Energy Bill

Public Bill Committee, 7 February 2013.

Clause 124 - Extent

Clause 125 - Commencement

Gregory Barker (Conservative, Bexhill and Battle)

I beg to move amendment 133, in clause 125, page 95, line 19, at end insert—

‘() sections [Power to modify energy supply licences: domestic supply contracts], [Section [Power to modify energy supply licences: domestic supply contracts]: procedure etc], [General duties of Secretary of State] and [Consequential provision] (domestic tariffs: modifications of energy supply licences);

() section [Powers to alter activities requiring licence: activities related to supply contracts].’.

Hugh Bayley (Labour, York Central)

With this it will be convenient to discuss the following:

Government new clause 13—Power to modify energy supply licences: domestic supply contracts.

Government new clause 14—Section [Power to modify energy supply licences: domestic supply contracts]: procedure etc.

Government new clause 15—General duties of Secretary of State.

Government new clause 16—Consequential provision.

Government new clause 17—Powers to alter activities requiring licence: activities related to supply contracts.

New clause 6—Cheapest tariff—

‘A company supplying electricity, gas or heating oil to a domestic customer shall, at least annually, inform the customer of the cheapest tariff available to that customer (based on that customer’s current method of payment and usage during the previous 12 month period) and move the customer to that tariff if that customer is aged 75 or over.’.

Government amendment 135.

Gregory Barker (Conservative, Bexhill and Battle)

The Committee may recall that in October the Prime Minister committed to legislate so that energy companies have to give the lowest tariff to their customers. This group of amendments fulfils that commitment.

We know that consumers already feel hard-pressed by their gas and electricity bills and that global energy prices are predicted to continue rising. Against that background, with our relentless determination to do more to help the consumer, the coalition Government are determined to help the consumer to get the best possible deal and to pay no more than necessary in a competitive market. We believe the best way to do that is through a well functioning, competitive market with suppliers bidding against each other on price and quality to win customers.

At the moment, a key ingredient of that competitive market, properly engaged consumers, is lacking. The latest evidence from Ofgem, which tracks consumer engagement through regular detailed surveys, is that some two thirds of all consumers say they have never switched their energy supplier, and only 13% to 14% had done so in the previous year. Of course, some consumers may have fully engaged with the market without ultimately choosing to switch if, after shopping around, they felt they already had a good deal. Nevertheless, Ofgem’s evidence suggests a large proportion of customers either do not attempt to engage in that way or try to do so but give up without completing the process. That level of unengagement appears to be particularly high among the most vulnerable customers.

In 2010, Ofgem launched its retail market review to investigate the problem and identify how to address it. Since then, the regulator has gathered evidence and conducted several phases of consultation across the full range of stakeholders. Likewise, my Department has recently produced a discussion document seeking views on a range of possible ways to improve the market, which will inform our policy along with Ofgem’s findings once they are finalised in the spring.

Alongside that detailed policy process, we have developed this group of legal provisions to ensure that action may be taken as quickly as possible to benefit consumers. The provisions provide a legal back-up and framework to Ofgem’s work and send a clear, unambiguous signal to energy suppliers of this Government’s intent to act in the area. Taken as a whole, the provisions form a coherent package that will enable measures to save consumers and improve the level of competition in the market, ensuring that customers are on the cheapest tariff consistent with their preferences. The provisions are sufficiently flexible to ensure that they remain relevant in a market that is rapidly changing. They are also subject to a sunset clause to ensure that they remain law only if still of value in 2018. The precise details of how they will be implemented will be set out through secondary legislation following our formal response to the comments on our proposals and the publication of Ofgem’s proposals. We would not want to prejudge the independent regulator on any specifics by announcing them today. Together, the provisions support simplifying the market for consumers, moving those consumers on poor value tariffs to the cheapest alternative and ensuring that clear information is provided to consumers on alternative tariffs and on any savings they could make by switching. The provisions also potentially bring within Ofgem’s regulatory remit third-party intermediaries such as switching websites.

I will now further explain the rationale for each of the main provisions. New clause 13(3)(a) allows the Secretary of State to require suppliers to offer particular types of tariff. The intent is to be able to establish one or more commons tariffs across the market, so that consumers can easily compare them and so that they feel confident about what they get from a tariff when considering moving to a new supplier. That may, for example, require all suppliers to offer a standard variable rate tariff. Subsection (8) restricts the provision so that the only feature related to price that can be specified is whether the price is fixed for a particular period or variable.

Proposed new subsection (3)(b) allows the Secretary of State to limit the number of tariffs, so that consumers face a more straightforward choice. The provision allows for different categories of tariff to be subject to different limits or to remain unlimited. The intention is to maintain flexibility in case there is a special category of tariff that the Secretary of State may want to exempt, such as tariffs designed specifically to help the fuel poor.

Proposed new subsection (3)(c) allows the Secretary of State to set out a range of options that can be offered to consumers as part of a tariff, such as discounts for paying by direct debit. The intent is to continue providing consumers with features that they value, recognising that different consumers have different preferences, but to ensure that that is done in a way that is consistent overall with simplifying the choices that they face.

Proposed new subsection (3)(d) gives the Secretary of State the power to require suppliers to provide information to current and prospective customers. As with other powers, that is limited to measures that fulfil the clause’s purposes in relation to competition and saving consumers money, as stated in subsection (2). Proposed new subsection (4)(a) provides examples of the sorts of information that may be required from suppliers under proposed new subsection 3(d), including information on the cheapest tariff available with the same supplier and on any savings the consumer could make by moving to it. Proposed new subsection (4)(b) indicates that the format of such information can also be prescribed, which would include requiring it in a form that could easily be transferred on to smartphones and other devices and used with software to calculate the best deals available across the market for that consumer. That could also require suppliers to provide figures, such as a standard comparator metric for each tariff the supplier offers, to ensure easy comparisons right across the market.

Proposed new subsection (3)(e) allows the Secretary of State to require suppliers to move customers from one type of tariff or supply contract to another. For example, some customers—in fact, a number—are on what are termed dead tariffs, which are closed to new customers and without a fixed end date, and therefore continue indefinitely. Some dead tariffs are good value and we would not propose to change them, but others are more expensive than the equivalent live tariff offered by the same supplier. Disengaged consumers, whom we know to be the majority, including a disproportionate number of vulnerable consumers, are much more likely to be on those poor value, passed-over dead tariffs than engaged ones are. The provision will give the Secretary of State the power to make it compulsory for suppliers to move those who could save money on to the cheapest, live standard variable-rate tariffs. This is the meat of what the Prime Minister was pledging to do. Customers would have the ability to opt out of the process, if they wish, while the remainder would save money without having to lift a finger.

Proposed new subsection (5) complements the provisions by ensuring that, through secondary legislation, the Secretary of State can through define the various elements involved, and prescribe standard assumptions and methodologies for all suppliers to follow. Paragraph (c) allows the Secretary of State to delegate some or all of these functions to the independent regulator, if desired.

New clause 14 establishes the process by which modifications can be made under new clause 13 and sets out the sunset provision for 2018. I do not propose to go through the detail, unless Members have specific queries, but new clauses 15 and 16 are, effectively, consequential amendments.

New clause 17 extends the scope of energy-related activities that can be made subject to a licence regime governed by Ofgem to include the activities listed in paragraphs (a) and (b) of proposed new section 56A(4A) of the Electricity Act 1989. An activity will not be subject to a new licence regime unless and until prescribed by order of the Secretary of State on the application of Ofgem. For that to happen, Ofgem would first need to specify the particular activities that it wished to make licensable and then, setting out its reasoning, to undertake a consultation of affected parties, including businesses carrying out affected activities or intending to do so. It must also set out what licence conditions it intends to apply to the activities in question. Depending on the outcome of that consultation, Ofgem may submit an application to the Secretary of State. Any order would be subject to the affirmative resolution procedure in this House. The purpose of the provision is to enable Ofgem to regulate third party intermediaries in the energy market, or TPIs, such as switching websites, should that be necessary.

New clause 13(2) sets the parameters within which the Secretary of State can take action in relation to retail tariffs, but makes it clear that powers may only be exercised for the purposes of promoting competition or helping to reduce overall costs to consumers. It is important to reiterate that those powers may only be exercised to promote competition or reduce overall cost to consumers. The provision does not mean that the Secretary of State can intervene to regulate energy prices or to go back to the nirvana of Harold Wilson in the 1970s and introduce price controls. The actions that can be taken are those set out in subsection (3).

The Government agree with the intent of new clause 6. The most vulnerable should be helped to keep their energy bills as low as possible—we are all agreed on that. The Government, however, want to go further. The amendments proposed by the coalition, therefore, will ensure that all households, not only the over-75s, are on the cheapest tariff that their supplier offers and which meets their preferences. The Government agree that all consumers should be assured that they are on the cheapest tariff available to them from their existing supplier. That is why we also propose to require suppliers to give their customers clear personalised estimates of any savings that they can make by moving to the supplier’s cheapest tariff.

New clause 6 will also require a company supplying heating oil to a domestic customer to inform the customer of the cheapest tariff available to them, and to move customers over 75 on to that tariff. The supply of heating oil is not covered by the natural gas and electricity regulatory regime that Ofgem operates, but safeguards are in place through the Office of Fair Trading and the Competition Commission to ensure that competition is fair and that consumers are protected. We believe that this open market for heating oil, with safeguards in place through the competition authorities, provides the best long-term guarantee of competitive prices for the consumer.

Albert Owen (Labour, Ynys Môn)

Have the Government considered whether Ofgem, as a regulator, rather than the OFT and others concerned with competition and fair trade, should look at the issue of people who are on heating oil and off the gas mains? If we are talking about the cheapest tariff in relation to gas and electricity, why not do so for oil?

Gregory Barker (Conservative, Bexhill and Battle)

I have a great deal of sympathy with that point, not least because I am an off-gas grid heating oil consumer in Sussex. It can be eye-watering to pay the heating oil bill, and I frankly wonder how some families manage to do so.

The reason why we have a regulator such as Ofgem to regulate the electricity industry is that electricity is a different type of market and is delivered in a different way from heating oil. Ofgem has a remit to regulate the monopoly companies that run the electricity and gas networks, which operate differently from the heating oil market. The Government have looked into that, because of concerns that cartels or tariffs might be at work and about a lack of competition in the market, but there are no natural or structural monopolies in the supply and distribution of heating oil or liquefied petroleum gas. It is simply not right to regulate heating oil in the same way as we regulate electricity, just as we would not regulate other commodities that people can buy online or over the phone and have physically delivered to their home.

Albert Owen (Labour, Ynys Môn)

I am grateful to the Minister for giving away again on this important point. I acknowledge that the Government have held another inquiry, though the Office of Fair Trading, as was done by the previous Government, and came to the same conclusion. Some of the most vulnerable customers whom we represent are off-grid, and the Prime Minister has stood up at Prime Minister’s questions, saying that he will help them get the cheapest gas and electricity. Surely the Minister understands that, even with such great difficulties, those who are off-grid and on oil also need cheap tariffs.

Gregory Barker (Conservative, Bexhill and Battle)

I understand that point and where the hon. Gentleman is coming from. As he said, his Government were not blind to the issue. They looked at it as seriously as we have done and came to the same conclusions, not because they were in any way blind to the problems, but because they came up with the same evidence base that we did when we commissioned our study. I assure him that we will continue to examine the sector in relation to both availability and cost, and if there are signs of genuine monopoly or cartel, we will act. I know that my hon. Friend the Minister of State is determined rigorously to watch the sector and is absolutely prepared to act if action is deemed necessary.

Michael Weir (Scottish National Party, Angus)

There may not be a monopoly in the sense there is in electricity and gas, but there are certainly regional monopolies in many areas, where one supplier may operate through various companies. The second point is that the main difficulty with fuel oil is that it has to be paid for up front with very large sums. Nothing in the Bill will in any way help people who have difficulty paying for it in that manner.

Gregory Barker (Conservative, Bexhill and Battle)

The hon. Gentleman raises valid points, but the problem is that he is starting to look at concerns that, although absolutely central for heating oil customers, are slightly beyond the remit of this electricity market reform Bill. He raises issues about how these things are paid for and how vulnerable customers, in particular, budget for them, but those come very much within the remit of the Department for Work and Pensions. The Government are endeavouring to bring policy together much more coherently, but benefit payments do not really come under the purview of the Committee, the Bill or electricity market reform.

Michael Weir (Scottish National Party, Angus)

It is not a question of welfare payments. The Minister talks about electricity market reform, and he is right, but the new clauses also refer to the mains gas market, so he is going beyond electricity market reform. The Bill now appears to encompass the prices paid by consumers for gas and electricity, so I do not see why he cannot address the question of fuel oil.

Gregory Barker (Conservative, Bexhill and Battle)

As I said, we are fundamentally dealing with issues that come within Ofgem’s remit, and heating oil does not, although it does come under the remit of the Office of Fair Trading. I understand the hon. Gentleman’s frustrations, but, in exactly the same way, biofuels and people with wood-burning stoves do not come under Ofgem’s remit. Such fuels, which can be supplied and delivered to the home quite independently of a monopoly transmission grid, are structurally different. That is why they do not come under Ofgem’s remit. Ofgem’s legal powers are limited to regulating electricity and gas markets, but we will keep the matter under review. We are not complacent about this in any way, shape or form, and we will consider appropriate interventions. However, the Bill is not the place for that.

Robert Smith (Liberal Democrat, West Aberdeenshire and Kincardine)

In that review, will the Government consider that Ofgem has not only a market role, but a role in promoting the social responsibility of suppliers of electricity and gas and in ensuring that they treat their customers fairly and deal well with vulnerable customers? In his review, will the Minister discuss with the solid-fuel and oil-supply industries how they can do more to understand whether they have vulnerable customers and to transfer some of the lessons learned in the electricity and gas market to the OFT-regulated market?

Gregory Barker (Conservative, Bexhill and Battle)

My hon. Friend makes a great deal of sense, and his suggestions are sensible. My hon. Friend the Minister of State actually has direct responsibility for those aspects of the DECC portfolio, but I know he has been concerned from day one about them and about the seeming ambiguities. He will be happy to take up my hon. Friend’s suggestion of meeting suppliers, considering a more holistic approach and working out whether there are lessons to be learned.

Albert Owen (Labour, Ynys Môn)

I am definitely trying to help the Minister—indeed, both Ministers, because I know this is not the right hon. Gentleman’s responsibility. The provisions are a broad appeal to customers to switch to get the cheapest tariff. Ofgem has responsibilities, and one of its priorities is to be the advocate for the consumer. All we are asking—the many of us who have taken part in this brief exchange—is that that be extended to oil customers. Will the Minister consider, during the passage of the Bill, whether it is possible for Ofgem to extend its portfolio, remit and responsibility to include oil heating?

Gregory Barker (Conservative, Bexhill and Battle)

I cannot make that promise, but the hon. Gentleman has to be clear that we are dealing with something very different. It is very easy to compare prices of heating oil from one supplier to another. However, with the existing tariff structure, it is very difficult to make that comparison on electricity consumption. It is much more complex. Comparing prices of heating oil is as simple as comparing Shell and Esso when filling up a car. We all have a great deal of sympathy with the points that the hon. Gentleman makes on competition, be that nationally or regionally, but in terms of tariffs, ease of understanding and comparison, it is quite simple. I know from when I compare prices that I can get offers. Offers change and fluctuate during the year, but in terms of comparing like with like among companies that offer heating oil, I do not think there is a compelling case for intervention, in the way that there is for comparing electricity prices, which is a much more complex field.

John Hayes (Conservative, South Holland and The Deepings)

My right hon. Friend is making an extremely powerful case about the differences, and he is right, as I think the Committee would acknowledge, that they are profound. With your indulgence, Mr Bayley, I might just say that the issues about accessibility are also profound. Being able to access the supply of heating oil is probably as significant as the issue of comparability. I hope that my comments are helpful. We need cross-party discussion on the matter, not necessarily in relation to the Bill, although we may need to discuss that, and I would be delighted to offer that through the avenue of this consideration. Perhaps we can begin a new initiative to consider the matter on a cross-party basis and see what can be done in the terms that have been described. My right hon. Friend is right that separate consideration is required because of the challenges associated with availability, comparability and price.

Gregory Barker (Conservative, Bexhill and Battle)

I thank my hon. Friend for that incredibly helpful and generous intervention. I hope that members of the Committee take it in the spirit that it was intended, as a genuine offer for candid, cross-party dialogue on the issue. It is not really about being partisan. As I said, the previous Government looked at the matter and encountered the same barriers and structures as this Government, and I think both sides of the House are willing to try and address it. I hope that my hon. Friend’s words will assuage in some way the Committee’s concerns.

Alan Whitehead (Labour, Southampton, Test)

On the question of Ofgem and the authority, would the Minister be able to help the Committee by setting out exactly which parts of new clauses 13 to 16 are not contained in the powers that Ofgem already has to modify licences? Which parts of those new clauses might, as he pointed out in relation to new clause 13(5)(c), be capable of conferring powers on the authority that it does not already possess?

Gregory Barker (Conservative, Bexhill and Battle)

I will be very honest, I cannot do that off the top of my head. However, if we are going to have a short debate on the clauses, in summing up, I would be happy to look at the points raised by the hon. Gentleman and come back to them in more detail, after I have swotted up.

In conclusion, taken together, the provisions that I have set out will enable the Government to take action on behalf of consumers to ensure that they are on the cheapest tariff offered by their supplier, consistent with their preferences, while at the same time, encouraging a simpler market for consumers to engage with, and also offering greater competition.

I see that the hon. Member for Liverpool, Wavertree is trying to dissect and disassemble my words. When the Prime Minister made the pledge, he was not proposing to take someone off a fixed-term tariff against their wishes and put them on to a flexible one, or take someone who had given a clear preference to be on a green energy tariff and put them on to a fixed-term tariff. That is not what he said. He proposed to cut through the blizzard of tariffs, which had escalated dramatically under the previous Government, to create a huge thicket.They increased by several hundred. When the Leader of the Opposition was Energy Secretary, he did nothing to simplify the market. We have the chance now. The Prime Minister knows what is important to consumers, which is why he made this important pledge. The powers that we are debating today will allow us unambiguously and clearly to deliver on the Prime Minister’s pledge to hard-pressed consumers. On that basis, I commend the Government’s amendments and new clauses, and ask the Opposition not to press new clause 6.

Robert Smith (Liberal Democrat, West Aberdeenshire and Kincardine)

On a point of order, Mr Bayley. In my intervention, I should have reminded the Committee of my entries in the Register of Members’ Financial Interests related to the oil and gas industries.

Hugh Bayley (Labour, York Central)

I am grateful to the hon. Gentleman for putting that on the record.

Luciana Berger (Labour, Liverpool, Wavertree)

It is a pleasure, as always, to serve under your chairmanship, Mr Bayley. I rise to speak to new clause 6 in my name and that of my hon. Friend the Member for Rutherglen and Hamilton West, and to respond to the Government amendments and new clauses in this group.

New clause 6 would force energy companies to inform all customers, at least once every year, whether they are on the cheapest available tariff, and automatically to move any customer over the age of 75 to that tariff. It would give real help to all those who are struggling to meet the rising cost of keeping warm.

Over the course of our deliberations, hon. Members from both sides of the Committee have often made the case for the Government to act to lower energy bills. After all, the cost of heating and lighting our homes has risen by £300 since 2010. The average fuel bill now stands at £1,400. According to National Energy Action, more than 6.6 million households across the UK cannot afford to heat their homes. Research by Consumer Focus shows that the number of households in debt to their electricity supplier has increased by more than 25% to 850,000, and the number of gas customers in the red has risen by 20% to more than 700,000. Many householders are in debt on both accounts. Not only have bills risen but so too has the number of tariffs. We have had this discussion before, but it is worth reiterating. As the Minister said, at present—I do not think that he put a number on it—more than 400 different energy tariffs are available to consumers. That makes the process of identifying the best deal incredibly complex. Despite the competition between the different companies, the complexity of the products on offer means that four in five households, or 80%, are overpaying on their gas or electricity bills. The Government have stated that it is possible for households to save up to £200 from an annual dual-fuel bill by shopping around for the lowest online rate. However, research by Ofgem shows that pensioners are less likely not only to switch supplier than the average consumer but to investigate cheaper tariffs and switch suppliers online.

If the Government accept the new clause, more than 10,000 pensioners in the constituency of the hon. Member for South Holland and The Deepings and 14,000 pensioners in the constituency of the right hon. Member for Bexhill and Battle would save on their energy bills. Across the country, it could save as many as 4 million pensioners as much as £200 a year on their energy bills. Such a saving could be achieved not by spending more money but by getting our energy firms to show greater responsibility to their most vulnerable customers.

I have just heard from the Minister details of what the Government’s proposals are in this area. However, despite what he said—I listened to him very carefully and made many notes during his remarks—there is still significant confusion about exactly what the Government are proposing, and about how the proposals outlined in the new clauses that we have just discussed would work in practice.

Since the Government published their new clauses, Labour Members have sought views from companies involved in the energy sector and from consumer groups, and it is clear that even following the remarks from the Minister the confusion that exists is still warranted.

During Prime Minister’s questions on 17 October last year, the Prime Minister said:

“I can announce…that we will be legislating so that energy companies have to give the lowest tariff to their customers”.—[Official Report, 17 October 2012; Vol. 551, c. 316.]

However, it is actually hard to see that that is what the Government are doing. On the surface, subsection (2)(b) of new clause 13 would appear to do what the Prime Minister said. It reads:

“The power under subsection (1) may be exercised for the purpose only of—

(a) promoting competition in domestic supplies of gas and electricity; or

(b) requiring licence holders to change the domestic tariffs or other terms of domestic supply contracts so as to reduce the costs to their domestic customers for supplies of gas or electricity.”

Subsection (2)(b) appears to give very broad powers to the Secretary of State, which could allow for a variety of things, including a cap on prices and, in effect, forcing energy companies to move their customers to a lower tariff. However, as we know, all is not what it seems, because subsection (8) of new clause 13 says that, when defining a “standard domestic tariff”, the powers may allow, as subsection 8(a) says,

“a term providing for a charge…to be fixed for a period”,

but subsection (8)(b) says they

“may not otherwise include any term setting a monetary charge or rate.”

That seems to rule out the possibility of using the powers in subsection (2)(b) to cap prices or to force energy companies to put customers on to the cheapest tariffs.

Gregory Barker (Conservative, Bexhill and Battle)

To be clear, the hon. Lady has just said that she is concerned that subsection (8) seems to rule out the ability to cap prices. Is she suggesting that the Labour party is seeking to cap and control electricity prices, in a return to a 1970s-style income and prices policy? Is that the new position?

Luciana Berger (Labour, Liverpool, Wavertree)

No. I thank the Minister for his intervention, and I note that he was in discussion with the other Minister who is here while I was making my remarks. I said, “and, in effect, forcing energy companies to move their customers to a lower tariff”. I am sorry if he misheard me when I made my remarks, but, no, what he suggested is definitely not what I was advocating. I am just trying to clarify something that has been very confusing to people outside this House since the Government tabled their new clauses; I am trying to decipher or interpret what they mean.

When I listened to the Minister just a moment ago, it was clear that we will not actually get clarification on these questions until secondary legislation. The Minister nods, so I have got that right. I listened carefully to what he said, and at the end of his response we heard a new term, one that we have not heard before. The Minister used it quite a number of times during his remarks. He said that consumers will be moved on to the cheapest tariff, and the term that he used was “consistent with their preferences”. This is the first time that we have heard that term, “consistent with their preferences”. Again, I was not quite clear. The Minister endeavoured to explain what he meant by that remark. However, the legislation, and the amendments and the new clauses that we are considering, do not mandate.

Again, in the Minister’s remarks, he said that there was “intent”, and he said that the measures will “allow”. However, the Prime Minister, in October, said very clearly that the Government would legislate. From what the Minister has said, and from the new clauses, Labour Members are not sure that the Bill will mandate energy companies to do that. Of course, we will now have to wait until secondary legislation to see, for sure, what the Government intend. I am not 100% clear from what the Minister said today. We will have to wait for the secondary legislation.

There are many things we can say from what the Government have said today. Certainly they are reducing the number of tariffs that are on offer. To some extent that is welcome. There is a huge array of complicated tariffs on offer, making it impossible for consumers to identify and choose the best deal. It is strange that while the Government say that they are concerned about the number of tariffs, they are not acting to change the nature of tariffs by simplifying them so they are made up of a standing charge and a unit price. The Opposition suggested that well over a year ago. Ofgem agrees with us. I am keen to know why the Government are not acting on this. The consumer group Which? also believes that this is a missed opportunity by the Government to make a change that would genuinely benefit consumers.

In an investigation last November, Which? asked more than 1,000 members of the public to select the cheapest out of six current tariffs and then do the same from six simplified tariffs with a unit rate. It found that just 8% of people could identify the cheapest current tariff whereas 89% of people picked the cheapest simplified tariff. The Minister said a moment ago that it was difficult to compare electricity and gas prices. Why are the Government not therefore going further and introducing these simple tariffs? What happens if consumers find that they will be paying more under the Minister’s proposals rather than less? There is a danger that to ensure that profit levels are maintained, even after the number of tariffs has been reduced, energy companies will simply raise their prices even further. How many people does the Minister expect will see their bills rise as a result of these proposals and by how much? What action will the Government take to combat across-the-board price rises?

We welcome the Government’s proposals for energy companies to tell their customers that they could save money on a different tariff, but there are serious concerns from consumer groups about the accuracy of these recommendations. Ofgem’s proposed tariff comparison rate, on which the Government’s proposals seem to be based, will not show consumers the price that they will personally pay. Instead it will be a blended price based on the national average annual price of a tariff at different consumption levels, either high, medium or low usage. If consumers fail to recognise, as we believe many will, that the TCR does not reliably tell them whether one tariff is cheaper than another for them personally, but is merely a prompt to search further and obtain a personalised price from a switching site or supplier, there is risk of mis-buying.

To make sense of the TCR, consumers will need to know their consumption or at least whether they are low, medium or high users. Evidence suggests that consumers do not have a sufficient understanding of their usage to do this. Using bills and annual statements to educate consumers about which usage category they are in is likely to be ineffective given low engagement with these communications. Even if the TCR does come up with accurate comparisons, as I have already mentioned, the crucial missing element of the Government’s proposals is the compulsion to act. Under the Bill—again we will have to wait for the secondary legislation on this—energy companies are not forced to put their customers on to the cheapest tariff. That is the crucial part.

It is reasonable to expect that when some consumers are presented with the information about cheaper options they may choose to switch. But the problem for us and for the people we are most seeking to help is that others may not. For some it will be because they do not read the letter and for others it will be because they have so little faith in what their energy companies tell them that they will not take their advice. A Consumer Focus report from June 2011 entitled “Missing the Mark” assessed the extent of consumers’ understanding and engagement with information from their energy suppliers.

Ian Lavery (Labour, Wansbeck)

Does my hon. Friend remember the former Energy Minister saying in evidence to the Select Committee that he had looked at the ways and means of changing his tariffs, but could not access what he wanted and gave up? If a Minister of the Crown cannot do it, how can we expect ordinary people at home on their laptops to change their tariffs?

Luciana Berger (Labour, Liverpool, Wavertree)

I thank my hon. Friend for his intervention. We did hear that, and we have discussed on many occasions the challenges of switching and how 19 out of 20 people, even when presented with all the facts, find it difficult to identify the cheapest tariff, because so many different tariffs exist and because people do not properly understand their energy usage. I refer back to my concern that if the Government expect people to know whether they are a high, medium or low user of energy, that could present further complications. I spent a long time switching. It took me many hours. I did manage it, but I know how complicated it was.

Further to my hon. Friend’s intervention, the Consumer Focus report showed that “vulnerable and less-engaged” consumers were not being reached by the behavioural prompts on bills or annual energy statements, such as companies offering cheaper tariffs or consumption help. Would it not therefore be better for the Government to do it the other way around? Rather than hoping that consumers will look at the information for themselves, which we know is not happening currently, why not force the energy companies to move them? Why are the Government not going down the opt-out route? After all, that is what the Prime Minister said that they would do. The consumer still retains the right to refuse the offer, which is sensible. Some people prefer to have a fixed tariff and some prefer to pay by direct debit, and it is right that they retain those rights—the Minister mentioned the green tariff. However, this was the opportunity to change the way that the market works, so that energy companies give their customers the best deal and leave it up to them to choose whether they want a more expensive option, as opposed to the current situation where energy companies give consumers the more expensive option and then leave it up to them to fight for a better deal.

Gregory Barker (Conservative, Bexhill and Battle)

Is the hon. Lady therefore suggesting that someone who has opted for a green energy tariff would be automatically switched to a variable, regular, non-renewables tariff without their knowledge or consent and that it would then be up to them to opt back in to the green tariff?

Luciana Berger (Labour, Liverpool, Wavertree)

Could the Minister make that point again?

Gregory Barker (Conservative, Bexhill and Battle)

The Bill’s intent is to put everybody on to the cheapest tariff. Ofgem has consulted on reducing the number of tariffs to four. The hon. Lady seems to say that she wants everybody on the cheapest tariff available regardless of its type. If I understand her correctly, that would in effect mean that those who have elected to be on, say, a green tariff—hundreds of thousands of consumers—would be taken off that tariff and put on to cheaper tariff, if available. They would then have to opt back in. Is that what she is saying?

Luciana Berger (Labour, Liverpool, Wavertree)

I was in discussion with my hon. Friend the Member for Rutherglen and Hamilton West, because I did not quite understand the Minister when he first made his point. The point is that consumers should be offered the cheapest tariff, which they are not at the moment.

Michael Weir (Scottish National Party, Angus)

The answer is actually quite simple. New clause 13(3)(e)(i) states that a supplier may have to switch a consumer

“to a different domestic tariff or different supply contract terms, unless the customer objects”.

The company will therefore have to go to the customer and say, “We want to switch you to this tariff.” If the customer is on a green tariff, they can say, “I want to stay where I am.”

Luciana Berger (Labour, Liverpool, Wavertree)

The challenge for the Committee and the cause of our confusion is that we have not seen the secondary legislation. As a result, we are often talking at cross purposes. I refer back to my original point: in his opening remarks on the new clauses, the Minister talked about intent and the Secretary of State being allowed to act, but we did not get any clarification and so this debate is therefore very difficult for us. The Minister is nodding his head, as he agrees. We will have to wait for the secondary legislation before we can understand the measures fully.

I come back to my point about the new term we have heard discussed this morning. There were references to a tariff that is consistent with people’s preferences; what will that mean in practice? When he winds up, will the Minister give us more detail about that, as that is where some of the confusion lies? I thank the hon. Member for Angus for his intervention, as he sought to clarify matters a little more for us.

Dan Byles (Conservative, North Warwickshire)

I am confused about why the hon. Lady is so concerned about the reference to being consistent with consumers’ preferences. The Minister’s point was that it strikes us as entirely reasonable that if a consumer already has a preference—the example given was wanting to be on a green tariff—should the Government then do something to that consumer that is not consistent with that preference, that would seem wrong. Is she unhappy with that notion, or have we misunderstood? There is a lot of confusion on the Government Benches about her point.

Luciana Berger (Labour, Liverpool, Wavertree)

Again, we are talking at cross-purposes here. We do not have the clarification.

Michael Weir (Scottish National Party, Angus)

The hon. Member for North Warwickshire is missing the point entirely. Before there can be any change, it must be offered to the customer, who can say, “No, I want to stay where I am.” That is perfectly at evens with having choice for the customer, but also proactively trying to move people to a cheaper tariff.

Luciana Berger (Labour, Liverpool, Wavertree)

I thank the hon. Gentleman for that intervention. The other point I made during the Minister’s representations was that he also used the word “exemption”; the example he gave of an exemption that could be introduced was tariffs for households in fuel poverty. Again, however, we do not have the detail of what other exemptions could be included, and the Opposition are concerned about what might come forward in secondary legislation and what that might entail.

Alan Whitehead (Labour, Southampton, Test)

Would it be helpful if my hon. Friend asked the Minister whether he would consider that the adoption of the new clause would automatically invalidate the other new clauses being considered today—that is, would the new clause replace the other new clauses or would it stand alongside them? If the latter is the case, that is the letter of the law for the operation of the new clause, as far as the point about what is offered to customers is concerned. The points that have been made about the status of the new clause would then automatically fall away. Perhaps my hon. Friend will ask the Minister to clarify that.

Hugh Bayley (Labour, York Central)

Order. Before the hon. Lady replies and finds herself facing another intervention, it might be helpful if I say that both Mike Weir and Alan Whitehead are on my list. If there are particular issues they want to pursue, there will be the opportunity for them to do so and to take interventions.

Luciana Berger (Labour, Liverpool, Wavertree)

I thank my hon. Friend for his contribution. The Government could accept new clause 6 and it could stand alongside the Government new clauses. The Minister asked the Opposition to withdraw new clause 6, but I hope he will reflect on the contribution made by my hon. Friend. There is nothing to prevent the Government from accepting new clause 6, until we understand what the secondary legislation might look like.

Robert Smith (Liberal Democrat, West Aberdeenshire and Kincardine)

I thank the hon. Lady for clarifying the point; the hon. Member for Southampton, Test did not state which new clauses he meant. He talked about various clauses. Anyway, on new clause 6, I wanted to clarify the hon. Lady’s understanding of the oil market. New clause 6 refers to tariffs. My experience of the oil market is that it does not have tariffs; there are prices that are quoted at the time someone makes an order, and those prices depend on what the firm in question can get from the depot. The difference in prices between the various companies is their overheads for delivery and how they manage their delivery routes.

Luciana Berger (Labour, Liverpool, Wavertree)

The hon. Gentleman heard the earlier discussion—when the right hon. Member for Bexhill and Battle, took an intervention from the hon. Member for South Holland and The Deepings—on why we need to see a complete change in that sector of the market. I am encouraged by the Minister’s comments and hope to see some changes. That is a whole issue in and of itself, so I hope to see some progress.

There is a lot of confusion in Committee this morning because we have not seen the proposed secondary legislation, and it was clear from the Minister’s remarks that a lot of the detail and clarification will appear in that. The proposals as we have them today, in spite of the Minister’s efforts to clarify them, are not what the Prime Minister said that they would be. They do good things but they are not, as they stand, legislation that forces energy companies to give the lowest tariff to their customers. They do not go as far as they could do. If energy companies are only allowed to offer one tariff for every type of contract, that is not the lowest tariff but the only tariff. Even the cheapest deal in an uncompetitive market is not the best deal. Ministers should be honest with the public about that.

It would be wrong to mislead people and to let them think that they must be on the best deal because the Government have said that the energy company has to put them on to the cheapest tariff. Alongside what the Government are introducing today, they should accept new clause 6 to guarantee that the most vulnerable customers—those over 75, those least likely to engage with the energy market, those least likely to switch but who would benefit the most from doing so—are given the best deal. It would help more than 4 million pensioners save on their energy bills and it would not prevent the Government from coming back at another time with legislation covering all consumers, or with this detail forthcoming in secondary legislation.

In short, in what the Government have proposed today they flatter to deceive. The proposals create more questions than answers for consumers and for energy companies. We await the detail, but the only reason for the proposals seems to be that the Government were put in a challenging situation by the comments made by the Prime Minister last October. In the Minister’s response, I hope that he will accept that the new clauses as drafted will not do as the Government said that they would do. For that reason, I hope that the Government will also accept new clause 6, so that those over 75 can be guaranteed the best deal.

Michael Weir (Scottish National Party, Angus)

I do not want to be too critical of the Government proposals, because I accept that they are a genuine attempt to do something about the ever-escalating cost of energy to consumers, but I have several reservations about whether the proposals will have the effect that the Government hope. I will explore one or two of my reservations.

In new clause 13 powers are taken to require

“licence holders to change the domestic tariffs or other terms of domestic supply contracts so as to reduce the costs to their domestic customers for supplies of gas or electricity.”

Subsection (3)(e) of the new clause, however, then provides for

“requiring a licence holder to change the domestic tariff or other supply contract terms on which it supplies gas or electricity to a domestic customer by…switching to a different domestic tariff or different supply contract terms, unless the customer objects”—

that is the point I made in my intervention on the hon. Member for Liverpool, Wavertree about the green energy tariff—

“or…offering the customer, or inviting the customer to switch to, a different domestic tariff or different supply contract terms.”

My problem is with the “or”, the alternatives given. I fully appreciate that the Minister might argue that consumers should be given the maximum amount of choice and empowered to make their own decisions. I accept that to some extent. The plain fact of the matter, however, is that we all know—as remarked on in the regulatory impact assessment and by the Minister this morning—that there is a huge amount of inertia among energy consumers, in particular those who remained with their former monopoly supplier after privatisation.

If the clause remains as it is, there is a real danger that companies may take the second option and make an offer to the consumer, which prompts a question about what form that offer will take. At present, we receive a huge amount of paper from our energy providers. As well as bills, we get special offers; offers to maintain our domestic appliances, drains, pipes and electrics; and invitations to pay our bills in different ways, especially for those who they have not already managed to sign up on a direct debit—once they have done so, they regularly attempt to increase the amount we pay by direct debit, which sometimes bears no relation to the amount of energy that we actually use—and we now get annual and other regular energy statements. All that is very useful, but how many of our constituents take the time to go through such a mountain of information, and how many just put it in the recycling bin with all the other junk mail?

Option 1, on the other hand, is straightforward. If consumers are on a contract and their supply terms are not the best, they can automatically be transferred to a better deal, unless they specifically decide not to do so. The company has to approach them and say, “We don’t think you are on the best deal, and we suggest that you go on to this.” That answers the point about being on a green energy tariff—if consumers want to stay on it, they can say, “No, I am quite happy with it. I accept that it’s not the lowest, but I have a reason for being on it and I want to stay on it.”

This option would have a better chance of fulfilling the Prime Minister’s promise to ensure that every consumer is on the lowest tariff. Of course, it would have to be monitored to ensure that energy companies were indeed offering the lowest tariff, but that would surely be part of Ofgem’s remit and, to an extent, it would come under the provision in subsection (5) of new clause 13. I would be interested if the Minister addressed why there is almost a get-out clause for energy companies through their simply making an offer rather than taking action.

My other main concern is specifically about how the provisions relate to some of the poorest in our society, particularly those who have to rely on prepayment meters. The impact assessment states that the object is to

“move consumers on poor value ‘dead’ tariffs to better value ‘open’ tariffs”.

I raised the issue with the right hon. Member for Bexhill and Battle during the last DECC questions, and that was basically the answer the Minister gave me. However, page 3 of the impact assessment states that the provisions will

“require bills to include personalised estimates of the savings to be made from moving to the cheapest tariff for the customer’s current payment method”.

That seems to me to be the difficult point. If someone is on a direct debit tariff, that may be fine, but if, for example, they are on a prepayment meter, they will still be stuck on a higher tariff, because those tariffs are generally higher than ones available on direct debit. If the Government are truly intent on ensuring that everyone has the lowest possible bills, they must ensure not only that that happens within the type of contract that people already have, but that people are allowed to move to a cheaper type of contract.

The issue is important. As the Minister has not done so, I advise him to read the document from Citizens Advice Scotland on the people who go to see them about energy issues. They report that, in the past year, they have dealt with 7,400 people with 9,500 different energy issues, of which 83% related to difficulties with paying or debt. The report states that

“the cases highlighted by bureaux regarding difficulty paying are most commonly with regards to prepayment meters recouping an unaffordable amount for arrears every time the consumer tops up.”

That is the other problem with prepayment meters: it is not only that tariffs tend to be higher—to be fair, many companies now fix it at their standard tariff, but that is higher than the tariffs that can be achieved by other means—but that many of those on prepayment meters are put on them because they have a debt and part of that debt is recouped every time that the consumer tops up the meter. The costs of installation may also be added to that debt, meaning that consumers are pushed further into debt.

Prepayment meters tend to be used when a consumer is already struggling, which has the perverse effect that someone already struggling to keep up with payments on a cheap tariff, perhaps an online or direct debit one, who then falls into difficulties—due to losing their job, illness or any number of reasons—might end up being put on an even more expensive tariff, which will simply deepen their difficulties. The Citizens Advice Scotland report cites the case of a single parent with two children who currently has to lose £7 towards arrears every time she puts £10 in the meter. The Minister will appreciate that the remaining £3 is insufficient to heat her home. What chance does someone like that have of getting out of debt or of keeping her home warm?

Prepayment meters also have the problem of self-disconnection. People who cannot afford to heat their homes simply do not put money in the meter. There is no active disconnection by the energy company, but the end effect is the same. The CAB recommends that prepayment meters should be fixed at the cheapest tariff offered by the supplier. That would help to ensure that customers who have difficulty in paying for energy and use prepayment meters as a budgeting tool are not penalised for doing so, and that customers with arrears are not pushed further into debt by the additional costs of installing a prepayment meter and of paying a higher tariff.

I appreciate that there are difficulties with prepayment meters, and additional costs, but these people are struggling to heat their homes and to meet their bills. If the Government are serious about tackling the issue, they must bite the bullet, look at the whole issue of prepayment meters, and ensure that the most vulnerable have access to cheaper tariffs to get them out of the cycle of debt and to ensure that their homes are heated. Will the Minister consider that? The amendments will not be changed today, but we could consider the matter on Report. The Minister should consider how to tackle this important issue for many of our constituents.

Hugh Bayley (Labour, York Central)

I remind the Committee that with this we are discussing the following:

Government new clause 13—Power to modify energy supply licences: domestic supply contracts.

Government new clause 14—Section [Power to modify energy supply licences: domestic supply contracts]: procedure etc.

Government new clause 15—General duties of Secretary of State.

Government new clause 16—Consequential provision.

Government new clause 17—Powers to alter activities requiring licence: activities related to supply contracts.

New clause 6—Cheapest tariff—

‘A company supplying electricity, gas or heating oil to a domestic customer shall, at least annually, inform the customer of the cheapest tariff available to that customer (based on that customer’s current method of payment and usage during the previous 12 month period) and move the customer to that tariff if that customer is aged 75 or over.’.

Government amendment 135.

Gordon Henderson (Conservative, Sittingbourne and Sheppey)

I have not actually said a great deal during this process, and I will not detain the Committee for too long this afternoon, but I have a couple of queries on new clause 6 that I hope can be clarified.

I come from a pretty rural constituency where many people use heating oil or liquefied petroleum gas, and I must declare an interest by saying that I am one such person. It is clear to me as a user that my supplier does not actually the tariff; I pay whatever the going rate is. I would like some clarification from the proposers of new clause 6 as to whether, when they mention the suppliers of heating oil to domestic customers annually declaring the cheapest tariff, they actually mean the cheapest tariff of the company supplying the oil or the cheapest tariff that is available from other companies as well. If it is the latter, does that mean that garages that supply oil and fuel for cars will eventually have to do the same? As a consumer of LPG in the home, I know that it is expensive. My gas bill is approaching £1,500 a year, but I probably spend, as an average motorist, twice as much as that a year at the pumps when I fill my car. If we are talking about protecting consumers, we ought to protect everybody. Does “cheapest tariff” mean that of the company supplying the consumer or the cheapest tariff collectively?

I have another point, which touches on what the Minister, my right hon. Friend the Member for Bexhill and Battle, said earlier about whether consumers will automatically be put on to a particular tariff whether they choose it or not. He asked whether someone on a green tariff who uses renewable energy, even though it may not necessarily be the cheapest, would be forced on to the cheapest available tariff. Frankly, new clause 6, as it stands, does force people on to the cheapest tariff. I am sure that that is not the intention of those who tabled the clause, but I will read it to them and they can perhaps clarify the matter:

“A company supplying electricity, gas or heating oil to a domestic customer shall, at least annually, inform the customer of the cheapest tariff available to that customer…and move the customer to that tariff if that customer is aged 75 or over.”

It does not say that the customer must be in agreement or that the customer has a choice. The new clause would make it obligatory, in law, for the company supplying the oil to move a customer on to the cheapest tariff if they are over 75—[Interruption.] It does not say that in the clause. That is all I wanted to say, and I would welcome some clarification.

Alan Whitehead (Labour, Southampton, Test)

You suggested earlier on, Mr Bayley, that hon. Members might make their points in contributions rather than interventions, so I am carrying out your advice to the letter by making a contribution.

The direct answer to the question of whether new clause 6 forces people over 75 on to particular tariffs is that were new clause 6 to go into the Bill, it would stand alongside the other Government new clauses—unless they were withdrawn or voted against in such a way that they fell—and new clause 13(3)(e)(ii) refers to

“offering the customer, or inviting the customer to switch to, a different domestic tariff or different supply contract terms.”

One clause would therefore be read in conjunction with the other clause and that is how that new clause 6 would actually work.

Robert Smith (Liberal Democrat, West Aberdeenshire and Kincardine)

How would the person reading the two clauses know which was supreme?

Alan Whitehead (Labour, Southampton, Test)

Clause 13 would go into the Bill as the primary clause for the purpose of this particular section and therefore the other clause would go in in the context of that section. That is exactly the answer that the Minister gave me the other day about possible clashes between two clauses relating to investment contracts.

Gregory Barker (Conservative, Bexhill and Battle)

So just to be clear, if the energy company sent out a notification of the cheapest tariff available, which could be a cheap coal-based tariff, a variable coal-based tariff, and the customer was currently on a green tariff, if they did not respond to that communication—perhaps they did not open it, or did not receive it, or they put it in a pile to act on later—they would be switched off their green tariff and on to that coal-based tariff. Is that right?

Alan Whitehead (Labour, Southampton, Test)

I am not sure that the Minister has looked as closely as he might at new clause 13(3)(e) which states:

“for requiring a licence holder to change the domestic tariff or other supply contract terms on which it supplies gas or electricity to a domestic customer by—(i) switching to a different domestic tariff or different supply contract terms, unless the customer objects”.

Under the circumstances the Minister outlined, if the customer put an offer behind the clock on the mantelpiece, as it stands precisely what he suggests might happen under new clause 6 would happen under new clause 13. The Minister may have hit on something that he should perhaps go away and look at. He might look at how new clause 13 might work or he might accept my suggestion that the two clauses would work alongside each other and that things would work reasonably well under those circumstances.

Gregory Barker (Conservative, Bexhill and Battle)

There can be no doubt that the intent of the Bill, which will be complemented by secondary legislation—the Committee still has not seen it and that is not specific to this Bill, but to any Bill with secondary legislation attached; I appreciate that that makes scrutiny that little bit more difficult, but that is nothing new—is to put people on the cheapest tariff, but respecting their preferences. It seems that this measure simply puts people on the cheapest tariff full stop, which would have the effect of moving people off a green tariff and on to cheap coal.

Alan Whitehead (Labour, Southampton, Test)

The Minister’s first line of defence is, “If you knew what I knew and if you were privy to this new secondary legislation then you would know a lot more about the Bill.” As we are not privy to the secondary legislation, clearly we do not. Secondly, he would have to remove this subsection from anything that went into the Bill in order to give new clause 6 the effect that he has suggested it has.

I accept that there is conceivably a conflict between what new clause 6 says and what new clause 13 says. However, when I raised the question a little while ago—this can be looked up in Hansard—of the possible conflict between two clauses involving investment instruments, the Minister of State, Department of Energy and Climate Change, the hon. Member for South Holland and The Deepings, told me which clause was the superior clause, particularly in relation to repeals, and that there would not be a conflict in the way that I had suggested.

Ministers cannot have it both ways round. Either this clause is the main clause in this part of the Bill and other clauses are subservient, and new clause 6 should be read in that context, or it is not, in which case the subsection should be withdrawn for clarification if the Minister wants that to come about. As he clearly does not, he will probably want the status quo to remain as far as the clauses are concerned.

Gregory Barker (Conservative, Bexhill and Battle)

This is a small point, but it needs a slightly greater explanation to be absolutely clear that this is not the case, but I will respond in my speech rather than by way of intervention.

Alan Whitehead (Labour, Southampton, Test)

I remind the Minister that we are the Opposition and he is the Minister. We do not necessarily have to explain exactly how all legislation, including secondary legislation, will work. The Minister has access to that secondary legislation. If there were to be any conceivable conflict between a new clause and another clause that went into a Bill—were that to be passed—it would be a relatively straightforward issue, as the Minister said, to clarify, by secondary legislation, what is the superior part of the legislation, along the lines that the Minister, the hon. Member for South Holland and The Deepings, set out previously. However, that is not what I want to talk about, although it is connected with new clause 13(3)(e). The fundamental question is whether new clauses 13 to 16 comprise powers that we do not already have under existing legislation. It is incumbent on the Minister, when he is replying to this debate, to set out which parts of those clauses are indeed new, and which parts of those clauses do indeed replicate existing legislation. New clauses 13 to 16—I accept that new clause 17 talks about different issues—talk about the powers that are set out under the Utilities Act 2000 relating to modification of standard conditions of licences. Section 35 of the Act goes into some detail about how the authority, Ofgem, may modify the standard conditions of licences, which are set out in section 6(1) of the Electricity Act 1989 and in legislation on gas.

The section in the Utilities Act 2000 to modify standard conditions of licences is not bounded; the authority may do anything it wishes to modify standard conditions of licences except for one thing. Let me explain. Section 35(5) of the 2000 Act enables the Secretary of State

to direct the Authority not to make any modification,

and if the Secretary of State has directed the authority not to make a modification, the authority will comply with the direction. The Secretary of State can intervene to stop the authority making a modification to a licence—but it is otherwise unbounded. That is a negative power.

In section 76 of the Energy Act 2011, the Secretary of State was given the power to modify electricity supply licences subject to the question of providing information about tariffs. The section states:

“(a) the amount of the tariff;

(b) the amount the customer would have paid or saved in relation to any past period if the customer had been on the tariff for that period;

(c) the amount the customer would be likely to pay or save in relation to any future period if the customer were on the tariff for that period;

(d) where to find further information about the tariff;

(e) how to switch to it.”

It is clear in section 76 of the 2011 Act—incidentally, new clause 16 seeks to repeal those passages—that the Secretary of State has a power, particularly in relation to moving people to the lowest tariff, offering it to them, or inviting them to go on it. The Secretary of State has the power to do that, even if the authority does not otherwise agree to do it—that is, the Secretary of State may directly undertake that action. The authority has a power to modify licences, pretty unbounded, and the Secretary of State has an additional power to make the authority modify licences in a particular way, relating to lowest tariff provision.

That is my interpretation of how the legislation stands. Of course, one might not consider, particularly in relation to section 76 of the 2011 Act, that my interpretation alone is sufficient to persuade hon. Members that that is the case. In 2011, the then Minister of State, the Member for Wealden (Charles Hendry) , who was in charge of the Energy Bill, as it was then—he was sitting next to the Minister of State, the right hon. Member for Bexhill and Battle at the time—had this to say about what was clause 74, and is now section 76 of the 2011 Act:

“The Bill will allow the Government to require suppliers to inform customers about their lowest tariff and how to switch to it.”––[Official Report, Energy Public Bill Committee, 16 June 2011; c. 336.]

That power was included in the Energy Bill—subsequently the Energy Act 2011. The new clauses would replace those measures, and in some circumstances, appear to narrow some provisions in the 2011 Act. The effect of the three new clauses, if anything, is not to provide new powers, but to remove some elements of related powers, particularly as far as the Secretary of State is concerned.

One might ask oneself, “How have we got to a position where we are debating three very detailed clauses, even though it appears, on the face of it, that all the powers that are necessary in order to do what it is claimed those clauses wish to do already exist in legislation?” If one were a very world-weary and cynical Member—not that I am—one might refer to what the Prime Minister said at Prime Minister’s Questions Time, when he announced that energy companies will

“have to give the lowest tariff to their customers”.,

We are not debating today, as the Minister emphasised a few moments ago, that anyone will have to give the lowest tariff. Indeed, he was at pains to emphasise that were new clause 6 to be enacted, people over 75 would have to go on a particular tariff. I was at pains to emphasise—I think he also emphasised—that that was not the case, that Government new clause 13(3)(e) would offer or invite the customer to switch to a different domestic tariff.

The Prime Minister has not exactly had a win, shall we say, in terms of what he said in the House, as far as the new clauses are concerned. We are debating offering tariffs today, not having to give them. The Prime Minister also said—it was slightly before, and rather missed—that the

“hon. Gentleman will welcome, that we will be legislating so that energy companies have to give the lowest tariff”. —[Official Report, 17 October 2012; Vol. 551, c. 316.]

It would be extremely difficult to legislate if the legislation already existed, would it not? Obviously, one could not legislate if all the powers that one needed were there already. However, one could, of course, propose remarkably similar legislation to what was previously there, to give the illusion that one was legislating, in order to carry out what the Prime Minister had said in response to parliamentary questions. If one were a cynical and world-weary Member, one might think that is what the whole exercise is about.

That is why it is important that the Minister sets out for the Committee the specific things in new clauses 13 to 16 that the authority, the Minister, or both combined, could not previously do, which they could do if the legislation were passed, in such a way that hastens the idea of customers being offered the lowest tariff. I also remind the Minister that, when the Prime Minister made his statement in Prime Minister’s Question Time, Ofgem was already carrying out an exercise with this in mind, apparently through the powers that it already possessed, which are remarkably similar to the powers in this legislation.

I hope that the Minister will be able to satisfy the Committee on this particular matter. If he is unable to do so, we will conclude that we have been wasting our time this afternoon. The people in the Department who have been working so hard to get this legislation together would also have been on a fool’s errand, as far as getting something on to the statute books that was already there and could have satisfied all our requirements.

Albert Owen (Labour, Ynys Môn)

I will follow your guidance, Mr Bayley, and not raise the issues I raised in interventions. I will keep to the new territory that was encroached on by the hon. Member for Angus, which I think is very important. I am sure that the Minister wants to listen to this; I have some specific questions for him.

When the Prime Minister made his announcement at Prime Minister’s questions, he was quite clear that everybody would go on to a lower tariff. That is how it was understood by Members of Parliament and their constituents. But now there is a qualification that means that for many people, that simply will not be the case. When this was first raised with the Secretary of State by the Energy and Climate Change Committee, he was quite clear that because it was so soon after the Prime Minister had made this announcement, we would have to wait for the Energy Bill to come forward. The Bill was delayed on a number of occasions, but it arrived before us a few weeks ago. The details of these tariffs were not contained in the Bill—in fact, we only had these amendments this week. Therefore we have had very little time to scrutinise them thoroughly. However, the Minister knew about them— because he helped to draft them —and he has had the opportunity to explain them to us today.

There is one category that has failed to convince me—and, if they are honest, many other Members—with regard to vulnerable members of our community, those on pre-paid meters. They do not have the choice of smart phones or of direct debit, as many of us have. I want to ask a specific question—not to trip up the Minister, but to get absolute clarity. Will those people who are now on an expensive tariff, because of their circumstances, be able to go on a cheaper tariff after this legislation? We have not seen the secondary legislation, but the Minister can tell us at this moment. I do not think that that will be the case, and that would let down many vulnerable people. It is essential that the Minister clarifies that. As the hon. Member for Angus said, there are many ways of helping; to be fair, the companies themselves are trying to help those people. PayPoint offers some facilities for them, but they will still be on the lowest category and paying the most. We need clarification on that.

On the regulator, my hon. Friend the Member for Southampton, Test is right to say that this amendment could restrict some of the powers that already exist. I know that the Minister wants to be helpful in looking again at the remit of the regulator for domestic heating fuel. Many of my constituents who were listening to the Prime Minister and the Government were paying more for their domestic heating than those on electricity and gas. They do not understand how the privatisation of gas and electricity came about. They were led to believe that they would have help with their domestic fuels; it was not argued at the time. I have been campaigning about this since I came into this House, because in certain areas these people do not have the opportunity of electricity and gas tariffs. Some regions of the United Kingdom pay more for their electricity when they are off-grid, so they have a double whammy of having to pay the high cost of domestic oil and for electricity that is charged at a higher rate than in some other parts of the country.

Gregory Barker (Conservative, Bexhill and Battle)

I do understand the case the hon. Gentleman is making, but very few customers are off the electricity grid.

Albert Owen (Labour, Ynys Môn)

If that is what the Minister understood me to say, I am sorry that I said it wrong. What I was saying was that those who are off the gas grid pay more for their electricity. For example, as I am sure the Minister knows, in Wales there are regional variations between what people pay. In peripheral areas of rural Scotland and Wales, people pay more for their electricity than those in other parts of the country. On top of that, they must pay more for domestic heating oil than if they were on the gas main. That is my point.

We cannot change the Office of Fair Trading’s monopoly investigations through the Bill, but we can give the same protection to those who are off the gas grid through the regulator. Ofgem’s priority under its remit is to protect customers. There is no one to protect the customers I am referring to, but there is an opportunity to do so in this Energy Bill. I keep hearing from successive Governments that they will provide that protection, but Energy Bill after Energy Bill comes along and does not do so. Many of the people we represent have been ripped off over many years and have paid a lot more, which is unfair. I hope that the Minister will consider the matter of prepaid meters seriously, and then work with his fellow Ministers to look at the role of the regulator so that customers in all parts of the United Kingdom enjoy the same protection from the regulator that those on the gas and electricity grids enjoy.

Luciana Berger (Labour, Liverpool, Wavertree)

I will reiterate some of the points I made earlier. It is clear that without the secondary legislation we are unable to have a full debate about what exactly the Government intend. We very much look forward to the introduction of the secondary legislation, and seeing the details of how it will work in practice. It was clear from the exchanges between my hon. Friend the Member for Southampton, Test and the Minister that the Minister knows what he is expecting, but the Opposition are in the dark about exactly what those details will be. To some extent, we have been speaking at cross-purposes, and the hon. Member for Sittingbourne and Sheppey sought clarification.

As I said in my speech, and I am happy to reiterate, under our new clause customers aged over 75 would be informed of the cheapest tariff available to them by their supplier and moved on to it unless they opted out. At the moment, people do not opt on to the cheapest tariff, and those most vulnerable groups should have the opportunity to be on the cheapest tariff. If they decide otherwise, they can make that choice.

Gregory Barker (Conservative, Bexhill and Battle)

I honestly do not think the hon. Lady means the cheapest tariff. I think she means the cheapest price within that tariff. If she means the cheapest tariff, she is suggesting that someone on a green tariff would be switched not just to the cheapest price available within a tariff suite, but off that green tariff and on to a coal tariff. Will she clarify, because I think that is the root of the misunderstanding? She does not mean tariff, because there will continue to be several tariffs, certainly under our legislation; she means the cheapest price available within that tariff suite.

Luciana Berger (Labour, Liverpool, Wavertree)

I thank the Minister for his intervention. We are talking about different things. He may recall from my earlier contribution to the debate that I was responding to the wider issue of different tariffs. The point I have just made was specifically in respect of customers aged over 75. In that regard, we would put them on the cheapest tariff, and it would be up to the consumer to opt out of the tariff.

Gregory Barker (Conservative, Bexhill and Battle)

So to be clear, someone aged over 75 on a green tariff would be automatically taken off the green tariff and put on to any cheaper tariff—

Luciana Berger (Labour, Liverpool, Wavertree)

Offered the option.

Gregory Barker (Conservative, Bexhill and Battle)

There is a difference. People are offered cheaper tariffs all the time. The key measure that we are concerned with is to take someone off automatically. They would then have to opt out of that and make a positive decision not to change instead of just being offered it through the usual marketing channels.

Luciana Berger (Labour, Liverpool, Wavertree)

I thank the Minister for his intervention. Yes, people would be offered that cheapest tariff and, over a period, moved on to it, unless they decided that they did not want to be. We already know that people on green tariffs, for instance, are the most active consumers, and those who chose green tariffs will therefore be more inclined to read letters they receive. They have actively chosen a green tariff and, because they have decided to opt out and so are already in conversation with their energy supplier, they will be able to choose to remain on it.

This is about giving people that choice, and ensuring that the most vulnerable consumers—those aged over 75—are moved on to the cheapest available tariff. We know that those people do not move to such a tariff at the moment, because they are less likely to have access to the internet to identify the best tariff for them to switch to, and less likely to have access to a bank account. The 1 million people in this country who do not have a bank account cannot benefit from direct debits.

Gregory Barker (Conservative, Bexhill and Battle)

To be clear, people would therefore be automatically moved not only off green tariffs to the cheapest tariff, but off fixed-rate tariffs that they had elected to be on.

Luciana Berger (Labour, Liverpool, Wavertree)

Yes, as we have said before. We have discussed many times how our proposal would mean that the over-75s were on the cheapest tariff from their supplier.

I return to the point that we have not been given the detail, and we would like to have it. I am only sorry that it has not been made available today. Clearly, the Minister has seen something in draft that we are not privy to. It makes it difficult for Opposition Members if we are essentially in the dark. The proposal has been put forward by the Opposition on many occasions, and we will therefore seek to press the amendment to a Division.

John Hayes (Conservative, South Holland and The Deepings)

For the information of the Committee, following our earlier debate about offers to customers in relation to heating oil, I have since written to my officials to ask them to effect the commitment that I made, which was that we would hold a meeting for Members from across the Committee to talk through those matters and their possible relationship with the Bill, because there will be issues that go beyond it. I wanted to put on the record that, as I pledged to do, I have actioned that, and I expect to be in touch with Committee members shortly.

Michael Weir (Scottish National Party, Angus)

I thank the Minister for what he says, which is very welcome. He mentions issues that go beyond the Bill. I have been in communication with the Department for Work and Pensions about such issues, and I have put it in touch with suppliers who want to talk about the possibility of a social tariff. Will the Minister expand the meeting to take that in, so that we can have a full picture?

John Hayes (Conservative, South Holland and The Deepings)

I expect that officials will be present at any such meeting, and the hon. Gentleman’s suggestion is helpful. We need to consider the issue across Departments, so I will certainly approach the Department for Work and Pensions. I think that the meeting will be genuinely open-minded, and when we consider a range of options, it is important to do so in the spirit he describes. I am more than happy to agree to that.

Tom Greatrex (Labour, Rutherglen and Hamilton West)

Further to the point made by the hon. Member for Angus and the Minister’s response, the Minister will be aware that an all-party group has taken up such issues across different parties and different parts of the UK. Is the Minister minded to engage with members of that all-party group in those discussions?

John Hayes (Conservative, South Holland and The Deepings)

I am absolutely inclined to do so, but I am mindful that there is a slight risk of the debate becoming one of the whole House, because so many people have a perfectly legitimate and understandable interest in it. If we are to confine it and move forward, we will need to think carefully. It would of course be entirely appropriate to link it to the work of the all-party group, and frankly it would be impertinent of us not to.

Gregory Barker (Conservative, Bexhill and Battle)

This has been a very interesting and worthwhile debate, even if we have been somewhat confused or talking at cross-purposes at times. I fully accept the point that the Opposition make: there is a slight difficulty in understanding or rather scrutinising the Government’s full intention, because further detail will be added in secondary legislation. We also await a formal response to consultation, which we cannot prejudge. In terms of the concept, I accept that parliamentary protocol and procedure perhaps make for an imperfect debate. However, I can be absolutely explicit about the intention of the measures under scrutiny and assure members of the Committee that the secondary legislation that we bring forward in due course will deliver on the Prime Minister’s promise in full. The Prime Minister was obviously very brief when he described the tariffs. It was a response to a question at Prime Minister’s Question Time. It was not a comprehensive statement. He was not at liberty to give chapter and verse on a policy in what is quite a complex area.

What is clear is that the Opposition, who are not simply giving a response to an answer in a crowded House of Commons but have thought through their response, have got themselves into a right pickle. The hon. Member for Liverpool, Wavertree got herself into a right pickle because now her explanation is that the Opposition propose to move every person over 75 on to the cheapest tariff. At the moment there are more than 400 tariffs. Our proposals are to simplify that radically. The Ofgem consultation paper and our own consultation paper suggested four tariffs, but the Opposition are saying that anyone over 75, no matter what tariff they are on, will be moved to the cheapest tariff. I believe that the Ofgem consultation paper suggested that the core choice might consist of a fixed-rate tariff, an internet tariff, a variable-rate tariff and, most likely, a green tariff, but somebody on a green tariff—

Barry Gardiner (Labour, Brent North)

A prepaid meter tariff.

Gregory Barker (Conservative, Bexhill and Battle)

And a prepaid meter tariff. Under the Labour proposal, in new clause 6, somebody on a green tariff would be moved off annually, so they would elect to go on to a green tariff and then they would be moved to a cheaper, dirtier tariff if there was one available. That cannot be right, particularly for someone over 75 who goes to the trouble of selecting a green tariff. They make a conscious choice. They go for a clean, green choice or perhaps a fixed-rate choice and then find themselves moved off it. They have to keep opening the mail to find out whether they are still on the tariff that they elected to go on in the first place. It is a very muddled proposition, and the reason why it is muddled is that the coalition Government have shot Labour’s fox. The Opposition put forward an ill-thought-through proposal to simplify things for the over-75s, even if in reality what they proposed in new clause 6, or at least new clause 6 as it was explained by their Front-Bench team today, would not do that.

The Government propose not just to simplify the matter and give people over 75 the best deal, but to give everybody the best deal, and importantly—the hon. Member for Liverpool, Wavertree referred to this in her opening remarks—the best deal in line with their preferences. It is a sensible, balanced judgment, exactly in line with what the Prime Minister pledged to do. We have come forward, in Committee, with a sensible, more detailed understanding of what the Prime Minister outlined in general.

Alan Whitehead (Labour, Southampton, Test)

Forgive my continued puzzlement, but the Minister says that after the secondary legislation is introduced, it will carry out the Prime Minister’s pledge in full. That pledge was to make people move to the lowest tariff. Would that not turn out to be exactly what the Minister is accusing the Opposition of proposing in the new clause?

Gregory Barker (Conservative, Bexhill and Battle)

The Prime Minister was speaking in the House of Commons and being necessarily brief. He was not making a statement. He was not speaking at length. He was not at liberty to define at greater length what the policy would mean. That falls to the Committee. By definition, what we do in this place is to expand on something that is summarised. The Prime Minister was very clear, and we are now giving effect, in a detailed Bill and through a raft of clauses, to his clear pledge. The Opposition can squirm as much as they like. They are just sore because they did not come up with the measure, and because their proposal is not half as radical as the coalition Government’s. They are squirming because we are acting far more radically, far more ambitiously and far more comprehensively than they did in 13 years.

During 13 years of Labour, we had an explosion of tariffs, making it much more difficult to switch and bemusing the consumer. There was nothing like our proposal. The last person to sit in charge of the Department of Energy and Climate Change is now Leader of the Opposition. What did he do to help the consumer? Zip, zero. Within two and half years, the coalition Government have come forward with a radical response that really gets to the heart of the matter and gives life to a simple pledge. The Conservative party has a proud tradition of tariff reform, and I like to think that we are carrying on the work of Sir Robert Peel.

Albert Owen (Labour, Ynys Môn)

The Minister is really enjoying this little knockabout. It might be good in sixth-form politics, but it does not help us with the Bill. At the beginning of his contribution, he said that he understood that the Opposition were in a difficult position because there was little detail in the Bill. He now says that the Bill contains great detail. Which is it?

Gregory Barker (Conservative, Bexhill and Battle)

There is a lot more detail than there is in two lines in response to a question at Prime Minister’s Question Time. We have come forward with a Bill that gives enabling powers, and those powers will be detailed in secondary legislation.

Albert Owen (Labour, Ynys Môn)

When exactly?

Gregory Barker (Conservative, Bexhill and Battle)

The hon. Gentleman has been in this place longer than I have and is probably more versed in parliamentary process than I am. There was a statement of intent, which was followed with a Bill.

Barry Gardiner (Labour, Brent North)

A mis-statement.

Gregory Barker (Conservative, Bexhill and Battle)

There was no mis-statement at all. We were absolutely clear. There can be no question about that. The hon. Gentleman is absolutely right that previous Governments have gone round and round in circles and have never come up with such a proposal. The Prime Minister could not have been clearer or less ambiguous. The Opposition are just sore because they are on the back foot. We shot their fox.

Barry Gardiner (Labour, Brent North)

I am so delighted that I have managed to catch the end of this contribution. When the Prime Minister was so clear, was he so clear with the word “tariff” or with the word “price”?

Gregory Barker (Conservative, Bexhill and Battle)

We have already done this. If the hon. Gentleman had been here earlier, he would know that. Nobody can be under any illusion as to what the Prime Minister intended. We have spelled it out in a great deal of detail. We issued a consultation document. In a thoughtful and thorough way, our proposals give life to the Prime Minister’s clear pledge in exactly the same way as acres of legislation gave life to Labour’s pledge card in 1997. A simple pledge from the Prime Minister at PMQs in the autumn has given rise to a responsible Bill containing responsible pledges. We will do it. Unlike new clause 6, there is no ambiguity except to say that further detail needs to come forth in secondary legislation. I would love to debate it now. The detail is not being held back for lack of transparency; it is simply parliamentary process. We will have the opportunity to scrutinise the secondary legislation in the usual way. I can, however, tell the Committee now that what that legislation will not do is introduce a system that automatically moves the over-75s from green tariffs, or other tariffs they may have chosen, on to the cheapest, dirtiest tariff available, which is what Labour Members are suggesting. I have probably exhausted the Committee’s patience on that issue, and a number of other points were raised that I would like to deal with.

The hon. Member for Ynys Môn said that there were delays to the Energy Bill. I assure him that the Bill was not delayed; we said we would introduce it in November, and we did. We made it clear that we would consult consumer groups, the industry and others on tariffs before bringing forward proposals for the consideration of the House.

I think that we have discussed the issue raised by the hon. Member for Southampton; new clause 6 could not be incorporated into the Bill as he suggested—or as drafted—without creating greater uncertainty. Section 76 of the Energy Act 2011 enables the Secretary of State to require information to be provided, not to move customers on to different tariffs, and not to simplify the tariff structure. Section 76 will be repealed by our new clauses, and its power is now found in new clause 13(3) and (4).

Alan Whitehead (Labour, Southampton, Test)

It is the authority that simplifies the tariff structure. For the Minister to say that it is a different power because it does not say that in clause 76 of the Energy Act 2011 is totally irrelevant. It is what the authority does, and what the authority already has power to do, that I asked about.

Gregory Barker (Conservative, Bexhill and Battle)

If by the authority the hon. Gentleman means Ofgem, then yes, he is partially right. The fact of the matter is that Ofgem can be challenged; it can be judicially reviewed. It is open to the big six to challenge Ofgem, and that can involve lengthy delays. That is why we have been very explicit from the outset. We made that pledge in the autumn, we want to crack on and we also want to do so without any uncertainty or ambiguity. By putting this into law, we believe that it is most unlikely that there will be any challenge to Ofgem, and that brings greater certainty—absolute certainty—whereas the hon. Gentleman is quite right that beforehand there was some ambiguity. We are ending that ambiguity, and we are bringing certainty that this enjoys the power of statute, rather than that of an authority that can be challenged in the courts.

The hon. Member for Angus quite rightly raised the issue of prepayment meters. I know this is an issue which concerns all of us who are worried about fuel poverty, and it is driven by a number of factors. These are real issues, not just of poverty but also of fairness. However, there are other issues, such as moral hazard, and the cost to other consumers, which need to be balanced. I totally understand the hon. Gentleman’s concerns, but I assure him that customers on prepayment meters will benefit from the legislation. They will be moved to the cheaper tariff or price for their payment type, and they will be advised of cheaper alternatives, for example, a fixed-term tariff. I am also informed that even people with debts of up to £500 are not precluded from switching suppliers.

Michael Weir (Scottish National Party, Angus)

To be fair to the energy companies, the problem with prepayment meters is that they tend to be on a standard variable tariff. I cannot see that anything other than one of the other, direct debit, tariffs would actually be cheaper, unless the legislation specifically instructs the energy companies about that. Will the Minister also address the issue of debt? I was quoted by Citizens Advice that £7 of every £10 put in the meter is to meet debt. I appreciate that debt has to be paid, but that seems an extraordinary way of getting back money from people who are on the breadline and struggling to heat their homes.

Gregory Barker (Conservative, Bexhill and Battle)

This is a very difficult issue and I understand exactly what the hon. Gentleman is saying. I do not think there is an absolute right answer, not least because there is inherent unfairness in that different circumstances lead people into debt, some of which are in their control, some of which are entirely outside their control. It is very difficult for politicians to make sweeping statements about fairness or people’s individual circumstances. However, I totally understand that there are people who, through no fault of their own, end up in those circumstances and it seems very harsh. However, that area is effectively in the realm of the Department for Work and Pensions rather than the remit of electricity market reform.

Michael Weir (Scottish National Party, Angus)

With respect to the Minister, it is not in the area of DWP. It is caused by the cost of the tariff and the way that the debt is recovered through the meter. These are matters that are properly the object of energy companies, Ofgem and his Department. We must be serious about tackling fuel poverty. I accept that there may sometimes be people who are their own worst enemies, but many people are not. They could have been on a cheaper tariff, but their circumstances mean they have ended up being put on a prepayment meter because of debt, and when that happens it deepens debt.

Gregory Barker (Conservative, Bexhill and Battle)

Let us be clear: we are dealing with tariffs, not the prepayment element in the prepayment meter. The hon. Gentleman raises a very good point, but I am afraid that that specific element does not form part of the Bill and nobody has laid any amendments to the Bill. The hon. Gentleman had an opportunity to and has not laid any amendments that would deal with that.

Michael Weir (Scottish National Party, Angus)

This is the first time we have had a chance to debate anything to do with tariffs. We could not put down amendments on these provisions because they will not be in the Bill until they are passed. We can perhaps do it on Report.

Gregory Barker (Conservative, Bexhill and Battle)

Of course, that is open to the hon. Gentleman. As we stand here today there is not a Government amendment on the issue—it is not within the purview of EMR. He raises a legitimate point. It is difficult to be totally arbitrary about what is definitively a fair balance, not least because individual circumstances play such a huge role. This is something that comes within the remit of Ofgem. I invite the hon. Gentleman to have a discussion with me about Ofgem’s role, and using existing powers and legislation, to look at the fairness of the status quo. It may be that this is not something that requires legislation.

Graham Jones (Labour, Hyndburn)

On a very small point, when the Minister is talking about tariffs and tariff simplification, could he consider the issue of fixed tariffs that expire? There will not be—it will come in the secondary legislation—tariffs that expire from the fixed rate and are then on a higher variable rate, which seems to be a problem now. Will he be mindful of that, and ensure that customers are not shifted and that they are on a continuous fixed rate if there is a fixed-rate tariff, which there will be?

Gregory Barker (Conservative, Bexhill and Battle)

I think I understood the hon. Gentleman. I suppose it depends on whether the new fixed rate is directly comparable. For example, if a one-year fixed product has been withdrawn and the only other fixed-rate product is a five-year or three-year fix, it is not a directly comparable product. Where there is a directly comparable product, my understanding is that every time there is a better deal, everyone on that comparable product will be offered the better deal. However, where there is no comparable product, people will automatically be moved on to the best variable tariff.

Graham Jones (Labour, Hyndburn)

There is a plethora of tariffs now, and it is difficult for any Member to keep up with them all, but the simple explanation is that they are like mortgages; people can get a discount deal for two years. After that, if the customer does not say anything, they are moved to a higher rate. Will the Minister look at that? I would ask him to consider that it should not form part of the tariffs that will be put forward by the Government in secondary legislation.

Gregory Barker (Conservative, Bexhill and Battle)

I am not absolutely clear what the hon. Gentleman is saying. I do not mean to be deliberately obfuscating.

Graham Jones (Labour, Hyndburn)

What happens is that the customer is not notified; it is part of the original deal. They will have a fixed discount deal, which will end, and they will then go on to a variable tariff that is far higher, because that is part of the original deal and there is no break clause. Those are the tariffs that catch people out, because when the discount period ends, there is quite an escalation in the charge.

Gregory Barker (Conservative, Bexhill and Battle)

I understand. I do not know whether that would be possible. I will have to look into whether the customer would move from one fix to another fix. I think that they would be more likely to go on to the variable tariff, but it would be the best variable offer. There would not be different types of variable tariff—there would be one standard variable, which would be the default variable. There would not be special offers available only to new customers, for example, that would subsequently fix people on to an uncompetitive offer without them re-entering as a new customer.

Barry Gardiner (Labour, Brent North)

With mortgages, sometimes there is a period where the depressed rate is charged and then there is a lock-in for a particular period of time after that on the standard variable rate. That would be a distinctly unwelcome innovation in the energy market for precisely the reasons that my hon. Friend has just outlined. That is something we would seek assurance on.

Gregory Barker (Conservative, Bexhill and Battle)

We have not published the final proposal yet, so I cannot give an emphatic answer, but it is very difficult to see how that sort of mortgage-style tariff would be able to find its way into the very narrow band of choices we are going to introduce.

Albert Owen (Labour, Ynys Môn)

Is the Minister saying that there will be an opportunity for people to transfer to cheaper tariffs offered elsewhere?

Gregory Barker (Conservative, Bexhill and Battle)

The whole gist of the legislation is that the default position will be that customers would go on to the cheapest variable tariff—there will not be a plethora of tariffs. The reason it is currently so complex is because of new customer offers—basically, there is a variable tariff and various other types of tariff, but there are also new offers that are not available to existing customers, which are designed to entice the small number of switchers. That is where the differential arises. Under our proposals, everyone will be able to benefit from the cheapest tariffs, although we will respect the preferences of individual customers so that they are not forced off green tariffs or a fixed rate.

Albert Owen (Labour, Ynys Môn)

I fully understand that, but, in response to the hon. Member for Angus, the Minister said that the issue of the DWP and debts would be dealt with elsewhere. Is he saying that there would be cheaper pre-paid meter tariffs in his proposals?

Gregory Barker (Conservative, Bexhill and Battle)

Yes, absolutely. I can confirm that the scope will include pre-paid meters and their tariffs.

As for opting in or out, which was raised by the hon. Member for Angus, subsection (3)(e) would allow the Secretary of State to determine whether the moving of customers by suppliers from poor value dead tariffs to other tariffs is an opt-in or an opt-out. However, it will be not be up to suppliers, and our current intent is that customers would have to opt-out.

In her opening remarks, the hon. Member for Liverpool, Wavertree raised a valid point about unit pricing, which has been championed by Which? She is absolutely right that currently it is often difficult to compare bills, tariffs and offers because they are so opaque. The single unit rate proposal from Which? is a very interesting idea. We did not originally consult on it, and it is not something that a large number of other groups have lobbied on. However, I think that it has considerable merit, and I have met with Which? to discuss the idea in more detail and commissioned my officials to do more work on the single unit rate proposal.

There are potentially some unintended consequences or perverse impacts, particularly on vulnerable customers, which bears heavily on us. The intent around the single unit rate is to make a much more transparent, easily comparable pricing structure, which would make the energy sector much more akin to the petrol sector. There is a price per litre when filling up a car. There needs to be as much simplicity in the energy fuel market so that customers can easily make that cross-company comparison. We are looking at that actively. Ofgem looked at the tariff structure and proposed that all tariffs be structured as a standing charge and a single unit rate. That was the result of its consideration of this issue. The Which? proposals bring an additional dimension to the debate and that is what we now looking at.

The hon. Lady asked whether we were in favour of Ofgem’s tariff comparison rate. New clause 13(4)(b)(ii) allows for a requirement that suppliers provide a single figure or set of figures for the expected cost of their tariffs. This could include providing a typical cost similar to an annual percentage rate in order to help consumers make a more informed choice between the different energy suppliers. Ofgem has consulted on one, the tariff comparison rate. New clause 13(4)(b)(ii) would facilitate a TCR, or other standard comparator metric, but does not commit us to any specific model at this stage as we are still looking at this in more detail. However, as with other areas of detail, we have not formed a final view and will wait to consider Ofgem’s final position, including its proposed methodology, before making our final decision.

Robert Smith (Liberal Democrat, West Aberdeenshire and Kincardine)

When considering the proposals will he consider how those on dynamic teleswitching, those with off-peak tariffs, get to enjoy the same benefits of this reform of the tariff structure and the ability to shop around? He obviously cannot do that just now, but could he undertake to take that on board in that review?

Gregory Barker (Conservative, Bexhill and Battle)

Absolutely. Various issues also need to be taken into account. I can assure him that we will do that.

In conclusion, we are here giving life to the Prime Minister’s commitment radically to simplify tariffs and in so doing to boost consumer choice and drive genuine, transparent competition between the big six, but also to make it easier for other companies to enter the market. The smaller, disruptive entrepreneurial companies do not have a large customer base that they can milk, relying on the fact that they will stick on dead tariffs and only a small proportion will move. Our proposals have been strongly welcomed by many of the smaller companies that are keen to play a larger part in our energy economy.

New Clause 8 - Decarbonisation target range

John Hayes (Conservative, South Holland and The Deepings)

I beg to move, That the clause be read a Second time.

Hugh Bayley (Labour, York Central)

With this it will be convenient to discuss the following:

Government new clause 9—Matters to be taken into account.

Government new clause 10—Further duties of the Secretary of State.

Government new clause 11—Meaning and calculation of “carbon intensity of electricity generation in Great Britain”.

Government amendment 134.

John Hayes (Conservative, South Holland and The Deepings)

It is a delight to be able to address the Committee again after the useful debate we have just had on tariffs and their role in the Bill.

The new clauses set out the Government’s position on the decarbonisation target range for the electricity sector. We discussed that matter at some length earlier, and I believe that there is little doubt that the Opposition share the Government’s determination that a decarbonisation target for the power sector has the potential to increase certainty for investors in the large and long-term projects that will be necessary if we are to achieve the low-carbon future to which we all aspire.

I will explain why the Government are proceeding on the basis of the provisions before us. We have, as I said, already debated the matter at length, but to affirm the Government’s case I wish to make three relatively brief points. The first is, in a sense, one that I have trailed already, which is that Members on both sides of the Committee have been absolutely crystal clear about the need to provide certainty in order to inspire investor confidence. We have heard that from both Government and Opposition Members. There is absolutely no difference between us on that point. We also know that there is already a series of targets and measures that provide that kind of certainty, but there is a case to be made, and I have heard it made with cogence and enthusiasm, that further assurances would take us a step closer to increased certainty.

Our case is, therefore, that the powers should be available to the Secretary of State to do just that, and that, gauged in 2016 by the Government, taking into account the prevailing circumstances at that time on the basis of the best advice provided to them by the Committee on Climate Change and others, the Government could exercise those powers as a way of achieving that greater certainty, which is the product of greater clarity.

Secondly, our provisions importantly recognise that decarbonisation of the electricity sector is inextricably linked to the whole economy, in meeting our 2050 target. That matter has been widely discussed and considered by the Select Committee, a number of whose distinguished members we have on this Public Bill Committee. It is understood by, I think, the whole House that unless we take a cross-departmental, cross-Government view of the 2050 target, we are unlikely to achieve our objectives. A decarbonisation target range should not be set before the level of the fifth carbon budget, which covers the corresponding period, has been set in law.

We understand the salience of the electricity sector—of course we do—and the whole Committee knows that many of the other measures that we have introduced are designed to reinforce the commitment to a low-carbon generating mix, which is a necessary contribution to the target I have described. None the less, without waxing either too lyrical—if that were possible—or too wide of the mark, in your terms Mr Bayley, it is important to mention again that we know that in the transport sector, for example, it will be vital to achieve the 2050 target if we are to make radical changes.

My third and final point is that the new clauses introduce a simple, but effective, framework for meeting a target range which, once set, would be integrated within the framework already set by the Climate Change Act. I will say a word about each of those three points. I will try and say four things, making seven points in total, because asymmetry in oratory is rather like asymmetry in flower arranging: always better, for those of you who are flower arrangers. I can see one or two on this Committee who I imagine might be. I hope that will be a useful additional value that hon. Members have gained from their consideration of the Bill.

On the first of those four supplementary points, the important reason for the addition of these powers in the Bill is because they speak clearly of the Government’s commitment. It would have been possible for us to introduce a Bill without mentioning a 2030 target. After all, the 2050 target is well established. While there is much pressure for a 2030 target, I know that Committee members will realise that many thought it should not be mentioned at all. They will also realise that the addition of these powers came as a result of discussions across Government, which are no secret, including discussions of the Quad, where a bargain—in the words of the Secretary of State—was made. Of course, a bargain implied bargaining, and bargaining indeed took place.

As a result, these powers have emerged: the 2050 target to cut emissions by at least 80%, which is likely to require the electricity sector to be virtually decarbonised; the fourth carbon budget that runs up to 2027, which requires the UK to halve total emissions in the whole economy; and the 2020 renewables directive, which will mean 30% of electricity generation coming from renewables in 2020, compared with about 11% today. All these are important components in the certainty that I described. What the Bill does is set those in a long-term framework for electricity market reform.

My second supplementary point is that we are not satisfied. We are demanding of ourselves, as a Government should be. We should be ever critical of our own performance, for if we are not, we are unlikely to do our best and be our best. We are not satisfied with that. We have also committed to provide further clarity up to 2030 by issuing guidance to National Grid on an indicative range of decarbonisation scenarios for the power sector to 2030 consistent with the least-cost approach to achieve the overall 2050 target. I can see my hon. Friend, perhaps provoked by my remarks about flowers, is about to intervene.

Robert Buckland (Conservative, South Swindon)

I agree about asymmetry in flower arranging, but I am trying to conjure up the notion of a target range, which one associates with the military, and decarbonisation. Putting that to one side, my hon. Friend talked about the ability to set that range. Will he sketch out the breadth of that range? How wide would that range be? Would it be so wide as to be meaningless or a much narrower, proper target range?

John Hayes (Conservative, South Holland and The Deepings)

That is an apposite question, because there are those who believe that even now we should set a target on the face of the Bill for an immensely demanding figure in respect of the reduction in carbon. Part of our argument is that the flexibility which these provisions provide gives us a chance to gauge what that range might be, in the context of the circumstances that prevail and in accord with—in concert with, in harmony with—the fifth carbon budget. And speaking of harmony, I am happy to give way to the hon. Gentleman.

Barry Gardiner (Labour, Brent North)

Could the Minister just clarify whether he abjures the range that has already been suggested by the Committee on Climate Change, namely that it should not exceed 100 grams per kWh by 2030? The Committee on Climate Change was quite clear that it believed that it would be better if it were about 50 grams per kWh. So would he say that the broad parameters of the range that the hon. Member for South Swindon suggested might be between zero and 100?

John Hayes (Conservative, South Holland and The Deepings)

As the hon. Gentleman knows, almost every figure has been suggested, from 50 grams per kWh to 200 grams per kWh. We had those who believe that it should be set at 50 grams per kWh now, and they might be described as being at one end of the spectrum, and there are those at the other end of the spectrum who do not believe that we should have a figure at all. And slightly within that band, there are those who believe that we should set the figure somewhere between, as he described, 50 grams per kWh and 200 grams per kWh.

It would be premature, given what I have already said, for me to speculate on what we might do at the time when we fix this target, for our whole purpose is to fix the target then, and not now. Heaven knows, given that that is our purpose, Members of this Committee—alluring though they are—would hardly expect to encourage me to contradict that purpose by committing to a figure now. But I see an alluring form—well, I see the hon. Member for Southampton, Test—

Alan Whitehead (Labour, Southampton, Test)

The question is whether the Minister is envisaging any limits at all on what the range might be, and if not, has he consulted his own impact assessment of 4 February 2013, which discusses three ranges? It indicates that the greatest welfare benefit would come from a 50 gram target in 2030, and indeed the best impact on customers’ bills would come from a 50 gram target in 2030. If he envisages having no target whatsoever, what value does he put on the impact assessment that his own Department has produced on target ranges?

John Hayes (Conservative, South Holland and The Deepings)

I do not say that we envisage having no range whatever, because we already know, of course, what progress we are making in terms of carbon reduction. We have modelled a range of scenarios, as the hon. Gentleman suggests, and they are given life by what we have said in the impact assessment. I make no bones about the fact that the scenarios we modelled include 50 grams, 100 grams and 200 grams. I said earlier that the debate has ranged between different views, including the views of those who feel that there should not be a target at all, because of course we have those who think that there should not be a target or a power to set it. I have resisted those who take that view, because I am wholly committed to the purpose that I described at the outset of my remarks, and I know that the Committee will want to acknowledge that robust resistance.

However, to anticipate what might happen, when we have said that we want to take into account all the advice and circumstances that prevail at the time, would be unwise, given that the implicit range is the one to which the hon. Gentleman alludes, as I have acknowledged.

Barry Gardiner (Labour, Brent North)

I was not encouraging the Minister to speculate. I asked him a much simpler question, and that was whether he abjures the suggestion by the Committee on Climate Change that an appropriate range would be between zero and 100 grams, and that the limit of 100 grams was because beyond that a low-carbon trajectory to 2050 would not be achieved without disproportionate cost.

John Hayes (Conservative, South Holland and The Deepings)

Speculation in politics is dangerous, particularly when one stands where I stand, rather than where the hon. Gentleman stands. I have learnt that speculation as a Minister has even more profound dangers. So, although I am happy to say that the power might be used given the circumstances, I am also happy to say that it might be in the range set out in our impact assessment, to which the hon. Member for Southampton, Test drew the Committee’s attention and which I have also mentioned. It can be fixed only given the circumstances that prevail at the time, which takes me to the third of my three supplementary points.

It is not as if we are debating the matter out of context, which is the £7.6 billion of funding for low-carbon electricity agreed in the levy control framework. The Quad discussions, to which I attributed the successful agreement on a decarbonisation target, also concluded an arrangement on the levy control framework at a level that exceeded some expectations. The Government’s commitment makes it clear that we must support low-carbon generation to achieve our ambitions.

I do not want to overstate the matter, because overstatement is not my way, but the levy control framework is a landmark decision that has received widespread support from the sector, consumer groups and business representatives. They recognise that it adds certainty and opportunity for those who are making their own business plans, because they do so knowing that they are supported by a Government characterised by clarity and determination.

That brings me to the last of my four supplementary points—[Interruption.] No, I said there would be four supplementary points following my three points, which makes seven in total.

The Government are not complacent. We are taking practical steps to decarbonise the economy while ensuring security of supply. I will say a word about consumers, because they have been mentioned. Security of supply is the defining salient for a Government, because if we were to fail to provide that, we would not only damage the well-being of our citizenry but jeopardise the performance of our economy. Energy supplied securely at the right cost is critical, both socially and economically. Also, we must be mindful of the cost to consumers, which we spent a good deal of time debating this morning.

John Hayes (Conservative, South Holland and The Deepings)

This gives me a chance for another peroration, so with that prospect in mind I give way to my hon. Friend.

Peter Aldous (Conservative, Waveney)

I am grateful to the Minister for giving way and for explaining so passionately the reasons for the new clause. One reason that has been advanced for including a decarbonisation target in the Bill is that it is needed to prevent a possible hiatus in investment in the renewable sector in 2020. Does the new clause provide a framework within which one can establish a decarbonisation target before 2016?

John Hayes (Conservative, South Holland and The Deepings)

It provides the opportunity to put in place a decarbonisation target in line with the fifth carbon budget. That is the link. We are not talking about a particular date for its own sake, but a date that relates to the fifth carbon budget.

I know that my hon. Friend is a great champion of his constituents and their economic interests, and I met some of them with him this week. I simply tell him that Dr Kennedy, the chief executive of the Committee on Climate Change said:

“What you have to do is find a balance between providing certainty to investors, particularly to supply chain investors, and then have flexibility to respond to unforeseen circumstances. You do not want to write a blank cheque to the industry. Let us be clear about that. It cannot be decarbonisation at all costs. That is why you design a target to allow you to relax the ambition, for example, if costs do not come down as we currently think that they will.”––[Official Report, Energy Public Bill Committee, 17 January 2013; c. 98, Q283.]

Dr Kennedy—not me—made the case for flexibility. He said that we should fix the target in terms of prevailing circumstances, anticipating the fact that we will need to adjust our thinking according to those circumstances. The advocates of decarbonisation are clear and resolute that we have this right. I will give way one last time before I bring my remarks to an exciting conclusion.

Barry Gardiner (Labour, Brent North)

Does the Minister not recall that when Dr Kennedy was making those remarks, he said that that was precisely why the Committee on Climate Change had accepted that the flexible target could be as much as 100 grams per kWh, and that it should not simply be confined to 50 grams? In fact, I think the figure that was being talked about at that stage was 40 to 60 grams.

John Hayes (Conservative, South Holland and The Deepings)

The hon. Gentleman makes a point that he has made already, and by amplifying it he cements the point that the range and the figure both matter. The argument is not that when the target is set the figure will not matter; the argument is about when the target should be set and in what prevailing circumstances. As I said when we debated the matter a day or two ago, we are arguing not about a principle but about a process. On Second Reading, I accused the Opposition of dancing on the head of a pin. I slightly regret doing so, because it was a tad critical and I do not like to be unnecessarily hard on them. That is not entirely fair, however; I think that they are dancing on the head of something slightly bigger than a pin—perhaps a 6-inch nail. None the less, let me be clear: agreement on this matter and on the Bill is far more significant in terms of the signal it sends out beyond this place than a disagreement about process or mechanism, which is essentially what we are debating in respect of the new clause. I do not necessarily expect the Opposition to agree with every word, but I hope that they will at least agree with that sentiment, and on that basis I beg to move that the clause be read a Second time.

Tom Greatrex (Labour, Rutherglen and Hamilton West)

It is a pleasure to welcome you back to the Chair, Mr Leigh. It seems like only yesterday that we were discussing the decarbonisation target; in fact, it was the day before yesterday, and you were in the Chair at the time, so you heard the debate about the target. Now we are debating Government new clauses on the process of setting the target.

In the third or fourth attempt at his peroration, the Minister invited us to agree with his view that we are talking not about the signal we send but about a process, and that the signal is more important. I will explain why I think that, perhaps unintentionally, the Government new clauses send some very worrying signals.

Earlier in his comments, the Minister said that the Government new clauses were designed to achieve decarbonisation at the least cost option, and the clauses were consistent with that aim. The logic of that position would therefore dictate that he agree with the Committee on Climate Change, which said that 50 grams per kWh was the least cost option. I appreciate that logic does not always follow in oratory, but I will leave him to consider that point.

Earlier this week, in this very room, the Government rejected setting a 2030 decarbonisation target; our discussion was on Tuesday morning and the Division was on Tuesday afternoon, if I recall correctly. I was not aware until after I left the Committee Room that on the same day—indeed, at about the time that we adjourned—the Deputy Prime Minister was giving evidence to the Liaison Committee, and made a point about being in support of a 2030 decarbonisation target; in fact, he was effusive in his explanations of its importance and his reasons for supporting the target. That was on the very same day that two of his Members of Parliament voted against having such a target in the Bill. The hon. Member for West Aberdeenshire and Kincardine referred to the reason for that being issues around what was in the Liberal Democrat manifesto. We all know how important the contents of Liberal Democrat manifestos are. That was the reason he gave, and the reason why we have missed the chance to have a decarbonisation target in the Bill and instead are talking about Government new clauses to give the Secretary of State power to set a target.

I do not think that we need legislation to give the Secretary of State a power to set a target. He can set a target already, at any point, using any other vehicle. In our sitting on Tuesday, the Minister said

“let us be absolutely clear at the outset: this is not a debate about principle, as some have argued. The principle, that it would be useful and of value to set such a target, is established. The debate is not about that, but about process and timing.”––[Official Report, Energy Public Bill Committee, 5 February 2013; c. 489.]

That seems to be a way of saying, “Move along now; there’s nothing much to see here.” However, despite the Minister’s assurances that the matter of whether a target is useful and of value has been settled, the wording of the Government new clauses seems to indicate something quite different. New clause 8(2) states:

“The Secretary of state may by order…set or amend a decarbonisation target range in relation to a year.”

As we have already debated many times, wording is very important. Indeed, some of the arguments the Minister and his ministerial colleague have used against Opposition amendments have been about the precision of their wording. The wording of the Government new clause states that the Secretary of State “may” set a target. It does not say that he will, must, or is obliged to; simply that he “may”. That means the argument about whether there should be a target is not settled, and it certainly does not accord with the Minister’s statement in the debate earlier this week that the principle of setting a target “is established.”

The Government have already set themselves a number of targets on various issues. There is a target for cloud computing, which was set in 2011; a target for the level of food bug in chickens, which was set by them in 2010; and a target for the use of sustainable palm oil, which was set last year, and about which I understand from correspondence there will soon be an order involving the Department of Energy and Climate Change. The Government do not always meet their targets, but the point is that targets have already been set. Although my expertise on sustainable palm oil may develop ahead of the introduction of the statutory instrument, I cannot pretend that it is huge—I know very little about cloud computing or about chickens and bacteria—but I doubt that the process of setting those targets was as confusing and contradictory as this one.

Secretaries of State set many targets, and it is not always necessary to use primary legislation to give them the power to do so. Legislation is used to set such targets, but the Secretary of State already has the power to set a target to which the new clauses will add nothing. The impact of the new clauses—the point made, in his very constructive way, by the hon. Member for Waveney—is that the earliest year in which the target might be set, if it is set at all, is 2016, which is when the carbon budget for 2030 will be set. Crucially, however, there is ambiguity in the drafting of new clause 8.

Barry Gardiner (Labour, Brent North)

Will my hon. Friend remind me whether that target is also after the next general election?

Tom Greatrex (Labour, Rutherglen and Hamilton West)

It is, indeed, after the next election.

Dan Byles (Conservative, North Warwickshire)

We can move the general election back.

Tom Greatrex (Labour, Rutherglen and Hamilton West)

The hon. Gentleman suggests an extension to the Fixed-term Parliaments Act 2011 to take us even further, which may be the only way he can be on the Government Benches after the next election.

Despite the Government’s assurances that 2016 is the intended date, nothing in new clause 8 will compel them to set a date at that point. It provides only that

“the first decarbonisation order may not be made before the date on which the carbon budget for the budgetary period which includes the year 2030 is set.”

The Government cannot set a target until 2016 at the earliest, but there is nothing to compel the Secretary of State to set a target in 2016, 2017, 2018 or any other year.

The Minister argued that it is right to wait until the carbon budget for 2030 is set and that, in any event, we already have the toughest climate change targets in the world. However, the hon. Members for North Warwickshire, for Bracknell, for South Thanet and for West Aberdeenshire and Kincardine made this recommendation in the Energy and Climate Change Committee’s pre-legislative scrutiny report:

“Although statutory carbon reduction targets are set out in the Climate Change Act 2008, these are economy wide, rather than sector specific. We conclude that providing greater clarity about the contribution that the power sector is expected to make towards meeting these targets would help to provide certainty to investors.”

Andrew Buglass from the Royal Bank of Scotland and the Low Carbon Finance Group, said in his evidence at the start of the Committee’s proceedings that a 2030 target

“is absolutely critical from the conversations I have with potential supply-chain investors because they quite rightly point out that it is very difficult for them to take investment to their board if they really only have visibility on three or four years-worth of work.”––[Official Report, Energy Public Bill Committee, 15 January 2013; c. 51, Q154.]

The kindest way—I am disposed to be kind, as far as I can—of describing the Government’s new clauses on the decarbonisation target is muddled. To be clear, they may or may not, at some point in the future that has yet to be defined and may in fact never be defined or reached, set a decarbonisation target range for the carbon intensity of electricity generation in Great Britain, although the definition of carbon intensity and the means of calculating it can be changed by the Secretary of State, who by the way can revoke the order.

The lack of clarity in the new clause is concerning, even by the standards of a Bill that has significant gaps. The subsection on the revocation of a decarbonisation order is almost incomprehensible:

“The Secretary of State may not revoke a decarbonisation order unless, in respect of each year in relation to which the order sets a decarbonisation target range, a decarbonisation target range remains in effect.”

One way of reading that is that the Secretary of State can revoke a target only if it remains in effect, which I do not consider hugely clear.

I looked back at our discussions earlier this week, because the Minister made a number of comments. On several occasions, he suggested that the debate we were having was not so much about whether a target should be set but more about the methodology, process and timing for setting the target. He said:

“The principle, that it would be useful and of value to set such a target, is established.”––[Official Report, Energy Public Bill Committee, 5 February 2013; c. 489.]

A little later, he said that

“the Government intend to do just what the members of the Committee—particularly those who have spoken from the Opposition Benches, but actually from the whole of the Committee—have said is necessary: to signal our intent”,

and then:

“So there is no debate about our ambition, about the principle or about the efficacy of establishing a target that allows us to gauge the effect of the Bill.”––[Official Report, Energy Public Bill Committee, 5 February 2013; c. 490.]

He also said:

“We are arguing, are we not, about how that power is expressed and when that target is set? There is a debate about not the fundamental matter of a target but the detail of the Bill.”––[Official Report, Energy Public Bill Committee, 5 February 2013; c. 496.]

If that is the case and it is the Minister’s position, the new clauses are deficient, because they give his Secretary of State and future Secretaries of State the opportunity not to set a target at all. It is not only about the timing and the process but about whether there is a target. That returns to the points made by the Minister during his contribution. We have heard them a number of times, and I and almost every Member who has spoken in the Committee during the course of the past few weeks talked about the clarity and certainty and their importance for investors.

I had an e-mail earlier today from a significant potential investor in this country, a foreign company seeking to invest in our manufacturing and supply chain. The e-mail commented in particular on proposed new subsection (5) in new clause 8:

“The earliest year in relation to which a decarbonisation target range may be set is 2030; and the first decarbonisation order may not be made before the date on which the carbon budget for the budgetary period which includes the year 2030…We are puzzled by the logic of legislating to prohibit the setting of a carbon-intensity target for any year before 2030. This means that not only would HMG not commit within the Energy Bill to set a target before 2016 for the year 2030 but it would go further than that by prohibiting the setting of a carbon-intensity target for any earlier year, regardless of future circumstances. What can be the logic underlying such a proposal; in tying the hands of future parliaments in this way?”

The provision appears to send a signal to investors that does not add to clarity and detracts from our current position.

Will the Minister address another point? Proposed new subsection (8) repeals section 5 of the Energy Act 2010 which, among other things, obliges the Secretary of State to report on the progress of the development of carbon capture and storage. The Minister has said a number of times how much he values the potential of CCS—as I do too; he said why it is so important and that it is a crucial part of the Bill. Can he explain therefore the rationale behind repealing the duty to report on CCS? It appears to send a signal to investors that the Government are not that serious about it. Added to the other deficiencies I highlighted, it all sends a signal that important as he says the Bill is, and as probably most of us agree because we have devoted a huge amount of time and effort to understanding it—Opposition Members probing it and Government Members defending it—it is actually not important; what is important is the gas strategy the Government produced with the help of the Treasury. That is why we are particularly concerned about the new clauses.

I finish with another quote from the e-mail I received this morning. At present, I am not at liberty to say which company it is from, although I understand that in the near future—before Report, I suspect—it and others may make their views much more public, because the issue is crucial to future investment. It is a serious, large overseas company that wants to invest in our manufacturing and supply chain, which we all say is so crucial to driving jobs and growth in the UK. The company said:

“We fear that the inevitable message to the wider world would be one which increases rather than assuages concerns about the decarbonisation commitment with all the predictable consequences for the pace of development, economic growth and job creation in the UK which is under consideration by major manufacturing companies.”

Those concerns are driven not by politics, but by a company that wants to invest, is seeking to invest, and has the capital to invest, but it will make the decision to invest only if it is clear about where the Government and the country are going. The new clauses were tabled to deal with the issue. It was flagged up by the Select Committee, in pre-legislative scrutiny, by Members on both sides of the House, even by the Deputy Prime Minister yesterday, by the Liberal Democrat conference, and by the plethora of organisations and companies we cited earlier. That is why the matter is so important. The new clauses do not do the job. They are not good enough, and they give the Government a way out of even seeking to set a target, despite the way they are described. Those are the reasons why the new clauses are not good enough, and why we oppose them.

John Hayes (Conservative, South Holland and The Deepings)

The shadow Minister claims the new clauses are lacking. Let me go through some of his points in particular detail. The need for a power to set a target if we want a legal duty to meet a target is vital, and is provided in the new clauses. That is the duty found, as he knows, in first part of new clause 8. The Secretary of State cannot revoke a decarbonisation order unless there is still a target range in place. Our reporting framework provides for an annual report on decarbonisation as a whole, and there is no need for a three-yearly report under the 2010 Act. The shadow Minister knows that Government provisions take the critical step of establishing legal authority for the setting of a future binding decarbonisation range for the power sector here in the new clauses.

If the Government were, as the shadow Minister describes, looking for a way out, would we have put the power in the new clauses in the Bill at all? Would we have chosen to set these constraints on a future Secretary of State when considering the fifth carbon budget? Would we have been debating this matter at the length we have in the Committee? Of course the answer to all those questions, as the Committee and you, Mr Leigh, will know, is no.

It is critical that the Committee understands that the issue here is not one of principle. The new clauses provide that power. The hon. Gentleman is right, and I made the point to my hon. Friend the Member for Waveney. It is true that if the target is set in concert with the fifth carbon budget, we cannot say that it must be done in a given week, on a given day, or in a given month. It will be done in harmony with the information provided in the context that that information gives rise to in the conditions prevailing at the time. That is at the very heart of the Government’s position. Is that inflexibility unreasonable and unwelcome? It is certainly not unwelcome to the Committee on Climate Change, as I said earlier.

I want to be brief, but I am a sucker for the hon. Member for Brent North, so I give way to him.

Barry Gardiner (Labour, Brent North)

The Minister said, “Would we have put the power in the Bill. No.” He also said, “Would we have spent all this time discussing it? No.” Would we have put “may” instead of “must” in clause 2? The answer is also no.

John Hayes (Conservative, South Holland and The Deepings)

A reasonable feature of opposition is not cynicism, but suspicion about Governments. Suspicion is an important part of the business of opposition, and a healthy part of the interface between both sides of the Committee. There is scepticism rather than cynicism, and I do not criticise hon. Members for that. I absolutely know, however, that while there is arguably an illogicality about who I am and what I say—in the hon. Gentleman’s eyes at least—there is no lack of feeling. I reject the Enlightenment’s excessive emphasis on logic. I believe that the Bill is about intent, feeling, belief and purpose, and those are things that began long before the age of reason and will last long after it. Such things are at the heart of my party and my values. The Bill is full of that belief and purpose. It is full of the determination and drive that has typified the Governments led by my party through the ages. It is with that spirit and that determination, with that belief that the Bill provides certainty, with that understanding that, while targets matter, weapons matter most. The Bill provides the weapons, which no Government before us have provided, for us to hit the targets. It is in that spirit that I commend the new clauses to the Committee. Should the Opposition choose to divide the Committee, we would welcome that as well, because it is their right and, some might say, their duty.

New Clause 9 - Matters to be taken into account

New Clause 10 - Further duties of the Secretary of State

New Clause 11 - Meaning and calculation of “carbon intensity of electricity generation in Great Britain”

New Clause 12 - Fees for services provided for energy resilience purposes

John Hayes (Conservative, South Holland and The Deepings)

I beg to move, That the clause be read a Second time.

Tom Greatrex (Labour, Rutherglen and Hamilton West)

I want to ask the Minister about a couple of points regarding new clause 12, because I was not immediately clear on the thinking behind the clause. As it was tabled late there were no explanatory notes available; I sought some from his Department but it was not able to provide them, so perhaps the Minister could explain. The letter that accompanied the amendment stated that the charging power of the new clause will enable DECC to charge fees for providing energy-resilient services in the event of a disruption or threatened disruption to energy supplies. This will allow DECC to offer support services to businesses and to set fees for those services, in line with Government policy.

I wonder whether the Minister could say a few words about what disruption or threat of disruption is envisaged in this new clause, and whether this includes situations where there is a threat of a blackout, or disruption that arises from the possibility of industrial action? Could the Minister clarify to whom the fees charged under this new clause would apply, and what discussion he had with stakeholders about this new clause? I was not clear why this new clause was being included at such a late stage, and why it was not included in the draft Bill and therefore subject to the pre-legislative scrutiny that was undertaken. Could the Minister explain a little bit more for the record, given that there were no explanatory notes available when the clause was tabled?

John Hayes (Conservative, South Holland and The Deepings)

That is a perfectly reasonable set of questions, which I will be delighted to respond to. This clause is a minor provision, as the hon. Gentleman implied. It will provide my Department with the ability to charge fees for providing energy services in the event of a disruption or threat of disruption to energy supplies. It will allow the Government to recoup some or all of the cost of support services provided to businesses, and to set appropriate fees for those services, as the hon. Gentleman suggested. It is an enabling power, and does not provide specific powers to charge for any specific service, set any fee or charge any rate.

I will give a brief explanation of its reason and purpose. Widespread disruption to fuel supplies was threatened last year during an industrial dispute between haulage companies and their drivers. That incident revealed the need for robust contingency plans to be put in place to safeguard supply. In those terms, supply essentially means the well-being of our citizens and the supply chains of goods and services that feed that well-being. The increasing possibility of floods or other emergency circumstances, such as extreme weather events, and the potential impacts of other risks, such as cyber-attacks, energy security and critical plant closures, have caused us to consider closely our resilience plans. We have been discussing what those plans should look like, how they might be framed and how they might be appropriate to the particularities of the emergencies I have described. The emergency might be of all the kinds—and others—that I mentioned.

Barry Gardiner (Labour, Brent North)

Will the Minister confirm that the powers might also be used in relation to a strike, perhaps of lorry drivers or others who withdraw their labour in respect of the delivery of fuel?

John Hayes (Conservative, South Holland and The Deepings)

Yes, it might be that. As I said, the industrial dispute last year is an example of such an emergency. The situation is certainly not limited to that kind of emergency. The powers described by the hon. Gentleman are enabling powers, allowing us to apply the powers to specific circumstances. The new clause does not specify the precise nature of the emergency, nor should it.

Barry Gardiner (Labour, Brent North)

In such an eventuality, whom might the fees that the new clause speaks of be levied against?

John Hayes (Conservative, South Holland and The Deepings)

The powers enable DECC to set fees for the provision of services. The new clause does not specify the organisations and individuals who would be charged. The service would be provided on a discretionary basis and the fees would be set in a way that provides transparency on the character of the fees, who will be charged, when, and how. The power does not specify the matters described by the hon. Gentleman. The character of the emergency would determine the kind of services that need to be procured, who might provide them, how much they might cost and how we might recoup the money for them.

The flexibility that is implicit in the enabling power is there not because the Government want to be capricious, but because the Government would need to respond to a set of circumstances the nature of which, by their very kind, cannot be anticipated.

Barry Gardiner (Labour, Brent North)

I am grateful to the Minister. He is helpfully trying to elaborate, but my question was more specific. What I am seeking to establish is, if a union took its members out on strike and that caused a disruption in the supply of energy, is it a possibility that the fees for the services that were put in place in order to replace that labour would be charged to the union? Is the new clause intended to be a strike-breaking clause?

John Hayes (Conservative, South Holland and The Deepings)

If there was an event that disrupted the supply of energy products—I am using that term broadly, because of the variety of emergencies that could lead to such disruption, whether that be a natural hazard, industrial action or malicious attack—the Government would certainly want to be able to procure services flexibly and then to charge accordingly. The hon. Gentleman has given one example. One could envisage a scenario of the kind that he described, but we do not have anything particular in mind. We have not worked out a set of fees, nor have we defined a set of circumstances in the precise way that he described.

Barry Gardiner (Labour, Brent North)

I am grateful to the Minister, because I think the turf is beginning to be exposed. Will he clarify, in relation to the example that I have outlined, whether such fees would be levied against the normal recipients of the service, or could the fees be levied against the union that had withdrawn its labour? That is the essential point I am trying to establish, because if it is the former, I feel more relaxed than if it is the latter. If it is the latter, I for one would wish to vote against it.

John Hayes (Conservative, South Holland and The Deepings)

The hon. Gentleman has now been very clear. I wholly appreciate the point. It will be charged to the companies who would use the service, not the unions. I do, by the way, for the benefit of the record, declare my interest as an associate member of the Association of Teachers and Lecturers. I do not imagine it would be involved in this, but none the less one likes to be scrupulous about such matters. So, not the unions, is the answer to the hon. Gentleman’s specific question.

The shadow Minister asked why this was not in the draft Bill. The issue was raised by the Treasury during the period of scrutiny. Frankly, I would have liked it to have been prepared for introduction but my officials have been working on it. Given its character, I have asked for it to be introduced now because it is important that we have these enabling powers. The Bill is an important vehicle for that. I am delighted to have had this short debate about it. Notwithstanding that these are very important questions, I do not think these powers are politically contentious. They are presented very much in the spirit that I have made the case for them, as enabling powers to deal with a range of emergencies. Frankly, until we know quite what the emergency looks like, it is hard to be more specific about the scale of response, the source from which that response would be provided or, indeed, the fee involved. Disruption to energy supply is at the very heart of this and the clauses are here because of the importance that has for the national interest.

Barry Gardiner (Labour, Brent North)

One further possibility in reading sub-paragraph (2) has just occurred to me. If the police or the Army were used to clear a way for transport of fuel that was deemed necessary under these clauses and the clearing of the way was against an official union strike and picket, can the Minister be equally explicit that there would be no recourse to charge the union for the clearance of the road and from any blockage by the picket in order to maintain the supplies? He is being very helpful and he will see that I want to nail him absolutely on this point.

John Hayes (Conservative, South Holland and The Deepings)

Again, that is a perfectly reasonable question. Let me answer by giving some examples. I did not expect such a long debate on this. Is it not delightful that we are having it? It is important that all these things are scrutinised in detail and the Opposition are doing a fine job in testing me as I wish to be tested so that the Bill is right. Let me give some examples: the personnel that the Government could provide in the event of the widespread impact on workers of pandemic flu; equipment or vehicles that would be needed in extreme weather conditions to carry out repairs or to clean up an area effectively; the provision of assets to enable the critical component supply chain to remain viable in those kinds of events, or different kinds of events, in the short term until alternative options are identified. Those are all examples of where it might be appropriate to charge a business.

As I said, the genesis of our re-examination of our capabilities in this area was the widespread disruption to fuel supplies resulting from industrial action, but this is not solely about that kind of event; it was just that that event stimulated and encouraged us to think afresh about the provisions that we had in place. However, because the hon. Gentleman clearly wants a cast-iron assurance on the matter that he raised about the possibility of the unions being charged, let me say that the answer to his question is no, they would not be.

Tom Greatrex (Labour, Rutherglen and Hamilton West)

I have a different point from the one my hon. Friend was pursuing. Given that the Minister said that this clause was some time in the gestation, which is why it was not in the draft Bill, did that time include consultation and discussion with the Road Haulage Forum, which is the tripartite body that was established and then reinvigorated after the recent dispute, to ensure that it is clear about the intention and consequence of this clause?

John Hayes (Conservative, South Holland and The Deepings)

Yes. We have had discussions with both hauliers and the military, because of the possible need to involve the military in an emergency situation. I emphasise that, again, these are enabling powers and if any charges were to be made, they would be made in full consultation with the organisations concerned and they would either be based on full-cost recovery or set at a lower level, which the market could support. I am very happy to commit further that that process will be transparent. I would be more than happy to ensure that any calculation or discussion of that kind was open in terms of providing transparency about how any fees have been calculated and on what basis. Yes, of course, we have had discussions with a number of parties that might be involved in such an emergency circumstance.

With that, I hope that we can draw these important matters to a conclusion. Once again, if I may do so through you, Chairman, I thank Members for giving us the opportunity to have this debate and I hope, on that basis, we can move swiftly on.

New Clause 13 - Power to modify energy supply licences: domestic supply contracts

New Clause 14 - Section [Power to modify energy supply licences: domestic supply contracts]: procedure etc

New Clause 15 - General duties of Secretary of State

New Clause 16 - Consequential provision

New Clause 17 - Powers to alter activities requiring licence: activities related to supply contracts

New Clause 1 - Payment of winter fuel allowance to pensioners off the gas grid

Michael Weir (Scottish National Party, Angus)

I beg to move, That the clause be read a Second time.

It is a pleasure to appear under your chairmanship this afternoon, Mr Leigh. The new clause is on a topic I have raised many times in this House. In fact, I introduced a private Member’s Bill on it, which had support from hon. Members of all parties, including the my hon. Friend the Member for Ynys Môn and the hon. Member for West Aberdeenshire and Kincardine. That demonstrates the depth of concern over the off-gas-grid energy market, which we touched on early in our debates. It is important because 15% of all households in the UK are not on the gas grid and 32% of off-gas-grid households are in fuel poverty. Double the number of off-grid households are in fuel poverty compared with on-grid households. Not all of them are pensioners, but the statistic is stark.

The new clause does not seek to extend winter fuel payments to additional groups, nor does it tread on the contentious issue of means tests, which concern some hon. Members. It is tightly drawn to give relief to a particularly vulnerable sector: pensioners who are off the gas grid.

As all Committee members know, the price of all forms of energy is rising and home fuel oil is no exception, but there is clear evidence that the price of home fuel oil rises in early autumn and stays high over the winter period. If hon. Members look at www.valueoils.com, which sells oil, they will read:

“Winter months are typically more expensive than the summer given the rise in demand across Europe, the summer months of June and July will usually provide the lowest rates.”

The graph on the site shows a dramatic increase in all areas of the UK over the winter months. It is important to note that it is not only an issue for Scotland; it is as much an issue for the rural areas of Wales and England as it is for the highlands and islands of Scotland. Figures from the Oil Firing Technical Association suggest that a typical rural household could have saved £170 if heating oil was bought in June 2010 compared with January 2011, which would nearly double the value of the winter fuel allowance.

When I introduced my private Member’s Bill, the House of Commons Library produced a note that said:

“The average costs of heating and providing hot water for a typical three bedroom house with LPG have been estimated at around £2,300 per year (based on April 2012 prices with a conventional boiler), heating oil is thought to cost around £1,700 and gas around £1,200.”

Those are very significant differences.

It is also worth noting that over the past four years, the cost of heating an average home with propane or home fuel oil has increased by £850 and £750 respectively, while gas has increased by £400—a significant figure, but much less than the off-grid supply. Not only are off-grid homes more expensive, but the costs are rising much more sharply. In short, it costs almost double to heat a home with LPG than a home with access to the mains gas grid. It is also important to note that the main use of LPG and home fuel oil is heating, so although the homes generally have electricity, they still face greater costs.

Traditionally, the Government have called for an extension to the mains gas grid as one means of tackling the problem; indeed, the Scottish Government recently announced a new scheme to do just that. Realistically, such schemes will help only those with gas mains nearby. Even then, the costs of linking to a gas main can be substantial and it will never happen in many rural and island areas where there is no gas grid.

The problem in many rural areas is exacerbated by the fact that much of the housing is old and constructed in a way that makes it difficult to install energy-saving measures, such as cavity wall insulation.

I am sure the Minister will tell me that those households will receive the same winter fuel allowances as pensioners on the gas grid, but the crucial difference is how the energy is delivered. Those on the gas grid will receive their winter fuel bill around the time that the winter fuel allowance is generally paid and it therefore works very well for them. Indeed, in their explanatory notes to the regulations that last amended the benefit, the previous Government specifically said:

“They are paid in a lump sum each winter to ensure that money is available when fuel bills arrive.”

That is not the case for those off the gas grid. They face the difficulty of having to pay for their LPG or home fuel oil up front at the beginning of winter, well before they have the benefit of the winter fuel allowance. Many find it difficult to do so and may well not fill up the tank completely, leaving them having to do so in the depths of winter, which brings problems of its own, as we have seen in recent weeks.

The OFT did a report and found that there were many competing suppliers in the market, but that by definition many of those were small suppliers. Although some of the larger players offer greater flexibility in payment, many smaller ones cannot. In reference to the earlier debate on new clause 6 and tariffs, it is interesting that the home fuel oil market has no tariff as such. Many people, when they phone to order the oil, are told the price for that day. That is not necessarily the price that is charged, because the price depends on what the price is on the day of delivery. Even when they order the oil, they cannot be sure how much they will have to pay, and that causes a great deal of concern. The price of fuel often rises quite substantially as winter approaches, and even those suppliers who offer a fixed winter price do so at a higher price than the summer price.

The current winter fuel allowances are paid as a result of regulations that specify a date by which pensioners must apply. It is worth noting that once they are on the system, they do not have to apply every year. If the Government’s problem with the new clause is on having an earlier date—that seems to be the import of their response to a report by the Energy and Climate Change Committee in 2012—they could keep the September date and simply allow payment to off-grid gas consumers at an earlier date from year two.

I have drawn the clause as simply as possible to allow the Government to look at regulations to implement it. There is nothing revolutionary about my proposal; it simply seeks a minor change to begin to address the problems of off-grid gas consumers by targeting a particularly vulnerable group. None of the problems are insurmountable with political will.

I have raised this issue before. I was pleased by what the Minister said about the possibility of a cross-party grouping, because I raised that with the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb) after discussions that I had with at least one major supplier indicated that it was at least prepared to look at some sort of social tariff idea. I believe that there have been some discussions with the Department for Work and Pensions on the matter, although I am not sure how far they have progressed since the industry body is now also becoming involved in this matter.

There is some movement on the matter, but for so long off-grid gas consumers have been put away and labelled as too difficult to deal with. As the Bill deals with tariffs and trying to get a better deal for gas and electricity customers, we should not forget that group yet again. The new clause is one way of doing it. It is not the only way, but it would give immediate help at relatively little cost.

Gregory Barker (Conservative, Bexhill and Battle)

I thank the hon. Member for Angus for raising this issue. We have an opportunity to go over ground that we have already covered to a considerable degree in our earlier debates, but I will resist that. I reiterate that I understand and appreciate his concerns about the pricing and supply of fuel for those who are not connected to the main gas grid. Many Committee members have a number of constituents affected in that way.

Winter fuel payments are made under the power contained in section 138(2) of the Social Security Contributions and Benefits Act 1992. Section 138 does not require the Secretary of State to make regulations for early payment of winter fuel payments to those not connected to the mains gas grid, as the new clause will. However, the powers under section 138 could be used to make regulations allowing for winter fuel payments to be made to individuals not connected to the mains gas grid no later than 30 September in any year.

We do not propose to use our existing powers in that way. However, our approach needs to reflect the need to deliver 13 million winter fuel payments a year in the most cost-effective and straightforward way. More than 95% of the 13 million winter fuel payments are made during November and December. That is the most valuable time to receive a payment for the vast majority of the recipients. Paying automatically means that people do not miss out.

I appreciate the logic of what the hon. Gentleman said, but bringing forward payment for that group is not straightforward. We do not hold the necessary information and to require everyone to complete claim forms to collect that information would be expensive and impractical. To send payments outside the normal payment cycle would also add great complexity and expense to the taxpayer at a time when there is unprecedented focus on reduction of calls on the public purse in order to deal with the deficit. We could consider bringing forward the payment date for all 13 million winter fuel payment customers, but we do not believe such an enormous change is desirable.

Let me explain. The timing of the payment currently coincides with the onset of winter, and so comes immediately ahead of the coldest winter months. That gives people the reassurance that they can turn up their heating in the knowledge that they have help towards higher bills. Evidence from the Institute for Fiscal Studies has shown that people put a substantial amount—estimated to be about 40%—of their winter fuel payment towards their fuel bill, even though the payment is a universal and unconditional benefit. Distancing the payment from the cold weather with which it is associated might have a detrimental effect on that mental accounting. People on lower incomes, who are most at risk of fuel poverty, might be more likely—through necessity or temptation—to spend their winter fuel payment on things other than fuel bills if higher winter fuel bills are less imminent.

Robert Smith (Liberal Democrat, West Aberdeenshire and Kincardine)

In the discussion that the Minister’s Department will have with the industry, and the discussions that the Department for Work and Pensions might have, will they look at the role that credit unions and other institutions can play? This is a cash flow problem. These pensioners miss out on buying fuel at the cost-effective time, so they find it more expensive to turn the heating up in the winter when the payment finally arrives.

Gregory Barker (Conservative, Bexhill and Battle)

That is a very thoughtful and useful contribution. I hope that my officials will capture that so it can form part of our discussions. I thank my hon. Friend.

Additionally, if the qualifying week for winter fuel payments was brought forward, say by a couple of months, from the end of September to the end of July, more than 50,000 new customers each year would receive their first winter fuel payment ten months later than is currently the case. That is because eligibility for a winter fuel payment is based on reaching women’s state pension age by the end of the qualifying week. We wish to avoid this negative effect. About 10% of households receiving winter fuel payments use oil, liquefied petroleum gas or solid fuels as their main source of heating. Bringing forward payments would have a disproportionate impact on the majority of older people who receive the winter fuel payment.

We are keen to assist the people that the new clause seeks to target. Older people who are not connected to the mains gas grid will be able to benefit from the Government’s programme of help with heating costs. For example, poorer pensioners might qualify for a warm home discount, now worth a record £130 this winter, on their electricity bills. Cold weather payments of £25 a week, which has been recently increased, go to vulnerable people in spells of exceptionally cold weather. The energy company obligation, which is running alongside the green deal, will ensure that help goes to low-income and vulnerable households to enable them to heat their homes more affordably on a long-term basis and improve the energy efficiency of their homes. Unlike previous schemes, an absolute amount of that funding is ring-fenced for the rural poor. I hope that the hon. Gentleman has found my explanation reassuring. I know that he might be disappointed that we cannot offer him exactly what he was seeking. None the less, I hope that he will consider withdrawing his new clause.

Michael Weir (Scottish National Party, Angus)

The Minister is repeating his “all too difficult” line. His point about the winter fuel payment, if it is paid early, being away from the time when it is needed is wrong. If it was paid early for those who are off grid, it would arrive at the very time it is needed, so I am afraid he has grasped the wrong end of the stick.

Gregory Barker (Conservative, Bexhill and Battle)

With respect, I totally understand what the hon. Gentleman was saying. My point was that it is, I am afraid, a complex and difficult proposition to disaggregate those who are off gas grid from the rest of the 13 million people who receive the benefit. To move it for everybody to earlier in the year so that people who are off the gas grid could benefit in such a way would not be helpful to the vast majority who are not off gas grid. There is not a sense of cohesion there.

Michael Weir (Scottish National Party, Angus)

I understand what the Minister is saying, but I am not sure that that is what he said about—never mind. I do not accept his point about the difficulty. In all other benefits, people have to fill in forms at regular intervals and report changes in circumstances. I do not see that any of that is insurmountable. Having said all that, I appreciate what he said earlier about the possibility of cross-departmental meetings. It is not great, but it is a step forward. I would like to think more about it. I will not press for a Division this afternoon and I beg to ask leave to withdraw the motion.

Alan Whitehead (Labour, Southampton, Test)

On a point of order, Mr Leigh. In the absence of Government amendments relating to demand side reduction, which I had anticipated, is it your understanding that, should we divide on new clause 3, the Committee would then report that the business had been concluded on this subject, and amendments that might then be moved at a subsequent date would not be ruled admissible, because the issue had already been decided by Committee?

Edward Leigh (Conservative, Gainsborough)

I am afraid that that is not a matter for me. Selection and grouping on Report is a matter for Mr Speaker.

New Clause 4 - Market access for independent renewable generators

New Clause 6 - Cheapest tariff

New Clause 7 - Extension or operation of renewable energy in Wales

Albert Owen (Labour, Ynys Môn)

I beg to move, That the clause be read a Second time.

It is a pleasure to speak to this last new clause and to bring proceedings close to an end. The Labour party has been consistent with this new clause. In the previous Bill, we put it forward but did not have time to debate it. We have time now. I am sure that Opposition Members will feel a little aggrieved that we have put many good new clauses and amendments to the Committee but have not had them accepted. I was told that these two Ministers are generous, that at the end of proceedings they may be a little vulnerable and that generosity will shine through. I am hoping that that will be the case.

The new clause is important and would make only a minor change that I hope will be accepted. The Ministers are very reasonable people and support localism, accountability and bringing decision making closer to the people. Seeking these responsibilities for renewable—and just renewable—energy consent on land and offshore, up to 100MW, was part of the Labour party’s 2011 manifesto.

In addition, the Welsh Government wish to exercise the responsibilities. It is part of their programme of building renewables in an imaginative way. There the policies have the support of all the parties in the National Assembly for Wales. They have cross-party support there and I am sure that the Liberal Democrats and Conservatives here would wish to support their colleagues in Cardiff bay by supporting the new clause. It also has the support of the Local Government Association in Wales and RenewableUK.

The new clause has strong support, and would introduce important changes on consent. I know that the Minister has voiced his support for local accountability and for communities to be involved when it comes to wind development, for example. The new clause would help that. It would free up the planning system and make it easier for wind farms to be developed offshore and onshore up to 100 MW in Wales. I am sure that that is in tune with his and the Government’s thinking on localism and greater accountability for communities.

The First Minister has taken responsibility for energy measures in Wales, and I know that he has met DECC on a number of occasions. We have new Ministers now—a new Secretary of State and a new Minister of State—so perhaps the thinking will be different from what it has been in the past, or at least that is my hope tonight. The changes would affect the targets that the UK Government wish to reach as well. If the programme in Wales can be pushed forward at a faster pace, it will help the UK to meet its targets in the EU. It is therefore a win-win situation for the Welsh and UK Governments, and for meeting our EU targets.

In that spirit, I believe that the Minister will take on board exactly what has been said, follow his own instincts about local accountability and helping local communities, and support the new clause. It is important that we progress in Wales with renewables. The new clause would not touch the gas strategy, nor would it touch consent for any other form of energy. It would only affect renewables—not nuclear, not gas—so it would complement the Government’s road map for taking renewables forward. I await the Minister’s response and I hope that we can get full support in the Committee, as there has been from all parties in the National Assembly for Wales.

Gregory Barker (Conservative, Bexhill and Battle)

New clause 7 seeks to extend the competence of Welsh Ministers beyond the devolution settlement. It seeks to transfer consenting powers for renewable energy generating schemes of up to 100MW in Wales from the Secretary of State, the Marine Management Organisation and, in the case of smaller onshore schemes, Welsh local planning authorities.

The Government support decision making at the most appropriate level. For nationally significant energy infrastructure in England and Wales, as defined in the Planning Act 2008, we consider that the right decision maker is the Secretary of State. For offshore renewable projects of up to and including 100MW, that responsibility is presently vested in the Marine Management Organisation, under the relevant provisions in the Marine and Coastal Access Act 2009. We believe, I am afraid, that the present arrangements are fit for purpose in that they minimise delays and unpredictability, and ensure investor confidence in the decision-making process.

Our concern is that the new clause would only serve to fragment the decision-making process for renewable schemes in England and Wales, resulting in increased complexity, uncertainty for developers and investors, and more piecemeal and expensive development. That would ultimately pass on greater costs to consumers in England and Wales.

An apparent consequence of the new clause would be to transfer to Welsh Ministers ultimate responsibility for determining three of the five applications to build wind farms of more than 50MW in Powys, which are currently the subject of a joint public inquiry. That would mean that the decision-making responsibility for the three wind farms in question would change halfway—or more than halfway—through the process. It would, I suggest, be not only poor legislative practice to shift responsibility for making decisions while applications are still live in that way, but perverse from an administrative standpoint to split decision making between the Secretary of State and Welsh Ministers, when everybody agrees that the ways in which the different projects impact on each other are a key consideration overall. Moreover, major energy infrastructure in Wales is part of a national Great British infrastructure policy, and powers to consent such infrastructure are an integral component of that policy. The Government therefore believe that both policy and decision-making powers should remain with DECC Ministers.

The Welsh devolution settlement follows that policy, and the Government are clear that any requests for the further devolution of powers to Welsh Ministers should be considered in light of the recommendations of the Silk commission, which is due to publish its report on the second part of its work, reviewing the powers of the National Assembly for Wales, in spring 2014. The Government will need to consider those recommendations carefully before taking any decisions on changes to the devolution settlement.

Albert Owen (Labour, Ynys Môn)

The devolution settlement was reached some 15 years ago. We are now in a position where many renewable schemes are above 50 MW, which is why there is a request for the competence to be reconsidered. Surely the Minister is not saying that the devolution settlement is written on tablets of stone, because there is a lot of bilateral agreement between Ministers here in Westminster and Ministers in the Welsh Government.

Gregory Barker (Conservative, Bexhill and Battle)

Of course I am not saying the devolution settlement is written on tablets of stone, but—as I have set out—we have serious concerns about complexity, fragmentation, uncertainty and, first and foremost, the implications for the devolution settlement. I reiterate that we will consider the matter in the context of the wider devolution settlement in light of the recommendations of the Silk commission in spring next year.

The Government disagree with the new clause.

Albert Owen (Labour, Ynys Môn)

I guess it is down to me to be generous. I do not want to detain the Committee much longer, so I beg leave to withdraw the clause and reserve the right to reintroduce it at a later stage.

Title

Edward Leigh (Conservative, Gainsborough)

May I say what a pleasure it has been to chair this Committee? You have been exceptionally calm and well behaved, and I have much enjoyed the Ministers’ rhetoric, but the Opposition Front Bench team have been altogether more charming.

John Hayes (Conservative, South Holland and The Deepings)

That is a contentious claim, Mr Leigh. Now that we have reached the conclusion of our convivial consideration, all that is left to me is to offer my gratitude, first, to you and your fellow Chairman. You have presided over our consideration of the Bill with immense charm, diligence, sagacity and benevolence.

The series of other people whom I wish to thank include: our Clerks, who have guided both you and us through our consideration and have helped to keep us in order; the Official Report writers, who have, as ever, painstakingly recorded our complex proceedings; the Doorkeepers, who always look after us so wonderfully; the officials and lawyers from my Department, without whom I would not have made the outstanding contribution that I have to this Committee, for which they deserve the vast bulk of the credit; and officials from the Ministry of Defence and the Department for Work and Pensions, who have been here to support the Government through various debates.

I also thank my fellow Minister, my right hon. Friend the Member for Bexhill and Battle. We have been wedded during these few weeks, have we not? Given our respective views that is a frightening prospect, but we have worked closely together. I am also immensely grateful to my Parliamentary Private Secretary, my hon. Friend the Member for Central Devon, to my right hon. Friend’s PPS, to my Whip and to all other members of the Committee. I include in that, by the way, the members on both sides of the Committee. I draw no difference between the members of the Committee, all of whom have made outstanding contributions.

Robert Peel has gazed down on us during our proceedings. I am not an immense fan of Robert Peel, because of course I do not take on board his radical views about the Corn Laws for one thing, but it was Peel who said:

“Agitation is the marshalling of the conscience of a nation to mould its laws.”

And we have indeed been engaged in moulding the laws of this country through the scrutiny of this Bill. I think that we can all take credit for doing that. The Opposition Front-Bench team have been immensely impressive in the way in which they have held Ministers to account, and that needed to be said on the record. We can also all take credit for the way in which the Committee has taken very seriously the fact that the Bill is for the future, not for the Parliament, and for the country, not for a particular party.

I will leave us, if I may, Mr Leigh, with the words of Yeats, because we have heard too little from him in this Committee. He may be the greatest of all the modern poets. Eliot and Yeats are the only contenders, and Eliot would have said Yeats, so that is good enough for me. Yeats said:

“Every conquering temptation represents a new fund of moral energy. Every trial endured and weathered in the right spirit makes a soul nobler and stronger than it was before.”

I hope that the trial that I have endured and weathered will make me both stronger and more noble.

Tom Greatrex (Labour, Rutherglen and Hamilton West)

Could I join in the thanks to you, Mr Leigh, and Mr Bayley primarily, but also Sir Roger Gale and Mr Hood for the guidance given to us during the past few weeks? I also join the Minister in thanking the Clerks for their wise and considered advice to us, particularly those of us who have not done this before. It has been hugely helpful. I also record our thanks to the Hansard scribes. Being able to make some sense of my notes is a very impressive achievement. I also thank the Doorkeepers. Their skills in locking and unlocking doors have been tested a number of times this afternoon.

I would also like to place on record our appreciation for the Minister’s officials, because I know that they work very hard. There has been a stream of officials coming in and out at various points. I did notice the other day, when we were talking about the nuclear clauses, that a whole group of officials was outside and overheard me saying that I thought we would not be too long on this bit. I was not sure whether they were looking terrified because they had taken everyone out of the office to come here or delighted at the fact that there would not be too many questions, but I think we used the afternoon in another way.

At various times in the course of our consideration, Opposition Members have been accused of being long-winded and, on one occasion, of being surprisingly brief. Overall, though, we have probably—hopefully—got the balance right in seeking to scrutinise the Bill. I thank my hon. Friend the Member for Liverpool, Wavertree, who is on the Front Bench, all the other hon. Members from my party and the hon. Member for Angus, from the other Opposition party represented on the Committee, for their support and assistance in taking us through the Bill.

It would not be right to finish without reflecting on the lead Minister, the hon. Member for South Holland and The Deepings, and particularly his ability—he has done it again today—to tick off some more from his bumper book of quotes. We have heard from a range of different poets and others during the past few weeks, so I will leave us with a quote from Disraeli. I like quoting Disraeli back at the Minister, because I know that he is a fan of Disraeli.

John Hayes (Conservative, South Holland and The Deepings)

My hero.

Tom Greatrex (Labour, Rutherglen and Hamilton West)

A shared hero. Disraeli said:

“As a general rule, the most successful man in life is the man who has the best information.”

While we have been discussing the Bill, sometimes the Government have had more information than us, but that does not necessarily mean that we have not been able to make some successful points. We look forward to returning to some of them on Report.

Robert Smith (Liberal Democrat, West Aberdeenshire and Kincardine)

I would like to associate my hon. Friend the Member for St Austell and Newquay and myself with the thanks to all those who have been involved in making the Committee the success it has been. In particular, I pay tribute to hon. Members on both sides of the Committee for their constructive engagement. As the Minister said, that shows how important the subject of the Bill is to the country and the future.

Edward Leigh (Conservative, Gainsborough)

Thank you for those comments. Meanwhile, I can put on my CV that I have chaired the proceedings on this Bill without understanding much of what has been going on, or indeed having to say a word in favour or against.