Standing Charges (Hansard, 28 June 1982)

§ 2. Mr. Chapman
asked the Secretary of State for Energy if he has yet completed his review of standing charges on gas and electricity.

§ 12. Mr. Winnick
asked the Secretary of State for Energy if he is now in a position to announce the result of the review into the effect of standing charges on consumers with small incomes.

§ The Under-Secretary of State for Energy (Mr. David Mellor)
The review is progressing well and is nearly complete. An announcement will be made as soon as possible.

§ Mr. Chapman
I appreciate that some poorer people could find themselves at a disadvantage if the standing charge were abolished and the lost revenue recouped by raising the unit cost of energy. However, will my hon. Friend bear in mind that many people of limited means could benefit from such a proposal, which would also encourage energy conservation? Will he bear this in mind when he comes to draw conclusions from the review?

§ Mr. Mellor
It is precisely that point—the balance of advantage—that is at the heart of the review, just as it was when this matter was last reviewed in 1976. One reason why it has taken some time to complete is that the numbers involved require sophisticated analysis. It is at the heart of what we are doing.

§ Mr. Winnick
Is the Minister aware that many people with small, limited incomes face the most tremendous difficulties and hardship in paying fuel bills, especially during the winter months? Is he aware that the removal of the standing charges would at least give some help to those whom I have described?

§ Mr. Mellor
We are well aware of the difficulties caused to poorer people by fuel bills. That is why this winter we shall be spending over £300 million, the largest sum ever, on assistance to those people.

§ Mr. Winnick
indicated dissent—

§ Mr. Mellor
The hon. Gentleman should know before he shakes his head that the difficulty about standing charges is that not all poor consumers are small consumers. A number of larger consumers of energy are also poor consumers who would not be assisted by a move from a standing charge to a higher unit charge.

§ Mr. Hannam
Does my hon. Friend agree that charges for renting television sets and telephones are the equivalent of standing charges? Has not the Child Poverty Action Group stated that large poorer families that use large amounts of electricity would be adversely and disproportionately affected by the abolition of standing charges and their transfer to the unit cost of electricity?

§ Mr. Mellor
I have reason to believe that my hon. Friend is correct. If only the argument were as simple as saying that the poor consumer is a small consumer, it would be a good deal easier to resolve the problem.

§ Mr. Merlyn Rees
The Opposition understand that there is no simple answer. Will the hon. Gentleman bear in mind, in coming to his conclusions, that the problem confronting old-age pensioners, according to what I am told in my constituency, is that they conserve energy because they cannot afford it, only to find that the standing charge amounts to more than the cost of the electricity that they have used?

§ Mr. Mellor
There is undoubtedly a category for whom that is true. They tend to be those who feel aggrieved and turn up at the right hon. Gentleman's advice centre, just as they do at mine. The right hon. Gentleman might be interested to know that one figure that has already emerged from the survey is that the number of old-age pensioners for whom the standing charge is larger than the unit charge is no higher than 15 per cent.