Domestic Gas and Electricity (Tariff Cap) Bill — House of Commons, 2018-07-18
Topic: Domestic Commerce
John David Penrose (Conservative, Centre-right): We are nearly there. With fingers firmly crossed, it looks as though this is the last, or last but one, trot around the track for the Bill before it goes off for Royal Assent. I echo the thanks that have come from all sides for the combined and cross-party efforts to get us here. The fact that everyone is rushing to claim a degree of authorship shows the truth of the old saying that success has many parents, whereas failure is an orphan. Thankfully, this is not a failure I was extremely concerned by the Lords amendment as it came to us before the amendment in lieu was tabled. That was not because I disagreed with the principle of a relative cap—in fact, I spoke strongly in favour of relative caps at earlier stages—but because, in trying to install a relative cap, their lordships had made it an open-ended intervention in this market. For people like me—perhaps more on the Conservative side of the House—who are avowed free marketeers, a temporary intervention is very important. An open-ended commitment would create a great deal of unease among many of us, on the grounds that the opportunity for regulatory meddling would be extremely strong, and that the temptation would prove too hard to resist over time I am therefore delighted to see the proposed amendment in lieu. Not only does it not add any fresh powers—it asks Ofgem to use its existing powers, giving it a firm and direct mandate from this House that those powers should be used—but it refocuses the Bill. I for one—I do not think I am alone in this—had become a little bit concerned that the Bill had gone a little off track or off topic in its passage through Parliament The Bill was proposed in the first place in response to an underlying mischief or immorality—that of "tease and squeeze" behaviour. People could start off on a razor-keen introductory tariff and then, without taking any firm decisions, they might find that when the tariff came to an end after one or two years, they had in a surreptitious way become liable for a sky-high default tariff. That would happen without their saying yes to anything, because of the tease and squeeze tactics, particularly of the big six. The central behaviour, which is deeply embedded in this market, of taking advantage of people’s loyalty and inertia—their stickiness, as my right hon. Friend the Minister said—was griping everybody and making them feel that customers were being taken advantage of. That was why the Bill was first conceived, and why it rightly garnered so much support throughout the House The amendment in lieu brings us back to that central point. It reminds us why we are here and, most importantly, it means that Ofgem will no longer have an excuse to look the other way. We all want this temporary price cap, when it comes to an end, not to be needed any more because the market—the big six in particular, but also the market as a whole—will have learned the error of its ways and will stop behaving in the way that has griped everybody, so that there is no need for further interventions. However, I do not think I am alone in being a little bit cynical and saying that that might not happen, even with all the other interventions and reforms that Ofgem is rightly introducing to try to sharpen competition, improve consumer choice, and both improve the behaviour of suppliers and help us as customers to use our freedoms more actively It is just possible that, even after all the changes introduced by Ofgem during the period of the cap, the market is not yet properly reformed. We are all here because Ofgem has in the past refused to use the powers it has. I have had conversations with senior people in Ofgem, as I am sure have many others in the Chamber, asking, "Why don’t you get on with it? Why don’t you use these powers? You’re being weak-willed, and you are pathetically—like wet lettuces—not doing what you are there for. What’s the point of having an economic regulator if you aren’t going to stick up for people who are vulnerable and people who are being taken advantage of?" We all got fed up with arguing that it should do so, and it would not do so, and that was why the Bill came into being. The amendment in lieu should solve that because, for future reference, it should ensure that Ofgem has a backbone statutorily inserted into it We all hope that those powers are not needed, and that the reforms designed to sharpen competition mean that they will never be needed, but the amendment in lieu means that they can be used in the future. With any luck, as with a good nuclear deterrent, no one will ever have to press the button, but my goodness me, they will know that they are there. That is the crucial point. With that, I welcome the amendment in lieu. I hope that the message goes out loud and clear to Ofgem that we will not put up with its being weak-willed in the future. It is up to Ofgem to ensure that this market functions properly, not just during the temporary period of the cap, but on an ongoing basis in the future. With any luck, after that none of us will ever have to worry about the energy market’s mispricing again.