HC Deb 22 March 1996 vol 274 cc683-90

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Bates.]

2.31 pm
Mr. John Hutton (Barrow and Furness)

In 1988, the Department of the Environment calculated that there were some 2,000 park home sites in England and Wales and approximately 80,000 park homes. It is reasonable to assume that the figure is now significantly higher. There are probably more than 100,000 park homes in the United Kingdom, providing homes for nearly 250,000 people.

The reason for the increase is attributable to the attractions represented by park home living. It offers retired or semi-retired people the opportunity to realise the capital value of their homes and to live comfortably, often in beautiful rural or semi-rural locations. In my constituency, there is a large park home site on Walney island—West Shore park—with more than 300 homes and 500 residents.

Park home residents have recently been the victims of deliberate and totally unacceptable discrimination on the part of the regional electricity companies. I refer to the fact that the majority of the park home residents will not receive the £50 rebate payable to domestic electricity consumers in connection with the privatisation of the National Grid Company. That is despite the fact that all those people will have been life-long consumers of electricity—and, of course, still are—and, through their taxes, they have contributed to the industry through all the years of public ownership.

Withholding the £50 rebate from park home owners is not only unfair and unreasonable—it also contradicts the Government's policy of ensuring that all electricity consumers benefit from the sale of the national grid. It is worth repeating the comments of the Minister for Industry and Energy in a DTI press release dated 24 October 1995: I am determined to ensure that the full benefits of privatisation should flow through to consumers. Quite simply, that is not happening.

In simple terms, the regional electricity companies, the Department of Trade and Industry and, to a lesser extent, the electricity regulator have failed to ensure fair play for electricity consumers and denied a valuable rebate to a large number of people, often living on fixed or low incomes. That deliberate discrimination might have saved the regional electricity companies more than £5 million—no doubt underwriting the huge profits made by a few people from the sale of the national grid—but it has tarnished the companies' image as well as reducing the already dwindling reputation of Ministers in ensuring that electricity consumers get a fair deal.

The reason for the rebate not being paid to park home owners is purely administrative, which is grossly unfair. Most park home owners purchase their electricity through the site owner and thus are not direct customers of the regional electricity companies. The site owner is the company's only direct customer, but will probably be regarded as a non-domestic consumer and therefore not receive a rebate. After consultation between the Government and regional electricity companies, it was agreed to provide the rebate only to direct customers so as to simplify the scheme. I fully understand the need for simplicity and for fraud prevention in administering the rebates, which will apply to nearly 21 million customers. I find it extraordinary, however, that it proved completely impossible to devise any acceptable scheme to ensure that park home owners receive the rebates to which they are obviously entitled.

The Director General of Electricity Supply approached the regional electricity companies directly last year, and they responded that they had considered his request carefully but had concluded that the legal and practical difficulties were such that they were not willing to extend the rebate to consumers living in park homes.

The north-west electricity consumers committee in my region was informed by Norweb on 28 November 1995 that the rebate scheme in the north-west would not be extended to park home owners who purchase their electricity supplies through the site owner rather than from Norweb. No reason or justification for that decision has ever been provided. In the interests of fairness, it should have been the policy of regional electricity companies and the Government that the rebate eligibility criteria would be widely drawn, but they were not. As a result, tens of thousands of people throughout the country have lost out, and there is no sign that the Government have any intention of pushing the regional electricity companies to extend the rebate scheme.

Most electricity consumers have received their rebates, which were included in their 1996 first quarter bills, but it is not too late to protect the interests of park home residents. I invite the Minister immediately to invite the regional electricity companies to discuss with him the implementation of the rebate scheme, to determine whether everyone who should have benefited from privatisation of the national grid has done so. He should also consider asking the companies to consider two methods of extending the rebate scheme to park home owners.

There is no reason for park home owners not being invited to apply directly to their regional electricity companies for the full rebate. They would need to establish that they are domestic consumers, which they could do easily by providing a copy of the electricity bill from the site owner. There is no objection in principle to the rebate being paid in the form of a cheque, in the limited case of park home owners. In a letter dated 8 November 1995 to the north-west electricity consumers committee, Norweb indicated that it was prepared to pay the rebate by cheque if requested.

I will quote that letter because it is important that the Minister should understand that the rebate does not necessarily have to be administered through the billing system. Norweb's letter to the chairman of the committee, which is signed by Joe Ashe, directorate liaison officer, states: As far as the method of reduction, there will be a one line entry on the bill, for regular bills/payment plan customers, and a cheque will only be given if requested by a customer … Customers will receive Royal Bank of Scotland cheques, which can be cashed at any of our shops, or Royal Bank of Scotland branches, free of charge. In other words, Norweb has already accepted that the rebate can be administered through a cheque system. I hope that the Minister will raise that issue directly, not only with Norweb but with the other regional electricity companies, and that residents on park home sites can be alerted to the fact that the rebate scheme might be extended to them by the regional electricity companies simply placing advertisements in local newspapers.

Alternatively, the regional electricity companies could be asked to introduce a reduced unit price regime for park home sites for a limited period. There may also be other ways of solving this problem, but it is simply not acceptable for the regional electricity companies to wash their hands of the matter in the hope that it will go away, because it will not. Neither is it acceptable for the Government to say that these are matters for the electricity companies alone to determine. The Government have a wider responsibility to ensure fair play and it is simply not being discharged.

If it is possible for a way to be found to charge 8 per cent. VAT on domestic electricity supplies to park home owners, even though they are not direct customers of regional electricity companies, a way can and should be found to ensure that they receive the £50 rebate. I do not believe—and neither will park home owners—that it is beyond the wit of the regional electricity companies to solve this problem.

I hope that the Minister will announce today that he will pursue this matter further and take whatever action he can to help park home owners receive the £50 rebate to which they are without any doubt entitled.

2.40 pm
Mr. Andrew Miller (Ellesmere Port and Neston)

I congratulate my hon. Friend the Member for Barrow and Furness (Mr. Hutton) on raising this subject on the Adjournment and on all the work that he does on behalf of people resident in park homes. My interest stems from three such sites in my constituency—Orchard park in Elton, and Wervin and Dunham Hill parks. I shall concentrate my remarks on the latter because I have some evidence, to which I hope that the Minister will listen carefully, which supports solidly the argument made by my hon. Friend and gives good grounds for the Minister to reflect and come back with a positive answer in the not too distant future.

The three sites house 260 electors in my constituency, living in 173 homes. In a letter dated 1 March to Mr. Wilton-King, the secretary of Dunham Hill park residents association, the Department of Trade and Industry made it clear that the problem lay with the regional electricity companies. There was a gentle buck-passing exercise from the Department down to the regional electricity companies. The Department said: Unfortunately the RECs have not been able to find a way of making the discount to this group of customers. My hon. Friend made the important point that the RECs had managed to find a way of collecting VAT, so it seems ludicrous that they cannot manage to collect the information necessary to make the rebate.

In an earlier letter dated 12 December to a gentleman in Towngate Wood park in Tonbridge, Kent, the same official at the Department used exactly the same sentence. He preceded it by saying: I should point out that the National Grid Company belongs to the RECs and that it is they, not Government, who are making the fixed sum reduction to their domestic customers. In the end, it is they who will have to determine the means for making the reduction and how widely the net of eligible customers may be spread. He went on to say that the Minister for Industry and Energy had requested that officials look for methods of extending it. He then went on to use the same sentence as in the letter of 1 March: Unfortunately the RECs have not been able to find a way of making the reduction to this group of customers. Manweb, which services parts of the north-west, including the whole of my constituency, states that it would be impossible to extend any discount scheme to benefit all of those categories. There would clearly be serious problems arising as to the definition of those intended to get the benefit and methods of auditing their entitlement. Manweb has also told me in writing: There would be no practicable process for identification or auditing indirect claims. There are practical processes for collecting council tax and for charging VAT on electricity, so there must be a practical process for this objective, too.

The Dunham Hill park estate is owned by Mr. Hassall, who also resides on the site and therefore knows the situation facing the residents extremely well. He wrote to me recently to say: This park is for retired and semi-retired people, all of them registered customers of Manweb in their previous homes and now because of the way the system works they are paying more for their electricity than other people who are supplied direct by Manweb. He then makes a proposition which I hope that the Minister will consider: With regard to Manweb saying it would be difficult to identify eligibility I would be happy to supply them with a list of residents or copies of my electric accounts to help them, or of course they could consult the electoral register. So the information is readily available. I can understand the difficulties with people in caravan holiday homes and so on, but not with people who are on the electoral register and regularly making payments into the system. Mr. Hassall has been so open with me as to provide me with a copy of his electricity bill. It shows him, as a resident on the site with a Manweb account, getting his £50.56 credit—on a total bill of £1,872.66. That is considerably more than most of us would pay for electricity; yet he receives only one discount.

Why cannot we agree on a simple methodology along the lines suggested by Mr. Hassall? I urge the Minister to go back to the regional electricity companies, knock a few heads together and put in place a sensible system of rebates for people who are legitimately entitled to them as long-term electricity consumers.

2.47 pm
The Minister for Small Business, Industry and Energy (Mr. Richard Page)

I thank the hon. Member for Barrow and Furness (Mr. Hutton) for raising this subject, aided and abetted as he was by the hon. Member for Ellesmere Port and Neston (Mr. Miller). I am grateful for the opportunity to respond and to clarify the issue involved. I too have a park home site in my constituency.

I am sure that hon. Members are aware of the background to the grid discount and of the tangible benefits it is bringing to 21 million domestic customers of the regional electricity companies, but for the record I should like to set out briefly how the discount came to be made.

When the industry was restructured in 1990, the national grid was separated from the Central Electricity Generating Board and its ownership transferred to the RECs. They were the owners of the national grid, which was privatised along with the RECs in December 1990. From that date until December last year, the grid was the property of the RECs—of private sector companies, not of the Government.

In the five years since privatisation, private sector disciplines have created an industry and a national grid that are virtually unrecognisable from their nationalised days. Costs have been reduced, efficiencies introduced and investment in infrastructure has been secured without recourse to the public sector restrictions—all while reducing final prices to the public and improving dramatically the profitability of those companies.

As the industry evolved, the ownership structure of the national grid gradually became less appropriate. Flotation of the grid as an independent quoted company was seen by many as the sensible next step. The RECs made their proposals to float the company last year. The Government, the regulator, Stephen Littlechild, and National Grid all welcomed that as a step that would focus the company even more effectively and reinforce the grid's independent position in the electricity market. This is important in the light of its statutory duties as a facilitator of competition in generation and supply.

The Government supported the proposed flotation in principle and encouraged the RECs to share the considerable benefits of that flotation with their customers. The RECs saw the force of that argument and proposed a discount of £50 to all their domestic customers as soon as practicable after the flotation took place.

Let us be clear. Until December last, the grid belonged to the RECs. They made the discount to their domestic customers. We encouraged them to do so and we welcomed the sizeable benefit that customers have received. But it was for the RECs to decide how to make the discount to their domestic customers and whether the benefit could be extended to others.

My colleagues and I—as I am aware from my own constituency—are acutely aware of the disappointment that is felt by people who, for whatever reason, have not or will not receive the discount. Let me also make it clear that neither the RECs nor anyone else are discriminating against owners of mobile homes. The issue is simply whether one was a domestic customer of one of the 12 regional electricity companies on the register date. The vast majority of domestic customers in England and Wales are customers of the RECs, but some are not. They may buy their electricity from other companies altogether, such as industrial suppliers; others buy from their landlord or from a reseller, such as a site operator. Some are metered; some are not. Some are charged separately for their electricity; some are not.

Residents of many mobile home sites buy from their site owner. In that respect, the site owner is not a mere agent of the RECs, as some believe; he is a trader in his own right. The charges made by the reseller are not simply passed through to the RECs. The reseller buys his electricity from the RECs. He then resells it to his customers, charging for the units used and for making his private distribution system available to the final consumer. The local REC has no relationship with the final consumer. It is unlikely that he even knows who the consumer may be. Legislation exists to prevent overcharging, but beyond that the reseller is a commercial trader like any other. The hon. Member for Barrow and Furness asked whether I would discuss that with the RECs.

Mr. Hutton

I am grateful to the Minster for showing his usual courtesy in giving way, but I am afraid that he is splitting hairs. It is quite unrealistic to maintain that park home owners get their electricity other than through the RECs. Electricity comes to the site from the RECs. It is then passed on to the park home owners, but it comes from the RECs. It does not come from any other source, so it is quite irrelevant that there is a middle man who passes the electricity on to the park home owners. The RECs have a responsibility. As my hon. Friend the Member for Ellesmere Port and Neston (Mr. Miller) said, it is easy to establish who the park home residents are. The RECs have a responsibility to find ways to pass that rebate on. I am afraid that the Minister does not seem to be willing to pursue that matter with them.

Mr. Page

What I was about to say dovetails with what the hon. Gentleman just said. When the details of the discount were being finalised by the RECs, my officials asked whether those who purchased electricity from resellers would receive the discount. The argument that has just been made was made at the time. The RECs were then, and are now, of the view that it is not possible to do so. I understand, and the hon. Gentleman confirmed this in his speech this afternoon, that Professor Littlechild also raised that matter with the RECs and received a similar response.

I know that some have argued that the discount could have been given in a different way. That is a point of view. I understand the disappointment of people who feel that they should benefit from a measure, but in the end do not. But let us remember that the discount is going to about 21 million customers across England and Wales. Let us also remember there are many other benefits to consumers already in the pipeline, which should feed through to all consumers.

Prices paid by both domestic and industrial customers are falling. Domestic prices have fallen by 7 per cent. in real terms, excluding VAT, since privatisation, and industrial prices by 10 per cent. in real terms. Those reductions are set to continue. The Director General of Electricity Supply has estimated that the new price controls introduced last year, with the further tightening of the regime and the whole environment that will take place this year, should reduce a typical annual electricity bill by about £21 in real terms. The reduction in the fossil fuel levy at the time of nuclear privatisation will bring further reductions.

Already considerable benefits to the consumer are in place, and are set to continue. As I said, I appreciate the feelings that have been represented in the debate. I know that the position of the RECs is absolutely clear, but undoubtedly they will see the substance of the debate, and will have to note the suggested solutions. It will be up to them whether to take up those suggestions.

Mr. Miller

If Stephen Littlechild and the RECs could get together and further examine the possibilities of finding such a solution, would such a meeting have the Minister's support? Would he encourage the RECs and the regulator to get together and try to find a working solution, given the existence of that tightly defined group of people who pay their council tax, VAT, and so on?

Mr. Page

As I have already said, Professor Littlechild has already spoken to the RECs and is fully aware of the situation. My concluding sentence was to have been, and now is, that I would draw the attention of the RECs to the substance of the debate and to the solutions that have been suggested.

Question put and agreed to.

Adjourned accordingly at three minutes to Three o'clock.