§ 8. Mr. Greenwayasked the Secretary of State for Energy if he will introduce legislation to abolish standing charges on gas and electricity; and if he will make a statement.
§ 18. Mr. David Atkinsonasked the Secretary of State for Energy if he has had any recent discussions with the chairman of the Electricity Council on standing charges.
§ Mr. GoodladStanding charges for gas and electricity are a matter for the industries concerned. The charges reflect the fixed costs of maintaining a supply, and their abolition would result in higher unit charges to consumers.
§ Mr. GreenwayWill my hon. Friend ascertain what he can do to abolish standing charges for pensioners? Is he aware that, taken over the years, standing charges absorb a whole month's pension and are a considerable imposition on pensioners? It is time something was done.
§ Mr. GoodladStanding charges cover unavoidable costs incurred by the industry, such as in maintaining connections, meter reading, accounting and billing and emergency services. As lost revenue would have to be recovered through increased unit rates, abolition would penalise many of the less well-off, such as the sick and the old, who may have large heating needs. As I said to the hon. Member for Tooting (Mr. Cox), the Government target financial help with fuel costs on those in need through weekly supplementary benefit rates, including £400 million in 1984–85 in heating additions.
§ Mr. AtkinsonIs not the main grievance against standing charges the fact that they bear no relationship to usage and consumption? Surely it is not beyond the wit of my hon. Friend's Department or of the industries concerned to come up with a fair scale of standing charges that bear a relationship to usage and consumption.
§ Mr. GoodladI note my hon. Friend's views. In 1982, at the Government's request, each of the industries asked the independent consultants, Deloitte, Haskins and Sells, to review the rationale and level of their standing charges. In both cases it was confirmed that the principle of standing charges was justified and that the costs involved were fairly represented in the charges. Both reports were placed in the Library of the House. The consumer councils of both industries considered the standing charge rebate schemes to be unfair to the majority of consumers. In consultations with the industries, they endorsed the industries' decisions to reduce or abolish the rebates.
§ Mr. WrigglesworthDoes not the hon. Gentleman understand that the pressure to abolish standing charges will continue because they bear most heavily on the hardest hit in the community, such as the unemployed and the old? Will the hon. Gentleman look at this matter again and realise that many of the commercial organisations with 602 problems similar to those of the coal and electricity boards do not impose standing charges in the way that those boards do?
§ Mr. GoodladThe hon. Gentleman is incorrect. Our experience with the rebate scheme showed that much of the rebate went to those not in need, such as second home owners and lock-up garage owners, and that the targeting of the social security benefit system is a much better way of helping those in need.
§ Mr. WattsDoes my hon. Friend agree that abolition of standing charges would shift the financial burden from low consumers to high consumers? Does he further agree that, because many pensioners are necessarily high consumers of energy, abolition of standing charges would not be to their benefit—indeed, quite the reverse?
§ Mr. GoodladMy hon. Friend is quite correct.
§ Mr. MaddenWhat fairness can there be for a blind constituent of mine who estimates that the cost of the electricity that she uses is about 20p a fortnight, but who has to pay a full standing charge? Will the hon. Gentleman undertake to look urgently at a letter that I have written to him on this case and to send my constituent and me a favourable reply? My constituent and I understand that standing charges bear heaviest on those with the least. We are not impressed with the consultants' reports and the other justifications for doing away with the rebate scheme.
§ Mr. GoodladI have received the hon. Gentleman's letter and I hope to reply to it soon. I cannot accept that the social security system is not the best way to deal with the matter.
§ Mr. RowlandsDoes the Minister recall that in the autumn statement the Chanceller of the Exchequer imposed upon the electricity industry a negative external financing limit of £1.4 billion? Given that a similar sum will have to be clawed back from the industry, would it not be sensible to meet the demands from both sides of the House concerning standing charges and ensure that in the coming 12 months electricity prices do not rise above the rate of inflation?
§ Mr. GoodladI am amazed at the hon. Gentleman's effrontery, given the record of his party when it was in power over increasing the price of electricity. His question has nothing to do with standing charges. He will be aware that the price of electricity is a matter for the industry. The chairman of the Electricity Council recently told the Select Committee that he expected the next price rise to be about 5 per cent.
§ Mr. Robert B. JonesIs my hon. Friend aware that Marks and Spencer has fixed overheads but that it does not impose standing charges? Are these charges not a remnant of the attitude of the electricity and gas industries in terms of being more producer than customer-orientated?
§ Mr. GoodladI am not responsible for Marks and Spencer.