Ed Davey
MP for Kingston and Surbiton · Liberal Democrat · United Kingdom
“I associate myself with the Prime Minister’s opening remarks, not least about the 25th anniversary of the horrific terror attacks of 9/11. I welcome the Government finally banning imports from illegal Israeli settlements, something Keir Starmer should have done a long time ago.”
“I thank the Prime Minister for that answer. Britain should be the safest country in the world to have a baby. We will keep raising this issue until it is the safest.”
“No mother should have to give birth in such circumstances. Does the Prime Minister agree that Musgrove Park cannot wait until 2033 for work to start on a new maternity unit? Will he offer a meeting to local MPs, so we can move it forward? And will he make fixing the maternity scandal across our country a top priority of his Government?”
“I hope at that summit the Prime Minister will negotiate a good deal for our country, our economy and our defence, and that means rejoining the single market. North Devon’s maternity unit has been closed for three weeks due to staff shortages, so women now have to travel for up to two hours to give birth.”
“The Prime Minister said yesterday that Brexit ushered in “a decade of low growth and stalled regeneration.” —[ Official Report , 1 September 2026; Vol. 790, c. 27.] He is right. Our economy is stuck in this mess thanks to the Conservatives—and the leader of Reform UK—and their terrible Brexit deal.”
“There are so many more problems in our political system: too much power in the hands of social media barons who interfere in our politics and crypto billionaires who use donations to buy influence; and too little power in the hands of our people.”
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“Unlike the hon. Lady’s party leader when he was doing my job, we have referred the energy markets to the independent competition authorities for the most thorough investigation to check that they are behaving in the interests of consumers. More than that, unlike the previous Government who saw the number of energy companies fall from 15 to six, we have increased competition so that people have a real choice, and that is now working. There is still more to do, because the energy markets we inherited from the previous Government were in such a mess.”
“I am grateful to the hon. Gentleman for raising the issue of fuel poverty, because I do look at the statistics and we are focusing very much on that. It is worth noticing that fuel poverty went up under the previous Government, but under this Government it has gone down by 5% according to the latest figures. It is interesting that the figures have gone down under both the old definition and the new one. Right hon. and hon. Members might want to understand why we brought in a new definition of fuel poverty. The old definition, which was introduced by the previous Government, was so ineffective that it described the Queen as being in fuel poverty in some years. We are targeting fuel poverty, and we are spending more on tackling fuel poverty than the previous Government. We have a good record, and we want to do more.”
“I think I have proved that I certainly do care, because we have done a lot more than the previous Government. Let me take up the point about the wholesale market. The previous Government did absolutely nothing; they created the big six that sell energy to each other. [ Interruption. ] Opposition Members do not like it, but it is a fact. Under this Government, Ofgem has brought in the market maker obligation, which creates the transparency that the Opposition were asking for. The Opposition failed, but we have succeeded.”
“My hon. Friend makes an important point. The collective switch, of which that scheme was a part, has made big progress. We have seen a lot of initiatives and we are learning a lot of lessons. A lot of people are saving a lot of money because they are coming together for group purchasing. The point about faster switching times is absolutely right, and that is one of the reasons why we called in the industry. We inherited a situation in which it took five and a half weeks, on average, to switch, which was unacceptable. We have now got commitments from industry, with Ofgem leading the way, to halve switching times by the end of the year, and we have a plan to get the time it takes to switch down to 24 hours. That is the right approach.”
“My hon. Friend is absolutely right. An energy price freeze would hit investors, hit investment, hit energy security and hit our efforts to decarbonise. Worst of all, it would hit consumers, because energy companies would put up their prices directly after the freeze. Everybody knows that, and it is one of the reasons why we have been pushing competition. Competition means not merely freezing bills—five of the big six have announced that they will freeze their bills this year—but, because of independent suppliers, enabling people to cut their bills. Our policy is to cut bills; the Opposition’s is simply to freeze them. We are the ones who are ambitious and on the side of the consumer.”
“My hon. Friend makes a really important point. The Minister of State, my right hon. Friend the Member for Sevenoaks (Michael Fallon) has been working with the industry on the concordat. The statistics that have emerged from the new fuel poverty definitions show, unlike previous ones, that much fuel poverty is in off gas grid areas. When we bring forward the fuel poverty strategy shortly, we will be focusing on off gas grid customers, because they are really suffering, and—guess what?—the previous Government did nothing about it.”
“If the House wants a little more analysis, let me point out that a few months ago wholesale prices were coming down, yet in the past few weeks they have gone up. Are the Opposition saying that they would force energy companies to move directly with daily and weekly moves in the wholesale costs? That is surely madness.”
“The right hon. Lady will remember that yesterday I made it clear that we have real concerns about the energy market. That is one reason why we support the competition inquiry. I made it very clear that we are worried about the fact that when wholesale prices go up, retail prices follow them quickly, which is the rocket effect, but that when wholesale prices come down, retail prices do not come down as quickly—the feather effect. We believe that that has to be addressed. The previous Government had the same problem and they did not address it. We are addressing it. The problem with the proposed regulation, as I told the House yesterday, is that when we look at the detail we can see that it would fail and would lead to prices going up. It is a bungee-jumping approach to energy prices and it would increase volatility and fluctuations.”
“The UK enjoys a stable and secure energy supply, and we are working hard to ensure that it continues. As a Government, we are actively managing a number of risks to our current and future energy supplies, including the current challenges from Iraq, Russia and Ukraine. Our recent national gas risk assessment demonstrated that our gas infrastructure is robust. The measures recently announced by National Grid respond to the energy crunch that, owing to the legacy of under-investment and neglect, was predicted for this winter, but which will not now happen.”
“I am grateful for the hon. Gentleman’s question. We are giving huge support. We published the first ever interconnection strategy in December and we are working with Ofgem, which recently published a new registry framework. We hope that three interconnector projects will get to financial close very shortly—the Eleclink through the channel tunnel, the Nemo Link project with Belgium and the NSN project with Norway—and we think that two other projects could come forward with France. The question is really important as it involves the single European energy market, of which we are strong supporters. We are working tirelessly on that very point.”
“The last thing we need for energy security is a new quango. The system involving National Grid, Ofgem and my Department is working incredibly well, which is why we dealt with the problem that we inherited. The demand load measures that the hon. Gentleman talked about have been welcomed by the CBI and industry; they are used an awful lot in north America and in other countries, but we have underused them. They are mainly used by companies volunteering to pay to use on-site generation, rather than national grid electricity, at the peak.”
“I hope that the hon. Gentleman is not trying to suggest that the last Government were effective in investing in electricity production, because they were very weak. There has been £45 billion of electricity investment since 2010. The investment rate is going up, not just in gas but in renewables. The first nuclear deal was struck last October. We are going across the board, and the lights will stay on under us; if Labour’s policy had continued, they would have gone out.”
“My hon. Friend is absolutely right. The interest from around the world in the UK’s reformed electricity markets, particularly the world’s first ever low-carbon electricity market, is profound. It is not just the Chinese; there is interest from the French as well as from Japanese companies such as Hitachi and Toshiba-Westinghouse—and not just in nuclear, but across the low carbon piece.”
“To address short-term capacity issues, this month National Grid announced demand-side balancing reserve measures that will ensure that the risk of disruption remains at very low levels. Energy efficiency is also a key part of energy security, and in June we announced new energy efficiency funding worth £540 million over three years, including boosting cash-back offers under the green deal.”
“In advance of our dinner tomorrow night, let me tell the House that in May, in response to the crisis in Ukraine, the G7 and the European Union re-evaluated our energy security plans and agreed a new approach that would strengthen our long-term energy security. The United Kingdom is rated the most energy secure country in the EU. To maintain this position, we are pressing forward with the diversification of our energy supplies. In April, we announced £12 billion of investment in renewable energy projects, supporting 8,500 jobs under the final investment decisions enabling process, which is resulting in the development of offshore wind, coal-to-biomass, and dedicated biomass for combined heat and power projects.”
“That is a very important question. We are one of the world leaders in promoting international climate finance, and we very much support this fund. It has taken a while to get together to finalise the arrangements. Some real progress has been made in recent weeks, at long last. We hope that countries will start pledging to the fund at United Nations Secretary-General Ban Ki-moon’s summit in November or at the UN framework convention on climate change talks in Lima in December. It is also important that we have private climate finance. Only last week, the Minister of State, my right hon. Friend the Member for Bexhill and Battle (Gregory Barker), brought together many people to ensure that there is private money to help to get to the $100 billion target.”
“Of course, that is completely wrong and when I have my next meeting with the management of British Gas I will bring it to their attention and make my views very plain.”
“No. There is an awful lot of research that shows that in-home displays lead to changed behaviour. There is nothing to stop an energy supplier offering other options in addition. If the hon. Lady wants the improved energy efficiency and lower energy bills that the smart meter programme wants to deliver, I hope she will look at the research, because it is pretty strong.”
“I can give my hon. Friend an interim update. As part of our work on the fuel poverty strategy, we are looking at reforms to the warm home discount to make sure that it is more effective.”
“There needs to be some form of intervention to improve the markets. The differences between us start to arise over what sort of intervention will work. What is it, exactly, that the Government and the regulator can do that will help the consumer most? The right hon. Lady believes that the change we need is regulation—price regulation. Labour now wants two regulatory interventions on prices. First, it wants legislation so that the Government can fix prices through a temporary 20-month price freeze. In addition, she now wants the energy regulator to intervene when retail prices do not quickly follow changes in wholesale prices. Such price control would be a massive, permanent state intervention.”
“It would be nice to have more opportunities to explain by how much renewable investment has risen in the UK. According to Bloomberg New Energy Finance, the UK had the highest level in Europe in 2013. It would be nice to have a chance to tell the House in detail how we have turned around the legacy of under-investment that we inherited, which was threatening Britain’s energy security. To be clear, I am more than happy, instead, to be debating energy prices again. I will deal with the right hon. Lady’s core argument head-on, because energy prices are of concern to people and businesses. Even on energy prices, there is some agreement between us. We agree that Britain’s energy markets need to be reformed. If we are to get a better deal for people, whether in terms of prices or customer service, there needs to be change.”
“Labour voted for the Energy Act 2013 and backed its centrepiece—contracts for difference—which will be crucial in creating the world’s first ever low-carbon electricity market. Labour appeared to be backing our measures that are driving the massive increase in energy investment from which the UK is benefiting, including the more than doubling of renewable electricity. Labour seemed to be backing the measures that we are introducing to keep Britain’s lights on, such as the plans for a capacity market and National Grid’s supplemental balancing reserve. I am fairly confident that there has been a consensus on energy security and climate change for some time, because the right hon. Member for Don Valley never questions me about our climate change or energy security policies. I am grateful for her support, however tacit.”
“I join the right hon. Member for Don Valley (Caroline Flint) in congratulating the hon. Member for Totnes (Dr Wollaston) on her election as Chair of the Health Committee. The right hon. Member for Don Valley began by wanting to reach consensus and, to be fair, it is not the first time that she has done so. Right hon. and hon. Members might be surprised to learn that she talked warmly in a speech last week about the consensus on energy policy in the UK. They might be even more surprised to learn that I agree that there is consensus on some aspects of energy and climate change policy. The Labour party has accepted the coalition’s major reforms of Britain’s electricity market.”
“My hon. Friend has spotted a point to which I will return. There is a bit of inconsistency there. The historians among us might note that the two proposals for price control regulations are particularly interesting because they reverse the policy that Labour backed in government. In 2002, under Labour, Ofgem abolished all price controls on gas and electricity. Is it not interesting that, even though there is now more competition than in 2002, Labour has done a U-turn and wants price control regulations back?”
“We want to get more energy firms into the market, make it easier for customers to change energy supplier when they do not get a good deal and prevent firms from abusing their market dominance. Price controls will not do any of that. My argument today is that our reforms to Britain’s energy market are beginning to work. Increased competition is beginning to help people not only to freeze but to cut energy bills. Our approach, fixing the messed-up energy markets we inherited from the Leader of the Opposition, is now bearing fruit.”
“I am very grateful for the hon. Gentleman’s intervention. This is the greenest Government ever. We have the green investment bank. We have more than doubled renewable electricity. Low-carbon electricity is booming. This is the top place in Europe for renewable electricity, the best place in the world for offshore wind, the best place in the world for tidal investment and the second best place in the world for biomass. I could go on. I hope that he intervenes on that point again. As I was saying, the interventionist approach of the Opposition is not our approach. We want to aim our intervention at ensuring that our energy markets are more competitive and work harder for consumers.”
“I certainly believe that local energy generation is key in driving competition. I am proud that it was this Government who published Britain’s first-ever community energy strategy to help local communities and individuals and small businesses to generate energy.”
“I am about to do so. I said that our reforms are beginning to work. It is true—that is what I said. I admit that energy prices have gone up in this Parliament, but they have gone up slower than they did in the last Parliament, when energy bills went up faster on average every year than they have in this Parliament. Indeed, fuel poverty went up under Labour, whereas the latest statistics show it falling. The hon. Gentleman should look at the facts.”
“Interestingly, the independent competition authorities stated: “We have found that suppliers do not adjust their prices as quickly when costs fall compared to when wholesale costs rise.” In fact, it was one of a number of reasons and findings that led Ofgem to propose a market investigation reference. That is exactly what I think we should support when faced with such a worrying finding for consumers. There should be a no-holds barred inquiry by independent experts, whom we have given real teeth to act for consumers. That is the action that the right hon. Lady should be proposing and that I am backing as Secretary of State for Energy and Climate Change.”
“Like many people before her, she is worried about the so-called rocket and feather problem: the energy companies appear all too ready to allow their retail prices to go up like a rocket when wholesale prices rise, but when wholesale prices fall their retail prices are no longer rockets but feathers, gently falling ever so slowly so that the energy firms can profit. That argument leads to two questions: first, is it true? Do energy prices follow this rocket and feather model? Secondly, if it is true, what should we do about it? My answers to these questions are clear. It may well be true—there seems to be evidence that it happens. It was one of the reasons I asked the competition authorities last year to undertake the first-ever annual competition assessment of the energy markets.”
“Many people, over many years, have looked at this phenomenon—at the way in which wholesale and retail energy prices relate to each other and at how there always seems to be a time lag between changes in wholesale prices and in retail prices, especially when wholesale prices are falling. The explanation that energy firms give for this time lag is the way in which they buy their wholesale energy: to spread their risks and hedge, to smooth out the prices they charge customers, they buy much of their gas and electricity six months, 12 months, 18 months or even further ahead on the futures markets. Therefore, energy firms claim, they cannot immediately pass on today’s wholesale price falls, because the gas or electricity they are supplying was bought at the higher prices of months past. The right hon. Lady spoke a lot about that.”
“No, I will not; I am going to make some progress. Pursuing the Opposition’s policies would be nothing short of a disaster, not just for consumers but for investment, for decarbonisation and for energy security. If any Government were so misguided as to intervene with the two prices regulations proposed by the right hon. Member for Don Valley (Caroline Flint) it would lead to chaos in our energy system. Today’s latest debate on energy prices does have something new—well, sort of new. The right hon. Lady—quite rightly, in my view—wants us to focus on the fact that while wholesale prices for gas and electricity have by and large fallen in recent months, most energy companies have yet to cut their retail prices.”
“It just never happened. But, to be fair, he went further, in standing up to the energy companies. He told the House that “The Government and the industry are agreed on the need to bring down retail gas and electricity prices.” —[ Official Report , 18 November 2008; Vol. 483, c. 14WS.] It was “agreed”; it just never happened—it never reflected wholesale prices. Perhaps that was because, a month later, the Labour leader backed down. He said—fiercely, no doubt, and the right hon. Lady should listen to this— “We have recently seen big falls in wholesale gas and electricity prices, but I understand that because energy companies tend to buy in advance they won't be passed on immediately.” It sounds as though he was more impressed upon than impressive.”
“A big driver of those falls was, of course, the massive recession, and they went on so long that, eventually, retail prices for consumers fell—but only by a bit: electricity by 7.5%, not the 62.5% fall in wholesale prices enjoyed by the energy firms, and gas by 5.6%, not the wholesale fall of 43%. The energy prices rocket and feather phenomenon is, therefore, not new. I thought it would be worth finding out what lessons we have to learn from my predecessor, the leader of the Labour party. What did he do when he had the power? He called a summit—a summit. He reported back to this House on what action he had taken: “I impressed upon the companies the need for retail energy prices to reflect changes in wholesale prices as soon as possible.” He “impressed upon” them that retail prices should reflect wholesale prices “as soon as possible”.”
“No. I am not the first Secretary of State for Energy and Climate Change to be confronted with the problem of wholesale and retail energy prices—the possibility of a rocket and feather consumer energy price rip-off. As Secretary of State for Energy and Climate Change, the right hon. Member for Doncaster North (Edward Miliband), the Leader of the Opposition, presided over a period in which wholesale prices crashed and retail prices did not. When he did my job, between September 2008 and January 2010, wholesale prices actually fell faster than the figures set out in the Opposition’s motion. Wholesale electricity prices on the day-ahead market fell not by the 23% mentioned in the motion but by 62.5%. Under the Leader of the Opposition, wholesale gas prices to businesses fell not by 38% but by 43%.”
“I will give way to the right hon. Lady, who will no doubt tell us why the Leader of the Labour party was unable, when doing my job, to do anything.”
“She does not understand how markets work.”
“Let me imagine that the Labour leader has thought more about it, listened to the right hon. Lady and changed his mind. Let me examine their proposals for two new price controls and how they would work. As set out in the motion, Labour now has two competing ideas. The first is a temporary energy price freeze for 20 months, which is a policy to lock in a price, regardless of what happens in the wholesale markets. If wholesale prices go up, the smaller energy suppliers that cannot soak up the losses will go bankrupt. We have never received an answer to that. If wholesale prices go down, companies hedging against the freeze will have to maintain their prices and customers will lose out. The right hon. Lady is shaking her head, but companies that hedge against a freeze will lose money and potentially go bankrupt under her policy.”
“On 5 March 2009, he said: “I do not think that at this stage a referral to the Competition Commission is the right way to go”. —[ Official Report , 5 March 2009; Vol. 488, c. 983.] On 7 December 2009, he said: “It is better to look at policy options…rather than at a lengthy Competition Commission investigation.” —[ Official Report , 7 December 2009; Vol. 502, c. 45.] Of course, he did not actually take any policy options. On 25 February 2010, he was still in denial: “I am not in favour of referring these matters to the Competition Commission”. —[ Official Report , 25 February 2010; Vol. 506, c. 444.] That is what Labour’s then Energy Secretary said, so my advice to the right hon. Member for Don Valley is this: stop embarrassing your leader. For the sake of debate, let me accept another Labour U-turn on energy policy.”
“Lady should listen to this: “I’m afraid there was no substantial policy in this area by the previous government and as a result no announcements.” There was nothing. The Leader of the Opposition simply did not have the same great ideas as the right hon. Lady. Perhaps I am being too harsh. Perhaps the Leader of the Opposition was not advised to take the various actions we have taken, such as our support for a reference of such problems to the independent competition authorities—in other words, the experts. My research, however, suggests that the Labour party was told to act when he was doing my job. In fact, we have found that he was told to act on at least three occasions. The Leader of the Opposition was asked three times to refer the issue of energy prices to the Competition Commission, and three times he refused.”
“That leads me to the not unreasonable conclusion that he must have stood up to the energy companies—that he must have a proud record of taking on energy firms at some stage. So I did some more research to find out what tough action the leader of the Labour party took. I was convinced that he of all people, faced with much larger falls in wholesale prices than we face today, would have acted. I therefore commissioned the research on what action Labour’s leader, when Energy Secretary, had actually taken on wholesale energy prices—what announcements he had made. The research has come back, so let me read it: “You asked for any statements of information provided by the last government on the link between wholesale and retail energy prices”— [ Interruption. ] The right hon.”
“I have already said that I believe that there is a problem—Ofgem and the competition authorities told us that in the report I commissioned. I think there is a need for intervention—that is what I have been saying. The question is: what is the right intervention? Is it the price regulations proposed by Labour—the quite big interventions that I shall explain when I describe how they would work—or is it to ask the independent experts from the competition authorities to ensure that our markets work for consumers. The latter is what we are doing, and I think it is the right approach. The Leader of the Opposition tells the Government all the time that we should stand up to the energy companies.”
“Lady is a rollercoaster approach to energy price freezes. I call it Labour’s bungee-jumping approach to energy prices, and one would be hard pressed to think of a more incoherent and inconsistent approach. It is a populist, opportunist, soundbite approach to energy policy that would not just hit investment but leave consumers worse off. In other words, yet another con.”
“Rather than keeping prices the same, this price regulation seems to want them to change more frequently and more rapidly, mirroring the wholesale markets. That is interesting, because if we look at what has happened recently, we will see that wholesale prices can go up and down on a daily basis. A fortnight ago, wholesale prices were falling: day-ahead electricity prices fell by 7% and the natural gas spot price fell by 12%. Last week, however, the day-ahead electricity price went up four days out of five, ending up at almost 6% by the end of the week, and the natural gas spot price was up 10% by the end of the week. In other words, the spot prices on the wholesale markets go up and down—they are very volatile and fluctuate all the time. The price regulation proposed by the right hon.”
“My hon. Friend is absolutely right. All the new independent suppliers who are coming into the market and taking on the big six companies created under Labour do not like the policy, because they know it would undermine competition, put them out of business and be bad for consumers. Although we have debated many times the price-freeze intervention proposed by the right hon. Member for Don Valley, she still has not convinced anyone. We have shown time and again that it is just a damaging con. The second, and latest, price control is proposed legislation to force energy companies to pass on variations in the wholesale markets more rapidly, which is sort of the exact opposite of a price freeze.”
“The day-ahead or the month-ahead price, or perhaps something else in the futures market? I think we should know. Which all-seeing, all-knowing official in Labour’s new energy Gosplan regulator would work that all out?”
“I am grateful for that intervention because it shows that Labour has not even looked at what is happening to the economy. Employment is going up and unemployment is going down; inflation and the deficit are going down, and growth is up. The hon. Gentleman ought to notice that. Let me ask a few questions about Labour’s latest policy. How would Labour’s bungee-jumping energy price regulation work? Let us try to get our heads round what is proposed—Labour wants to be in government in under a year, so I am sure it has thought through the detail. Would Labour legislate to force companies to pass on each and every cut in wholesale prices? Would it give Ofgem that power? How frequently would the link between wholesale and retail prices be made, and which wholesale price would Labour choose for Ofgem to intervene with?”
“It will be consumers who pay in higher prices.”
“If regulation forces retail prices to track wholesale prices, how often will a consumer’s energy bill have to be recalculated and what will be the cost of that? Who will be the genius who second-guesses companies’ forward buying strategies, and decides whether they are good or bad? Will all suppliers have to purchase at the same time for the same contract period in Labour’s brave new world? The logic of the massive state price control that Labour is proposing is clear: Labour wants to destroy the forward energy markets. It wants to end competition between companies, which is based on who has the brightest and best purchasing strategy to deal with things such as events in the UK or in Iraq, and manage those sorts of problems. If we end that competition, who will lose when the risks are greater?”
“I have spoken to Ofgem’s chief executive, Dermot Nolan. He is worried because the Labour party wants to get rid of Ofgem, even though it is doing this fine job and talking to energy companies. Ofgem is worried that Labour wants to undermine the regulatory system. Interestingly, who set up Ofgem? The Labour party. Who reformed Ofgem just a few years ago to make it more effective? The Leader of the Opposition. There is no consistency or coherence about anything on energy policy from Labour. Let us consider some more basic questions—Labour Members will have to answer them at some stage if they are to be vaguely credible. If the regulation forces energy bills to drop immediately when day-ahead wholesale prices drop, what will that mean when wholesale prices rise? Will the regulation be exactly same both ways?”