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Cost of Living: Energy and Housing

Part of Bills Presented — Finance Bill – in the House of Commons at 10:24 am on 5th June 2014.

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Photo of Edward Davey Edward Davey The Secretary of State for Energy and Climate Change 10:24 am, 5th June 2014

The hon. Gentleman has been a champion in the debate on housing in London for many years. I do not think that he can point to any halcyon days over the past 30 years. The cost of housing was the biggest issue when I became an MP in 1997, and for many of my constituents it remains the biggest issue. There have been changes, but many of the housing benefit changes that we have made have actually hit the landlords, not the tenants. I think that he ought to welcome that.

I am very proud of our record of helping people on low incomes, and not only the personal tax allowance increases, but the rest of our help with the cost of living—fuel duty freezes, council tax freezes, free school meals and help with child care. The coalition has listened and is helping. Of course, all those measures take time to feed through. Everyone knows that in some parts of the country people are yet to feel the turnaround, and that was always inevitable. Many people are only now beginning to experience the end of the post-recession squeeze.

I think that what is worrying the Labour party is that in 10 months’ time many more people will be feeling the benefits of the recovery and Labour’s latest economic argument on the cost of living will look ever hollower. Of course, last summer the Opposition already began to switch their economic argument again. It was not the general cost of living or general inflation that they were talking about, or the full basket of goods that people buy; it was a few specific ones. That is why we have today’s debate on energy and housing costs. They are very important issues, and my right hon. Friend the Secretary of State for Communities and Local Government will, I am sure, take on the housing costs debate. I am sure that he will cover not only our record of low mortgage rates, but our record and our plans to build more houses to reduce housing costs.

However, I want to deal with energy costs, because, unlike the previous Government, we have acted on energy bills. We have taken on the energy companies, unlike the Leader of the Opposition when he was doing my job, when he could have acted but did not. It is interesting to look at the record on energy bills. In almost every year under Labour, energy bills rose: in 2005 they went up by 12%; in 2006 they went up by 20%; and in 2008 they went up by 16%. In the previous Parliament, under Labour, energy bills rose by a whopping 63%, and Labour did nothing. Yet they lecture us. Of course, bills have also risen in this Parliament, but by 8% a year, compared with 11% a year in the previous Parliament.

Labour did act to reform the energy markets; they managed the great feat of reducing the number of energy market firms and creating the big six. In other words, they made it worse and created another mess for us to clear up. This coalition is really reforming the energy market and taking on the energy companies. From day one, we began reforming the market to create real competition, with new competitors. Twelve new independent suppliers have entered the market since 2010, and independents are topping the best-buy tables, increasing their market share from less than 1% to 5% and rising, giving people a real chance not only to freeze their bills, but to cut them.

Just look at what has been done to help people with their energy bills: Ofgem’s reforms are making bills simpler and forcing firms to put consumers on the cheapest tariffs; switching rates are increasing, with switching speeds getting faster; and Government action is taking £50 off the average energy bill. Where the Opposition wanted to legislate for a freeze, with all the impact such regulatory intervention would have on investor confidence, the coalition has worked to ensure that the Government and competition are delivering something better than a freeze. Scottish and Southern Energy, British Gas, npower, Scottish Power and EDF have all announced that they will not increase energy prices this year unless network costs go up or wholesale energy costs rise, and of course they are not.