18 Jun 2014 : Column 1175

3.58 pm

The Minister for Security and Immigration (James Brokenshire): May I say at the outset that I understand entirely why so many right hon. and hon. Members across the House have sought to bring to Ministers’ attention a number of individual cases? That is precisely what Members of Parliament are for—to represent their constituents. I understand why they have sought to use this debate to do that. This debate has underlined the work of the Passport Office in seeking to respond to and address the concerns that have been flagged. Like other right hon. and hon. Members, I pay tribute to the hard work, dedication and professionalism of HMPO staff who are working to process applications and respond to individual customer and MP inquiries. We recognise the need to service MPs’ individual requests. That is why, from the start of this week, the MP team was strengthened to ensure that a service is provided to deal with those individual cases.

I note the number of individual cases and circumstances that have been flagged. Sadly, in the time available, I will not be able to respond to each of them, but a careful note is being taken of a number of them. A note is also being taken of some of the points that have been made, for example on the courier services. I have heard that DX is working late evenings, but we will look at each case. We will also look at each point that has been flagged on individual countries.

I underline our commitment to focus on those individual circumstances that have been flagged, but I also underline the Home Secretary’s message. We apologise to anyone who has been affected by their passport not being delivered when expected through no fault of their own. I understand the concerns that have been flagged and the individual cases that have been raised. I understand the concerns of the right hon. Member for Manchester, Gorton (Sir Gerald Kaufman) and his desire to raise individual cases, but I say to him in careful terms that the tone and nature of his contribution did not fit the debate.

I should like to underline some of the individual actions we have taken to address the current high volume of passport applications. Her Majesty’s Passport Office issued 3.3 million passports in the first five months of the year, compared with 2.95 million in the same period last year.[Official Report, 7 July 2014, Vol. 584, c. 2MC.] We have had an additional 350,000 applications compared with last year, and the highest demand for passports in 12 years.

I stress to the right hon. Member for Delyn (Mr Hanson) that our actions have not just happened in recent weeks. Since January, HMPO has put in place measures to deal with the increase, and the vast majority of customers have received their passports on time and straightforward renewals of passports within the three-week period. I stress to him that the website advises:

“It should take 3 weeks to get the passport - use a different service if you need the passport urgently…It can take longer if more information is needed or your application hasn’t been filled out correctly.”

Mr Robinson: The Minister is correct that applications are roughly 10% up on last year—this is in my letter to him, as he will see when he gets round to replying—and that manpower was increased from January to May by 10%. Is not the point that, if we had all that planning, why has the crisis arisen? Is it not because of

18 Jun 2014 : Column 1176

the decision to incorporate into that planning system the different volume of requirements for overseas applications?

James Brokenshire: We have had sustained demand and the demand has come earlier in the year than would normally be the case. Therefore, that increase and the period in which demand was sustained is an important factor. That is why HMPO has been operating seven days a week since March and why passports are delivered within 24 hours by couriers.

Some 250 staff were moved from back-office roles to the front line, and an additional 200 people will soon be supporting front-line operation. The focus has been given to getting passport applications turned round. I also stress that 650 extra staff are working on the customer helpline—an increase to 1,000. We understand people’s anxieties and action has been taken.

As the Home Secretary has said, we are ensuring that those who need to travel in the next seven days whose applications have been outstanding for more than three weeks through no—[Interruption.]

Madam Deputy Speaker (Mrs Eleanor Laing): Order. I hesitate to interrupt the Minister, but Members who have come into the Chamber who have not been here for the debate should not be talking through his speech.

James Brokenshire: Thank you, Madam Deputy Speaker.

To confirm, we have taken action on those needing to travel within the next seven days whose applications have been outstanding for more than three weeks through no fault of their own. They will have their applications fast-tracked without charge.

We have introduced processes overseas for those wishing to renew their passports to travel to the UK. Customers can apply for an extension to their existing passports at consular offices overseas. Overseas posts have been provided with stamps and customers are booking appointments for this service. The Foreign and Commonwealth Office is now issuing emergency travel documents for children who need to travel to the UK.

Staff at HMPO are working hard to process passport applications. Again, I underline the Home Secretary’s thanks to them for their dedication at this time. To give a sense of the scale and nature of the work being undertaken, let me give some numbers to put the issue into context. Almost 160,000 passports were issued in the past week

Penny Mordaunt (Portsmouth North) (Con) rose—

Keith Vaz rose—

James Brokenshire: I give way to the Chair of the Home Affairs Committee.

Keith Vaz: I appreciate that he was not the Immigration Minister when the decision to close the overseas posts were made, nor was he the Minister earlier this year. However, when was he told personally by Mr Pugh that there would be a problem with the number of applications and does he still have confidence in the chief executive of the agency?

18 Jun 2014 : Column 1177

James Brokenshire: The Chair of the Select Committee took evidence yesterday from Paul Pugh, who was right to say that his focus is on dealing with the issues at hand—the increases in demand and some of the points that have been flagged up to the House this afternoon. Obviously Ministers receive regular updates from HMPO, which indicated that additional measures were being put in place to deal with demand.

As the right hon. Gentleman will know, HMPO’s performance figures up to May show that 97% of straightforward applications were dealt with within three weeks and 99% within four weeks. When it comes to claims of a backlog, it is important to note that there are approximately 480,000 active applications currently being processed. It is not unusual during peak periods for HMPO to operate with high numbers of applications in the system at any one time, with this year seeing the highest level for 12 years—as I have indicated, some of the inflow and outflow gives a sense of that. HMPO is a fast-moving, demand-led business. It receives up to 150,000 domestic applications and around 9,000 overseas applications in any given week. Those applications are necessarily at different stages of the examination process, on what we might describe as a production line, and they have to be scrutinised carefully, for the reasons that have been underlined—security and to ensure that the gold standard of the British passport is maintained.

Hon. Members raised the issue of the Newport passport office, which continues to operate as a customer service centre, offering face-to-face passport applications for premium and fast-track customers, with 150 full-time equivalent posts.

Penny Mordaunt: Will the Minister give way?

James Brokenshire: I am conscious of time.

In Scotland, extra resources have been put in place to focus on ensuring that people receive their passports in good time, recognising the earlier school holidays. To address the point made earlier, we are also in close contact with the Glasgow office on the availability of individual appointments. On the staffing point, I again underline what the Home Secretary said—and, indeed, the point my hon. Friend the Member for Northampton North (Michael Ellis) made—about the increase in numbers since 2012. We now have 3,444 full-time equivalent staff.

However, we recognise how important passports are, as well as securing people’s renewals in as short a time as possible. Passports are not just dry official documents; they are the key to eagerly anticipated holidays and facilitating international business travel. We recognise the need to review what has happened, which is why it is right that the Home Secretary has commissioned the reviews that she has. On the overseas transfer, that change was made to ensure greater scrutiny and security, ensuring that the gold standard of the British passport is maintained and securing greater continuity of service between all the different parts of the service.

Several hon. Members rose—

James Brokenshire: I know that Members have flagged up individual cases involving passports from overseas. These applications take longer and require additional scrutiny. That is why we have to be careful to ensure that those principles are maintained.

18 Jun 2014 : Column 1178

Fiona Mactaggart rose—

Penny Mordaunt rose—

James Brokenshire: I believe I have only a few seconds left.

I would like to underline that we are committed to resolving this issue. We are monitoring it extremely carefully, with a focus on ensuring that performance at HMPO improves, that passport applications are processed efficiently and effectively and that urgent and compassionate cases are prioritised. I recognise the importance—

Mr Speaker: Order. I do not know what understandings there might be—I feel sure that they would have to be respected by the parties as a matter of integrity—but procedurally, there is no question of the Minister having only a few seconds left. He has relatively unlimited time if he wishes to avail himself of it. I call the Minister.

Pamela Nash rose—

James Brokenshire: I give way briefly.

Pamela Nash: I sensed that the Minister was about to conclude his remarks, but two specific points from my speech have not been addressed. First, I asked about the circumstances when the date by which a passport is needed is not necessarily the date of travel—where there is a visa or electronic system for travel authorisation, for example—so will he advise the Passport Office to make it a priority to deal with that? Secondly, he mentioned interviews at Glasgow, but can he guarantee that Scottish people will be able to get such an interview at Glasgow where it is more suitable for them rather than having to travel elsewhere?

James Brokenshire: On the latter point, the Home Secretary has spoken to the head of operations at the Glasgow office. We are carefully monitoring the availability of appointments at the counter in all our offices, and we are specifically focused on Glasgow, given the understandable desire for people to get passports for their holidays. As for individual foreign cases, we have set out the guidance on the seven-day period for providing information on airline bookings and other details. I recognise the importance to each individual and each family of receiving their passports. That is why our focus remains on delivering a high-quality passport service for the benefit of the public. That is what this Government are committed to do and that is what we are focused on delivering.

Question put,

The House divided:

Ayes 235, Noes 282.

Division No. 10]

[

4.11 pm

AYES

Abrahams, Debbie

Ainsworth, rh Mr Bob

Alexander, rh Mr Douglas

Alexander, Heidi

Ali, Rushanara

Allen, Mr Graham

Ashworth, Jonathan

Austin, Ian

Bain, Mr William

Balls, rh Ed

Barron, rh Kevin

Beckett, rh Margaret

Begg, Dame Anne

Benn, rh Hilary

Benton, Mr Joe

Berger, Luciana

Betts, Mr Clive

Blackman-Woods, Roberta

Blenkinsop, Tom

Blunkett, rh Mr David

Bradshaw, rh Mr Ben

Brown, Lyn

Brown, rh Mr Nicholas

Brown, Mr Russell

Bryant, Chris

Buck, Ms Karen

Burden, Richard

Burnham, rh Andy

Byrne, rh Mr Liam

Campbell, rh Mr Alan

Campbell, Mr Gregory

Campbell, Mr Ronnie

Caton, Martin

Champion, Sarah

Chapman, Jenny

Clark, Katy

Clarke, rh Mr Tom

Clwyd, rh Ann

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

Curran, Margaret

Dakin, Nic

Danczuk, Simon

David, Wayne

Davidson, Mr Ian

Davies, Geraint

De Piero, Gloria

Dobbin, Jim

Dobson, rh Frank

Docherty, Thomas

Dodds, rh Mr Nigel

Donaldson, rh Mr Jeffrey M.

Donohoe, Mr Brian H.

Doran, Mr Frank

Doughty, Stephen

Dowd, Jim

Doyle, Gemma

Dromey, Jack

Dugher, Michael

Durkan, Mark

Eagle, Ms Angela

Eagle, Maria

Edwards, Jonathan

Efford, Clive

Elliott, Julie

Ellman, Mrs Louise

Engel, Natascha

Esterson, Bill

Evans, Chris

Farrelly, Paul

Field, rh Mr Frank

Fitzpatrick, Jim

Flello, Robert

Flint, rh Caroline

Flynn, Paul

Francis, Dr Hywel

Gapes, Mike

Gilmore, Sheila

Glass, Pat

Glindon, Mrs Mary

Godsiff, Mr Roger

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

Havard, Mr Dai

Healey, rh John

Hendrick, Mark

Hermon, Lady

Heyes, David

Hillier, Meg

Hilling, Julie

Hodge, rh Margaret

Hodgson, Mrs Sharon

Hoey, Kate

Hood, Mr Jim

Hopkins, Kelvin

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, Mr Kevan

Jones, Susan Elan

Jowell, rh Dame Tessa

Kane, Mike

Kaufman, rh Sir Gerald

Keeley, Barbara

Kendall, Liz

Khan, rh Sadiq

Lammy, rh Mr David

Lavery, Ian

Lazarowicz, Mark

Leslie, Chris

Lewell-Buck, Mrs Emma

Lewis, Mr Ivan

Llwyd, rh Mr Elfyn

Long, Naomi

Love, Mr Andrew

Lucas, Caroline

Lucas, Ian

MacNeil, Mr Angus Brendan

Mactaggart, Fiona

Mahmood, Mr Khalid

Mahmood, Shabana

Mann, John

Marsden, Mr Gordon

McCabe, Steve

McCarthy, Kerry

McCrea, Dr William

McDonagh, Siobhain

McDonald, Andy

McDonnell, Dr Alasdair

McDonnell, John

McFadden, rh Mr Pat

McGovern, Alison

McGovern, Jim

McGuire, rh Mrs Anne

McKenzie, Mr Iain

McKinnell, Catherine

Meacher, rh Mr Michael

Mearns, Ian

Miliband, rh Edward

Miller, Andrew

Mitchell, Austin

Moon, Mrs Madeleine

Morden, Jessica

Morrice, Graeme

(Livingston)

Morris, Grahame M.

(Easington)

Mudie, Mr George

Munn, Meg

Murphy, rh Mr Jim

Nandy, Lisa

Nash, Pamela

O'Donnell, Fiona

Onwurah, Chi

Osborne, Sandra

Paisley, Ian

Pearce, Teresa

Perkins, Toby

Pound, Stephen

Powell, Lucy

Qureshi, Yasmin

Reed, Mr Jamie

Reed, Mr Steve

Reeves, Rachel

Reynolds, Emma

Reynolds, Jonathan

Riordan, Mrs Linda

Robertson, Angus

Robertson, John

Robinson, Mr Geoffrey

Rotheram, Steve

Ruane, Chris

Ruddock, rh Dame Joan

Sawford, Andy

Seabeck, Alison

Shannon, Jim

Sharma, Mr Virendra

Sheerman, Mr Barry

Sheridan, Jim

Shuker, Gavin

Skinner, Mr Dennis

Slaughter, Mr Andy

Smith, rh Mr Andrew

Smith, Angela

Smith, Nick

Spellar, rh Mr John

Stringer, Graham

Stuart, Ms Gisela

Sutcliffe, Mr Gerry

Tami, Mark

Thornberry, Emily

Trickett, Jon

Turner, Karl

Twigg, Derek

Twigg, Stephen

Umunna, Mr Chuka

Vaz, rh Keith

Vaz, Valerie

Walley, Joan

Weir, Mr Mike

Whiteford, Dr Eilidh

Whitehead, Dr Alan

Williams, Hywel

Williamson, Chris

Wilson, Sammy

Winnick, Mr David

Winterton, rh Ms Rosie

Woodcock, John

Wright, David

Wright, Mr Iain

Tellers for the Ayes:

Phil Wilson

and

Bridget Phillipson

NOES

Adams, Nigel

Afriyie, Adam

Amess, Mr David

Andrew, Stuart

Arbuthnot, rh Mr James

Baker, Norman

Baker, Steve

Baldry, rh Sir Tony

Baldwin, Harriett

Barclay, Stephen

Barker, rh Gregory

Baron, Mr John

Barwell, Gavin

Beith, rh Sir Alan

Bellingham, Mr Henry

Benyon, Richard

Beresford, Sir Paul

Berry, Jake

Bingham, Andrew

Binley, Mr Brian

Birtwistle, Gordon

Boles, Nick

Bone, Mr Peter

Bradley, Karen

Brady, Mr Graham

Brazier, Mr Julian

Bridgen, Andrew

Brine, Steve

Brokenshire, James

Brooke, Annette

Bruce, Fiona

Buckland, Mr Robert

Burley, Mr Aidan

Burns, Conor

Burns, rh Mr Simon

Burrowes, Mr David

Burstow, rh Paul

Burt, rh Alistair

Byles, Dan

Cable, rh Vince

Cairns, Alun

Campbell, rh Sir Menzies

Carmichael, Neil

Carswell, Mr Douglas

Cash, Sir William

Chishti, Rehman

Chope, Mr Christopher

Clappison, Mr James

Clarke, rh Mr Kenneth

Clifton-Brown, Geoffrey

Coffey, Dr Thérèse

Collins, Damian

Colvile, Oliver

Cox, Mr Geoffrey

Crabb, Stephen

Crockart, Mike

Crouch, Tracey

Davey, rh Mr Edward

Davies, Glyn

Davies, Philip

de Bois, Nick

Dinenage, Caroline

Djanogly, Mr Jonathan

Dorrell, rh Mr Stephen

Doyle-Price, Jackie

Drax, Richard

Duddridge, James

Duncan Smith, rh Mr Iain

Dunne, Mr Philip

Ellis, Michael

Ellison, Jane

Ellwood, Mr Tobias

Elphicke, Charlie

Evans, Graham

Evans, Mr Nigel

Evennett, Mr David

Fabricant, Michael

Fallon, rh Michael

Farron, Tim

Featherstone, Lynne

Field, Mark

Foster, rh Mr Don

Fox, rh Dr Liam

Francois, rh Mr Mark

Freer, Mike

Fuller, Richard

Gale, Sir Roger

Garnier, Sir Edward

Garnier, Mark

George, Andrew

Gibb, Mr Nick

Gillan, rh Mrs Cheryl

Glen, John

Goldsmith, Zac

Goodwill, Mr Robert

Gove, rh Michael

Graham, Richard

Gray, Mr James

Grayling, rh Chris

Green, rh Damian

Griffiths, Andrew

Gummer, Ben

Gyimah, Mr Sam

Halfon, Robert

Hames, Duncan

Hammond, rh Mr Philip

Hammond, Stephen

Hands, rh Greg

Harper, Mr Mark

Harrington, Richard

Harris, Rebecca

Hart, Simon

Haselhurst, rh Sir Alan

Hayes, rh Mr John

Heald, Oliver

Heath, Mr David

Heaton-Harris, Chris

Hemming, John

Henderson, Gordon

Herbert, rh Nick

Hinds, Damian

Hoban, Mr Mark

Hollingbery, George

Hollobone, Mr Philip

Holloway, Mr Adam

Horwood, Martin

Howarth, Sir Gerald

Howell, John

Hughes, rh Simon

Huppert, Dr Julian

Hurd, Mr Nick

Jackson, Mr Stewart

James, Margot

Jenkin, Mr Bernard

Jenrick, Robert

Johnson, Gareth

Johnson, Joseph

Jones, Andrew

Jones, rh Mr David

Jones, Mr Marcus

Kawczynski, Daniel

Kelly, Chris

Kennedy, rh Mr Charles

Kirby, Simon

Kwarteng, Kwasi

Lamb, Norman

Lancaster, Mark

Lansley, rh Mr Andrew

Leadsom, Andrea

Lee, Jessica

Lee, Dr Phillip

Leech, Mr John

Leslie, Charlotte

Lewis, Brandon

Lewis, Dr Julian

Lloyd, Stephen

Lopresti, Jack

Luff, Sir Peter

Lumley, Karen

Main, Mrs Anne

May, rh Mrs Theresa

Maynard, Paul

McCartney, Jason

McCartney, Karl

McIntosh, Miss Anne

McLoughlin, rh Mr Patrick

McPartland, Stephen

McVey, rh Esther

Menzies, Mark

Metcalfe, Stephen

Miller, rh Maria

Mills, Nigel

Milton, Anne

Moore, rh Michael

Mordaunt, Penny

Morgan, rh Nicky

Morris, Anne Marie

Morris, David

Morris, James

Mosley, Stephen

Mowat, David

Munt, Tessa

Murrison, Dr Andrew

Neill, Robert

Newmark, Mr Brooks

Newton, Sarah

Nokes, Caroline

Norman, Jesse

Nuttall, Mr David

O'Brien, rh Mr Stephen

Offord, Dr Matthew

Ollerenshaw, Eric

Opperman, Guy

Ottaway, rh Sir Richard

Parish, Neil

Patel, Priti

Penning, rh Mike

Penrose, John

Percy, Andrew

Phillips, Stephen

Pincher, Christopher

Poulter, Dr Daniel

Prisk, Mr Mark

Pritchard, Mark

Pugh, John

Raab, Mr Dominic

Randall, rh Sir John

Reckless, Mark

Rees-Mogg, Jacob

Reevell, Simon

Reid, Mr Alan

Robertson, Mr Laurence

Rogerson, Dan

Rosindell, Andrew

Rudd, Amber

Ruffley, Mr David

Russell, Sir Bob

Rutley, David

Sanders, Mr Adrian

Sandys, Laura

Scott, Mr Lee

Selous, Andrew

Shapps, rh Grant

Sharma, Alok

Shelbrooke, Alec

Shepherd, Sir Richard

Simmonds, Mark

Simpson, Mr Keith

Skidmore, Chris

Smith, Henry

Smith, Julian

Soames, rh Sir Nicholas

Soubry, Anna

Spelman, rh Mrs Caroline

Stanley, rh Sir John

Stephenson, Andrew

Stevenson, John

Stewart, Bob

Stewart, Iain

Stewart, Rory

Streeter, Mr Gary

Stride, Mel

Stuart, Mr Graham

Stunell, rh Sir Andrew

Sturdy, Julian

Swales, Ian

Swayne, rh Mr Desmond

Syms, Mr Robert

Tapsell, rh Sir Peter

Thornton, Mike

Thurso, John

Timpson, Mr Edward

Tomlinson, Justin

Tredinnick, David

Truss, Elizabeth

Turner, Mr Andrew

Tyrie, Mr Andrew

Uppal, Paul

Vara, Mr Shailesh

Vickers, Martin

Walker, Mr Charles

Wallace, Mr Ben

Ward, Mr David

Watkinson, Dame Angela

Weatherley, Mike

Webb, Steve

Wharton, James

Wheeler, Heather

White, Chris

Whittaker, Craig

Whittingdale, Mr John

Wiggin, Bill

Williams, Mr Mark

Williams, Roger

Williams, Stephen

Williamson, Gavin

Wilson, Mr Rob

Wollaston, Dr Sarah

Wright, Jeremy

Wright, Simon

Young, rh Sir George

Zahawi, Nadhim

Tellers for the Noes:

Mark Hunter

and

Claire Perry

Question accordingly negatived.

18 Jun 2014 : Column 1179

18 Jun 2014 : Column 1180

18 Jun 2014 : Column 1181

18 Jun 2014 : Column 1182

18 Jun 2014 : Column 1183

Speaker’s Statement

Mr Speaker: I will now announce the result of the ballot held today for the election of a new Chair of the Select Committee on Health. A total of 433 votes were cast, with two spoilt ballot papers. The counting went to four stages and 421 valid votes were cast in the final round, excluding those ballot papers whose preferences had been exhausted. The quota to be reached was therefore 211 votes. Dr Sarah Wollaston was elected Chair with 226 votes. The other candidate in that round was Dr Phillip Lee, who received 195 votes. Dr Wollaston will take up the post immediately. I warmly congratulate her on her election. The results of the count under the alternative vote system will be made available as soon as possible in the Vote Office and published on the internet for public viewing.

Dr Sarah Wollaston (Totnes) (Con): On a point of order, Mr Speaker. I thank my right hon. Friend the Member for Charnwood (Mr Dorrell) for his exemplary leadership of the Health Committee for more than four years. That leadership has been widely respected. I thank him for everything that he has done on behalf of patients, acting, as he has done, as their voice. The NHS touches people’s lives a million times every 36 hours. It is the most extraordinary achievement and also the most extraordinary challenge. The new chief executive of NHS England has called on everyone in the NHS to think like a patient and act like a taxpayer. The role of the Select Committee is to ask those challenging questions on behalf of patients and taxpayers so that this most cherished institution can continue to be there for all of our constituents when they need it the most.

18 Jun 2014 : Column 1184

Mr Speaker: I thank the hon. Lady for her words.

Dr Phillip Lee (Bracknell) (Con): Further to that point of order, Mr Speaker. I congratulate my hon. Friend the Member for Totnes (Dr Wollaston) on her success in the election. I know that she has the knowledge and, above all and perhaps more importantly, the wisdom to be a very good Chair of the Health Committee and I wish her all the very best.

Mr Speaker: I thank the hon. Gentleman for his gracious words.

Chris Bryant (Rhondda) (Lab): On a point of order, Mr Speaker. I know that you know that parliamentary procedure says that we should not be allowed to applaud in this Chamber, but might not this be the kind of occasion when the Speaker abolished the rule and allowed applause?

Mr Speaker: There is an old adage that was taught to me by the hon. Member for New Forest East (Dr Lewis) some 30 years ago that if one is intent upon a particular course of action, one should never give a bureaucrat a chance to say no. I think that I will leave it there for today.

I now have to announce the result of the deferred Division on the question relating to European Union document No. 15808/13, a Commission Report: Alert Mechanism Report 2014, and other documents referred on 11 and 18 December 2013 and 9 April and 11 June 2014. The Ayes were 269 and the Noes were 217, so the Ayes have it.

[The Division list is published at the end of today’s debates.]

18 Jun 2014 : Column 1185

Energy Prices

4.28 pm

Caroline Flint (Don Valley) (Lab): May I be one of the first to add my congratulations to the hon. Member for Totnes (Dr Wollaston) on winning her election today to become Chair of the Health Committee?

I beg to move,

That this House notes the policy of Her Majesty’s Official Opposition to freeze energy prices for 20 months while the energy market is reformed; further notes that in recent months wholesale gas and electricity prices have fallen significantly, with gas prices for next day delivery 38% lower than their level this time last year and electricity prices 23% lower; believes that in a properly competitive market wholesale cost reductions should be passed on as quickly and as fully as cost increases; and calls on the Government to provide the energy regulator for Great Britain with powers to force energy suppliers to pass on price cuts to consumers in all parts of Great Britain when wholesale costs fall, if suppliers fail to act.

Last week we learned that wholesale energy prices have fallen significantly since the start of the year, and yet there has been no reduction in consumers’ energy bills. Indeed, bills are more than £60 higher this year than they were last year. So today we put before the House a very simple motion. It notes this sustained and substantial fall in wholesale prices in recent months, and it calls for decisive action from Government.

Other proposals could have been included, to which the Opposition remain committed, including a price freeze for 20 months while the energy market is reformed, which the motion notes and the Opposition reaffirm, which, just to be clear, would stop energy companies increasing their prices, but would not stop them cutting them; put a ring fence between the generation and retail arms of vertically integrated energy companies; create a pool for all electricity to be traded in; and provide greater transparency for trades in the gas market. But we have debated and voted on those many times before in the House without agreement. So in the interests of securing consensus today, the motion proposes only one measure, on which we hope it will be possible to find agreement: new powers for the regulator to be able to force suppliers to cut their prices when wholesale costs fall if they do not do it first.

We believe that we need to establish a new regulator with a clearer mandate to protect consumers, because in this respect alone, we believe Ofgem has failed. But again, given there is not consensus on this point, the motion simply proposes that the regulator—whether the current regulator, or a new one, as we have proposed—be invested with tough new powers to ensure that consumers see the benefit of falling wholesale energy prices. This is a motion that the whole House should be able to support, and I want to set out why.

David Wright (Telford) (Lab): Is not this just the kind of issue on which politicians can reconnect with the public? One fact that emerged from the recent elections is that people feel that politicians are powerless. When energy companies flout public opinion, they feel that we have very little to say from this House. Should we not be supporting the motion because it is a real opportunity for politicians to reconnect with the public? The public are not stupid. They see prices rise—

18 Jun 2014 : Column 1186

Madam Deputy Speaker (Mrs Eleanor Laing): Order. The hon. Gentleman is not making a speech. An intervention has to be short.

Caroline Flint: This is a chance for us to come together and pass the motion so that we can tell the public that we understand that regulation does not protect them when wholesale prices fall and those cuts are not passed on to them.

Let me start by explaining exactly what has happened to wholesale prices. Energy suppliers source their energy in a variety of different ways over a period of time. For the big six, some will be bought from their own generation arms, some will be bought in bilateral deals with other generators, and some will be bought via an open exchange. This process of buying and selling, and re-buying and re-selling, will begin some years before the energy is required for delivery. Not all of those trades are made public. It is precisely that lack of transparency that lends weight to the suspicion that energy companies can always find some kind of wholesale price movement to justify whatever prices they want to charge.

On the data that we do have, however, and to which the regulator has access, the picture is clear: wholesale prices are down, and not just slightly down, but substantially down, month after month. Forward prices are 16% lower for gas this year compared with last year, and 9% lower for electricity. Spot prices are 38% lower for gas compared with last year, and at their lowest level since September 2010, and electricity prices are 23% lower and at their lowest level since April 2010. But so far, the only people to benefit are the energy companies.

One of the things that happened when Labour was in government was that Ofgem began requiring companies to report publicly on their profits. Two weeks ago, in its most recent supply market indicators, Ofgem found that the profit margins on selling gas have now hit 10%, double the 5% margin the companies were making this time last year. The profits on a dual fuel bill have more than doubled during the last year, too. But consumers have not seen any benefit, and if the energy companies fail to cut their prices for the rest of this year, a typical household could miss out on savings of more than £130. The same is true of businesses, which have even fewer protections than households, a problem that my hon. Friend the Member for Streatham (Mr Umunna) and I are determined to correct.

John Glen (Salisbury) (Con): Does the right hon. Lady recognise that a principal problem is that those on prepayment meters are twice as likely to be in fuel poverty? Therefore, does she welcome the moves by EDF to introduce a fixed-rate tariff for prepayment meter customers? Does that not rather indicate that the market and these companies are beginning to listen and to take the actions necessary?

Caroline Flint: No. We can simplify the tariffs, and we recognise and welcome that. We can look at the problems of people on prepayment meters, but if the price that has been struck as part of the overall bill is not a fair one and does not reflect the fact that costs are going down for the companies, no simplification of tariffs and no efforts to help people on prepayment meters are a good deal. We must get ahead of this. We must get to grips with how the wholesale prices are set and what we are going to do when the companies do not pass on cost reductions. That is the essence of our motion today.

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Andrew Gwynne (Denton and Reddish) (Lab): Will my right hon. Friend give way?

Caroline Flint: I will give way one more time, then I want to make progress. I realise that we are short of time because the earlier debate went on considerably longer than expected.

Andrew Gwynne: I am grateful to my right hon. Friend. Was she as shocked as I was to see in the annual fuel poverty statistics report projections of households in fuel poverty increasing to 2.33 million? That is equivalent to the population of west Yorkshire living in fuel poverty. Is that not a damning indictment of a market that just does not work?

Caroline Flint: It is regrettable and worrying that, as I understand it, the number of families in fuel poverty is higher now than 10 years ago. All families deserve a good deal, whether they are in fuel poverty or not, but of course we need to give full attention to those who are most vulnerable.

As is to be expected, the companies have come up with all kinds of excuses, and I shall deal with each of them in turn. The first excuse is that even if wholesale costs have fallen, other costs have increased. Given that wholesale costs are by far the biggest single component of a household’s energy bill, making up about half of it, we would need evidence of quite dramatic increases in other costs for this claim to hold true. What might those other costs be? Energy bills are made up of five components: wholesale costs, network charges, environmental and social policies, and the supplier’s operating costs and profits. If we leave aside the operating costs and profits, which are within the company’s control, that leaves only two possibilities—network charges and policy costs, both of which, helpfully, are regulated by Ofgem or mandated by Government, meaning that we can test the companies’ claims.

According to Ofgem, network costs are up slightly, by about £7 on the average bill compared with last year, and are forecast to remain flat this year. So that cannot explain the gulf between wholesale costs and retail prices. What about environmental and social policies—the levies that pay for investment in clean energy, insulation and support for the most vulnerable? Given the cuts to schemes such as ECO, the energy company obligation, the fact that the warm home discount is now funded by the taxpayer and the cuts to the forecast increase in the carbon floor price, the claim does not ring true.

Undoubtedly, there are cost pressures, particularly from the small-scale feed-in tariff, but I hope the Secretary of State, who, after all, sets and monitors these costs, will agree that in no way can they account for the scale of the gap we are now seeing between the prices that companies pay for energy and what they charge their customers.

The second excuse we have heard is that the companies’ hedging strategies prevent them from passing on the reductions. What are these hedging strategies? One would be forgiven for thinking that they are a convenient device that enables the companies to complicate matters and confuse people whenever they are challenged about their prices. In fact, they are simply companies’ trading strategies, which determine how far out and in what

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quantity they begin to buy the energy they need for any given day. So what the energy companies are saying, in effect, is, “Sorry, we bought our energy on another day when it happened to be more expensive”—which, by the way, just happens to make their generation businesses more money, but let us not get into that for now.

It is impossible for anyone to verify the companies’ claims because they never disclose their hedging strategies, but I invite the House to be sceptical. In a properly functioning competitive market, we would expect that, given that wholesale costs are the largest single component of bills, there would be some motivation for companies to try to out-compete their competitors on that price. Adopting a different hedge might allow them to do that. Just to say that companies have different hedging strategies does not address the substantive question of whether they are adopting trading strategies that impose higher than necessary costs on consumers.

An even less persuasive version of that argument has been suggested. Some so-called analysts have suggested that the reason the companies have failed to pass on the cost reductions is the prospect of an energy price freeze. Although I welcome their confidence in a Labour victory at the next general election, I must say that of all the excuses I have heard in my time in this job, that has to be the most ludicrous. The idea that the day after my right hon. Friend the Leader of the Opposition made his speech on 24 September last year all the energy companies went out and bought up all their energy for the next four years does not stand up to the slightest scrutiny.

Let me be clear: if there is any evidence of suppliers colluding to inflate their margins, which I am sure the Competition and Markets Authority will monitor with great interest, and if this Government refuse to take action, we will. Of course, if we had greater transparency in the way energy is bought and sold in the first place, as Labour has proposed through our electricity pool and ring fence, the issue would be a lot clearer for everyone.

The final excuse we have heard is that nothing untoward could possibly be happening because the energy market is so competitive. Switching is up, we are told, and competition has never been more vigorous, but the facts speak for themselves: wholesale costs have fallen substantially, and over a sustained period; and not only has none of the major suppliers cut its prices, but none has even indicated that it has any intention of doing so. Indeed, some suppliers have actually ruled out price cuts this year. In its interim management statement, published last month, Centrica reported:

“No change expected in residential energy prices this year”.

However, as today’s motion notes, if competition was working effectively, we would expect wholesale cost reductions to be passed on as quickly and fully as wholesale cost increases, but we never see that. A report published by Ofgem in 2011 stated:

“We have found some evidence that customer energy bills respond more rapidly to rising supplier costs compared with falling costs.”

In its “State of the Market Assessment” this year, which led it to make a referral to the CMA, Ofgem again found that:

“There appears to be an asymmetry in how suppliers respond to changes in costs. We found that suppliers pass on cost increases more fully and more quickly than cost decreases.”

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Furthermore, it observed that:

“The asymmetry we found was greater than when Ofgem performed a similar exercise in 2011.”

It is not just wholesale costs. It must be a bitter disappointment to the Secretary of State that four of the big six have still not passed on the full £50 saving to 3.7 million customers following the deal he struck with them on green levies in December.

This is not some passing trend that will correct itself in the fullness of time; it is a systemic problem in our energy market that is a result of deep-seated and fundamental flaws in its structure and regulation. Waiting for the CMA to report is not an option. Wholesale prices have been falling for the past six months, with no signs that consumers will benefit, and the CMA investigation, which has not even begun, will take a further 18 months to complete.

That being the case, the question raised is this: what should we do about it? In theory, there are two things that can protect consumers: competition, where companies compete on pricing and customer service to win and retain customers; and regulation, where consumers enjoy certain defined protections. But in the energy market competition is at best immature and regulation, at least on pricing, is non-existent.

Mr Barry Sheerman (Huddersfield) (Lab/Co-op): Will my right hon. Friend give way?

Caroline Flint: I will give way one last time.

Mr Sheerman: My right hon. Friend is very kind. Is there not another dimension to this? In the country, including my constituency, the consumer base is getting angrier and better organised, through social media and other ways. They will not put up with this for much longer.

Caroline Flint: Absolutely. People were told that technology—doing things online, for example—would always make things better, but that is not the case. The point applies to those who do not have the confidence to challenge and those with busy lives who just do not have the time. I seem to recall a previous Energy Minister admitting that he spent at least half a day trying to sort out his own energy bill. If he cannot do it, what hope is there for others?

Jake Berry (Rossendale and Darwen) (Con): Will the right hon. Lady give way?

Caroline Flint: No, I will not.

Let me get back to the issue of competitive pressures. As I said, competition in the energy market is at best immature and regulation on pricing is non-existent, which means that the normal competitive pressures that we would expect to restrain companies from increasing prices, or to encourage them to pass on falling costs, are weak, while regulation is unable to correct the situation. That is precisely the Catch-22 situation in which the Government have left consumers. The Government tell them that regulation is not needed because we have a competitive market, when all the evidence from the regulator, consumer groups and parts of the sector

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clearly shows that competition is not working as it should. We should not forget what consumers are saying. Research out from Which? today shows that complaints to the big six have hit a new record high, because the market is just not working for the public.

Today’s motion proposes a new back-stop power for the regulator to force companies to cut their prices when wholesale costs fall if companies do not do it first. I want to be clear about the nature and extent of the power. It is not a return to full-scale price regulation as existed in this country until 2002, including under Margaret Thatcher and John Major, or as it still exists in most member states of the European Union; it is a back-stop measure that empowers the regulator—not the Government, Ministers or anyone else—to ensure that all consumers can enjoy the full benefits of competition to which they are entitled.

If competition works and cost reductions are passed on, the power may never need to be used. Indeed, its very introduction may act as an incentive on companies to do the right thing. However, if in its view anti-competitive practices happen in our energy market that cause harm to consumers, the regulator should have the power not just to write to the companies to ask them politely to explain to their customers why they are being ripped off, but to do something about it.

That is what today’s motion proposes, and it is something that Members from both sides of the House can support. After all, what did the Prime Minister say before the last election? On 8 September 2009, on his Cameron Direct roadshow in Bedford, he said:

“I think we all feel that when the gas prices or the oil prices go up, they rush to pass the costs onto us and yet when we read in the papers that the oil price has collapsed and the gas prices are coming down, we wait for a very long time before we see anything coming through on our bills, and I think the first thing you’ve got to do...is give the regulator the teeth to order that those reductions are made and that is what we would do.”

I agree. Let me be direct: it is just a shame that, four years into this Parliament, that commitment has gone unfulfilled.

I tell the House today that if we are elected, alongside our price freeze and our market reforms, we will give the regulator that power. However, it would be far better for the Government to take action now rather than consumers having to wait another 11 months to see the benefit of falling wholesale prices. If the Government do, I guarantee them our support. Given the Queen’s Speech, if there is the will, time could be found. In that spirit, I commend this motion to the House.

Several hon. Members rose—

Madam Deputy Speaker (Mrs Eleanor Laing): Order. Before I call the Secretary of State, let me say that it will be obvious to the House that a great many hon. Members want to take part in the debate and that the time available is very limited. I must therefore impose a time limit—initially of seven minutes—on Back Benchers.

4.48 pm

The Secretary of State for Energy and Climate Change (Mr Edward Davey): I join the right hon. Member for Don Valley (Caroline Flint) in congratulating the hon. Member for Totnes (Dr Wollaston) on her election as Chair of the Health Committee.

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The right hon. Member for Don Valley began by wanting to reach consensus and, to be fair, it is not the first time that she has done so. Right hon. and hon. Members might be surprised to learn that she talked warmly in a speech last week about the consensus on energy policy in the UK. They might be even more surprised to learn that I agree that there is consensus on some aspects of energy and climate change policy. The Labour party has accepted the coalition’s major reforms of Britain’s electricity market. Labour voted for the Energy Act 2013 and backed its centrepiece—contracts for difference—which will be crucial in creating the world’s first ever low-carbon electricity market. Labour appeared to be backing our measures that are driving the massive increase in energy investment from which the UK is benefiting, including the more than doubling of renewable electricity. Labour seemed to be backing the measures that we are introducing to keep Britain’s lights on, such as the plans for a capacity market and National Grid’s supplemental balancing reserve.

I am fairly confident that there has been a consensus on energy security and climate change for some time, because the right hon. Member for Don Valley never questions me about our climate change or energy security policies. I am grateful for her support, however tacit. It would be nice to have more opportunities to explain by how much renewable investment has risen in the UK. According to Bloomberg New Energy Finance, the UK had the highest level in Europe in 2013. It would be nice to have a chance to tell the House in detail how we have turned around the legacy of under-investment that we inherited, which was threatening Britain’s energy security.

To be clear, I am more than happy, instead, to be debating energy prices again. I will deal with the right hon. Lady’s core argument head-on, because energy prices are of concern to people and businesses. Even on energy prices, there is some agreement between us. We agree that Britain’s energy markets need to be reformed. If we are to get a better deal for people, whether in terms of prices or customer service, there needs to be change. There needs to be some form of intervention to improve the markets.

The differences between us start to arise over what sort of intervention will work. What is it, exactly, that the Government and the regulator can do that will help the consumer most? The right hon. Lady believes that the change we need is regulation—price regulation. Labour now wants two regulatory interventions on prices. First, it wants legislation so that the Government can fix prices through a temporary 20-month price freeze. In addition, she now wants the energy regulator to intervene when retail prices do not quickly follow changes in wholesale prices. Such price control would be a massive, permanent state intervention.

Ian Swales (Redcar) (LD): Does the Secretary of State share my surprise that the motion talks about the importance of passing on wholesale cost changes as quickly as possible, while also calling for a price freeze?

Mr Davey: My hon. Friend has spotted a point to which I will return. There is a bit of inconsistency there.

The historians among us might note that the two proposals for price control regulations are particularly interesting because they reverse the policy that Labour backed in government. In 2002, under Labour, Ofgem

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abolished all price controls on gas and electricity. Is it not interesting that, even though there is now more competition than in 2002, Labour has done a U-turn and wants price control regulations back?

Mr Sheerman: I have a lot of respect for the right hon. Gentleman, as he knows, but he has spoken about history and about inconsistencies in Labour policy. We were all prepared to oppose the greenest Government ever. If he wants to get the history right, he will recognise that there has been a wholesale retreat from that commitment.

Mr Davey: I am very grateful for the hon. Gentleman’s intervention. This is the greenest Government ever. We have the green investment bank. We have more than doubled renewable electricity. Low-carbon electricity is booming. This is the top place in Europe for renewable electricity, the best place in the world for offshore wind, the best place in the world for tidal investment and the second best place in the world for biomass. I could go on. I hope that he intervenes on that point again.

As I was saying, the interventionist approach of the Opposition is not our approach. We want to aim our intervention at ensuring that our energy markets are more competitive and work harder for consumers. We want to get more energy firms into the market, make it easier for customers to change energy supplier when they do not get a good deal and prevent firms from abusing their market dominance. Price controls will not do any of that.

My argument today is that our reforms to Britain’s energy market are beginning to work. Increased competition is beginning to help people not only to freeze but to cut energy bills. Our approach, fixing the messed-up energy markets we inherited from the Leader of the Opposition, is now bearing fruit.

Paul Uppal (Wolverhampton South West) (Con): The concern is the inelasticity of prices, especially in their coming down. I am pleased that the Competition and Markets Authority is looking at the market. Does my right hon. Friend agree that a solution to price volatility would be to move from centralised energy production to a system whereby individual customers—SMEs—produce their own energy, increasing long-term competition in the sector?

Mr Davey: I certainly believe that local energy generation is key in driving competition. I am proud that it was this Government who published Britain’s first-ever community energy strategy to help local communities and individuals and small businesses to generate energy.

Michael Connarty (Linlithgow and East Falkirk) (Lab) rose—

Mr Davey: I will let the hon. Gentleman intervene, but then I must make some progress.

Michael Connarty: It is very important that the Minister is not allowed to get away with an empty boast. The Energy and Climate Change Committee report states that

“gas and electricity have risen by 41% and 20% in the UK in real terms. . . This has had an adverse impact on fuel poor households and thrown Government targets to eliminate the problem by 2016 off-course.”

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How can the right hon. Gentleman boast that prices are being cut in real terms when the facts in the Committee’s report deny that?

Mr Davey: Let me be fair to the hon. Gentleman—

Michael Connarty: Answer the question.

Mr Davey: I am about to do so. I said that our reforms are beginning to work. It is true—that is what I said. I admit that energy prices have gone up in this Parliament, but they have gone up slower than they did in the last Parliament, when energy bills went up faster on average every year than they have in this Parliament. Indeed, fuel poverty went up under Labour, whereas the latest statistics show it falling. The hon. Gentleman should look at the facts.

Paul Flynn (Newport West) (Lab): Will the right hon. Gentleman give way?

Mr Davey: No, I will not; I am going to make some progress.

Pursuing the Opposition’s policies would be nothing short of a disaster, not just for consumers but for investment, for decarbonisation and for energy security. If any Government were so misguided as to intervene with the two prices regulations proposed by the right hon. Member for Don Valley (Caroline Flint) it would lead to chaos in our energy system.

Today’s latest debate on energy prices does have something new—well, sort of new. The right hon. Lady—quite rightly, in my view—wants us to focus on the fact that while wholesale prices for gas and electricity have by and large fallen in recent months, most energy companies have yet to cut their retail prices. Many people, over many years, have looked at this phenomenon—at the way in which wholesale and retail energy prices relate to each other and at how there always seems to be a time lag between changes in wholesale prices and in retail prices, especially when wholesale prices are falling. The explanation that energy firms give for this time lag is the way in which they buy their wholesale energy: to spread their risks and hedge, to smooth out the prices they charge customers, they buy much of their gas and electricity six months, 12 months, 18 months or even further ahead on the futures markets. Therefore, energy firms claim, they cannot immediately pass on today’s wholesale price falls, because the gas or electricity they are supplying was bought at the higher prices of months past. The right hon. Lady spoke a lot about that. Like many people before her, she is worried about the so-called rocket and feather problem: the energy companies appear all too ready to allow their retail prices to go up like a rocket when wholesale prices rise, but when wholesale prices fall their retail prices are no longer rockets but feathers, gently falling ever so slowly so that the energy firms can profit.

That argument leads to two questions: first, is it true? Do energy prices follow this rocket and feather model? Secondly, if it is true, what should we do about it? My answers to these questions are clear. It may well be true—there seems to be evidence that it happens. It was one of the reasons I asked the competition authorities

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last year to undertake the first-ever annual competition assessment of the energy markets. Interestingly, the independent competition authorities stated:

“We have found that suppliers do not adjust their prices as quickly when costs fall compared to when wholesale costs rise.”

In fact, it was one of a number of reasons and findings that led Ofgem to propose a market investigation reference. That is exactly what I think we should support when faced with such a worrying finding for consumers. There should be a no-holds barred inquiry by independent experts, whom we have given real teeth to act for consumers. That is the action that the right hon. Lady should be proposing and that I am backing as Secretary of State for Energy and Climate Change.

Paul Flynn: Will the right hon. Gentleman give way?

Mr Davey: No.

I am not the first Secretary of State for Energy and Climate Change to be confronted with the problem of wholesale and retail energy prices—the possibility of a rocket and feather consumer energy price rip-off. As Secretary of State for Energy and Climate Change, the right hon. Member for Doncaster North (Edward Miliband), the Leader of the Opposition, presided over a period in which wholesale prices crashed and retail prices did not. When he did my job, between September 2008 and January 2010, wholesale prices actually fell faster than the figures set out in the Opposition’s motion. Wholesale electricity prices on the day-ahead market fell not by the 23% mentioned in the motion but by 62.5%. Under the Leader of the Opposition, wholesale gas prices to businesses fell not by 38% but by 43%. A big driver of those falls was, of course, the massive recession, and they went on so long that, eventually, retail prices for consumers fell—but only by a bit: electricity by 7.5%, not the 62.5% fall in wholesale prices enjoyed by the energy firms, and gas by 5.6%, not the wholesale fall of 43%.

The energy prices rocket and feather phenomenon is, therefore, not new. I thought it would be worth finding out what lessons we have to learn from my predecessor, the leader of the Labour party. What did he do when he had the power? He called a summit—a summit. He reported back to this House on what action he had taken:

“I impressed upon the companies the need for retail energy prices to reflect changes in wholesale prices as soon as possible.”

He “impressed upon” them that retail prices should reflect wholesale prices “as soon as possible”. It just never happened. But, to be fair, he went further, in standing up to the energy companies. He told the House that

“The Government and the industry are agreed on the need to bring down retail gas and electricity prices.”—[Official Report, 18 November 2008; Vol. 483, c. 14WS.]

It was “agreed”; it just never happened—it never reflected wholesale prices. Perhaps that was because, a month later, the Labour leader backed down. He said—fiercely, no doubt, and the right hon. Lady should listen to this—

“We have recently seen big falls in wholesale gas and electricity prices, but I understand that because energy companies tend to buy in advance they won't be passed on immediately.”

It sounds as though he was more impressed upon than impressive.

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Caroline Flint rose—

Mr Davey: I will give way to the right hon. Lady, who will no doubt tell us why the Leader of the Labour party was unable, when doing my job, to do anything.

Caroline Flint: The proposition is that we should, across the House, recognise that when wholesale costs fall they are not passed on quickly enough. Does the right hon. Gentleman agree that leaving things to the market does not achieve that and that the proposition that a regulator should have the power is the way forward—yes or no?

Mr Davey: I have already said that I believe that there is a problem—Ofgem and the competition authorities told us that in the report I commissioned. I think there is a need for intervention—that is what I have been saying. The question is: what is the right intervention? Is it the price regulations proposed by Labour—the quite big interventions that I shall explain when I describe how they would work—or is it to ask the independent experts from the competition authorities to ensure that our markets work for consumers. The latter is what we are doing, and I think it is the right approach.

The Leader of the Opposition tells the Government all the time that we should stand up to the energy companies. That leads me to the not unreasonable conclusion that he must have stood up to the energy companies—that he must have a proud record of taking on energy firms at some stage. So I did some more research to find out what tough action the leader of the Labour party took. I was convinced that he of all people, faced with much larger falls in wholesale prices than we face today, would have acted. I therefore commissioned the research on what action Labour’s leader, when Energy Secretary, had actually taken on wholesale energy prices—what announcements he had made.

The research has come back, so let me read it:

“You asked for any statements of information provided by the last government on the link between wholesale and retail energy prices”—[Interruption.]

The right hon. Lady should listen to this:

“I’m afraid there was no substantial policy in this area by the previous government and as a result no announcements.”

There was nothing. The Leader of the Opposition simply did not have the same great ideas as the right hon. Lady.

Perhaps I am being too harsh. Perhaps the Leader of the Opposition was not advised to take the various actions we have taken, such as our support for a reference of such problems to the independent competition authorities—in other words, the experts. My research, however, suggests that the Labour party was told to act when he was doing my job. In fact, we have found that he was told to act on at least three occasions.

The Leader of the Opposition was asked three times to refer the issue of energy prices to the Competition Commission, and three times he refused. On 5 March 2009, he said:

“I do not think that at this stage a referral to the Competition Commission is the right way to go”.—[Official Report, 5 March 2009; Vol. 488, c. 983.]

On 7 December 2009, he said:

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“It is better to look at policy options…rather than at a lengthy Competition Commission investigation.”—[Official Report, 7 December 2009; Vol. 502, c. 45.]

Of course, he did not actually take any policy options. On 25 February 2010, he was still in denial:

“I am not in favour of referring these matters to the Competition Commission”.—[Official Report, 25 February 2010; Vol. 506, c. 444.]

That is what Labour’s then Energy Secretary said, so my advice to the right hon. Member for Don Valley is this: stop embarrassing your leader.

For the sake of debate, let me accept another Labour U-turn on energy policy. Let me imagine that the Labour leader has thought more about it, listened to the right hon. Lady and changed his mind. Let me examine their proposals for two new price controls and how they would work.

As set out in the motion, Labour now has two competing ideas. The first is a temporary energy price freeze for 20 months, which is a policy to lock in a price, regardless of what happens in the wholesale markets. If wholesale prices go up, the smaller energy suppliers that cannot soak up the losses will go bankrupt. We have never received an answer to that. If wholesale prices go down, companies hedging against the freeze will have to maintain their prices and customers will lose out. The right hon. Lady is shaking her head, but companies that hedge against a freeze will lose money and potentially go bankrupt under her policy. She does not understand how markets work.

Ian Swales: Does the Secretary of State share my concern that the chief executive of First Utility, the largest independent supplier, says of the prize-freeze proposal:

“Bluntly, it could put me under”?

Mr Davey: My hon. Friend is absolutely right. All the new independent suppliers who are coming into the market and taking on the big six companies created under Labour do not like the policy, because they know it would undermine competition, put them out of business and be bad for consumers. Although we have debated many times the price-freeze intervention proposed by the right hon. Member for Don Valley, she still has not convinced anyone. We have shown time and again that it is just a damaging con.

The second, and latest, price control is proposed legislation to force energy companies to pass on variations in the wholesale markets more rapidly, which is sort of the exact opposite of a price freeze. Rather than keeping prices the same, this price regulation seems to want them to change more frequently and more rapidly, mirroring the wholesale markets.

That is interesting, because if we look at what has happened recently, we will see that wholesale prices can go up and down on a daily basis. A fortnight ago, wholesale prices were falling: day-ahead electricity prices fell by 7% and the natural gas spot price fell by 12%. Last week, however, the day-ahead electricity price went up four days out of five, ending up at almost 6% by the end of the week, and the natural gas spot price was up 10% by the end of the week. In other words, the spot prices on the wholesale markets go up and down—they are very volatile and fluctuate all the time.

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The price regulation proposed by the right hon. Lady is a rollercoaster approach to energy price freezes. I call it Labour’s bungee-jumping approach to energy prices, and one would be hard pressed to think of a more incoherent and inconsistent approach. It is a populist, opportunist, soundbite approach to energy policy that would not just hit investment but leave consumers worse off. In other words, yet another con.

Geraint Davies (Swansea West) (Lab/Co-op): Is not the key difference that we are now in a situation where, because of the flatlining of the economy for the past three or four years—[Laughter.] It is all very well laughing, but real wages have fallen through the floor as prices have rocketed. People are being thrust into abject poverty, particularly those at the bottom for whom energy makes up a bigger proportion of their expenditure. People are in desperation, which is why we need action now. That desperation was not the case in the past.

Mr Davey: I am grateful for that intervention because it shows that Labour has not even looked at what is happening to the economy. Employment is going up and unemployment is going down; inflation and the deficit are going down, and growth is up. The hon. Gentleman ought to notice that.

Let me ask a few questions about Labour’s latest policy. How would Labour’s bungee-jumping energy price regulation work? Let us try to get our heads round what is proposed—Labour wants to be in government in under a year, so I am sure it has thought through the detail. Would Labour legislate to force companies to pass on each and every cut in wholesale prices? Would it give Ofgem that power? How frequently would the link between wholesale and retail prices be made, and which wholesale price would Labour choose for Ofgem to intervene with? The day-ahead or the month-ahead price, or perhaps something else in the futures market? I think we should know. Which all-seeing, all-knowing official in Labour’s new energy Gosplan regulator would work that all out?

Caroline Flint rose—

Mr Davey: Oh, some answers—I am looking forward to this.

Caroline Flint: I understand that Ofgem—the regulator —wrote to all energy companies last week to say that they should pass on reductions in wholesale costs. Has the Secretary of State had a word with Ofgem about its expectations of how that should be achieved?

Mr Davey: I have spoken to Ofgem’s chief executive, Dermot Nolan. He is worried because the Labour party wants to get rid of Ofgem, even though it is doing this fine job and talking to energy companies. Ofgem is worried that Labour wants to undermine the regulatory system. Interestingly, who set up Ofgem? The Labour party. Who reformed Ofgem just a few years ago to make it more effective? The Leader of the Opposition. There is no consistency or coherence about anything on energy policy from Labour.

Let us consider some more basic questions—Labour Members will have to answer them at some stage if they are to be vaguely credible. If the regulation forces

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energy bills to drop immediately when day-ahead wholesale prices drop, what will that mean when wholesale prices rise? Will the regulation be exactly same both ways? If regulation forces retail prices to track wholesale prices, how often will a consumer’s energy bill have to be recalculated and what will be the cost of that? Who will be the genius who second-guesses companies’ forward buying strategies, and decides whether they are good or bad? Will all suppliers have to purchase at the same time for the same contract period in Labour’s brave new world?

The logic of the massive state price control that Labour is proposing is clear: Labour wants to destroy the forward energy markets. It wants to end competition between companies, which is based on who has the brightest and best purchasing strategy to deal with things such as events in the UK or in Iraq, and manage those sorts of problems. If we end that competition, who will lose when the risks are greater? It will be consumers who pay in higher prices.

Paul Flynn: Will the Secretary of State give way?

Mr Davey: Forward markets help reduce risk and therefore help reduce prices for consumers. They help competition and smooth prices for consumers that make fixed-price deals.

Paul Flynn: On a point of order, Mr Deputy Speaker. I came to the Chamber expecting a debate about energy prices. Nowhere on the Order Paper does it say that we would be treated to a drivelling, ad hominem attack on the Leader of the Opposition.

Mr Deputy Speaker (Mr Lindsay Hoyle): That is not a point of order. You have made your point, Mr Flynn, but it is up to the Secretary of State whether he wishes to give way. He is giving way now and again. It is not as though he could not hear you, so I suspect he is not giving way by choice.

Mr Davey: The House can probably see why I made that choice—[Interruption.] Frit? That is a joke.

The forward markets help competition, smooth prices for customers and make fixed-price deals possible. Under Labour’s proposals, there would be no more fixed-price deals for consumers—ironically, the area in which competition between companies is greatest. The plain truth is that this latest headline-grabbing, price-control state intervention is as unworkable and damaging as Labour’s last one. Just like under the last Labour Government, such policies would simply mess up our energy markets and hit consumers hard. Labour reduced competition and created the big six. We have had the hard task of clearing up Labour’s energy mess. This Government have reformed the energy markets and boosted competition so that the big six—created by Labour—are now being challenged like never before.

We have seen 12 new entrants into the market. The share of independent energy firms has risen from less than 1% to almost 6%—and fast. According to Energy UK, in May this year for the first time ever more than half of people switching switched to an independent supplier. Small suppliers have gained more than 1 million customers since May last year.

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The Government have worked to help all consumers. We have been harder and more effective in working for consumers in just four years than Labour managed in 13. We have championed switching, acting to make it simpler, with fewer confusing tariffs and easier to read bills—all things that Labour never did. People now understand the choices they have and are more confident about switching. We have acted to speed up switching too. Ofgem this week confirmed that switching times will be cut in half by the end of the year, from the ridiculous more than five weeks that we inherited, and that we are on course for my objective of 24-hour switching within four years.

We have even acted to encourage new forms of switching. Labour talked about the collective principle, but never did anything about it. The Cheaper Energy Together firm is piloting initiatives around the country that have saved tens of thousands of people millions of pounds. Just today, in the latest collective switch—the Big Deal—we learned that customers on a typical standard tariff with a big six supplier could save £210 by switching to the new deal delivered for consumers who have come together to buy energy. That is a new deal from an independent energy supplier which entered the UK energy market only last year. That is competition working.

We are always looking to do more for consumers, to sharpen competition and to explore new business models. That is our approach to helping people cut their bills. At the next election, the choice on energy bills will be clear. People can either trust Labour politicians to fix energy prices for them with state intervention or they can trust the growing number of new, smaller energy suppliers which are already delivering for millions of people, taking on Labour’s big six with competition. People can opt for the right hon. Lady’s approach to improving our energy markets—policy on the hoof with 1970s-style price controls—or they could opt for the most detailed ever, in-depth inquiry into Britain’s energy markets by independent experts.

Above all, at the next election, people can vote for energy price freezes under Labour or back the cuts in energy bills our policies are now making happen. Labour and the Leader of the Opposition flunked energy policy when they were in office. We must not ever let them do that again to Britain’s energy system.

5.19 pm

John Robertson (Glasgow North West) (Lab): In a debate for which we have two and a quarter hours, the Secretary of State has spoken for half an hour. He spent his time attacking what the Labour Government did six years ago. That is outrageous. Once again, we have seen the reinvention of history. The Secretary of State is so out of touch with the people of this country that it is a disgrace that he is still in office. If he had any decency, he would throw the towel in and go and get a job that he can actually do something in.

We are here today to talk about prices and costs. That has nothing to do with the reinvention of history and nothing to do with the previous Government—although the previous Government gave the Secretary of State the job he has today. If it had not been for the previous Government, we would not be talking about energy and climate change. It was the previous Government who set that up with, I have to say, help from Her Majesty’s Loyal Opposition at that time. His own party, the

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Liberals, were against having a balanced energy policy, because they did not like the balance. Let us put everything in perspective: if the Liberals were honourable, they would not take up a post in the Department of Energy and Climate Change, because they were totally against what the Labour party and the Conservative party wanted at the time. Our parties worked together to meet the needs of the nation. It seems now that the agreement we have had over the years has gone out of the window. I blame the Secretary of State for that. Until he came into the job there was still a friendship between the parties to ensure that energy was in place to meet the needs of the nation.

The cost of electricity and gas has gone down. That is a fact, otherwise Ofgem would not be trying to get in touch with all the companies to ask them what they are going to do. We have been in this position before, and companies were fined for not bringing down the price quickly enough. I have a lot of constituents in fuel poverty. The Secretary of State and the hon. Member for Redcar (Ian Swales), who asked questions from his party brief, might not have any people in fuel poverty in their constituencies, but I have plenty. I have to support them and look after them, and I want prices down to where they should be. The Minister of State laughs and says we are out of touch. I am sorry Minister of State, but we are so much in touch with the people we represent. It may be time for those on the Government Front Bench to have a reality check.

On prices and the amount of money that has been, shall we say, siphoned off by energy companies, the Secretary of State talks about transparency. There is no transparency in the energy companies. He talks about having a look and seeing where the money goes. The Select Committee has tried that. We asked experts to try to look at the books and understand what energy companies do with their money, but they cannot work it out. At a meeting with EDF yesterday, I told them that until such time as they get their act together and become totally transparent—showing the books for us to be able to read and understand—people will not trust them. Until they do that, we will still be calling for price reductions. To prove that they do not deserve to have their prices reduced, they will have to open the books and make them totally transparent to Parliament. We have to be able to say, “Yes, they are right and they should not have to have a reduction.” They deliberately do not do that. I have to conclude from that that they do not want it to happen and are hiding something. This is for the Government to pursue, but they have not done so.

Ofgem has done a particularly poor job—let us be honest. I agree that it is not as bad as a lot of people think, but, having said that, it has not done a particularly good job. It is so slow at doing things it is not true. Perhaps a stick of dynamite somewhere might be helpful, but I expect that stick of dynamite to come from the Secretary of State—not from me and not from the Opposition, but from the Government. It is time the Secretary of State got his act together and sorted out Ofgem. He still has some time left before the general election. When the Labour party wins the election we will obviously have to sort it out.

Let me give the House an example. A reduction in wholesale prices managed to give the chief executive of Scottish and Southern Energy, Alistair Phillips-Davies a £2.7 million annual salary. That is obscene, and it does

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not include his bonuses. That is the kind of thing we are subsidising. We are subsidising chief executives receiving lots of money. We are subsidising money being invested who knows where. At one stage, ScottishPower was taking £800 million from Scotland through Spain to the United States. We should not allow that to happen.

If the Secretary of State stands up and has a go at Ofgem, I will be right behind him to help him, but with the best will in the world, he does not seem to be looking after the needs of the nation at this time. I want him to do so—it is important that he looks after the needs of the nation. If that means that energy companies have to tighten their belts, they can join the rest of us doing so Everybody else has to tighten their belt, so why should they not cut back a wee bit on their profits for the needs of the nation, rather than siphoning money away from the UK to Germany, Spain or France? That is not right and I expect our Government to look at it.

The companies have tried to blackmail us. They said that if we freeze energy prices, all hell will be let loose, but then one company said it will freeze its prices. The idea of freezing is to sort the problem out. The idea is not to put prices up or down, but to stop people getting ripped off the way they have been over the years, and to ensure that our Government look after the people who are important.

Ian Swales: Will the hon. Gentleman give way?

John Robertson: I am not interested—I have only a few seconds left.

It is important that the Government remember the people who are in fuel poverty instead of attacking people because of policies that happened years ago.

5.26 pm

Jake Berry (Rossendale and Darwen) (Con): It is a pleasure to follow the hon. Member for Glasgow North West (John Robertson). I am sure our constituencies have something in common. We have snow every year in Rossendale and Darwen, and I am sure Glasgow has snow every year too. Energy prices are a concern to residents in my constituency because of the harsh winters. Mercifully, last winter was relatively mild, but we may have a harsh winter ahead of us.

I am pleased to speak in this important debate on energy prices. I want to talk briefly about the action the Government have taken so far to reduce bills and the concerns of my constituents about the difficulty in switching. Finally, if I get a moment at the end, I want to address the issues faced by those on non-conventional fuel, by which I mean liquefied petroleum gas and oil-fired central heating, which is a problem in my constituency for those in rural properties. As I go through my speech, I am sure I will refer to the motion several times.

In 2010, when the Government inherited a broken and dysfunctional energy market, it was imperative that they acted and took steps to restore it. Let us look at some of the problems that existed at that time. Fuel poverty doubled between 2005 and 2010, despite a commitment in the Labour party’s 2005 manifesto to eradicate it. We went from having 15 energy suppliers in

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the market in 2000 to having the big six, which were given to us in 2010. Bewilderingly, in 2010, there were in excess of 4,000 energy tariffs for people to choose from. Bills climbed by 50% in Labour’s period in office. We had a perfect storm of reduced competition in the market, rising global energy prices, which drove bills up, and green taxes imposed on every household, which put up individual bills. That situation would have been difficult enough for families to deal with if the record of incompetence and dithering had not reached every other part of the Government and gifted families a huge recession to deal with at the same time as they had to deal with rising energy costs.

Our Government set out to reform that dysfunctional market. By deregulating the market, insurgent energy companies such as Ovo have come into it to drive competition. There have been nine new entrants to the market in the past two years—the number of people getting energy from such smaller independent companies has trebled. Recently, the Government knocked £50 on average off a bill by rolling back some of the green taxes on families. We have also simplified tariffs, going from having the bewildering 4,000 tariffs I mentioned to having just over 400.

The shadow Secretary of State mentioned that people are often too busy to look at switching. I have switched my energy supplier on a reasonably regular basis, but when I looked at my bill two days ago and was given a meter reading, I was reminded of the Prime Minister’s personal commitment to everyone in this country to try to help to reduce their energy costs. On my bill was a note saying that I was on the cheapest variable tariff, but there was also another note—in a prominent position, on an EDF bill—saying that if I switched to the online saver, I could save a further £85 a year on a dual fuel bill. I had never seen that on my bill before and, knowing that this debate was coming up, I was grateful for it. [Interruption.] The Secretary of State is claiming credit—I will have to buy him a beer now that he has saved me 85 quid—but there was also a personal commitment from this Government to help to reduce bills, which is something we have already done.

Switching is often the best way to save money, but we must make it faster and simpler. Lots of my constituents contact me to say, “It seems bizarre that I can now move bank accounts in a week or even a few days, but it can take me up to five weeks to switch my energy supplier.” I pay tribute to the Secretary of State for the work he has already done, getting the agreement of energy companies to halve that to two and a half weeks by the end of this year, but I hope and believe that the Government can go further. There is no reason why we cannot have 24-hour switching. It needs to be fast, easy and simple, so that people can do it on a regular basis.

We also need to give more consideration to hard-to-reach switchers. Going on the internet is not for everyone. We have people in rural communities who do not have broadband and older people who do not feel comfortable using a computer. That is why we must look at campaigns such as uSwitch’s “Send us your bill” for ways to support those who have not switched and the hard-to-reach switchers to make that saving. I run a switching campaign in my constituency every year in the winter to try to encourage people to switch. Other services are available, but uSwitch has been a huge support to me in that work and done excellent work on reducing bills.

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Despite those efforts and the Government’s work, however, bills have still risen. Global energy prices are now starting to fall. I echo the content of the motion, which says in terms that there is a suspicion that the rocket and feather approach is being applied to the price falls, which are not being passed on to consumers. I would go beyond suspicion: I would say that there is evidence. That is why I support the independent Competition and Markets Authority inquiry. We must ensure that the Government’s action to reduce people’s bills is passed on to consumers. An independent inquiry, with consumers and competition at its heart, is the best way to do that.

Finally, I want to talk about non-conventional heating sources: oil and liquefied petroleum gas, particularly in rural areas. I am disappointed that the motion does not address that issue, because it is a challenge to farmers and people in rural areas, who have seen the cost of oil and, in particular, LPG increase significantly. Lots of those businesses, which are off-grid, are energy-intensive users. I hope and believe that the Secretary of State will look at what can be done to help off-grid consumers and support their businesses.

5.33 pm

Mr Mike Weir (Angus) (SNP): It does seem to me sometimes in these debates that it is the same old gang assembling to go over their greatest hits. However, the recent decision to make a referral to the Competition and Markets Authority has changed the scene significantly. I support the referral and hope that a decision will come fairly swiftly, although the history of such referrals does not give me a great deal of confidence.

Mr Davey: My previous job was as competition Minister and we reformed the processes so it is quicker.

Mr Weir: I will wait and see how quick “quicker” is.

It is interesting to look at some of the reasons that Ofgem give for the referral. It notes that average dual fuel prices increased by 24% between 2009 and 2013, which is just over 10% higher than general inflation over the same period. At the same time, energy consumption has decreased. In effect, even though consumers are perhaps reacting to the message of saving energy, they are still seeing substantial costs, leading many to question the cost-effectiveness of energy-saving measures. I have made the point before that one of the defects of the green deal scheme is that many consumers simply no longer trust the energy companies and will be reluctant to take part in any scheme—even a good one—that they are promoting. This is borne out by the state of the market assessment, which says:

“We found evidence of low levels of consumer satisfaction. Only 51-52 per cent of customers said they were satisfied with their supplier, and customer complaints have increased by more than 50 per cent since the beginning of 2011. Our survey evidence showed that in 2013, 43 per cent of customers did not trust energy suppliers to be open and transparent in their dealings with consumers, an increase of 4 percentage points from the previous year.”

Not surprisingly, it concluded:

“Levels of customer confidence and trust are not what we would expect to see in an industry that is successful in meeting its customers’ needs and expectations.”

That is a fairly damning indictment of the way consumers view the major energy companies, and should not come as a huge shock to anyone who has dealt with the issue.

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This is especially true since the assessment also notes that between 2009 and 2012, the earnings before interest and tax, as it puts it, of the energy companies have shown a very substantial rise of around £700 million, standing as of 2012 at £3.7 billion.

It is interesting to note that within non-domestic supply, profits have fallen slightly, while domestic supply profits have increased from £233 million to £1,190 million —a staggering rise over a four-year period. It seems to me that there must be something wrong with that. Clearly, the hard-pressed consumer was bearing the brunt of the massive price rises at a time when wages were, at best, static and other essential costs such as food were also rising sharply. It is no wonder that many of our constituents were feeling under very considerable financial pressure, and many still feel that they are seeing no benefit from a recovering economy, when their family circumstances remain very tight indeed.

It was interesting to hear what the Secretary of State said about the rocket and feather approach. I am not an expert on hedging, but it seems to me that its object is to prevent sudden price spikes or price falls. Whether it comes down like a feather is one side of the equation, but if it is going up by a rocket, the hedging strategy is clearly not working. We must question whether the energy companies are truly taking part in a hedging strategy, or whether this might be just another excuse. The Competition and Markets Authority needs to look at that.

The figures on the costs are only part of the picture. It is all very well talking about the average cost of a dual fuel bill, but that disguises a multitude of other consumers who are on much more expensive deals. I have often cited the costs that those on prepayment meters face. Although it is true that many companies set those tariffs to the rate of their standard domestic tariff, those are still much higher than the tariffs for those who can pay by direct debit or have dual fuel or fixed-term deals, many of which are not available to those on prepayment meters. The situation can be much worse for those who have debts because the meter can be set at a very high recovery rate. Research by Citizens Advice Scotland disclosed cases where some people had £7 out of every £10 they paid taken towards arrears.

Governments have consistently argued—we have heard it again today—that switching is the way for people to save money. The truth is that those who would benefit most from switching are those who find it very difficult, if not impossible, to switch. Those who are most active in switching are those who are already on better deals. As Ofgem put it in its report:

“Customers that are prepared to manage their accounts online, pay by direct debit, and fix the cost of energy for 12-18 months are able to get the best deals.”

It is also true, it seems to me, that the amount that can be saved is relatively small; the differences between the best online deals of the major companies tend not to be great and the benefits of repeated switching are subject to a law of diminishing returns.

It is also the case, however, that the very nature of these deals—managing accounts online, paying by direct debit and so forth—tend to exclude those who are the most fuel poor since they are also the least likely to have bank accounts, or at least bank accounts prepared to

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accept direct debit payments, and the least likely to have ready access to a computer to enable them to manage their accounts online.

Jake Berry: Will the hon. Gentleman give way?

Mr Weir: No, as many others wish to speak.

In many of the rural areas of our constituencies, the banks have been in retreat for many years, so that many even quite large villages no longer have a bank branch, and some of the smaller towns are seeing banks close. The banks are, like so many other businesses, retreating to the internet, which increases the isolation and difficulties for those who do not have ready access to it in the area of energy switching as in so many other areas.

There are other ways in which the energy companies may be—I will not say “fixing the market”, but Ofgem talks of “tacit co-ordination”. It has said:

“Several firms’ business plans stated that they wait until competitors have announced their price changes, not just to avoid the adverse publicity of going first with a price rise, but to assess the extent of their own price adjustment.”

Is that not an example of what we have described all along as a “follow-my-leader” attitude among the companies? None of them will step far out of line. In a true competition, one would expect some companies to be prepared to take a hit on profits in the short term, at least, in order to build up their business, but that does not seem to be happening in this instance.

The Secretary of State attacked Labour policy. I myself remain very sceptical about many aspects of it, especially the price freeze, but I entirely agree that the regulator should have the power to force energy suppliers to pass wholesale price cuts on to consumers if the suppliers themselves fail to do so, and I will therefore be supporting the motion. However, let me issue one plea to both the Opposition and the Government Front Benches. Every time we talk about energy, we talk about the big six and dual fuel: gas and electricity. The poor off-grid customers are being left out again: they pay more than anyone else. Please will someone grasp that nettle?

5.41 pm

Chris Heaton-Harris (Daventry) (Con): It is a pleasure to follow the hon. Member for Angus (Mr Weir).

I often ponder on what could possibly be worse than an Energy Department being run by a Liberal Democrat. The answer has been made clear to me today: the worst possible outcome could be an Energy Department run by a Labour politician who would happily enact policies that would put everyone’s energy bills up in the long term and push more people into fuel poverty. Let me explain how that will happen, first by examining the economics behind an energy price freeze and then by examining the Opposition’s form and policy in this area.

The debate provides an excellent opportunity for us to demonstrate yet again that price controls are not an effective means of achieving improving standards of living, as they go against any notion of economic common sense. In fact, at a time when the Government should be focusing on providing incentives for improvement in the

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quality and quantity of energy provision, imposing price controls would achieve exactly the opposite effect, leading to a shortage of energy as consumers who want it at the artificially lowered price cannot gain access to a supply adequate to cater for their needs.

Price controls are Government restrictions on how much can be charged for the good or service in question in the market. In this case, the Opposition propose a price ceiling that would prevent gas and electricity prices from exceeding a maximum price decided by some fantastic new regulator. From an economic standpoint, the proposed price control would be problematic, as it would distort the price mechanism’s ability to allocate resources to the highest-valued uses. In unhampered markets, prices work to co-ordinate supply and demand and ration existing resources relatively —I would say very—efficiently. By manipulating the market price, controls such as those proposed by the Opposition distort that process, and result in both direct and indirect perverse repercussions.

Dr William McCrea (South Antrim) (DUP): Notwithstanding all that the Government profess to have done to end fuel poverty, Northern Ireland still has the highest level of fuel poverty in the United Kingdom. How would the hon. Gentleman and his party suggest that my constituents solve their fuel poverty problems?

Chris Heaton-Harris: I shall say something about fuel poverty later in my speech, but I believe that a huge majority of Northern Ireland fuel customers are off grid, and that solutions are currently being sought.

Michael Connarty: Will the hon. Gentleman give way?

Chris Heaton-Harris: I will take just one more intervention, from my good friend the hon. Member for Linlithgow and East Falkirk.

Michael Connarty rose—

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. Perhaps I can help here. Because of the interventions, I shall have to reduce the time limit for speeches, and one of the first to be affected will be the hon. Member for Linlithgow and East Falkirk.

Michael Connarty: Nevertheless, the point that I am about to make is very relevant. The hon. Gentleman has been a Member of the European Parliament. The European Union has restricted roaming charges and other charges that have been used excessively by telecoms companies. It is saying that that does not work. Is that not exactly what the hon. Gentleman is attacking in the context of energy prices?

Chris Heaton-Harris: Indeed, and across Europe those very same telecoms companies are now coming to Governments saying they are not investing as much as they used to, because they have not got as much money as they would have had otherwise.

A direct effect of price ceilings is a shortage of supply. In an unhampered market, especially in energy where supply and demand are balanced by the free-functioning price mechanism, if the Government were

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to impose a price ceiling below the market price, as is proposed, the quantity of energy supply would fall as it would make less financial sense for companies to produce, while demand for energy would increase as a result of the lower prices. The result would be a shortage of energy, with consumers unable to find satisfactory supply.

In addition to the direct negative effects of price control, a series of indirect effects would emerge from the Government manipulation of prices proposed by the Opposition. While price controls do legally change the price, they cannot overcome the fundamental economic issue of deciding how to allocate scarce resources among an array of feasible alternatives. In the absence of the ability to use prices to ration scarce goods, alternative mechanisms emerge. Shortages, for example, would lead to long queues, as happened in the United States in the past because of gas prices, and backlogs, which tend to lead to subsequent Government interventions such as rationing schemes.

Most people understand that the controlling of energy prices, which has been tried before in the UK and elsewhere, has conclusively failed. For proof, we can look west, to California’s experience with price controls on retail energy, which led to shortages manifested in rolling power cuts throughout the state.

Even more importantly, price controls would discourage energy companies from making new, long-term investments, which is precisely what is needed to increase the supply of energy and improve standards of living. What this means is that, at best, the Opposition’s strategy might provide short-term benefits in the form of lower energy bills for a few, but with the associated cost of some form of deterioration in quality and quantity of supply in the immediate future. In the long run, prices would have to go up because the universal improvement in supply would fall away completely. The Opposition policy would have the exact opposite effect on prices from what they intend.

All economic knowledge and sense dictate that the Opposition idea is wrong-headed and misguided. If their goal is to improve standards of living, policy must focus, as it currently does, on incentivising and improving the quality and quantity of supply. Price controls serve to achieve the exact opposite, lowering the standard of living of many while providing political gains for few. The proposal must be dismissed as an uninformed fallacy.

However, we should not be surprised that the Leader of the Opposition and his party are focusing on a price freeze and the cost of living. The right hon. Gentleman is essentially just watching his own back, for it was he, in his previous guise of Secretary of State for Energy and Climate Change, who drove through policies that he knew would drive up prices for consumers and drive people into fuel poverty. He was happy for that to happen—there was no concern at all about a cost of living crisis. Indeed, back when he was Energy Secretary, the Labour leader gave the LSE Ralph Miliband lecture. On 19 November 2009, he explicitly confirmed that his policies would see energy bills rise:

“It needs a willingness to take the argument to people about the tough choices involved in tackling climate change. This is the starting point: a willingness to engage with people on, for example, the fact that to deal with the problem of climate change, energy bills are likely to rise.”

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In January 2010, the Labour leader was even more candid:

“Yes, there are upward pressures on energy bills, and that makes life difficult for people, including those in fuel poverty; but it is right that we go down the low-carbon energy route.”

John Robertson rose—

Chris Heaton-Harris: There was no concern about a cost of living crisis then whatever: no concern for the poor—no concern for the people living in fuel poverty in Glasgow, I would suggest.

These policies are a fallacy; they are directly wrong. I hope the British people will be sensible and make sure that they are rejected fully at the next general election.

Several hon. Members rose—

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. I now introduce a six-minute time limit.

5.49 pm

Gemma Doyle (West Dunbartonshire) (Lab/Co-op): I am grateful to my hon. Friend the Member for Linlithgow and East Falkirk (Michael Connarty) for my six-minute rather than seven-minute speech!

The rise in energy prices is having a real impact on the financial stability and quality of life of people right across the UK. I say to the hon. Member for Daventry (Chris Heaton-Harris) that it is ludicrous to suggest that there was no concern about this matter under the previous Government. Some of what he said was hysterical hyperbole, which is not welcome in this debate. What we are talking about is a cost of living crisis that is happening now, not four years ago, which is why we are proposing a range of measures today.

We know that the cost of wholesale energy has fallen, yet consumers are still paying more than they should. That is of particular concern to my constituents, because, despite the unusual and lovely weather at home at the moment, it is not always warm in West Dunbartonshire, and people have to spend a higher percentage of their income on heating their homes. I am not talking about luxury. West Dunbartonshire has a high proportion of elderly people and people with long-term and chronic conditions. Keeping warm is about not just keeping well but, in some cases, keeping alive.

It is worth pointing out that when we talk about the varying costs of living across the UK, we often focus on the high costs of housing in London, but for those of us who represent constituencies with much cooler climates, the higher costs that people have to spend on heating their homes are also a big issue, especially when we consider things such as the rates of the living wage.

Wholesale gas prices have fallen by 38% and electricity prices by 25%, yet last year energy companies raised their prices by 10%. We may have seen some commitment from a few energy companies to freeze their costs this year, but we should not be tricked into thinking that they are doing us a favour. If the cost of wholesale energy comes down, then so, too, should the bills of our constituents.

I am sure I am not alone in saying that I am frequently contacted by constituents overwhelmed by the cost of heating their homes, or confused by the complex regulation

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and delivery of their energy supply. It is clear that we need to reform the energy market. Turning on heating is not a luxury. I am not talking about fanciful spending. I urge the Secretary of State to reflect on the statistics. Earlier this month, the annual fuel poverty statistics projected that there would soon be 2.33 million households in fuel poverty in the UK, the main factor being the increasing cost of energy.

Last year, UK households spent an enormous £19.5 billion more on energy than they did a decade ago, an increase of 131%. Those are big figures, but what do they mean? Last year, real-terms average earnings slipped back to the levels of the decade before, which meant that people were—and still are—attempting to pay bills that are far above what they had been paying 10 years before, but were doing so with the same amount of money.

Around 100,000 people in Scotland, and 30% of households in my constituency, are living in fuel poverty. My constituents are already suffering from the Government’s austerity package, and energy is one area in which the Government, if they were serious, could take real action. Life is hard enough without energy companies focusing on their profits rather than on how to get energy prices down for their consumers. The energy market is suffering from a lack of competition, which allows suppliers to get away with it.

I hear what the Secretary of State says about switching, which is important, but I want all my constituents to pay less for their energy—not just those who switch and get a better deal. I would rather we focused on how to do that, rather than producing even more complicated information for people. Poor practice, bordering on immoral behaviour, has now become commonplace. The big six have incurred financial penalties totalling about £40 million, but that is small change for an industry with profits closer to £4 billion. We need to take action and I fully support the motion. I hope that the Government see sense and do the same.

5.55 pm

Christopher Pincher (Tamworth) (Con): It is a pleasure to follow the hon. Member for West Dunbartonshire (Gemma Doyle) and to speak in this important Opposition day debate. By my recollection, it is the fourth energy debate tabled by the Opposition. It is an important issue and we should reflect the concerns of our constituents. However, it is a pity that Labour has chosen to table the motion from the relative comfort of the Opposition Benches, given that it had 13 years, the money, and the majority to do something about the issue that it now seems so concerned about.

This is an important debate and it is a pity that the motion makes no mention of diversifying our energy supply, which is inextricably bound up in high energy prices because of our reliance on imported hydrocarbons. Labour has talked about this issue in the past, but it does not seem to be in its motion today. What it does have, luckily, is an interest in passing on prices quickly and in making sure that there is a properly competitive market. It is just unfortunate, again, that the market the party bequeathed to us is not competitive.

The right hon. Member for Oldham West and Royton (Mr Meacher) said in a speech in the last energy debate that the big six are Labour’s oligopoly. He is absolutely

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right—it is Labour’s oligopoly, and it is this Government who are sorting out the competition issue by bringing in new players who want to be a part of our energy supply industry: nine new players in just the last two years. That will help us to drive down our energy costs, not drive them up.

I also note that the Opposition said that their price freeze will not affect investment. I do not think that that is true. Tony Cocker, the chief executive of E.ON, says that every time the right hon. Member for Doncaster North (Edward Miliband) opens his mouth, he drives up the cost of capital for firms such as his. That is the cost that they bear when they try to invest in our energy infrastructure.

We know that we need to spend about £110 billion in the next 10 years on our pipes, pylons and power stations to keep the lights switched on and the water warm. However, Labour’s proposals will damage that investment flow. E.ON itself, during the past five years, has invested about £7 billion in infrastructure. If we extrapolate that over the big six, over 10 years they will be investing about £75 billion in our infrastructure. That leaves a £35 billion gap between what we need invested and what is being spent. We need that extra investment to come from private enterprise, because if it does not, the poor old taxpayer—the GP, the factory worker or the van driver, who pay their taxes—will have to pick up the bill. Alternatively, it will have to be put on the bills of consumers, which means that bills will go up, thanks to Labour’s policy, which will cause investment to dry up.

The Opposition proposals are superficially attractive, but they will cost consumers and taxpayers more. I do not believe that if our voters and constituents think about it, they will be prepared to accept those costs. The way to deal with the challenge is not to freeze prices, but to reduce them. We could reduce prices quickly by rolling back some of the green levies that have been imposed in recent years. That would save consumers £50. Making it easier to switch and moving towards 24-hour switching could save consumers £200. Reducing the vast array of tariffs to just four and putting people on the tariff right for them could save them about £158. Those are ways in which we could help our constituents deal with the challenge—a long-term challenge that has been running for 40 or 50 years—of increasing oil and gas prices, rather than the con that the Opposition know they are proposing.

6 pm

Nia Griffith (Llanelli) (Lab): We have seen family fuel bills go up by £300 on average since 2010. Families are feeling this increase because wages are not going up, but costs are rising continually. People are saying, “Look at the profits that those companies are making.” In south Wales, many people are served by SWALEC, which is part of SSE. It has made £1.55 billion profit, a 9% increase on last year. Average households across Britain are contributing £96 of their dual fuel bills to the profits of the companies. That is up from £44 on average per household last year. The profit margin is now 7% on dual fuel bills, up from 3% last year.

People are seeing a huge increase in companies’ profits and asking, “How can they can have a 9% increase in their profits whereas we are struggling because we are still on the same wages as we had a couple of years ago or maybe 1% up on what we had?” There are 2.33 million

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households in fuel poverty. It adds insult to injury when people find out that gas prices are 38% lower than last year on the wholesale market and electricity prices are 23% lower. People ask why they cannot share in that benefit. That is why the motion specifies that the regulator should have the powers to force the companies to pass on those decreases in price. That would bring immediate help and relief to families right across the UK.

On the mythical £50 back that the Government promised by taking the green taxes out of the fuel bill and putting them on to general taxation, we are all paying for that as taxpayers, yet that £50 reduction has not come through. It will be only a maximum of £50 and it is not getting through, so consumers are not having the benefit of that coming off their bills.

Let us look at some of the ways forward with our policies. It is interesting that SSE has said that it will legally separate its household supply business from its generation business, exactly as we have said we want to see. Members on the Government Benches have continually said it is impossible, yet SSE says that it will improve transparency and be a reform that is in the clear interests of customers. That is what one of the energy companies is telling us. It is saying, “Yes, we accept that Labour has a good idea and this ought to be done.”

Some 96% of households are supplied by the big six, which are also responsible for 70% of the generation. When the two are conflated, it is impossible for people to see what has happened or for the market to be fair. That is why market reform is key to what we propose to do. The price freeze that we suggest is an interim measure in order to get the market right. It is not an end in itself. It is about giving people a break so that we can introduce the reforms and get them working so that the market will work better for people and deliver lower prices.

As it happens, SSE has now announced a price freeze. Some cynics might say, “Well, a price freeze at a time when prices are falling is only a moderate step”, but at least it is trying to say that it is possible to look forward to 2016 and impose a freeze. We are saying that these reforms are possible and the energy companies know it, so what we need is the will to make them happen.

We would like the Government to have the will to say, “Look at the way prices have fallen this year. Let’s see if we can get that into people’s pockets for this winter.” That is what people want. We might not have another mild winter next year; it might be a severe one. People would like the opportunity to pay less this year, rather than having to wait for Labour to take over after the general election and impose the price freeze.

Another point I would like to make quickly relates to the sorry state of investment in renewables that we have seen under this Government. Despite what the Secretary of State tried to say at the Dispatch Box, whereas we had £7.2 billion of investment in 2010, it is down to £2.3 billion in 2014, which is a dramatic drop. SSE says that it now has grave doubts about continuing its offshore wind programme. That is because it does not get confidence from the Government and it does not get a feeling that it will be backed. It gets no clear and definitive messages on what the Government want to do on renewable energy. We would like to see a considerably greater and more consistent commitment to the development of renewables, which have a tremendous potential in this country. We should be a world leader on renewables.

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6.6 pm

David Mowat (Warrington South) (Con): The hon. Member for Angus (Mr Weir) said that these debates are often attended by the same old gang, so I plead guilty to being part of it. I think that this is the fourth time we have debated this subject in this Parliament, but it is important that we do so. We all have constituents living in fuel poverty, and 700,000 people in this country work in energy-intensive industries, particularly in the north-east and the north-west. It matters very much that those industries are supported and that we do what is right for them. The issue is a serious one. The Secretary of State called it the “rocket and feather” issue, which I think is a good phrase. I think that we agree that the issue exists. The decision for the House is how we solve it: Labour’s method, or what the Government propose. I will talk a little about both.

There is a related debate that we never have, although I think that we will, either in this Parliament or the next. The big issue facing this country is not just about cost; it is also about security. We have to replace about 20 GW of supply by the end of the next decade. Our capacity margin in 2017 will apparently be 2%, which is almost too small to measure. This week the Secretary of State wrote to industries to ask them to volunteer for power cuts. I am a little less sanguine than he is about the efficacy of that.

How we solve that problem also goes to the heart of the Government’s and the Opposition’s approach to this serious issue: the changes in wholesale prices, on the face of it, are not being reflected in changes in the price of gas and electricity. It is right that Ofgem has been asked to investigate that and that there will be a full competition investigation. I do not know whether it is to do with the spot price, the forward price or the hedging price. I do not know whether it is to do with political risk, in the sense that energy companies will be cognisant of what the Opposition have said, which has an effect on their cost of capital that we need to acknowledge. However, I agree with the Opposition that if the energy companies are somehow keeping prices high in anticipation of a freeze, that is completely unacceptable. That is prima facie evidence that the market does not work. If that is happening, it is unacceptable and will have to be investigated.

What are the Government doing? We know about the competition review. We have talked about tariff simplification, in relation to our reduction of green deal charges. There are nine new entrants. One thing that mystifies me in this whole discussion is that we talk about the big six as an oligopoly and as presenting an issue, given the size of the market. However, in Germany, it is the big three in gas and the big two in electricity; in France, it is the big one or the big three; and even in Ireland, it is the big five. On the face of it, the problem is not one of market structure, but of other issues that we need to investigate.

The big issue we face is about why the market acts so stickily, why people do not transfer and why the feather comes down so slowly. It is clear that switching does not work as well as it should—it works better in the retail petrol market—and the industry plays it wrong because it likes the feather effect. The industry clearly wants to make money, and the feather works for it. Our job and the market’s job is to find ways of making the feather come down more like a rocket. That will include 24-hour switching, and I think that all such measures will work.

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What the Labour party is suggesting—in good faith—will not work. The word “moral” has been used today and there is a tendency to insult the big six, but these guys or some combination of them will have to spend £110 billion over the next decade or so. We have heard about secret deals and cartels, but we should not speak about the issue in that way.

The point must be made that every time we vote in this House on energy prices— this really surprises me—Opposition Members go through the Lobby in favour of more expensive energy. In 2011, the Minister of State, Department of Energy and Climate Change, my right hon. Friend the Member for Bexhill and Battle (Gregory Barker), wanted to reduce the solar PV tariff from six times grid parity to four times grid parity, but the Opposition rejected it. In 2013, they were determined to force through a unilateral carbon target, in spite of the fact that our carbon emissions are among the lowest in Europe; it would cost £130 on every bill. The big date was 4 December 2013, when Opposition Members voted in the Lobby for accelerating the closure of UK power stations over and above what is required by the directive relating to industries with large emissions.

An Opposition who vote in that way are not acting as though they were about to go into government or as though they were a serious party of government. It is reasonable for us and the country to conclude that they have nothing serious to say on the issue.

6.12 pm

Geraint Davies (Swansea West) (Lab/Co-op): Hon. Members from across the House should congratulate the Leader of the Opposition on bringing the issue of energy prices to the forefront of public attention and on placing it at the top of the political agenda. Despite what has been said, he has done so because we face a cost of living crisis. At the centre of that crisis is the inability of millions of people to pay their energy bills because their wages have gone down and they have fewer opportunities—1 million people are on zero-hours contracts—and because prices have gone up.

It is time to bring the big six to account. We can talk about the different ways of doing so, but the Opposition have shown clarity of purpose in saying that we want a freeze and then regulation, and in saying that we are pro-competition. Obviously, since we made our proposals, the Government have scampered around and scratched their head to think of an alternative, but they have just given a rendition of what we are saying.

In any case, we need to take action, and there are more radical approaches with which we could threaten the marketplace. The reality is that we are worried about the difference between the wholesale price and the retail price. Some Labour party members in my area are talking about the case for nationalisation of the retail side, or at least some form of intervention. For example, one of the retailers could become publicly owned in order to enforce price competition on other retailers so that at the end of the day we can have proper, competitive retail prices. I am not advocating that, but hon. Members from across the House should think constructively about ways of getting prices down.

Basically, the Labour party has got the whole debate going. Part of that debate relates to the need for security, as the hon. Member for Warrington South (David Mowat)

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mentioned, and another part is the need for diversity, as my hon. Friend the Member for Llanelli (Nia Griffith) said.

I want to comment on the Swansea lagoon initiative, which is being pushed as a way to provide wave energy. I have asked questions on the record about how we can balance what is best for our environment locally and nationally, and what is best for our economy locally and nationally. I have raised concerns about sewage outfall into the lagoon, the impact on the Gower beaches, the possibility of toxic waste being dug up, and the impact on tourism and the iconic view. Tidal Lagoon has come back with changes in its plans. Welsh Water has said that it wants the sewage to go outside the lagoon, and that may now happen. The company has come back on the concerns that I had about the concrete rock armour. It has now sourced denser granite to ensure that there will be natural rock armour, which will look better.

It started off as a green power station six times the size of Cardiff bay, stuck in Swansea bay, that had no benefits for Swansea in terms of energy costs and that might have undermined the tourism industry. The company has come back and provided a visitor centre and suggested berthing for cruise liners, which might help us to take advantage of the momentum from the Dylan Thomas centenary and our ambitions from the city of culture bid. In that way, the green offer might be combined with a tourism offer and an economic offer, and, hopefully, with sustainable energy prices, which is what this debate is all about.

I have been concerned, as colleagues will know, about sand movements and the muddying of the golden beaches of Swansea and Gower. A lot more work needs to be done by the Planning Inspectorate on contamination, waste and the carbon impact of the project. I am glad that it has taken the matter on and I will support whatever decision the jury reaches.

I make that point because we need to think about diversity of supply. There are issues with fracking, which some people are very concerned about. The Welsh Affairs Committee recently produced a report on fracking. Although we were cautiously optimistic, it is important that we focus on issues such as how contaminated water will be treated and disposed of, and the environmental risks in areas of outstanding natural beauty.

It is difficult to balance the environmental and economic issues. Although we all like to see robust exchanges across the Chamber, it is important that we have a greener, more secure and increasingly cost-effective solution to meeting our energy needs. That is why I welcome this debate. I hope that we see progress and action sooner rather than later on getting the cost of people’s bills down.

6.17 pm

Paul Flynn (Newport West) (Lab): Quem deus vult perdere, dementat prius. I know that I do not have to translate those words for your benefit, Mr Speaker, nor for the beneficiaries of comprehensive education in good Catholic authorities or the papal knights on the Opposition Benches, but perhaps I should explain for the victims of the public school system on the Government Benches that those words, which came into my mind while the Secretary of State was speaking, of course mean: “Those whom the gods intend to destroy, they first make mad.”

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The Secretary of State went to great lengths to shut me up. I tried with great difficulty to intervene on him, but he chose seven others and left me speechless. What terrible things can I have been saying that have alarmed him so much? I should perhaps warn my friends on the Opposition Front Bench that what I say might cause a little trauma to them. It might be a good idea, if they want one, to go out and have a cup of tea.

I wish to make a very simple point about the future cost of electricity. Incredibly, and almost without public controversy, we have done an extraordinary deal with money from China that will not do much for our energy security. We have done another deal with a corporation from France. Those are the countries that we will depend on for our energy security in future. That was the process for deciding on the Hinkley Point C power station.

The right hon. Member for Kingston and Surbiton (Mr Davey), who is now the Secretary of State, explained to his constituents in 2009 that he was against any nuclear power stations because they would cost taxpayers and consumers billions of pounds. I wonder if that is what he was afraid I would say. I am sure that his constituents would love to know, when they voted for him thinking that they would get a nuclear-free future, why they now find—possibly because of the lure of the red box—that he has changed his mind. I would like to know why, and perhaps he can explain that. The Liberal Democrat party is in a sorry state, and the gods are certainly sending a message, in the European elections and elsewhere, about its imminent extinction in the political fold. It is about time he forgot the lure of high office and returned to his anti-nuclear roots.

The European Commission is looking at Hinkley Point, and I hope that the Commission will do the right thing and say that the £17.6 billion subsidy that the power station receives puts it wildly in conflict with competition rules. For those of us with long memories—one can forget about things after four years—the Liberal Democrats agreed in 2010 that there would be no subsidies on nuclear power. I suppose that £17.6 billion is a trivial matter that is not worth considering.

We have got into an extraordinary deal whereby we have agreed to pay EDF £92.50 per MWh, which is three times what it charges its French customers and twice the going rate for electricity. Not only that, but we have guaranteed that price for the next 35 years. It is scarcely believable. We have even paid to insure EDF against any potential reduction in prices. The deal is wonderful for the French, and French newspapers have praised it, saying that it would mean 15,000 new jobs—not in Britain, but in France. No explanation for the situation has ever come forward. The Government are closing their eyes and hoping that they can just carry on.

What is the story of the success of nuclear power in recent years in Europe? Two new power stations have been built. One, in Finland, should have been generating electricity in 2009, so it is five years late and €4 billion over budget. The other, at Flamanville in Northern France, is in a similar state. There is an atrocious record of nuclear power that is never delivered on time or on budget.