Caroline Flint: As winter bills bite, why Theresa May must take on the Big Six energy giants

When will energy suppliers stop overcharging customers?

When will energy suppliers stop overcharging customers?

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SOME THINGS are to be expected during Britain’s winter weather. Darker nights, storm warnings, freezing fog, trains delayed, gas and electricity bills going up. Another British winter on the way.

Rumour has it a Cabinet sub-committee met behind those dark wood- panelled Whitehall doors to take another look at what the Government can do to tackle overcharging by the Big Six energy companies.

So I was hopeful that in his Autumn Statement the Chancellor Philip Hammond would make a big announcement that the Government would end the scandal of overcharging.

He failed. When I challenged his oversight, he referred to a promised review of how the energy market is working. The Chancellor forgets that a major competition market investigation had already taken place, under his Government.

It is six years since, in opposition as Shadow Energy Secretary, I highlighted how the Big Six energy giants overcharge their customers.

Six years of advising Ministers that energy companies were giving the worst deal to their longest-standing customers.

And six years of pointing out that most consumers were so confused and mistrustful that they gave up and never bothered trying to change supplier. Throughout those six years, a Conservative Prime Minister has occupied 10 Downing Street. The figures are staggering. British households were fleeced about £1.7bn a year since 2012, rising to £2.5bn a year by 2015.

Seven in 10 customers, who never change supplier, the ones paying the standard variable tariff, are about £300 a year worse off by not switching. That’s not my claim. It is the conclusion reached by the Competition and Markets Authority investigation earlier this year.

In 2013, I recall the Government trying to ridicule Labour’s price freeze pledge. Despite public indifference to some of Labour’s policies, it was clear that the public wanted something done about unfair energy prices.

The Government could not shake off the accusation that they were complacent about an important cost of living concern.

Finally, in 2014, David Cameron caved in and agreed to a CMA investigation. The PM thought that would kick the issue into the long grass, beyond a general election.

The CMA’s report is damning. It laid bare the £8bn of unjustifiable overcharging. One billion has been added to that figure since the report was published. A recent survey by consumer champions Which? revealed that 16 million customers are still being overcharged. This overcharging is not just a pressure on pensioners, or on the fuel poor. This has been overcharging of the many by the Six.

Theresa May wants to make her mark as being more in touch than her predecessor, standing up for the people who are just about managing or the ‘JAMs’ as they have now been coined.

So what’s new? A month ago, Mrs May told the Tory Conference: “It is just not right that two-thirds of energy customers are stuck on the most expensive tariffs.”

For people on pre-payment meters, who tend to pay more they will be offered a “protected tariff” – a price cap on what any energy company could charge.

The Government’s help doesn’t go far enough. Pre-payment customers are only one in six of all customers. The question remains: ‘What about the rest of us?’

The CMA and Ofgem, the regulator, have sidestepped the biggest problem once again. Ofgem’s not-so-big idea is to pass your details to other energy companies so you can be bombarded with offers. A recent Which? survey reports that three-quarters of customers have not heard a thing from their energy provider about lower prices.

The answer is within reach. Theresa May should extend the protected tariff for those on pre-payment meters, a limit on what the energy suppliers can charge, to every standard variable tariff customer. Even a time-limited protected tariff would give the Big Six the jolt that they need. In a healthy energy market competing for customers this wouldn’t be necessary – but it isn’t.

Standard variable customers pay over the odds, boosting profits without the companies doing a thing, as well as subsidising the energy-savvy consumers.

And the Government profits from this behaviour too. The Prime Minister admits that two-thirds of bill payers are paying too much, so what does that say about the VAT from those energy bills?

This is a test of Theresa May’s character. Does she have the backbone to stand up to the energy giants? David Cameron certainly didn’t.

As the smoke clears, we see the Chancellor’s announcements leave working people around three per cent worse off. Mr Hammond said it was his first and last Autumn Statement. This isn’t the first time I have challenged Government on unfair energy prices and I doubt it will be my last.

The nights will continue to get colder. If Mrs May and Mr Hammond duck this challenge, they can expect a frosty response in Parliament.

Caroline Flint is Labour MP for Don Valley and a former Shadow Energy Secretary.

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