improvements agencies, St Petroc’s, the Cornwall drug and alcohol team, New Connection and the councils’ own housing and adult social care teams. All of them are combining their efforts to tackle this problem. They will identify those most at risk of fuel poverty. They are going to make sure that people access all the advice and support that is already available for them. As the right hon. Member for Don Valley (Caroline Flint) said, millions of pounds go unclaimed in benefits and compensation from energy companies. This practical programme will make sure that the people who need support actually access it.

Mr Watts: Will the hon. Lady give way?

Sarah Newton: I will not, because I want to allow more colleagues to join in.

The programme is going to give people really good advice on how to protect themselves from the risks of high humidity and on insulating their homes, and it will make sure that they are taking up the available grants. It is also going to make sure that people really take advantage of the many existing free programmes.

This programme has had widespread support from people in Cornwall. The council cabinet member responsible for health and well-being has said:

“This is a great example of community and voluntary organisations coming together with the public sector to offer a joined up approach to a big issue. The funding is very welcome indeed as it will help all the agencies involved target support to those in most need and at most risk. By working together, frontline workers and volunteers will have systems in place to make sure that vulnerable people are directed to the service most able to help them.”

Our director of public health for Cornwall and the Isles of Scilly has also warmly welcomed this investment, saying that it will be used alongside money that Cornwall

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council and the NHS already spend in subsidising the Warm Front scheme to ensure that all the costs of insulating people’s homes are met.

In addition, the council cabinet member responsible for housing has said that this funding is “great news” and is going to back up the money already being received from the Government to tackle homelessness. People who are homeless or living in very poor quality accommodation—in the mobile homes and park homes that we have heard about; in poor quality, poorly insulated private rented sector accommodation—will be able to top up the money the Government are already giving to people at risk of homelessness, which will actually make a difference this winter.

In addition, I have been working with all these different voluntary sector organisations, and, together with Church groups and poverty forums, we have come up with a practical guide that will be widely distributed to people. Anyone and everyone who is worried about heating their homes this winter will have the full range of advice about all the benefits and services available to them.

I challenge my colleagues on the Opposition Benches. Yes, actions do speak louder than words, and rather than spending hours in these sterile and futile debates, why do they not roll up their sleeves, go back to their constituencies and work with those who really want to make a difference to people this winter?

Several hon. Members rose

Mr Deputy Speaker (Mr Nigel Evans): Order. I want to allow some people who have been here throughout the debate to get at least something on the record. I do not like dropping the time limit to three minutes, but I am afraid I have to. I call Mike Weir.

6.28 pm

Mr Mike Weir (Angus) (SNP): In the brief time available I just want to make a few comments. Rising energy prices are obviously causing huge problems for many families. Every 5% rise puts a further 46,000 households into fuel poverty. It is not a completely grim picture. For once, there is some good news in Scotland. The Scottish house condition survey, which measures fuel poverty, published in November, shows a reduction in the number of homes in fuel poverty in 2010, although, like the rest of the UK, the figure remains far too high. The current average dual fuel bill is now £1,345 a year, an increase of almost 50% over the past four years. Today, EDF trumpeted the decision to reduce gas prices by 5%, but that comes on top of an increase only a couple a months ago of 15.4%.

There are other related issues. I raised with the Secretary of State in an intervention the issue of prepayment meters. There is great concern about the huge increase in the number of people moving over to prepayment meters—presumably, people who are unable to meet their energy bills—and there is a real danger of self-disconnection when that happens. We do not always know when some of these people are doing this. That is a real worry and we need to do something about it.

The mantra of switching simply does not work. The energy companies appear to be doing a “follow my lead” on rising prices; I very much doubt whether that will necessarily occur when prices start to go down.

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I note that Labour’s motion suggests that we should

“require energy companies to provide the lowest tariff to over 75s”.

That, in itself, is a good idea, but the problem is that it will work only if the tariffs are lower; there is no point putting people on the lowest tariff if all the tariffs are high, which tends to be the position at the moment. At the Scottish Government’s energy summit last November, Scotland’s six largest energy providers pledged to help vulnerable customers transfer to their most efficient tariff, so there has been some movement on this issue and it should be encouraged. However, the previous system of higher winter fuel allowances for elderly people is a much better option, because it reduces the amount they have to pay out, irrespective of what bill they are on, and I am slightly disappointed that Labour seems to be moving away from that approach.

I wish to make the point about off-grid customers, of whom my constituency has many and about which other hon. Members have spoken. I have previously raised this prospect, but the Government should consider, at the very least, making the winter fuel payment earlier to vulnerable people who are off-grid, as that would allow them to fill up their tanks in the summer or early autumn, when the price tends to be lower, although it is not always. That is a no-cost and positive option, so I urge the Minister at least to consider it again.

6.30 pm

David Mowat (Warrington South) (Con): I have been sitting here for a few moments trying to work out whether to talk quickly in the next few minutes or to curtail my remarks. I wish briefly to say something about the structure of the UK gas and electricity industries.

First, I shall discuss the gas industry. I heard the comments made by hon. Members from both sides of the House, but particularly by Labour Members, about the predatory nature of the industry, cartels, price fixing and so on. I return to my earlier intervention by saying that this country has the lowest gas prices in Europe, leaving aside three small countries. I am not defending these organisations and if the prices could be lower, they should be lower. However, if that situation is the result of predatory pricing and the operation of a cartel, the companies are not very good at it.

Ben Gummer: Is my hon. Friend aware that the probe initiated by the previous Secretary of State found that the energy companies were not acting as a cartel and that there was indeed price transparency between them?

David Mowat: I was aware of that, and I shall finish on this point by saying that if Labour Members have evidence of directors operating a cartel, which is a criminal offence, they should come forward with it. Alternatively, they should just stop making the accusation, which is becoming increasingly silly.

I was somewhat disappointed by the Secretary of State’s answer to the question about shale gas, because it has the potential to be a game-changer. In the United States gas prices have reduced by a factor of three and, in 2015, the US is going to start exporting shale gas, and if we do not have it here, that could well have a major impact on the structure of the industry and how it will work in the future. For the first time, we are seeing the

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decoupling of gas and oil prices, and once that has happened, all bets are off. The price of gas in Europe—in the European balancing hub—is three times what it is in the US. If a fraction of what happened in the US happens here, the results could be very radical and could create some issues to address in terms of the debt strategy.

Whereas we have nearly the lowest gas prices in Europe, the same cannot be said for electricity prices. We have structural issues to address in our electricity market. We do not have cheap nuclear power, as France does. We have missed the opportunity on that, although we are doing our best to catch up.

In the minute remaining, I want to suggest to the Minister one area that I believe we have got wrong in policy terms. The Climate Change Act 2008 sets a very ambitious target of 80% decarbonisation, and I accept that, but I believe we have confused the need to decarbonise with the need to go for renewables. The 20-20-20 directive from 2009, which imposes a renewables target over and above what we could have done to reduce carbon, has confused the issue. As a result, we have gone into nuclear more slowly than we should have done and, frankly, we have gone more slowly into carbon capture and storage, which is an alternative. Will the Minister assure us that the Green investment bank will be concerned with decarbonisation, not just renewables, and that the money available from it will therefore be available to the nuclear industry, which is in as much need of it as other parts of the decarbonisation chain, and the CCS industry?

6.35 pm

Barry Gardiner (Brent North) (Lab): Since 2004, gas and electricity bills have increased more than six times faster than household incomes, meaning that a quarter of all households in England and Wales are now in fuel poverty. Increasing energy bills and stagnating incomes also mean that an additional 25% of people now face energy debts and more than 850,000 electricity consumers and more than 700,000 gas customers are now in debt to their energy supplier.

I would dearly love to give the hon. Member for Ipswich (Ben Gummer) a lesson in the history he so eloquently went into earlier, but I shall defer that to another occasion. I would point out, however, that although he accused the previous Government of not having tackled structural reform in the energy market, they did so on two occasions with the new electricity trading arrangements, or NETA, and the British electricity trading and transmission arrangements, or BETTA. We will save the rest of that debate for another day.

The point that I most wish to make is that the costs of environmental and social measures, such as CERT and the renewables obligation, now account for about 4% and 10% of gas and electricity bills respectively. This is an unpopular thing to say—and certainly unfashionable, coming from me—but it is the truth and we have to face up to it: developing a low-carbon energy infrastructure will require long-term planning and significant investment. Whereas 84% of recent energy price rises were unrelated to low-carbon measures, the remaining 16% were and the Committee on Climate Change estimates that policies to achieve a low-carbon economy will add about £110 to

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bills over the next decade. That is because it expects electricity consumption to drop by 50%, meaning that per unit costs of electricity will skyrocket. The most important thing we can do, therefore, is achieve energy efficiency.

On that point, I want to challenge the Secretary of State on ECO. He will know that the Fuel Poverty Advisory Group and National Energy Action have said that ECO spends only 25% of its funds on the fuel poor and 75% of its funds on trying to reduce carbon emissions, which could be better directed at targeting solid-wall insulation for the fuel poor in the private rented sector. I ask him please to consider that, as it can achieve his energy emissions objectives and increase the benefits to the fuel poor.

6.38 pm

Andrew Percy (Brigg and Goole) (Con): As many other Members have said, this is an issue of huge concern to constituents across the country, and my constituents have some particular concerns that make the impact of rising energy prices much greater. We have a lot of properties that are off-grid, which is a huge issue particularly in the marshland villages, and I also represent in the Scunthorpe part of my constituency a large number of park homes, which other Members have mentioned. A lot of people in my constituency live in single-skin properties, many privately rented, where landlords, despite their legal right, require them to be on energy meters. That was an experience I had for about three and a half years before I was able to buy my house. I lived in a rented property with one of those meters and I know the added costs. Like other Members, I am getting increasing amounts of casework about this matter. I hope the Secretary of State will act on the concerns about private rented landlords, park homes and single-skin properties.

There is not a great deal of time to go into casework issues, but another issue I want to discuss is switching. I was saddened by the comments of the right hon. Member for Don Valley (Caroline Flint) and I remind her that, under her Government, in the region we represent, Yorkshire and the Humber, fuel poverty went from 7.7% of households in 2004 to 19.9% in 2009, so this issue has not appeared overnight. It is wrong to pooh-pooh the idea of switching. One thing that I have done—my hon. Friend the Member for Truro and Falmouth (Sarah Newton) said that she had done something similar in her constituency—is to produce a book and guide for my constituents to assist them as best I can by informing them about how they can switch and how they can make use of the social tariffs and their replacements. There are practical things that we can do, but I do not deny that it is sometimes incredibly confusing. I had a lady in her 80s at my constituency surgery the other week. She explained that she was unable to switch because she did not have access to the internet and her children lived a long way away. We need to do more for such individuals.

I want briefly to address a point made by the right hon. Member for Don Valley. I intervened on her about it but it is worth saying again. If a point is worth making once it is worth making twice. Never mind the nonsense about the winter fuel allowance and the fact that Labour would probably have raised it—even though she committed today to not raising it, which tells us all

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we need to know—the one thing that would have helped pensioners in my constituency previously, instead of giving them that disgusting 75p rise, would have been Labour making good on its 1997 election pledge to link pensions to earnings. I am proud that we have done that, and it should put £5 or more into the pockets of pensioners.