Energy Market Competition

Energy and Climate Change – in the House of Commons at 12:00 am on 14th July 2016.

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Photo of Oliver Colvile Oliver Colvile Conservative, Plymouth, Sutton and Devonport 12:00 am, 14th July 2016

What her policy is on the proposals of the Competition and Markets Authority on increasing competition in the energy market.

Photo of Andrea Leadsom Andrea Leadsom The Minister of State, Department of Energy and Climate Change, The Secretary of State for Environment, Food and Rural Affairs

The Government welcome the Competition and Markets Authority’s final recommendations, which represent another step towards a competitive and effective energy market that works for all consumers, but it is key to understand that it is also the responsibility of energy suppliers to take action in response to the CMA’s recommendations, and we are meeting representatives of all the big six suppliers to urge them to do that.

Photo of Oliver Colvile Oliver Colvile Conservative, Plymouth, Sutton and Devonport

I congratulate my hon. Friend on answering all the questions this morning and wish her the very best of luck with anything that might happen later. Does she agree that it is only by having greater competition in the market that we can drive down prices, especially for those living in fuel poverty?

Photo of Andrea Leadsom Andrea Leadsom The Minister of State, Department of Energy and Climate Change, The Secretary of State for Environment, Food and Rural Affairs

My hon. Friend is absolutely right. I invite any of my hon. Friends on the Front Bench to jump up and answer any of these questions, should they wish to do so, but I am quite used to being the last person on the battlefield; I know my place.

The Government have taken a great deal of action to boost competition and to make switching easier for all consumers, and we have absolutely recognised that vulnerable consumers need additional help to engage with the energy market. To help to address that, we have provided about £3 million over the last three years to fund face-to-face support through the Big Energy Saving Network as well as £1 million of funding for this winter and £1.5 million of funding for a programme administered by National Energy Action over the next two years. This is a top priority for my Department.

Photo of John Bercow John Bercow Chair, Speaker's Committee on the Electoral Commission, Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Speaker of the House of Commons, Chair, Speaker's Committee for the Independent Parliamentary Standards Authority

The Deputy Leader of the House has other important responsibilities and she knows that. As far as the men sitting on the Front Bench are concerned, they all look absolutely fine and are doing the right thing—simply nodding in the appropriate places.

Photo of Alan Whitehead Alan Whitehead Labour, Southampton, Test

I thank the Minister for her kind comments this morning. I, too, enjoyed our exchanges—and the chocolate peanuts.

The CMA’s final report has been characterised as blaming sticky customers for not switching and condoning penalties on them if they continue not to switch. Does the Minister agree with that analysis?

Photo of Andrea Leadsom Andrea Leadsom The Minister of State, Department of Energy and Climate Change, The Secretary of State for Environment, Food and Rural Affairs

I also enjoyed the chocolate raisins.

The evidence is clear that customers on expensive standard tariffs could save £325 by switching to the cheapest fixed deal. I do not think that the CMA is blaming consumers; it is recognising a slight inertia or unwillingness to switch. We are trying to urge people to switch. Between January and March this year, almost 2 million energy accounts were switched, over half of which moved to new suppliers, so the push to switch is actually getting through and we are seeing some progress.

Photo of Mark Spencer Mark Spencer Assistant Whip (HM Treasury)

I congratulate the Minister on all that she has done to encourage competition, which helps consumers to get a price that is better for them. That is in stark contrast to Opposition Members who often scaremonger about capacity markets driving prices up and scare my constituents into worrying about whether they can pay their bills.

Photo of Andrea Leadsom Andrea Leadsom The Minister of State, Department of Energy and Climate Change, The Secretary of State for Environment, Food and Rural Affairs

My hon. Friend is exactly right. People all too often fail to recognise that the energy trilemma consists of keeping the lights on, keeping bills down, and decarbonising. He is right that the capacity market is there to ensure the security of supply and that is the payment we make to keep the lights on.

Photo of Callum McCaig Callum McCaig Shadow SNP Westminster Group Leader (Energy and Climate Change)

I echo the remarks made about Amber Rudd and wish her well in her new role as Home Secretary. I am glad that the Minister is here, because if she had not been, these questions may have been a little more rhetorical than usual.

The previous Prime Minister said in 2012 that he would legislate to ensure that all consumers were on the lowest tariff. We have had four years since then, and an extensive CMA report has come up with recommendations that are a little underwhelming in their scope. Does the Minister think that that will be enough to ensure that energy customers get the best possible deal?

Photo of Andrea Leadsom Andrea Leadsom The Minister of State, Department of Energy and Climate Change, The Secretary of State for Environment, Food and Rural Affairs

That was a fair question. The CMA has carried out a detailed piece of research and we are committed to implementing all its recommendations as soon as possible. We have also made it clear that if we do not see change, we will take further steps. The hon. Gentleman is right. We will implement the CMA’s recommendations. We will see costs come down, competition go up, and better remedies for people on prepayment meters, but we will also be alert to other opportunities to get costs down for consumers.

Photo of Callum McCaig Callum McCaig Shadow SNP Westminster Group Leader (Energy and Climate Change)

I am glad that the Minister says that the Government will remain vigilant on this matter. The CMA found that 70% of customers of the big six domestic suppliers were on the more expensive standard variable tariff. Will she set a target for reducing that so that we know what success looks like and to determine whether the further action that she mentions is required?

Photo of Andrea Leadsom Andrea Leadsom The Minister of State, Department of Energy and Climate Change, The Secretary of State for Environment, Food and Rural Affairs

As I have just explained, we do not want to set a specific target. However, we are successfully providing support to organisations that then go on to help people to switch. I love the idea that if anybody listening to this really wants to help their grandparents, neighbour or whomever, who may not have the confidence to switch themselves, they could go and help them switch, possibly saving them several hundred pounds. Instead of setting targets and blaming people when they are not met, we need to persuade people of the advantages of switching.

Photo of Barry Gardiner Barry Gardiner Shadow Secretary of State for Energy and Climate Change, Shadow Minister (Department for Business, Energy and Industrial Strategy) (Energy and Climate Change), Shadow Secretary of State for International Trade

I pay tribute to Amber Rudd and congratulate her on her appointment as Home Secretary. Under her charge, the Department of Energy and Climate Change played an important role in securing the Paris climate agreement, and she was a strong and enthusiastic champion for it. Only two weeks ago, some might have suspected that today she would be more likely to be standing at the Dispatch Box saying goodbye to me, but in this place we are beginning to learn to expect the unexpected. She was always courteous and often actually helpful in our exchanges, and we wish her well in her new role.

The CMA report states for the past five years the big energy companies have been overcharging customers by more than £4,657,000 every single day. Can the Minister name any other swindle of such enormous magnitude where the Government would simply say, “It is the customer’s fault. People should have shopped around and switched to another provider”?

Photo of Andrea Leadsom Andrea Leadsom The Minister of State, Department of Energy and Climate Change, The Secretary of State for Environment, Food and Rural Affairs

I am grateful to the hon. Gentleman for his question, but I completely refute the suggestion that the Government are saying it is the customer’s fault. We have been clear that we support the CMA’s recommendations; some huge changes are being undertaken. We are rolling out smart meters; simpler tariff rules are coming in; we will enable newer suppliers to pitch cheaper deals to inactive consumers; and there will be improved accuracy of quotes on price comparison websites. A range of remedies are being undertaken, and in no sense is there inaction on the part of this Government.

Photo of Barry Gardiner Barry Gardiner Shadow Secretary of State for Energy and Climate Change, Shadow Minister (Department for Business, Energy and Industrial Strategy) (Energy and Climate Change), Shadow Secretary of State for International Trade

The hon. Lady said that she was going to be meeting the industry and the big six. The Government’s own figures state that in England 2.38 million households are living in fuel poverty. Her Department could today take action to force—not to talk to, but to force—energy companies to pass on changes in wholesale prices immediately to customers through their tariff structures. In that way, customers would benefit directly from the drop in wholesale prices. Why is she failing to do this?

Photo of Andrea Leadsom Andrea Leadsom The Minister of State, Department of Energy and Climate Change, The Secretary of State for Environment, Food and Rural Affairs

I am afraid that just shows that the hon. Gentleman does not really understand how the energy market works. His party’s proposal to cap energy bills to consumers was a grave mistake, because we have seen wholesale prices come down and all consumers have benefited from that. I say again that this Government are absolutely committed to getting bills down for consumers at every opportunity, to implementing the CMA’s significant reforms and to looking at what else is available to be done.