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Domestic Supplies (Standing Charges)

Volume 24: debated on Monday 17 May 1982

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asked the Secretary of State for Energy whether he will make a statement on his review of standing charges for gas and electricity for those on low incomes.


asked the Secretary of State for Energy if he is yet in a position to announce the results of his review of fuel standing charges.

With my hon. Friend the Under-Secretary of State for Health and Social Security, I am making progress in a thorough review of the effects of standing charges on poor consumers, and ways of alleviating any difficulties. We shall announce the results as soon as possible.

Will my hon. Friend bear in mind that many pensioners pay more in standing charges than they do for fuel? Is that not terribly unfair?

I know of my hon. Friend's tireless work on behalf of pensioners. We are examining carefully the effect on pensioners of standing charges. However, preliminary indications are that while there are people in the plight that my hon. Friend describes, for the average pensioner, and for poor consumers generally, the standing charges represent only about 20 per cent. of fuel bills. In other words, elderly and poor consumers are not necessarily small consumers, and that 20 per cent. compares with 15 per cent. for the average consumer.

Will the Minister confirm that the increase in standing charges for gas has in some cases been over 300 per cent. over the past four years? Will he also confirm that this is part of a trend that is in danger of continuing, whereby the authorities are trying to recoup all the fixed costs from standing charges? If that is the case, it is thoroughly regressive and should be avoided.

The standing charge reflects a genuine distinction in the industry's costs, as was endorsed by the 1979 Price Commission report. On the hon. Gentleman's figures about gas standing charges, I must ask him to bear in mind that before the election of this Government there was a triple tariff in that, as well as the standing charge for gas, there was an enhanced charge for the first 52 therms. If at the time of the last election that enhanced charge had been removed, as it now has been, the standing charge for gas would have been about £6·37 a quarter, not dramatically below what it is today.

Is this not the third Question Time when the hon. Gentleman has been pressed from both sides—there is no party argument about this—on the whole question of standing charges and the imbalance that has arisen between the increases in those charges and the increases in charges for consumption? Will the Minister take into account the impatience that has been expressed by both sides of the House for a review and changes in what has been proposed?

I am aware of the concern, which I share. My hon. Friend the then Under-Secretary of State for Health and Social Security announced the review early this year, showing that the Government had anticipated some of the concern. We shall not take a moment longer than we need to complete the review properly.

I am sure that the hon. Gentleman will be aware that the last thorough and proper review was in 1976 under the Government of which he was a member. It took about 12 months to carry through. The hon. Gentleman should not feel that these issues are easy or that we can deal with them in just a few weeks.

I refer my hon. Friend to the letter to me from the Under-Secretary of State on 18 March, in which I was told that an increase in the unit costs of electricity and gas of about 15 to 20 per cent. could wipe out the standing charge system. Would that not be of tremendous help to people on low incomes?

I am glad that my hon. Friend has made the point. Standing charges bring into each industry about £500 million a year. We are exploring, as the 1976 study did, the impact of adding to the unit costs. It was found then that an increase of that kind, given that many poor consumers are not small consumers, would have borne more heavily upon them than standing charges now do.

Is the Minister aware that there is increasing concern at the Government's complacency about this matter? Does he understand that a single pensioner can spend up to 8 per cent. of his or her pension on standing charges alone, before having delivery of any of the services involved? Will the Government deal with this as a matter of urgency?

I fear that the hon. Gentleman is trying to make a party point, when none is appropriate. We are building on the foundations of the 1976 review, looking at the matter thoroughly. The review was announced less than three months ago. I hope that it will be only a matter of weeks before we are able to say something more substantial to the House. I ask the hon. Gentleman to understand that these matters cannot be dealt with overnight and that we are treating them as seriously as I am well aware both sides of the House would wish us to.