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Energy Prices and Profits

Part of Opposition Day — [6th Allotted Day] — Living Standards – in the House of Commons at 6:29 pm on 4th September 2013.

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Photo of Mark Lazarowicz Mark Lazarowicz Labour, Edinburgh North and Leith 6:29 pm, 4th September 2013

Mr Weir made the point that when the Prime Minister announced the Energy Bill policies on the hoof at Prime Minister’s Question Time, he told us that he would legislate to put customers on the cheapest tariff. That promise was reduced to a promise to simplify the tariffs that energy companies offered. I am sure that everyone would welcome simplification as an important tool in enabling customers to make a choice between different companies, but simplification by itself does not reduce energy prices.

The simplification process now underway has in some cases led to people having to pay more for their energy, rather than less. I want to draw attention to those low users of energy, often those on low incomes, who are now worse off because of the insistence, as a result of the Ofgem review, on companies having both a standing charge and a unit rate. After years of trying to get standing charges reduced or abolished because they are particularly damaging for those on low incomes, we are now seeing pressure on companies to bring them back.

A constituent who contracted me was told by npower—this applies to other companies and is more the fault of Ofgem trying to implement Government policies—that if he spent less than £27 on gas and £12 on electricity a month, he would see an increase in his overall costs. Indeed, he has worked out his energy costs and found that his bill would rise by between 50% and 60% as a result. That is an example of how, bluntly, inventing policy on the hoof, not thinking it through and then attempting to deliver it is damaging constituents. That is just one example of where I think the Government have to monitor carefully the effects of the policies to standardise tariffs that are being implemented. They must also ensure that companies do not end up profiting as a result of the way the tariffs have been introduced.

As I said at the start of my speech, standardisation does not cut energy prices. There are clear examples—npower is not the only one—of customers now being worse off as a result of the way simplification has been put into effect. The Government need to review that straight away. We need to look at that to ensure that low energy users, particularly those on low incomes, do not lose out as a result of the Government’s policies.