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Household Energy Bills

Volume 555: debated on Thursday 13 December 2012

Helping people with energy bills is a top priority for us, so we have a range of initiatives including tariff reforms, energy-saving policies and direct help to cut the bills of those on the lowest incomes. From our consultation on proposals to help to get consumers on the cheapest tariffs to the green deal, and from the warm home discount to our promotion of collective switching, this Government will do whatever we can to help people and businesses to combat the effects of rising energy prices.

Has the Secretary of State had a chance to peruse the report just produced by the Committee on Climate Change on the customer price differential between a renewable-rich strategy and a gas-rich strategy? Does he agree that that could represent a sixfold difference in long-term price increases for customers? Does he agree with the committee’s view, and will he be sharing his views with the Chancellor shortly?

The hon. Gentleman got a lot of questions in there. I have looked at the headlines but I cannot say that I have read the full report, although I certainly intend to do so. I agree that it poses some challenges to those who debate energy policy, because it suggests that with a high gas price prediction, we could see energy bills going up by, I think, £600, whereas under a renewables strategy it would be only £100. The Government are adopting a mixed-energy approach, so that we are not dependent on any single energy source and can therefore manage the risks, because we cannot know the future of gas prices or predict how the cost of renewables will go down. I believe that our approach is the best one for the British economy.

The cost of energy is crucial for the nearly 10,000 pensioners in my constituency, and I am worried about the Government’s policy to get people on to the lowest tariff. What would happen if the energy companies simply raised the price of the lowest tariff? How would the Secretary of State address that problem?

We have taken a balanced approach in our tariff reform proposals, on which we are now consulting. We have tried to ensure that those people who are on so-called dead tariffs, or on unnecessarily high tariffs, will automatically be switched down to the lowest tariff, given their preferences. We have also tried to ensure that there will still be competition, in that there will be four classes of core tariff so that the energy companies will be able to compete using those tariffs. The key is to try to help people who do not engage with the energy market to get a good deal, as well as to ensure that competition can deliver for consumers and for businesses.

With respect, the Energy Secretary has not answered my hon. Friend’s question. How are the Government going to ensure that the energy companies do not simply raise the price of their lowest tariff so that it is no longer as low as it was in the past?

With respect, I did answer the question. It involves something called competition. On this side of the House, we understand competition and how it supports consumers. I have to say to Opposition Members that an awful lot of people were asking the last Labour Government why they did not sort out the multitude of tariffs that were creating complexity and confusion and getting in the way of competition. Through our simplification, we are helping the most vulnerable people and those who have been on dead tariffs and paying far too much for their energy, but we are also ensuring that competition can deliver for our economy.

23. The Secretary of State will be aware that Scottish and Southern Energy has indicated that pre-payment customers will now be able to enjoy the same rates as other customers. Is he going to persuade the other suppliers to do exactly the same? (133342)

It is great news because it shows how competition can assist in this process. I refer the hon. Lady to Ofgem’s retail market review analysis, which showed that customers on prepayment meters can save an average of £65 and up to £152 by switching to the cheapest deal within that prepayment method. The proposals we are taking forward really will help people on prepayment meters.

Does my right hon. Friend agree that the best way to reduce energy bills is to reduce energy use? With that in mind, can he tell us whether he has reached an agreement with the green investment bank to help to fund the green deal?

My hon. Friend is absolutely right: when it comes to energy bills, saving energy is the best way to save money. The green investment bank is engaging with my Department and the Green Deal Finance Company over the support it will give to the green deal. I cannot make an announcement today. All I can say is that the green investment bank is being helpful on the green deal, as on many other areas, and that it is a victory for this Government that we have introduced the green investment bank.

Energy bills have risen by nearly £300 since this Government came to power. I agree with what hon. Members have just said—that one of the best ways for households to protect against rising prices is to improve the energy efficiency of their properties—yet the launch of the Government’s green deal scheme has been shambolic. I listened to the Secretary of State’s answer and noted that he cannot tell us even whether the green investment bank is going to capitalise the green deal, yet he expects people to sign their green deals in just over a month’s time. The number of homes expected to be insulated next year is set to fall dramatically. The Insulation Industry Forum is warning that low green deal uptake will mean that 16,000 jobs are set to be lost in the sector next year. Will the Secretary of State guarantee that he will not let that happen?

The hon. Lady does not seem to understand the green deal, For a start, it is being launched on 28 January, after the soft work we have seen over the last few months to prepare for it. We believe it will be a huge success. I believe the green deal should have cross-party support, and I hope that the hon. Lady will confirm from the Dispatch Box that the Opposition support it. The green investment bank’s support for the green deal will not be direct; it will come through supporting the financial arrangements of the credit. I thought the hon. Lady would understand that. As for predictions on insulation, I think we should wait. I believe the green deal will support the market and that it will be a real step forward.

I thank the Secretary of State for his answer, to which I listened carefully. We have been working on the green deal for over two years now, yet in five weeks’ time the Secretary of State expects consumers to sign a deal when they do not know what the interest rate and the cost of the finance will be, which I think will be crucial to the success of the scheme, which we all want. Rising prices are hitting all consumers, but their effects are felt most by those in fuel poverty. Two years ago, the Minister of State, Department of Energy and Climate Change, the right hon. Member for Bexhill and Battle (Gregory Barker), said at the Dispatch that his Government would really attack fuel poverty, yet uSwitch estimates that the number of those in fuel poverty has risen to 6 million under this Government. Analysis by National Energy Action has shown that even after the measures introduced by this Government, such as the warm home discount, funding for fuel-poor and low-income households will be cut by half from January. Will the Secretary of State now apologise for breaking his promise to the millions of people who will be feeling the cold this winter?

This Government are doing everything they can to tackle fuel poverty. My predecessor, my right hon. Friend the Member for Eastleigh (Chris Huhne), set up the review to look at how we measure fuel poverty, and that concluded that the last Government could not even measure fuel poverty correctly. We are using a whole set of new initiatives, including collective switching, using the power of people coming together. One would have thought that Labour Members would have used that in their 13 years in power. They failed to use the collective principle to try to help people; we are doing that, and we are determined to tackle fuel poverty.