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Energy Suppliers and Consumer Rights

Volume 731: debated on Tuesday 25 April 2023

I beg to move,

That this House has considered energy suppliers and consumer rights.

It is an honour to serve under your chairpersonship, Mr Hollobone. I am pleased that we have time today—although I suspect that it might be cut off and restarted—to debate this vital topic and hear from the Government what they can do to assist our constituents. I acknowledge the Members who are here. I thank the Minister for reaching out to me before today in the spirit of co-operation, and I hope we can make productive use of the time.

If there is one thing that should always have been clear—if it is was not before this winter, it absolutely is now—it is that being an energy consumer is not optional. People who are off grid are hugely in the minority—the Minister will probably be relieved to know that I do not intend to talk about them and delays to fuel payments today. But for most people—millions of people—in the UK, the only way to heat their home, have light at night and keep their food fresh is to be a consumer via an energy company. We have learned in the past year that many energy companies are simply failing those consumers, and there is shockingly little by way of consumer rights in this area.

I commend the hon. Lady for bringing this debate forward. In Northern Ireland, we have only two gas suppliers—there should be more. If there are more, there is competition, and if there is competition, prices come down. Does she agree that competition ensures that our constituents get better value?

I thank the hon. Gentleman for his intervention. This is a 30-minute debate, so we will not get a speech from him. I agree that consumers need choice. Until this winter, many Members probably did not know the differences between the energy markets in Northern Ireland and other parts of the UK.

I came to this issue largely through casework. I saw a puzzling trend of constituents seemingly being overcharged and struggling to find redress, so we started asking people more widely about their experiences with their energy companies, and that really brought the cases rolling in. The issue is obviously not limited to my constituency of North East Fife; indeed, it would be strange if it was.

I congratulate my hon. Friend on securing this incredibly important debate. It is certainly not just in her constituency; it is everywhere. I have a constituent called Jacqueline, who is a pensioner and fell into debt of £140 with OVO Energy, which sent round bailiffs. She broke down in tears and gave them a cheque there and then. Actually, the company was not reading her meter, and she is now £2,500 in debt. She is on a state pension, so she does not know what to do. That kind of callous behaviour by energy companies should not be tolerated. We must do something about it.

That is not dissimilar to some of the cases I have seen in North East Fife. It seems to be that if we speak to a different person at the end of the phone at a different time, we get a completely different outcome. That is simply not acceptable.

Citizens Advice has said that there was a 230% increase in energy complaints to its Extra Help Unit this winter. For the first time, that has made energy the top advice issue. This is not confined to Oxford West and Abingdon or North East Fife; it is taking place throughout the UK.

There is also a broader issue with the Government energy rebate during the winter period. People who live in park homes receive the energy rebate at the behest of the park home owner—they do not get a direct energy rebate from the energy company—but they are still potentially liable to the energy company. What would the hon. Lady suggest that the Minister do to ensure that park home residents receive the benefit of the energy rebates that the Government have made available, and to ensure that energy companies and park home owners are held accountable so that the energy rebates go to the residents of the park homes?

I thank the hon. Gentleman for his intervention. I, too, have park homes in my constituency, and that issue has come up. At the moment, we are completely dependent on the good will and good conduct of park home owners when it comes to ensuring that those living in park homes get their rebates. We need to consider the legislative agenda. The Energy Bill, which I will come to, had its First Reading in the House today and we should certainly be thinking about that.

What I am trying to say is that contacting an MP has sometimes become the only route for constituents who seek redress; as constituency MPs, we all know that. That is widespread. We can see that something in the system is failing, which is why I secured this debate. The Government have a role in consumer protection and the energy market. Just today, two new Bills have been introduced to the House: one, the Digital Markets, Competition and Consumers Bill, is explicitly about consumer rights, and the other is the Energy Bill. Both are about making our system fit for the future. Over the last year, we have seen that the Government have a role in ensuring that the energy market is working for consumers and that people can afford to pay their bills.

I would like to outline some of the problems that my constituents have been having before I return to the question of consumer rights. Overcharging has already been mentioned. A quarter of all the correspondence that I have received has been about that, which suggests that a huge number of people in the country—thousands, if not hundreds of thousands—must have the same issue. We know that energy bills have gone up and that there has been action to help people cope, but this issue is not about that. It is about energy companies billing families huge sums of money for energy that they have not used and about families doing their best to manage the cost of living—keeping costs down, putting food on the table and keeping afloat—and finding themselves facing debts of hundreds of pounds.

The overcharging comes in two forms, and both are deeply harmful. Imagine that you are a direct debit customer who pays bills monthly, accruing credit on your account. Those payments might have gone up when you renewed your contract last year, but that is fine because you planned for it. You budgeted. It has been difficult, but you made it work because that is what we all have to do. You have done your best to reduce your energy usage to make sure you did not end the year in debt. You have done everything that you reasonably can—[Interruption.]

Order. A Division has been called in the House. The sitting will adjourn until 4.22 pm if there is one vote and 4.32 pm if there are two votes.

Sitting suspended for Divisions in the House.

On resuming

I will move on quickly. I was outlining some of the issues with direct debits and giving the example of someone paying by direct debit whose payments may have gone up, but who was basically managing. But imagine if, despite that, their energy provider increased their direct debit payments, without their knowledge or any discussion about it, and they only found out because their carefully arranged budget was no longer in balance—they did everything right and were suddenly in debt anyway.

That is what is happening to people. I have seen a number of cases in North East Fife. One of my constituents had £900 in credit, yet their energy supplier is taking more. This surely is not right, and it is surely not the kind of practice we would accept. I urge the Minister to call this behaviour out and take proactive steps to prevent it from happening to other families and individuals.

The second form of overcharging is arguably even more egregious. This is where customers are receiving bills from energy companies for energy they have not used. Again, we are talking about hundreds of pounds being demanded, with threats of enforcement measures and huge amounts of distress as a result. I pay tribute to my casework team, who have been working these cases and providing fantastic support to my constituents. They try to understand what went wrong, but sometimes that is very difficult, as people are dealing with an opaque system and too often being told that their energy bill is final.

We have had some success in proving that bills are wrongly being charged, but even then energy companies do not always just cancel the bill. One of my constituents paid her £700 bill for fear of enforcement measures, and not many people have that sort of money just lying around. It is a stretch. Even now, the company has repaid only £500, insisting that £200 sits in the account as credit. That is £200 wrongly taken from my constituent that ought to be paid back.

As for the causes of these issues, some of it comes down to, arguably, predatory sales calls—lies are told and cooling-off periods are not respected. Some of it seems to be errors in the system, which when highlighted ought to be corrected, not defended. A lot of it seems to come down to smart meter issues. When they work, they are excellent, but when they do not, they are simply terrible. I fear the Government are trying to run before they can walk with the Energy Bill. They are pushing ahead with the roll-out and encouraging more use of smart appliances without getting the fundamentals right first.

Let us start with something basic: smart meters need to be connected to either the internet or a data signal. My constituency of North East Fife is rural. It is not as rural as some places, but rural enough that many properties are still without reliable internet access and there are mobile signal blackholes. Smart meters simply do not work in those conditions, but energy companies are too often refusing to listen. Another one of my constituents strongly argued against having her traditional meter replaced, knowing the signal issues at her property. The energy company ignored her and did it anyway. What a surprise: the smart meter does not work. Not only is she unable to monitor her usage, but her company, E.ON, is now charging her to reinstall the old-style meter.

Other constituents are able to have smart meters and, indeed, want them to help to keep on top of their bills, but even when the internet connection is good, smart meters still break. When they break, energy companies do not seem to want to replace them. One constituent’s meter stopped working last October and, despite requesting one, has not had a replacement from SSE since. In the meantime, she cannot monitor her usage and her company cannot take readings. As a result, the company is taking larger and larger sums from her bank account based on estimates.

Another constituent—a vulnerable pensioner—has been waiting five months for a replacement gas meter. She was told that she could go outside and read the old-style meter in the interim, but she is disabled—she simply cannot do that. The list goes on, and the longest waits for replacements that I am aware of are well over a year—month after month of knowing that prices are going up and not knowing how much it is costing, and energy companies erring on the side of caution to their benefit, taking huge sums from customers. Of course, all those problems are compounded when we talk about vulnerable customers. I welcome the fact that Ofgem has a vulnerability strategy; but again, from the casework I have received, more clearly needs to be done.

I am aware of time and have not reached my main point yet, so I will be brief. Two things come through in the casework. First, billing is confusing for many people. Not only is it fair for customers to understand their bills; it is better for the market when consumers can compare bills and charges between different energy companies, as the hon. Member for Strangford (Jim Shannon) alluded to. For that, I ask the Government to consult with stakeholders and disabled people to look at putting bills into a standard form. Secondly, priority service registers are not working effectively. More needs to be done to make it easy for vulnerable customers to identify themselves to energy companies, and companies ought to be proactive in looking out for those consumers. I am sure that all of us, as MPs, have encouraged constituents to get on those lists.

The thread that links all these issues together—and the reason why I am having to help constituents with energy issues, as I am sure everyone else here too—is simply the utterly abysmal customer service and the lack of clear consumer rights. Most consumer-facing industries have some form of consumer charter or code of practice. It exists in customer service and for aviation passengers, for water consumers under Ofwat and in broadcasting under Ofcom, but it does not exist when it comes to energy. What is there is incredibly basic and not helpful for individuals at all. Energy companies are regulated through Ofgem, and one of their licence conditions is that consumers must be treated fairly—that is it. That does not tell us anything. A Q&A document from Ofgem sets out some situations where a customer could be entitled to £30 compensation, such as when their smart meter breaks and is not investigated within five working days. Considering the sums of money being charged and the waiting times for replacements, that is a completely ridiculous method of enforcement and no incentive to companies to protect their consumers.

I am not criticising Ofgem. Indeed, I welcome last week’s code of practice relating to pre-payment meters and its plans to consult on further standards. I am grateful that Ofgem spoke to me at short notice on Friday. The new system operator being set up under the Energy Bill will not help when it comes to consumer rights. Its goals are controlling cost, moving to net zero and ensuring our energy independence. These are all welcome, but leave a gaping hole when it comes to basic rights and service. Clearly, energy companies are falling far below any ordinary standard of service to consumers, and the need to keep adequate suppliers in the market means that Ofgem cannot threaten to take licences away from all of them, because bad practice is simply too widespread.

Does the Minister agree that energy consumers—that is, all of us—should have the same rights as people taking a plane or running their tap? Does she agree that the energy market can function properly only when our consumers know their rights and are empowered to enforce them? Does she agree that it is unconscionable for energy companies to be treating their consumers in the way they are today? I want every single issue from my constituency sorted out, and I hope the Minister will engage with that and the energy companies too, but we can be proactive and solve the root cause. I am asking the Government to consult on a new consumer rights charter for energy bills that will be communicated widely and where good companies can be accredited, and which will make our energy market work for consumers as well as for responsible suppliers. I look forward to hearing the Minister’s remarks.

It is a pleasure to be here under your stewardship, Mr Hollobone. I congratulate the hon. Member for North East Fife (Wendy Chamberlain) on securing this incredibly important debate. We are going to get together to have a further conversation, so I have listened with great interest to all her comments.

I take the role of Minister for energy consumers and affordability incredibly seriously. At least once a day I comment on the fact that affordability is at the heart of all that we do. It is vital to bring down energy bills and ensure that consumers are protected. One of my key drivers is to ensure that the vulnerable are not made more vulnerable. I regularly meet the chief executive of market regulator Ofgem. I spoke to vulnerable consumers at a summit yesterday, and continue to engage with lots of stakeholders, including Citizens Advice, and other suppliers.

The Government have made it clear to Ofgem that we expect it to be robustly enforcing the rules aimed at ensuring that suppliers treat their customers fairly. Suppliers should continually strive to adopt and embed a customer-centric culture. That relates to how suppliers behave, provide information and carry out customer service processes. Ofgem’s guaranteed standards of performance exist to ensure that suppliers provide automatic compensation when domestic customers’ switches are delayed, when customers are erroneously switched, when issuance of the final bill is delayed, when there are missed or late appointments, or if a supplier does not send an engineer who has the skills and experience to carry out the planned work.

If a customer thinks their meter is not working properly, the supplier should agree a timescale with the customer to complete the work. If a supplier does not do what it said it would, it should give the customers £30 compensation, as the hon. Member mentioned. For prepayment meter faults, if the consumer cannot get any electricity or gas, and they think the meter is faulty, they should contact the supplier. The supplier should come round and repair or replace it within three hours, or four hours on a weekend or bank holiday.

If the consumer thinks their meter is faulty but the power supply is still working, they should still contact their supplier, and the supplier should arrange a future appointment within three or four hours. If a supplier does not do what it said it would, it should give the customer £30 compensation. Suppliers must pay £30 compensation to customers within 10 days of breaching an individual guaranteed standard. If it fails to pay the customer in time, it must pay an additional £30. I listened closely to what the hon. Member said, and I know we will have further discussions about the suitability of this arrangement.

Suppliers are required to submit complaints data to Ofgem on a monthly and quarterly basis. Suppliers also publish domestic complaints data on their websites, including the top five reasons for complaints, and the measures they are taking to improve how they handle customer complaints. If the customer remains unhappy with the outcome of their complaint, they can approach the energy ombudsman. Ombudsman Services is an independent body that provides dispute resolution, and it is free for consumers. Ombudsman Services can investigate and, where appropriate, oblige the supplier to rectify the situation.

One area that needs to be improved relates to prepayment meters. We all heard about the incredibly appalling practices that occurred with the forced fitting of prepayment meters. The Government have made their strong feelings clear on the issue. I am glad that suppliers have now signed up to a more robust set of standards. The new code of practice will help, but we still need to ensure that we work together to deliver an energy market that works for everyone.

Ofgem has acted to improve protection for vulnerable households, increased scrutiny of supplier practices and introduced redress where meters were wrongfully installed. We have been crystal clear that fitting a prepayment meter by force for any customer must be an absolute last resort, after all other options have been completely exhausted. The Government will monitor the behaviour of suppliers very closely and will not hesitate to intervene if necessary.

On the issue of understanding energy bills, Ofgem has produced a short video and short written guides for households. Suppliers are required to maintain a telephone support line and to provide an explanation of the customer’s bill in plain and intelligible language. Again, I look forward to meeting the hon. Member to discuss that further and to discuss whether there are more things that we should and could be doing. There are resources such as Citizens Advice’s big energy saving network, which is a network of trained advisers who help people to understand energy use in the home and how to get the support that they are entitled to.

I thank the hon. Member for North East Fife for securing the debate. I can reassure her and parliamentary colleagues that the Government expect energy suppliers to provide good customer service and to look after their vulnerable consumers. The Secretary of State and I have made it clear that that is a top priority for Government. As I mentioned, I meet regularly with Ofgem and key stakeholders, such as Citizens Advice and the ombudsman, to discuss the experiences of consumers and how they can be improved. When suppliers are providing poor customer service, they should expect customers to switch to a better supplier. Although the market for switching for a better price is only just restarting after the gas price crisis, some customers have continued to switch to find better customer service. I look forward to meeting with the hon. Lady to discuss these matters further.

Question put and agreed to.