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Energy: Prices

Volume 750: debated on Monday 9 December 2013


Tabled by

To ask Her Majesty’s Government what estimate they have made of the impact of recent energy price rises on local authorities in financial years 2015-16 and 2016-17, compared to a price freeze.

My Lords, on behalf of my noble friend Lord Kennedy of Southwark, and with his consent, I beg leave to ask the Question standing in his name on the Order Paper.

My Lords, the Government are helping local authorities with their energy bills. The Salix Finance public sector energy efficiency loan scheme provides interest-free loans to public sector organisations, including local authorities in England, Scotland and Wales. Last week we announced an additional £90 million of funding to help improve the energy efficiency of public sector buildings. The Government Procurement Service purchases energy on behalf of many public sector organisations, including local authorities, resulting in lower energy costs for the public sector.

My Lords, I thank the Minister for that reply. However, we know that local authority budgets are being cut to the bone and many local authorities are already struggling to meet their statutory obligations to vulnerable people. Notwithstanding what the Minister has said, does she agree that, by ruling out price freezes, households are faced with a double challenge of rising energy prices at home and further cuts to vital local authority services on which so many depend?

My Lords, although the Government cannot, of course, control wholesale prices, in our announcement last week we put forward a package of measures which should help local authorities and consumers. The noble Lord will be aware that only today the OECD said that if it were to follow the noble Lord’s party’s plans on an energy price freeze, there would be underinvestment as investment would be frightened off coming to the UK. I am sure that is not what the noble Lord or his party want, but, sadly, that is what would happen. The noble Lord will also be aware of the complete drop in share prices across energy companies following the statement made by the leader of his party in September.

My Lords, as part of their localism agenda, the Government have removed many restrictions on local authorities, one of which is the ability to generate electricity from their own resources. Will my noble friend the Minister remind us what income this initiative has generated for the benefit of council tax payers?

My Lords, my noble friend is absolutely right. This initiative is of great benefit to local communities and allows local authorities to look at how community-based renewable energy schemes can not just benefit local communities but help local consumers reduce their energy costs.

My Lords, my right honourable friend Ed Miliband is certainly leading the country in many ways and forcing many U-turns on the Government, but it would be extraordinary if the leader of the Opposition were to have such an impact on the share prices of energy companies 18 months away from a general election. That said, I note what the noble Baroness said about new measures which she believes will have a beneficial impact on local authorities. Have calculations been made about the rise in energy prices for hospitals, health centres and health in general in this country?

My Lords, the noble Baroness is being incredibly complacent if she thinks that making a statement would not have an impact on share prices across the country. Of course, it undermines investor confidence. We need to make sure that people wishing to invest in the energy infrastructure of this country are confident that we will have a stable set of measurements. That gives confidence to investors rather than deters them from coming here. The noble Baroness asked a number of questions about what we are doing to help. We have done an awful lot to help consumers get through the difficult period. Through ECO we have put in many measures to help 230,000 of our most vulnerable households. There are cold weather payments and there will be warm house discounts to help them see out cold winters. This Government are doing a lot to ensure that those who need help will receive it.

My Lords, is the Minister telling the House that the Government believe that those people with shares in energy companies are right to be confident that Labour will win the next general election? That is the implication of what she is saying. However, I do not expect a detailed answer to that point. Will the Minister say what she thinks will be the impact on police budgets of rising energy costs and whether this will further add to the loss of local neighbourhood policing in various parts of the country?

My Lords, on the noble Lord’s first question, no, I do not expect his party to win. In fact, I am trying to point out that he and his party ought to be very careful that we do not undermine this country’s great strength in attracting inward investment. Making complacent statements that have no substance puts investors off.

Does my noble friend think that I am being too optimistic in believing that my Centrica shares will start going up again as we approach the next election and the chances of the Conservatives winning it will increase?

My Lords, as long as we have a Conservative Government in place, I am sure that we will all benefit.

My Lords, the politics are very interesting, but the noble Baroness has been asked two questions—one about the impact of energy price rises on hospitals and the health community in this country and the second about the impact on police forces and policing. If the noble Baroness is not able to reply to these questions today, will she write with the requisite information?

My Lords, I do not wish to avoid answering any questions but, given the time, I have to answer as much as I can of the questions that I am given. The Government Procurement Service purchases energy on behalf of many public sector organisations, including, I am sure, the organisations to which the noble Baroness refers. Harnessing that collective purchasing power and buying directly on the wholesale market results in lower energy costs.

My Lords, does my noble friend remember, like me, that the present leader of the Labour Party was once the Secretary of State for Energy? Does she also remember that, far from increasing competition in the market, which is the one way that we will drive down prices, we saw competition decrease on his watch?

My noble friend is absolutely right. When the party opposite came to power, there were 14 energy companies. When it left, there were six. I am glad to announce that since then eight independent generators have come on the scene.