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Clause 27

Energy Bill – in a Public Bill Committee at 6:00 pm on 19th January 2010.

Alert me about debates like this

Adjustment of charges to help disadvantaged groups of customers

Photo of Simon Hughes Simon Hughes Shadow Secretary of State for Energy and Climate Change 6:15 pm, 19th January 2010

I beg to move amendment 24, in clause 27, page 22, line 6, leave out ‘considers’ and insert ‘discovers’.

This is a simple amendment with which we seek to replace one word with another. This part of the Bill centres on the adjustment of energy charges and clause 27(1) reads:

“If the Secretary of State considers that some customers of an energy supplier (the “disadvantaged customers”) are treated less favourably than other customers of the energy supplier (the “advantaged customers”) as respects charges for energy, the Secretary of State may by regulations make a scheme for the adjustment of charges for energy with a view to eliminating or reducing the less favourable treatment.”

The mission is a good one, but I think that the drafting of the clause has omitted the conventional word that allows the Minister discretion over the matter. I seek to make it a more objective consideration and a question of fact so that, if the Secretary of State discovers that there are less favourably treated customers, the obligation on him to think about regulations follows on from that. We can then talk about whether he would have to introduce them or not. I would be grateful if the Minister could tell me whether I am right in thinking that the drafting of the Bill could be tighter and whether the amendment would meet that objective. [Interruption.]

Photo of Charles Hendry Charles Hendry Shadow Minister (Energy and Climate Change)

The Under-Secretary says “You’re wrong” from a sedentary position. I am sure that he will give us a chance to understand his thinking with greater clarity in a moment. The hon. Member for North Southwark and Bermondsey has picked up on an important issue that runs all the way through clause 27. It is a bad piece of drafting and it will be a bad law if passed as drafted. The clause is too subjective—we will discuss that during the clause stand part debate. The fact that, according to its opening sentence, the Secretary of State can consider something means that he will have a huge raft of powers. What is missing from the clause is real evidence. In fact, the word “discovers” is not sufficiently robust; the word should be “establishes” or “confirms”. There should be no doubt about the evidence. It should not be based on the Secretary of State having a slight hunch or deciding on a whim one morning that something is not quite right.

We want a much more robust approach and the sort of factual evidence that Ofgem would be required to have if it was going to exercise the powers. It does not seem right that the Secretary of State should be able to operate on a whim and a hunch on a Monday morning when he pops into the office thinking, “I need a headline today; what shall I do? Oh, something’s popped up here!” He will then be able to act on it as if he was dealing with it on the basis of fact. The wording is sloppy and we look forward to the Under-Secretary trying to reassure us that it is not as sloppy as it appears.

Photo of David Kidney David Kidney Parliamentary Under-Secretary, Department of Energy and Climate Change

I will engage with the amendment. As the hon. Gentleman has said, his point relates to the clause stand part debate, during which I shall defend the entire clause to his satisfaction, I hope.

Clause 27 will allow the Secretary of State to make schemes to remove any disadvantage suffered by customers of an energy supplier who are treated less favourably than other customers of that supplier in terms of the prices they pay for their energy use. Amendment 24 would allow the Secretary of State to take such steps where he discovers that some customers are being treated less favourably rather than where he considers that to be the case.

The very first debate on part 2 of the Bill was introduced by the hon. Member for North Southwark and Bermondsey and centred on whether we should change a “may” to a “shall”. There is a “may” in line 9 of clause 27, but the hon. Gentleman is not seeking to change it to “shall”. I would therefore argue that the Secretary of State’s decision whether to make a scheme remains permissive whether we use either “discovers” or “considers”.

There must be some circumstances in which “considers” is a broader and stronger word than “discovers”, but it might be the other way around in other situations. For example, if the Secretary of State is told of a shocking situation, one could say that, having discovered it by being told, he should do something about it. “Discovers” might be thought of as a more pressing word than “considers”. Alternatively, the Secretary of State might know for a long time that something is terrible and it might be the length of time that is has carried on being terrible that makes the Secretary of State feel that something should be done. “Discovers” would not be the appropriate word then, because the Secretary of State knew for ages, so “considers” would be the stronger word. Sometimes one is better and sometimes the other is.

Photo of Charles Hendry Charles Hendry Shadow Minister (Energy and Climate Change)

The Minister has given us two different versions of the word “consider”. Does that not show why the word is inadequate in this circumstance? Will he consider or discover a better word, which is tougher and clearer, rather than one that can be interpreted in totally different ways?

Photo of David Kidney David Kidney Parliamentary Under-Secretary, Department of Energy and Climate Change

No, I do not accept what has just been said. I gave two different scenarios to show the difference between “considers” and “discovers” depending on the circumstances. Consideration is a word that suggests that somebody has weighed up all the evidence, given thought to it and made a decision. Judges give consideration to cases and Secretaries of State give consideration to things. “Consider” is an appropriate word.

The amendment would, in practice, make little difference to the clause. Whether or not the amendment is made, the Secretary of State will still have to identify a group of customers that is being less favourably treated and then decide whether to exercise his discretion to make a scheme. The change would not mean that the Secretary of State must provide for a scheme whenever he becomes aware that unfair treatment is happening.

As I explained in an evidence session, these are intended to be back-stop powers. In the first instance, Ofgem will be expected to act quickly when it discovers evidence of undue discrimination among customers. If, however, Ofgem is unable to take appropriate and speedy action to deal with any such unfairness, the Secretary of State will consider whether consumers are being disadvantaged and, therefore, whether he needs to introduce a scheme using the powers. The powers give the Secretary of State the discretion he needs to make schemes and ensure that consumers do not suffer harm. I can assure hon. Members that Ministers are ready to use the powers if it becomes necessary. I hope that the hon. Member for North Southwark and Bermondsey will agree to withdraw his amendment.

Photo of Simon Hughes Simon Hughes Shadow Secretary of State for Energy and Climate Change

The hon. Member for Wealden made absolutely the right criticism of the clause. This probing amendment sought to deal with the first of the discretions, and there are others, as the Minister has pointed out. We have tested the issue before and this clause stand part debate allows us to test it again. There is “considers” or the alternative wording, which may need to be adjusted, and there is the “may” or “must” option. The hon. Member for Wealden was right in the points that he made.

I understand the Minister’s argument; yes, judges do give consideration to things. The argument gets weaker when he says that the measure is there as a back-stop and if Ofgem does not intervene, the Secretary of State is there to pick things up. The history of doing things when Ofgem has not, has not been a happy one, so that is not an entirely persuasive argument. We are certainly keen that there should be back-stop powers because if Ofgem continues to be a relatively toothless tiger, somebody has to do something. I am happy that there is a two-stage operation.

I will reflect on what the Minister has said. This is not about semantics. There are normal words that parliamentary draftspeople use; I think that this one comes from the style of the conventional formulation rather than a more precisely required formulation. I am sure that we will come back to the wording, either in this House or the House of Lords. For the time being, I am happy to go away and reflect. I hope that we can build a consensus on this side of the Committee on the best way to deal with the clause as a whole, including this word. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Simon Hughes Simon Hughes Shadow Secretary of State for Energy and Climate Change

I beg to move amendment 10, in clause 27, page 22, line 25, at end insert—

‘(d) liquid petroleum gas for domestic use customers;

(e) fuel oil for domestic use customers.’.

Photo of Peter Atkinson Peter Atkinson Conservative, Hexham

With this it will be convenient to discuss amendment 11, in clause 27, page 22, line 32, at end insert—

‘(d) as respects a relevant liquid petroleum gas for domestic use customer;

(e) as respects a fuel oil for domestic use customers.’.

Photo of Simon Hughes Simon Hughes Shadow Secretary of State for Energy and Climate Change

These are probing amendments to explore whether we should add the two categories of people who have already featured in our debates: those who receive liquid petroleum gas for their domestic heating and those who receive fuel oil. The clause gives Ofgem the power and the Secretary of State the back-up power to intervene where there is seen to be differential treatment. There is an attempt to categorise the sort of people who might be regarded as disadvantaged, or a combination of whom might be disadvantaged. The list currently reads: electricity customers, gas customers and dual fuel customers. The amendment is to explore whether LPG customers and fuel oil customers should be included.

Photo of Michael Weir Michael Weir Shadow Spokesperson (Trade and Industry), Shadow Spokesperson (Environment, Food and Rural Affairs)

I understand what the hon. Gentleman is trying to do. I think it is similar to what I tried earlier. Clause 30 defines an energy supplier, and suppliers of LPG or fuel oil do not seem to fall under it, so his amendment would be ineffective.

Photo of Simon Hughes Simon Hughes Shadow Secretary of State for Energy and Climate Change

The hon. Gentleman is right. As we have discussed before, the market means that the suppliers are often the local garage or local distributor; they are not suppliers in the context of the Bill. We need to find another formulation. The hon. Gentleman did indeed try to open up this debate before and we supported his efforts. There is a will in the Committee to try to deal  with the people who are not on the gas mains in large numbers in Scotland, Wales and England. I want the Minister to tell me how to include LPG and fuel oil customers within the abilities of Ministers and Ofgem to consider who is disadvantaged, so that they can have the disadvantage remedy. This formulation may not be right, but there may be another that is.

The second amendment in the group is to do a similar thing later in the clause, so it would allow both the customer category and the charges and costs to be taken into account. I look forward to the Minister’s reply.

Photo of David Kidney David Kidney Parliamentary Under-Secretary, Department of Energy and Climate Change

As I highlighted during our debate on social price support last Thursday, I fully recognise the difficulties faced by some people who do not have access to the gas grid and therefore have little option but to buy heating fuels. Amendments 10 and 11 aim to bring the heating oil and LPG markets within the parameters of the Secretary of State’s power to adjust energy charges to help disadvantaged groups of consumers. They suffer from the legal flaw that the hon. Member for Angus pointed out: that the scheme relates only to licensed suppliers and these people are not licensed.

Those off-gas grid consumers, who are likely to be electricity-only customers, are already some of the potential beneficiaries of the clause as drafted. The clause gives the Secretary of State powers to address unfair discrimination between different categories of gas and electricity customers and provides for the introduction of schemes to adjust charges accordingly.

One of our main motivations for introducing these powers is for Ministers to have powers to ensure that people who are off the gas grid will not be treated unfairly in comparison with those who are on it. Our current intention with regard to the design of the new social price support mechanism, for a rebate on electricity bills, will ensure that consumers who are off the gas grid will receive the benefit. The hon. Member for North Southwark and Bermondsey asked to hear what I am going to say about how we can improve the situation. Clearly, the major option is to introduce some kind of new licensing system.

As I said last Thursday, I do not believe that bringing domestic heating oil and similar fuels under the same type of regulation as the gas and electricity markets is the right solution. Neither do I think it would be proportionate as the solution. The Electricity and Gas Acts deal with markets where there are natural monopolies, which means that competition cannot be expected on its own to protect consumers from the risk of unfair exploitation. In contrast, there is no natural monopoly in the distribution of heating oil, gas oil or liquefied petroleum gas. Consumer protection legislation such as the Sale of Goods Act 1979 applies to those fuels, and there is competition legislation. As we debated last week, the Office of Fair Trading, the Competition Commission and local trading standards all have powers that apply to those sectors. The Competition Commission has investigated the LPG market and after five years recommended changes and made orders as a result.

Photo of Phil Willis Phil Willis Chair, Commons Science and Technology Committee 6:30 pm, 19th January 2010

We understand the Minister’s point and he is right to repeat his earlier arguments. However, he has had time to reflect on last week’s debate and to  suggest how we bring the suppliers of liquid gas into a scheme in which the people paying their tariffs get access to some sort of social tariff from the suppliers. The reality is that, despite getting something knocked off their electricity bills, people in rural areas in particular will now pay extraordinarily extortionate prices for a product that they have no option but to buy. The Minister is proposing to do absolutely nothing, which is the frustration.

Photo of David Kidney David Kidney Parliamentary Under-Secretary, Department of Energy and Climate Change

That is an unfair characterisation of my position. I do not think that suppliers can charge extraordinary amounts of money for their services without any recourse to a remedy. As I mentioned, the whole of consumer protection legislation is there to protect them, as is the Office of Fair Trading and the Competition Commission.

Photo of Bill Wiggin Bill Wiggin Opposition Whip (Commons)

I do not normally intervene if I can possibly help it but, it would be helpful if the Minister realised quite how difficult it is in my constituency for customers for LPG find it. The Competition Commission recommended that the tanks that people have at their houses do not continue to belong to the companies that supply them but become exchanged between various suppliers, so to some extent things have got better. If the Minister saw a contract, he would find that he has to sign up for two years, irrespective of any price change. It is not fair to say, therefore, that there is a proper free market, because he has to bind himself into his supplier because he is an LPG consumer. Whether they can move the tanks around is no longer the criterion that holds the customer, giving them no freedom of choice and no freedom to escape from a contract once they have signed up to it. I do not think that the Minister was necessarily aware of that, although I have written to him about it on behalf of my constituents.

Photo of Peter Atkinson Peter Atkinson Conservative, Hexham

Order. Before the Minister replies—I am happy for him to do so—we are in danger of repeating a debate that we have already had in Committee. I hope that hon. Members will bear that in mind.

Photo of David Kidney David Kidney Parliamentary Under-Secretary, Department of Energy and Climate Change

I find it extraordinary that a Labour Minister is defending the industry and free market operators from the Conservative and Liberal Democrat parties. Nevertheless, that is my current position. I am saying that there is a competitive market, subject to laws about consumer and competition protection, which provides the protection for those customers. For those in fuel poverty, I have suggested a route, which, as the Chairman reminded us, we debated for a long time last week.

Photo of Phil Willis Phil Willis Chair, Commons Science and Technology Committee

The Minister is missing my point. We understand that there is a market. The reality is that, whether someone is the wealthiest or the poorest person buying heating oil, for instance, they pay the same price. The only difference is how much someone pays at a particular time. The poor buy smaller amounts and therefore pay more per litre than the wealthy. There is no social tariff whatsoever in those markets. The Minister is not promising to do anything about it. The amendment tabled by my hon. Friend the Member for North Southwark and Bermondsey is attempting to ascertain from the Minister a more comprehensive response to the issue than simply knocking down the amendments because they are inappropriate at a particular time.

Photo of David Kidney David Kidney Parliamentary Under-Secretary, Department of Energy and Climate Change

The hon. Gentleman and I will never come to one mind, it appears, because we shall both carry on along parallel lines. I am saying that people in rural areas off the main gas grid will get support if they are in fuel poverty or at risk of fuel poverty from a scheme that gives them money off their electricity bills. I do not see how he can possibly deny that, whereas I cannot deny his point that I am not proposing a similar scheme to give them money off their heating oil, their coal or their LPG. I am not suggesting such a scheme. An active, caring Government can give people alternatives to dependency on those energy sources, to make the market even more competitive.

For example, as well as the social price board we can look at energy efficiency measures that we promote, assist, subsidise, advertise and so on. We can look at alternative technologies that enable people to find new ways to heat their homes, so that they are not dependent on the traditional forms of energy. We can also look at new ways to help people make their payments, for example through credit unions.

To come back to the point made earlier by the hon. Member for Leominster, of course the Competition Commission made two orders last year. One was about transparency of charges and the other one was about enabling people to switch suppliers. So the points that were made have been addressed.

Photo of Simon Hughes Simon Hughes Shadow Secretary of State for Energy and Climate Change

Obviously we are listening and we hear what the Minister says. However, will he accept that, irrespective of the results of the investigation by the Competition Commission, all the evidence from consumer organisations is that there are large parts of the country where there is no choice? If one looks at the country as a whole, there is choice, but for many people there is no choice in their county, region, village, town or community.

Photo of David Kidney David Kidney Parliamentary Under-Secretary, Department of Energy and Climate Change

Perhaps this will come as a surprise but, as the Minister, I do not pretend to have all the solutions. The one point that I have considered since our debate last week and that I certainly took to heart is whether it would be valuable for hon. Members if I were to offer to bring together the appropriate people so that we, as a Committee, can have a discussion with those people present.

For example, we could bring in Consumer Focus, the expert body on the position of consumers; the Office of Fair Trading, the expert body on competition law, or Ofgem, the expert body on regulating gas and electricity markets. If it would be valuable for members of the Committee to get together with me and those expert bodies to look at what protection the law presently provides, what those actions last year by the Competition Commission and Ofgem on the licence conditions have done, what further powers those bodies have and to investigate whether they feel that they need more powers, I am happy for us to do so. We can get together to examine that idea in greater detail, between now and the Report stage. If that would help hon. Members—[Interruption.] I am hearing that people would find it helpful, so I will endeavour to arrange such a meeting so we can consider all those matters together.

I hope that the hon. Gentleman will withdraw his amendment.

Photo of Simon Hughes Simon Hughes Shadow Secretary of State for Energy and Climate Change

Those are some of the most helpful and positive responses we have had.

Photo of Simon Hughes Simon Hughes Shadow Secretary of State for Energy and Climate Change

I am not sure whether the Minister will want to put that comment on his election manifesto, but we will see. [Laughter.]

The Minister’s words are very helpful. I saw assent from the Conservative Members as well as from my hon. Friend the Member for Harrogate and Knaresborough. I am sure that our colleague, the hon. Member for Angus, would think the same about this suggestion. It is a helpful way forward. There are clearly people who are disadvantaged. I hope that, on that basis, there can be progress and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Simon Hughes Simon Hughes Shadow Secretary of State for Energy and Climate Change

I beg to move amendment 6, in clause 27, page 22, line 37, at end insert ‘, or

(c) the method by which the customer pays their energy bill’.

This would allow the Government to take into account differentials in charges between prepay customers and direct debit customers when considering the adjustment of charges to help disadvantaged customers.

This is the last of the amendments to this part of the Bill on Ofgem and it returns to an issue that we have touched on before, so I need not elaborate on it, other than very briefly.

The amendment is about discrimination in relation to the method by which customers pay their bill. We seek to amend clause 27 so that when the Secretary of State comes to use the powers given to him by the clause, subject to our clause stand part debate shortly, it would read as follows:

“The Secretary of State may make such assumptions and calculations as he or she considers to be appropriate for the purposes of this section, including assumptions and calculations to enable him or her to take into account—

(a) different charges for the same kind of energy, or

(b) charges for different kinds of energy.”

We wish to add:

“or

(c) the method by which the customer pays their energy bill’.

One of the inequities is that there is a differential pricing system depending on the way that someone pays their bill. Some people have all the options; some people have some of the options. Those who have more options have more choice and are less disadvantaged than those who, because they do not have bank accounts or because they have had a difficulty in the past and are required to have prepayment meters, have much more limited options.

I should be grateful if the Minister would indicate whether he is willing to go further than Ofgem has gone, to ensure that we move to a system whereby someone’s payment mode would not bring with it a price advantage or disadvantage.

Of course, I know that the utility companies find it easier and, therefore, cheaper if people pay by direct debit—that is obvious. They find it easier, although it is more expensive for them, if people use the prepayment method. It is easier in one sense in that they are guaranteed the income. They find it more difficult to chase up  people who pay quarterly by cheque or by going to the post office or whatever. It really would be a better system if we all knew that, however we paid, it would be at the same rate. I should be grateful if the Minister told us whether the Government are minded to go in that direction.

Photo of David Kidney David Kidney Parliamentary Under-Secretary, Department of Energy and Climate Change

In preparation for dealing with this amendment I received a briefing from my top-rate group of officials. They do an excellent job, but even with all their assistance I still had difficulty in capturing the argument about how many of those in fuel poverty use a prepayment meter and how many of those who use prepayment meters are in fuel poverty. My officials got me the 2007 figures for England and I thought it would be useful to begin my response to this amendment by setting them out.

First, of the people who use prepayment meters how many are in fuel poverty or at risk of falling into it? Among gas customers, 2.2 million households use prepayment meters. In the bottom 40 per cent. of income distribution, 60 per cent. or 1.3 million households use a prepayment meter and 47 per cent. use standard credit. In the top half of income distribution, 600,000 households or 27 per cent. use a prepayment meter and 40 per cent. pay by standard credit. There are not huge differences between the figures. There were 2.9 million households in 2007 using prepayment meters for electricity. In the bottom 40 per cent. of income distribution, 60 per cent. or approximately 1.75 million use a prepayment meter and 47 per cent. use standard credit. In the top half income distribution, 29 per cent. or around 870,000 use a prepayment meter and 43 per cent. pay by standard credit.

Coming at it from the other direction, how many people who are in fuel poverty use a prepayment meter? Some 2.8 million households were in fuel poverty in England in 2007. Of the electricity customers within that 2.8 million, 1.1 million paid by direct debit, 1.2 million paid by standard credit and 500,000 paid by prepayment meter. So the easy comment that the hon. Gentleman made—I do not mean that as a criticism because we all fall into this trap of saying that these are the poorest most vulnerable customers—is not borne out by the figures.

Photo of David Kidney David Kidney Parliamentary Under-Secretary, Department of Energy and Climate Change

Indeed. Who knows which of the 2.8 million are the most severely impoverished? If 500,000 of the 2.8 million use a prepayment meter, clearly more than 2 million who are fuel poor in this country are not paying by prepayment meter. Of gas customers 900,000 pay by direct debit, another 900,000 pay by standard credit and 400,000 pay by prepayment meter. That does not add up to 2.8 million so 600,000 pay in other ways. I thought that those two sets of statistics were useful to frame the debate.

Photo of Simon Hughes Simon Hughes Shadow Secretary of State for Energy and Climate Change

That is really helpful. I am very grateful. Obviously this will be in Hansard, but perhaps the Minister could let us have the tables at some stage. We have all been scribbling furiously, but that would be helpful. May I ask for one clarification? Does standard credit mean cheque, postal order or cash? I assume that it does, but could the Minister confirm that?

Photo of David Kidney David Kidney Parliamentary Under-Secretary, Department of Energy and Climate Change 6:45 pm, 19th January 2010

Standard credits refer to people who get a bill and pay it. It could be by cheque; it could be that they get their bank to send the payment; or they could go and pay the bill at the bank or the post office.

I have one last statistic. It is not something that my officials got for me specially; it was in the Ofgem probe. When it was investigating the reason for the difference in what prepayment meter customers were charged compared with other customers, and it said that some of the charges were excessive, it asked what the cost-reflective amount of prepayment meter was. Roughly, once it had stripped out the things that it thought were not acceptable, it said that the cost was something like £88 per year. I do not want to place too much emphasis on a particular amount because it will vary between customers and over time, but I thought that a ballpark figure would be useful for our discussion.

I shall now deal with the amendment. It would make it clear that the powers for the Secretary of State to adjust charges to help disadvantaged consumers would allow him to take into account payment methods when calculating the level of disadvantage. In fact, clause 27 is sufficiently wide to enable the Secretary of State to take payment methods into account.

Ofgem’s probe proved that campaigners were right that there had been some scandalous examples of overcharging of prepayment meter customers in the past. I count myself as having been one of those campaigners, when I was a Back Bencher. As a result of Ofgem’s finding and its decision to act, there has been a transfer of value of £96 million from suppliers to prepayment meter customers, and a new licence condition that says that in future the only difference permitted by Ofgem in its role as a regulator will be the actual cost of the payment method.

The explanatory statement provided by the hon. Member for North Southwark and Bermondsey makes it clear that the amendment aims to tackle the tariff differentials between prepayment meter customers and direct debit customers. I understand the concerns that have been raised, but I am hesitant to agree that politicians substitute the view of the suppliers and Ofgem with their own to that degree. Action has already been taken to address price differentials that are not cost-reflective. Ofgem’s probe investigated the differentials that consumers paid for different gas and electricity payment methods, and rooted out differentials that did not reflect the differences in cost to the gas and electricity suppliers of the different payment methods.

In September 2009, Ofgem changed licence conditions, to ensure that differences between payment methods are no more than broadly cost-reflective, and in a recent report Ofgem stated that tariff differentials for prepayment meter customers now reflect cost differences, on average. Five out of the big six energy suppliers have gone further and have equalised their prepayment tariffs with standard credit tariffs on both gas and electricity. For example, the average dual fuel prepayment customer now pays £4 less than the average standard credit dual fuel customer. That compares with a figure of £41 more in July 2008. It has been suggested that further action is needed to equalise direct debit and prepayment meter tariffs. The motivation is to help fuel-poor customers using prepayment meter tariffs, which I would support.  However, equalising tariffs in that way shifts where the costs of the payment method fall, so that people on standard credit and direct debit tariffs subsidise prepayment meter customers, as prepayment meters cost more to provide. That might help the up to 20 per cent. of fuel-poor people who use prepayment meters, but it would not help the around 80 per cent. of fuel-poor customers who are on standard credit or direct debit tariffs. Fuel-poor customers on such tariffs—we have discovered that there are many such households—would end up subsidising prepayment meter customers.

I fully agree that consumers should not suffer unjustified price differences because of their payment method. I support Ofgem’s work in putting in place new rules to protect the consumer further, in particular the proposal to clarify bills and require an annual statement, and the prompt to switch, which will include a comparison of the householder’s tariff with the supplier’s base monthly direct debit tariff. All those moves should help consumers to understand how to get a better deal on electricity and gas.

We need to keep looking for improvements, to make the system work better for consumers. We are legislating to give Ofgem improved enforcement powers to strengthen consumer protection, and to make it clear that Ofgem should address consumer detriment proactively, as and when it is identified. In the coming years, the national roll-out of smart meters will also give added impetus to removing all such differentials.

We will continue working with Ofgem and the energy companies to ensure that consumers, particularly the vulnerable, are given a fair deal, and we will continue to push forward our other measures, such as the introduction of the new social price support, to tackle more effectively the wider problems of fuel poverty. Tackling fuel poverty is not just about energy prices, of course; energy efficiency and incomes must be addressed too. The Government are doing so through programmes such as Warm Front and the winter fuel allowance.

As I said at the outset, the amendment is not necessary to give the Secretary of State the power to do what the hon. Gentleman urges on me, but I have explained my hesitation to commit to doing so. I have found the debate useful in weighing the arguments for and against making the difference, and I am sure it will remain a live issue if the clause remains in the Bill when it becomes an Act and when we consult over the summer on further measures to reach our shared objective of tackling fuel poverty. In the circumstances, I ask the hon. Gentleman to withdraw the amendment.

Photo of Simon Hughes Simon Hughes Shadow Secretary of State for Energy and Climate Change

I thank the Minister for his comprehensive, well-informed and helpful reply. I have two short questions, which he might be able to answer straight away. For the purposes of Hansard, I have given away the briefing that would have allowed me to answer one of them myself, but it would be helpful to put it on the record. He said that five of the six big companies do not now disadvantage prepayment customers with their tariffs. I have read the papers, but I have forgotten which one still uses differential payments. Will he put that on the record?

Photo of Simon Hughes Simon Hughes Shadow Secretary of State for Energy and Climate Change

Secondly, the Minister, in starting his reply and before he went into the substance of the issue, said that he does not believe that it is necessary to amend the Bill to give Ministers the power to deal with differential payments if they want to. Will he elaborate? I do not doubt what he says, but it would be helpful if he could put it on the record for me and those who have not seen what measures in the Bill or existing legislation give that power.

Photo of David Kidney David Kidney Parliamentary Under-Secretary, Department of Energy and Climate Change

Subsection (6) refers to the customer’s charges, and the overall impact of subsection (1) and the assumptions and calculations made in subsection (7) enable the Secretary of State to determine whether charging people according to their method of payment makes them disadvantaged customers.

Photo of Simon Hughes Simon Hughes Shadow Secretary of State for Energy and Climate Change

That is helpful. Again, I do not doubt what the Minister says. I will have a look at how the provisions work together. I read them differently, but if that is the advice given, I am prepared to accept that it is probably more likely to be right.

On the substance, before I accept the Minister’s request, the figures that he gave were helpful. They are counterintuitive in many ways. I think that we all started from an assumption about how many people in lower income groups, or who pay more than 10p in the pound on fuel bills, pay by forms such as direct debit. He said that it was probably about 30 per cent. of the total, which is much higher than I expected. I think that everybody else in the Committee probably had the same view. The figures are useful, and we can all learn from them in ongoing debates.

I am sure that I remember the Minister campaigning on the issue before he became a Minister. I do not doubt his commitment. I urge him to keep monitoring the issue to ensure that we minimise disadvantage and give people the freedom to make and vary their choices without financial penalty, depending on what works best for them. I am content that we have made good progress, and I am grateful to him, his officials and others for helping us. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Charles Hendryrose—

Photo of Peter Atkinson Peter Atkinson Conservative, Hexham

Order. Before I call Mr. Hendry, I say to the Committee that shortly we will have been sitting for three hours. I do not know for how long Committee members propose to go tonight, but if they want to go much beyond 7, I will adjourn the Committee for an hour for supper. Perhaps Committee members can work out how they want to play it.

Photo of Charles Hendry Charles Hendry Shadow Minister (Energy and Climate Change)

I can think of few more enjoyable ways to spend your birthday evening, Mr. Atkinson, than by listening to debate on clause 27 rumble on. There is a modest amount of debate still to be had on the clause, and I think that significant progress will be made after that. If you are minded to allow us to sit slightly beyond 7, and if that is the view of other Committee members, we can return briefly to the subject to finish it on Thursday morning.

Photo of Simon Hughes Simon Hughes Shadow Secretary of State for Energy and Climate Change

On a point of order, Mr. Atkinson. I may be wrong, but the advice that I received is that there might be a vote at 7 in any event. Certainly, for our part, we will be content to adjourn for today at 7 pm. I do not put pressure on the hon. Member for Wealden. I am content for him to make the points that he wants to make, if the Labour Whip is content, and I am sure that we can co-operate fully for the beginning of the next sitting.

Photo of Charles Hendry Charles Hendry Shadow Minister (Energy and Climate Change)

I am more than happy to proceed on that basis. I may even finish before we reach 7 o’clock, and it may be the hon. Gentleman who is cut off in his prime as we debate clause stand part.

We have touched on some of the aspects of the clause which cause concern, and on the fact that it does not seem to be good drafting, but a recipe for confusion. The Government have not set out the groups that they consider to be disadvantaged, which we should help in the Bill. It is not clear whether that might be by geographical location, although it could be. Therefore, it could relate to people who live in Scotland, the north-west or other parts of the UK—for example, in the Minister’s constituency—who he could decide are disadvantaged. It could relate to people who have waited nearly three months before being advised that their tariff was being changed—there is a whole range of different categories of people who could be helped by the clause, but it is so far from clear who the Minister has in mind that it is rather difficult to work out what is intended.

Also, the whole background to the clause is rather inadequate. When the Ministers before us were giving evidence to the Committee, the Minister of State said:

“I hope that when members of this Committee say, as they have been doing, ‘Let us have this and that and something else in the Bill,’ they will have in mind the realities of this parliamentary Session. It is important that the Bill’s measures get through, because they are real priorities and I believe that they are shared priorities across the political spectrum.”——[Official Report, Energy Public Bill Committee, 7 January 2010; c. 102, Q226.]

In talking about clause 27, the Under-Secretary took a rather different view, saying that the power introduced under the Utilities Act 2000

“has not been used since 2000, so it is legitimate to ask why it should be on the statute book at all...I think it is a useful backstop power and I am happy to give an assurance on the record that it is intended as a backstop for those kinds of situations.”——[Official Report, Energy Public Bill Committee, 7 January 2010; c. 123, Q270.]

Therefore, there is no urgency on the matter. The other power has been there since 2000, but it has never been used, and so far we have not been given a compelling reason why this power needs to be introduced at this stage.

However, I think it is the nature of the clause that causes the greatest concern, particularly that of subsection (7), which allows the Secretary of State to

“make such assumptions and calculations as he or she considers to be appropriate”.

During the evidence sessions, Rupert Steele from ScottishPower told us that

“there is a clause that says that if the Secretary of State does not know any data, he can make it up...It is clause 27(7).”——[Official Report, Energy Public Bill Committee, 5 January 2010; c. 19, Q37.]

Clearly, the nature of that aspect, the immense amount of discretion and the way in which it is phrased simply show that if there is no absolutely compelling evidence or a completely factual basis, action can be taken in whichever way the Minister considers appropriate.

We were treated over Christmas, Mr. Atkinson—I do not know whether you saw it—to a revival of many television programmes, foremost among them being “Not The Nine O’Clock News, 30 Years On”. There was a wonderful moment where Rowan Atkinson was berating a police officer for arresting someone for being in possession of an offensive wife. He further went on to charge him for walking through a built-up area wearing a loud shirt. The ministerial approach is the same sort as the “Not The Nine O’Clock News”—people are arrested for reasons that could never be clarified. If we are going to have such powers put into law, there has to be much greater clarity as to why they should be used, and the basis on which they are going to be adopted  and developed. If we are not going to have institutionalised confusion, we need to have a re-think of the approach.

Sarah Harrison from Ofgem made it completely clear in her evidence that the regulator could not act on such powers. It has to be evidence-based, and it has to work on that basis, or else it simply cannot take action. My great concern about the clause is that it gives Ministers the ability to have draconian powers, having confusion between what their powers are and what those of Ofgem are, and to act on the basis of supposition and potential prejudice, rather than on the basis of fact. I think we need much greater assurances from the Minister as to why the approach should be taken.

Ordered, That the debate be now adjourned—(Steve McCabe.)

Adjourned till Thursday 21 January at Nine o’clock.