See below my contributions to the debate on the Energy Bill on Monday 3rd June:
John Robertson (Glasgow North West) (Lab): On the rules governing what is considered sensitive, who will set the criteria: the companies themselves or the Government?
Michael Fallon: The judgment will be one for the Government, and I want to come on to a proposal on that. I also want to assure my hon. Friend the Member for Daventry, in relation to amendment 164, that there will be public consultation on the draft regulations in autumn. On amendment 170, relative to what is currently required under the renewables obligation, we would remove only redundant information requirements under the fixed price certificate scheme. However, in answer to the hon. Member for Glasgow North West (John Robertson), I am mindful of the points made in Committee on the need to maximise transparency.
John Robertson: I thank the Minister for being generous in taking interventions.
Who will scrutinise the counterparties’ liabilities? We saw how everyone thought that the banks were safe and had plenty of money and that things were good, but it did not turn out that way, and even the Treasury’s own predictions over the last three years have not been met properly. What guarantee can the Minister give, therefore, that the counterparties will have sufficient finances to meet their liabilities?
Michael Fallon: I am happy to give the hon. Gentleman further written assurances on that. He might be on rather weak ground in discussing the regulatory framework put in place for the banks, given that we have had to take immediate and fairly radical steps to improve it, but if I can give him any further reassurances on his main point, I certainly will.
John Robertson: Will the hon. Gentleman clarify something for me? Is he saying that we should not worry or think about our obligations on climate change? If he is not saying that, how does he expect his electorate to pay for what he is suggesting?
Mark Reckless: I am sorry to hear the hon. Gentleman not focusing on his constituents’ heritage. Climate reduction and the carbon issue should relate to cost. The coal price has collapsed globally largely because of the success of shale gas in the US and its export of coal, and that means that the cost of the proposals is now far larger than it was. Global temperatures rose until 1998 or 2000. Since then, projections of an exponential increase in temperature have not been borne out by recent data. We have cut our emissions by 24% since 1990, which I think is larger than any other country. What we are left with is a complete mess of policy in the Bill, with various subsidies interacting and greatly increasing bills for our consumers, and I am not sure what the effect will be on reducing carbon emissions compared with, say, the US, which has had a big decrease.
John Robertson (Glasgow North West) (Lab): Does my hon. Friend agree that we have also not used the current rules properly? The fines that have been imposed of late do not even go back to the people who pay the bills. Does she agree that we should be looking to compensate the people who pay the bills, rather than give that money to the Treasury?
Luciana Berger: My hon. Friend raises an important point. Currently, the fines that are being raised are going into the Treasury, and many questions have been asked about where that money should go.
John Robertson: Can my hon. Friend clarify what she means by turnover, as factors such as the central pot and whether generation is included as well make a big difference?
Luciana Berger: My hon. Friend raises a point we on the Opposition Benches have raised many times before about the challenges we face with our very opaque energy market, where we do not know the true cost of our energy and many of our generators are also our suppliers. We will wait for the secondary legislation to hear exactly what the Government mean by that term, but it is fair to say that we are dealing a lot in this Bill with a broken market, and it is a shame that the Government are not proposing legislation to fix it.
John Robertson: I ask the Minister the same question I asked my hon. Friend the Member for Liverpool, Wavertree (Luciana Berger): what is classified as turnover? Does it just include retail or does it also include generation?
Gregory Barker: I will correct myself if I am wrong, but I believe we are talking about global turnover—we are talking about very significant sums. [Interruption.] This relates to the turnover of the company under investigation. [Interruption.] That was very helpful.
John Robertson: Just for clarification, is “the company under investigation” the mother company as well as the subsidiary company, or does it include all the companies that that company is part of?
Gregory Barker: The hon. Gentleman asks a fascinating and timely question, one which deserves a proper answer. He may have misheard me, because when I said “global turnover” what I actually meant was UK turnover. Nevertheless, that is clearly a very significant amount.
John Robertson: The hon. Gentleman makes a very good argument and I had not thought of going down that road. Does he accept that those small companies could, through no fault of their own, follow what the large companies are doing and get themselves into bother that they did not really think about when they first started doing whatever it was that they did?
Mr Weir: My hon. Friend makes an excellent point. Whereas the big six would be able to take that financial hit, many of the smaller companies would not be able to do so. These proposals would take us down a road that could have serious repercussions. Many small companies are beginning to break into the market. Many of them are particularly strong in renewables, for example, and that is one way in which much of our renewables investment might be generated in the future.
John Robertson: It is a pleasure to follow the hon. Member for Angus (Mr Weir). He was an excellent member of the Energy and Climate Change Committee when it was first put together and I am very sorry that he is not still a part of it—but there is time for him yet, as they say.
I agree with a lot of what the Minister said—I do not pick holes in things just for the sake of it—but it is not my place to worry about whether the big six have financial difficulties or whatever else. Personally, I could not give one jot about any of those companies. They are big enough to look after themselves and they certainly know the rules, because they know how to break them and get away with it.
I support every one of the amendments tabled by my colleagues on the Front Bench. I have no problems with them whatsoever. The only thing I have to say to the Minister is that I was slightly disappointed by his speech. He talked about hard-working families and, yes, I believe that hard-working families should always be looked at and looked after as best we can. My constituency has more than its fair share of elderly people and it has the highest percentage of single women in any constituency in the country, which probably means that most of them will be elderly. That means that they might have some difficulties that other people do not have. There are also quite a number of people who are disabled. We have found over the years that those are the people who do not complain, because they are frightened to, and who do not get the help they probably should get. Once again, we are getting to a stage when people think that their biggest bill is their electricity bill, their gas bill or both. According to some newspaper articles, people will be more worried about how they will pay their fuel bills than how they will pay their mortgage.
I do not worry about the big six, because they are making plenty of money, but we have to nail down what we mean by profit and turnover. Let us take EDF, a large multinational company that is to build a new nuclear power station, from which it will make a lot of money. It also has other power stations in the United Kingdom on which it makes money, and of course it is involved in retail as well, where it says it makes 2% profit. It makes some 17% to 19% profit from generation.
It puts that 19% alongside the 2% when it comes to giving shareholders a dividend, but it tells Government that it is making only 2% profit. The company may therefore put up its prices—SSE did so only last October—yet these same companies are making enormous profits. They are telling people, “Invest in our company because you can get a return for your money.” That is not right.
That brings me to the point that I really want to make about being in default. The Bill is the end or start of a process. The Minister said that 19 cases are going on. Some of them will continue beyond the introduction of the Bill. Will they be judged under the old system, or will there be a “get out of jail free” card as the new Bill takes over? Will there be two different kinds of penalties running side by side?
Gregory Barker: I absolutely assure the hon. Gentleman that there will be no “get out of jail free” card.
John Robertson: That is a very good answer, but the Minister gave an answer earlier that was found to be wrong, so I will wait for a note to come over to him.
Barry Gardiner: I have listened carefully to the debate. Is there not in my hon. Friend’s mind, as there is in mine, a concern that we are putting on companies a financial penalty that will ultimately be borne by consumers? Should we not instead address the real problem, which is directors’ liability? It was noticeable in the recent SSE case that no criminal prosecution for fraud was brought, even though the maximum penalty was imposed. Would it not be better to impose a strict liability on the directors of the companies, so that it is not the consumer who ends up paying the fines?
John Robertson: My hon. Friend makes a very good point, which brings me to the next issue that I wanted to raise: what happens to the money? If we get £1 billion off a company—not that that is likely, because it would be a lot more than we get at present—or even £100 million, surely that company should have to pay that back to its consumers. It should not give it to the Treasury to spend, though I am sure it would spend it in a very nice manner. It should go towards what it was designed for: paying for electricity. That £100 million or £1 billion should go back to the customers of that company. I ask the Minister to look at that.
The Bill is a great deal better than it was when we scrutinised it on the Select Committee. Everything else about the Bill has been rushed. Look at the number of amendments tabled today, and the number of things that we are not being told—the strike price and so on. We are basically being given a promise that it will be all right on the night. We need to know what the Bill is. The Select Committee had five weeks’ scrutiny of the Bill, when normally the period is 12 weeks. Then we waited an inordinate amount of time for the Bill to come back to us. When we got it, we sent it back to the Minister and told him that it was a dog’s breakfast; it was terrible. We then got something else. It has been through Committee, and we have improved it. I implore the Minister to consider the amendments that hon. Members on both sides of the House are putting forward, and seriously look at using the best bits to improve the Bill
further, because this is an okay Bill, but that is all it is; it is not good. It is probably slightly better than what we had at the start, but we still have a long way to go. I ask the Minister to consider that.
I also ask the Minister to look at the issue of people paying their taxes. We see that npower has admitted that it does not pay corporation tax. Another three of the major companies say that they do not pay much corporation tax. I am pleased to say that the two companies with Scottish links say that they do pay their corporation tax, although I would still like to look at the books.
There lies the biggest problem that we have with energy: looking at the books. What are the books? I have talked to Ofgem and to the Minister. What do the books cover? That goes back to the definition of cost and the definition of turnover. Where does the generation element come in and where does the retail element end? What happens to all the money that is made on either side of the box in the middle? That is a real problem. When billions of pounds of profit are made on one side and appear not to be counted, and billions of pounds are missing on the other side so the companies put the prices up, they keep making money but the consumers—the poor, the elderly, the disabled, the hard-working families that the Minister likes to talk about—are all suffering, and it appears that our Government do not care.
We should be doing more. We have even got to the stage where HMRC hired a gentleman called Volker Beckers, who was the chief executive of RWE npower. I bet he knows how to deal with tax for those energy companies. I hope he uses the same skill as he used for RWE not to pay corporation tax to get the same money out of the same company for HMRC.
There is much that is good in the Bill. I hope the Minister will consider the amendments moved by my hon. Friend the Member for Liverpool, Wavertree (Luciana Berger) and listen to what my friend the hon. Member for Angus (Mr Weir) said. Between us all, we will make the Bill better, but we must remember that at the end of the day it is the people who put us here that we should be looking after.