[Un-allotted Half Day] — Energy Price Freeze

Part of Opposition Day – in the House of Commons at 3:38 pm on 2nd April 2014.

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Photo of Gregory Barker Gregory Barker The Minister of State, Department of Energy and Climate Change 3:38 pm, 2nd April 2014

This has been a lively debate with excellent speeches from across the House on this critical issue. I apologise for leaving the Front Bench for a short while. I had to go upstairs and pass the last piece of the legislative jigsaw for the renewable heat incentive—a ground-breaking piece of legislation of which the coalition is proud.

The fact that the referral of the energy market to the Competition and Markets Authority commands cross-party support is to be welcomed, as is cross-party support for our reforms to the electricity market to support clean energy generation, and the cross-party consensus on meeting our climate change objectives. Consensus on energy policy is not a product of the soggy centre, but something to which a responsible politician in government, or opposition, should aspire.

In practical terms, I am glad that behind the bravado, if we listened carefully we could just about make out the muffled echo of the Labour party sounding a retreat, and we may be inching back towards greater consensus on the strategic direction of policy. The Labour party is being offered an elegant way out of its discredited, disastrous, made-for-a-soundbite energy policy. As attractive and tempting as it might be in the age of social media to offer electorally attractive but fundamentally undeliverable policies, the fact remains that investment certainty and a better deal for consumers that moves to a clear energy system is a complex proposition. Effective energy policy in government requires well thought through proposals that command the respect and support of consumers and investors alike.

A clear demonstration of policy grip was shown by the Chair of the Energy and Climate Change Committee, my hon. Friend Mr Yeo, whose speech I thought was a tour de force. In his characteristically elegant way he made the key and most important point—which was completely lost on the Opposition—that the Government cannot control the global wholesale price of gas, and that that is the key price maker for UK electricity. The Government can no more control the price of gas than King Canute could command the waves, and to pretend otherwise is to con the British public. My hon. Friend’s second point, which is that an attempt by any Government to freeze prices with such a draconian arbitrary intervention in the energy market would have a terrifying chill on investment across the sector, was heard loud and clear across the Chamber. As my hon. Friend said, we know the price freeze is a cynical political manoeuvre, designed to prop up the dominance of Labour’s big six.

We heard many other excellent interventions. My hon. Friend David Mowat spoke powerfully about how a price freeze will damage investment in new capacity, and my hon. Friend

Damian Hinds was right to focus on putting consumers first and foremost in energy policy. We do not often hear from Labour about putting the consumer at the heart of energy policy, but the coalition is determined to do that.

My hon. Friend Dr Lee pointed out the complexity of the energy markets and said we should focus more on energy efficiency, and I absolutely agree. We heard contributions from other Members, including Dr Whitehead, who I thought was uncharacteristically ponderous and rather tiptoed around the illogicality of the Labour price freeze. We also heard contributions from the hon. Members for Angus (Mr Weir) and for Newport West (Paul Flynn). John Robertson said, in reference to the price freeze, that it is not a con to try something. I know he is sincere, but it is a con to try to sell something to the public when we know in our heart of hearts that it cannot work, and when every major commentator and expert in the field has said that it cannot work. That is trying to perpetrate a con.

The bottom line is that Labour’s hit-and-run soundbite energy policy is not credible to consumers or investors. When it comes to UK energy policy, Labour has a hashtag, but we have a long-term economic plan. Labour talks of a bill freeze; we act to cut bills. Labour’s big answer is a new quango; we are delivering real action. Labour’s answer to our problems is more red tape; we want more competition. Labour put its trust in its new super-bureaucrats; we believe that the answer lies not with more bureaucrats and their super quango, but with entrepreneurs and dynamic new entrants—those are the keys to competition. Labour wants to go back to the 1970s and put Whitehall at the heart of energy markets; we, as my hon. Friends have pointed out, want to empower consumers. Labour wants the best tariffs for the over-75s; we have acted to put everyone on the best tariffs.

Let us not just critique Labour’s record in opposition because we should not forget its record in government. Labour created the big six—[Interruption.] Yes, Labour Members may squeal; they hate to be reminded of it, but that is the fact. Labour created the big six. It had the opportunity to refer the issue to a competition inquiry, and not just Labour but the Leader of the Opposition failed to do so. Labour was responsible for the investment desert that characterised 13 years of under-investment in energy capacity. We saw contraction of competition under Labour, but the coalition is unleashing a new era of competition. Labour Members know that wholesale prices cannot be controlled. We would not know that from listening to them, but why else did gas prices double when they were in government and why else did electricity bills go up by more than 50% on their watch?

We know that we cannot control the world price, but that does not mean we stand aside from the market. We are rolling up our sleeves and making real reforms. Since day one, we have worked to make the energy market more affordable, and to increase competition and unlock much-needed investment. We have made the energy market easier to navigate by forcing energy companies to put people on to the lowest tariffs. We have slashed the number of tariffs we inherited from Labour from 400 to just four per supplier, and forced suppliers to put consumers on the cheapest variable tariff. This month we confirmed that we will halve the time it takes to switch providers to just two weeks. We plan to make that even faster: we have made a commitment to 24-hour switching and we will deliver on it. As

The Sun says today, switching is the best hope for consumers.

We are making the energy market more affordable by forcing energy companies to compensate customers for mis-selling and overcharging. Labour did not do that; we have legislated for it. We have given Ofgem new powers to force energy companies to compensate consumers for mis-selling and overcharging. We have also provided discounts and financial support to help people to pay their bills, including £130 off energy bills for 2 million households this winter. We have protected 12.7 million pensioners’ winter fuel payments, made cold weather payments to more than 4 million people, and cut taxes that add £50 to energy bills.

Last week, SSE announced a price freeze. This is not a Labour-style, 1970s legislatively imposed price freeze that would kill investment and scare away investors, but a price freeze borne of competition and an increasingly competitive market. SSE said that decisions taken to reduce delivery costs of the energy company obligation, and decisions announced by the Chancellor in the autumn statement, were the principal factors in it being able to make this price commitment.

We are making the energy market more competitive by deregulating the energy market to encourage vital new entrants. Nine new entrants have entered the market in the past two years alone, and the number of customers with independent suppliers has trebled under the coalition. We are forcing the big six to play fair with small suppliers.