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Energy Companies: Charges

Volume 576: debated on Thursday 27 February 2014

5. What steps he has taken to investigate the practice of energy companies having higher charges for non-direct debit customers. (902727)

Energy companies are required under the terms of their licence to ensure that any differences in charges to consumers between different payment methods reflect only the differing costs to the supplier of that particular form of payment. Ofgem is looking at payment differentials, including higher charges for customers who choose not to pay by direct debit, in its competition assessment, which will be published this spring.

About 1 million people do not have a bank account. What steps are the Government taking to help those who do not have a bank account and therefore find it impossible to pay by direct debit?

I am grateful to my hon. Friend for raising this important issue. The coalition is absolutely committed to improving access to financial services for the vulnerable, particularly the fuel-poor. As recommended by the Parliamentary Commission on Banking Standards, the Government are seeking a voluntary industry agreement on renewed minimum standards for basic bank accounts. In addition, we have committed nearly £2 million over this year to develop the big energy saving network to ensure that the most vulnerable are getting the best deals they can.

Is not the sluggishness of Ofgem in tackling this discrimination yet further evidence that it is no longer fit for purpose?

No, it is not. This is an ongoing situation. Ofgem has looked at the issue, but it is not something that one can look at once and then discard. That may be Labour’s approach, but we are maintaining long-term vigilance to make sure that the consumer is looked after on an ongoing basis, month in, month out. It is very important that they will now have the additional benefit of a referral to the competition test.

Will my right hon. Friend look at some of the work of Ofgem, and how it allows price rises in the energy sector that are way above inflation whereas Ofwat takes a much tougher line as regards water customers?

I am aware of the comparison that my hon. Friend makes. However, the fact is that we have an extraordinary requirement for new investment thanks to the dearth of investment, and long-term investment, that we saw under 13 years of Labour. We are now playing catch-up. We require over £100 billion to go into our energy sector to secure our supplies, and I am afraid that that money has to come from somewhere.