Domestic Energy Supplies (Hansard, 8 March 1982)

§ 1. Mr. Neubert
asked the Secretary of State for Energy, pursuant to his reply of 8 February, Official Report, c. 731, to what extent the standing charges of the electricity and gas supply industries take account of the length of time the supply has been installed.

§ The Under-Secretary of State for Energy (Mr. David Mellor)
Domestic standing charges do not reflect the length of time that a supply has been connected. They are set by the supply industries and reflect their fixed costs such as meter reading, billing, maintaining the connection and, in the case of gas, provision to deal with emergencies.

§ Mr. Neubert
Would it not ease the financial burden on pensioners, who, in general terms, will have contributed more than their fair share of overhead costs over the years, and at the same time create equity between the long-established user and users with a new connection if the standing charge were to take some account of the length of time the supply had been installed?

§ Mr. Mellor
As my hon. Friend will know, my hon. Friend the Member for Braintree (Mr. Newton) and I are currently reviewing standing charges. We shall bear in mind the point that my hon. Friend has raised.

§ Mr. Eadie
Does the Minister agree that the matter is urgent? Pensioners' tears have not yet dried and the bills are still racing in. Pensioners still face financial difficulties. I hope that the Government will approach the matter with urgency, as it would help to alleviate pensioners' problems.

§ Mr. Mellor
The hon. Gentleman will be aware that pensions have been fully indexed during the lifetime of the Government. He will also know that 1½2million pensioners are receiving the additional sums paid by the Department of Health and Social Security. In case the hon. Gentleman suggests that this is an easy matter, he will recall that when he was at the Department of Energy a document called "Energy Tariffs and the Poor" was published. It recognised the difficulty of changing existing tariff structures and that there was no easy route to assist poor consumers through changes in tariff structures.

§ 2. Mr. Durant
asked the Secretary of State for Energy if he will make a statement on the standing charges paid by retirement pensioners for their gas and electricity supplies.

§ Mr. Mellor
Together with my hon. Friend, the Under-Secretary of State for Health and Social Security, I am reviewing the problems faced by the elderly and other low-income consumers in paying standing charges. We hope to reach a conclusion fairly soon.

§ Mr. Durant
Is my hon. Friend aware that pensioners feel deeply that their standing charges are often much larger than their consumption costs? They do not resent having to pay for what they use, but they resent the standing charges. Will my hon. Friend therefore have a meeting with the heads of the nationalised industries to discuss the matter?

§ Mr. Mellor
I have already asked the deputy chairmen of the Electricity Council and the British Gas Corporation to meet me to discuss the issue.

§ Mr. Donald Stewart
Is the Minister aware that standing charges often represent a substantial proportion of bills and that there is great anger and concern among pensioners that standing charges have been constantly increasing? Does he accept that that is felt in Scotland particularly because of the severe climatic conditions?

§ Mr. Mellor
The standing charges reflect the cost to the industry of maintaining the supply. If the standing charges were abolished the gas and electricity industries would lose about £500 million in revenue each. That would mean a material increase in tariffs. While we are looking carefully at ways of assisting consumers, it is questionable whether that route would be the best.

§ Mr. Winnick
Is the Minister aware of the tremendous difficulties that fuel costs have presented to retired people and those on limited incomes? Is he aware that the removal of standing charges would at least relieve some of the agony that so many of our fellow elderly citizens have to face every winter?

§ Mr. Mellor
That matter was considered when the hon. Gentleman's right hon. Friend the Member for Bristol, South-East (Mr. Benn) was Secretary of State. He said in his foreword to the energy document: After considering the group's report, the Government have concluded that none of these possibilities offers a satisfactory way of helping poor consumers with their fuel bills. The hon. Gentleman is touching on a difficult subject that we are considering again. I urge him not to apply the double standards that are all too common in the House and not to expect that the Government will find it easier to answer these intractable questions than did his right hon. Friend.

§ Mr. Eggar
Will my hon. Friend consider whether consumers could be given a choice between a standing charge and a low unit cost, as at present, or no standing charge and a higher unit cost?

§ Mr. Mellor
That was the position with gas prices under the previous Government. There was a higher unit charge for the first 52 therms. The arrangement did not meet with the approval of the Price Commission, and it has been changed under this Government.

§ Mr. Merlyn Rees
Will the Minister confirm that gas prices have increased by 100 per cent. because of the 585 Government's actions and that the standing charge has increased by 300 per cent.? As there has been a decision to increase the charge, why can there not be a decision to change it in other ways?

§ Mr. Mellor
Removing the differential charge for the first 52 therms of gas meant that when the Labour Government left office the standing charge was £6.37 a quarter, so the effect is not markedly different.