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Energy Prices

Volume 570: debated on Wednesday 6 November 2013

6. What recent discussions he has had with Ministers of the Scottish Government on household and business energy bills. (900884)

7. What recent discussions he has had with Ministers of the Scottish Government on household and business energy bills. (900885)

Rising energy bills are obviously a serious concern for consumers and businesses. Over the past weeks, I have discussed the issue with representatives of the major energy companies. We continue to work closely with Scottish Government Ministers on all matters facing the economy in Scotland, including energy prices.

As a fellow islander, may I say that it is good to see an Ileach, an Islay man, at the Dispatch Box? With my constituency suffering the highest level of fuel poverty in the UK, can the Secretary of State investigate the benefits that some renewables might bring to offset that? Although it is good that the islands will have different renewables strike prices, he well knows that not all islands are the same. Will he represent that view to the Secretary of State for Energy and Climate Change, to make sure that all islands can benefit and we can tackle these high energy prices?

I am grateful to the hon. Gentleman for allowing me the opportunity to remind the House of this Government’s great achievement in establishing, and putting out for consultation, a strike price for island communities, which will make the development of renewable energy in communities such as his and mine a viable proposition at long last. That may have a contribution to make to tackling fuel poverty. I have already worked closely with the leader of his local council in this matter, and I urge him to do the same.

The Government have been giving strong indications that they intend to move some of the cost of paying for energy efficiency to general taxation, and the Scottish National party Government have said that they want to do the same. Unless we also have measures such as Labour’s energy price freeze, would such a transfer not just let the energy companies off the hook and reduce the pressure on them to control prices?

The hon. Gentleman is absolutely right to say that the position announced by Nicola Sturgeon takes money off energy bills but is going to have to be made up for elsewhere. At a time when there is already a £3.4 billion black hole in the SNP figures, one has to think that that is not going to offer much hope for people struggling to pay their energy bills already. We all know the problems associated with his price freeze, and I have no doubt that they will be rehearsed in the House later today. My particular concern relates to the position of smaller energy companies, which are at risk of being forced out. If we reduce the number of companies in the market, we will see prices go up—that cannot be good.

The Scottish Government and UK Government Energy Ministers appear to have joined forces to suggest that Labour’s plans for an energy price freeze would put the lights out. I know the Secretary of State to be a sensible man, so has he talked to the Scottish Government about this and does he agree that the energy price freeze would deliver a £120 saving to my constituents?

I am afraid that we have heard dodgy figures from the Labour party before, and I think we have just heard yet another one from the hon. Lady. The truth is that Labour’s price freeze does risk reducing the number of companies in the market. If competition is reduced, the price goes up. That is basic economics and the Labour party should learn it.

People who are on SSE’s “Total Heating, Total Control” system have been told by SSE that their system will not work properly if they switch to another supplier, which means that they are totally dependent on SSE and the huge price increases that it places on them. That is an unacceptable abuse of a monopoly, so will my right hon. Friend investigate it?

I am aware of the issue from my own constituency mailbag, and it relates to those currently on the “Total Heating, Total Control” tariffs. It is a fairly complex position, but I say to SSE that it has enormous customer loyalty from throughout the highlands and islands. When we get the answers to the questions that my hon. Friend poses, I shall be looking at them very closely, because I want to ensure that the customer loyalty that its hydro has in the highlands and islands is valued, and not abused.

Ofgem has estimated that £27 of the average annual fuel bill pays to help the fuel poor, £21 pays for renewable obligations and £6 pays for feed-in tariffs. That comes to a total of £54, which is less than the tax paid on a single tank of petrol. Does the Secretary of State agree that that is a good return on a small outlay?

My hon. Friend makes the point very well that although there are such charges on electricity bills the money is then spent wisely on improving the quality of housing and energy efficiency. That, of course, is the real opportunity offered by the energy debate and I think that the Government are sensible to pursue it.

Does the Secretary of State agree that the way to reduce energy costs overall is to encourage competition, support innovation, increase supply and remove unnecessary costs rather than a price freeze?

I wonder whether my hon. Friend and I might have a slight difference of opinion in what we consider to be an unnecessary cost, but with that one caveat I have absolutely no difficulty in agreeing with him. Such an approach runs wholly counter to the Opposition’s proposals.

11. Last Saturday, my advice surgery was full of desperate people who do not know how they are going to get through the week, never mind through the winter. If the Government are not prepared even to consider the price freeze, what action will they take right now to help people to get through the winter? (900889)

I take seriously the hon. Lady’s point. That is a real and deep concern for households across the country and that is why the Government have taken action on a number of fronts. This year, 230,000 homes will be warmer because of the increased energy efficiency measures that we support and 2 million vulnerable households will get help under the warm home discount. That is £135 off electricity bills for some of the poorest pensioners. The ongoing winter fuel payment for older people and the £25 cold weather payment have been made permanent by this Government.

Labour’s energy price freeze would save Glasgow and Edinburgh city councils, Scotland’s two largest local authorities, close to £3 million a year. That is equivalent to 71 teachers and 140 care workers. In the vote later today, will the Secretary of State vote with the Tories and side with the energy companies or will he vote for Labour’s energy price freeze and side with the people of Scotland?

I will be supporting the coalition Government and I am proud to do so, because we recognise that there are no easy answers in this debate and that the proposals from the Opposition will end up putting people’s prices up.