Energy Companies: Charges

Energy and Climate Change – in the House of Commons at 9:30 am on 27 February 2014.

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Photo of Rehman Chishti Rehman Chishti Conservative, Gillingham and Rainham 9:30, 27 February 2014

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

Photo of Gregory Barker Gregory Barker The Minister of State, Department of Energy and Climate Change

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.

Photo of Rehman Chishti Rehman Chishti Conservative, Gillingham and Rainham

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?

Photo of Gregory Barker Gregory Barker The Minister of State, Department of Energy and Climate Change

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.

Photo of Nicholas Dakin Nicholas Dakin Opposition Whip (Commons)

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

Photo of Gregory Barker Gregory Barker The Minister of State, Department of Energy and Climate Change

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.

Photo of Anne McIntosh Anne McIntosh Chair, Environment, Food and Rural Affairs Committee, Chair, Environment, Food and Rural Affairs Committee

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?

Photo of Gregory Barker Gregory Barker The Minister of State, Department of Energy and Climate Change

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.