Energy prices have been rising in the UK and many other European countries for nearly a decade, largely driven by the rise in global gas prices, itself driven by forces such as high economic growth in Asia and higher demand for gas in Japan post-Fukushima.
The other main causes of the rise in energy prices seen in the UK have been the need to fund the investments needed in new generation, including low carbon, and new transmission and distribution networks, as old power stations and networks need replacing. Although we cannot control price pressures from global markets, and although we have to make vital investments to keep the lights on, we are doing everything we can to help people and businesses struggling with this decade of energy price rises.
Further to the exchanges earlier in this sitting, I am still a little confused about the Government’s position. Will the Secretary of State support Labour’s plan to break the dominance of the big six and require them to sell into a pool, which could have a real effect on energy prices?
The hon. Lady is right to say that there are issues, because the previous Government created the big six. We have acted from day one to put pressure on them.
On the hon. Lady’s last point about selling into a pool, let me explain the Labour party’s policy, because it is already out of date. Because of measures that we and Ofgem have taken, next-day trading has increased dramatically to more than 50% of electricity. That is equivalent to a pool. From talking to independent generators competing with the big six, we know that they are not interested in increasing that more; they are interested in forward markets, because that provides greater liquidity to enable them to compete. That is what Ofgem announced this week. I am afraid that Labour, as always, is completely behind the curve.
My hon. Friend is absolutely right to raise that issue, because there are some really cost-effective and good wins to be had. That is why we introduced the electricity demand reduction strategy in the Energy Act 2013. We will have a pilot—we expect it to go forward later this year—which will be the first ever electricity demand reduction project in this country.