Prepayment Meters

(Urgent Question): To ask the Secretary of State for Business, Energy and Industrial Strategy if he will make a statement on families having prepayment meters forcibly installed in their homes by energy companies.

The Government recognise the importance of protecting customers, including those on a prepayment meter. That is why this weekend, the Secretary of State set out a five-point plan on prepayment meters. He wrote to energy suppliers to call on them to take every step to support consumers in difficulty. The Government want much greater effort from suppliers to help consumers in payment difficulty, including offers of additional credit, debt forgiveness and tools such as debt advice. Suppliers have been asked to commit to stop moving households to a prepayment meter wherever possible, and to reveal the number of warrants they have applied for in recent months, as part of a drive to increase transparency around prepayment meter installations.

There are reports that the courts are handling batches of applications for warrants, so the Department for Business, Energy and Industrial Strategy is working with Ofgem and the Ministry of Justice—I am pleased to have beside me the courts Minister, the Under-Secretary of State for Justice, my hon. Friend the Member for Finchley and Golders Green (Mike Freer)—to ensure that the process by which suppliers bring such cases to court is fair and transparent and supports vulnerable customers.

The Government have urged suppliers to take action to increase the number of vouchers being redeemed under the Government’s energy bills support scheme. We have published a list of supplier redemption rates, showing who is best meeting their responsibilities and those who need to do more.

The Secretary of State has written to Ofgem, asking it to do more to ensure that suppliers protect vulnerable consumers, including by revisiting its approach to the enforcement of supplier compliance and through the urgent publication of the outcomes of recent investigations into vulnerable customers. I will meet energy suppliers, Ofgem, Energy UK and Citizens Advice later this week to discuss these matters further. Those actions come on top of the Government’s unprecedented cost of living support, including the £400 discount under the energy bills support scheme and the energy price guarantee, which will save a typical household—on top of that £400—£900 this winter, with equivalent support in Northern Ireland.

I am glad that the Government have in the last few days finally woken up to the fact that we have a national scandal around prepayment meters. The question is whether their actions will stop the scandal; I fear the answer is no.

The Secretary of State could only say in his letter published yesterday that he

“would expect that the volume of…pre-payment meter installations and disconnecting households will start to subside over the coming months”.

The words “start to subside” are no comfort for the thousands more people who are facing bailiffs and being disconnected. Labour called for a ban on the forced installation of PPMs for at least the course of this winter to ensure that the Government, the companies and the regulator reform a broken system. Let us be clear that this is a broken system, with no proper criteria for what forced installation as a last resort means; no clear definition of the vulnerable; no proper clarity about the credit that should be offered to people on PPMs; no proper rules on debt repayment; and people on PPMs—the most vulnerable in our society—paying the most for their energy: a prepayment penalty.

Will the Minister answer three questions? First, would not the best thing he could do to prevent hardship this winter be to impose a temporary ban on the forced installation of prepayment meters? That is the way to protect thousands more who may fall into misery. Secondly, does he agree that, particularly in this cost of living crisis, it is quite wrong that those on prepayment meters are paying more for their energy, and will he take action to end that penalty? Thirdly, will he pledge to look at the system in other countries whereby nobody can forcibly be cut off—as we do with water in the UK—with a minimum amount of power supplied to all households?

Energy companies are forcing their way into people’s homes and millions are being disconnected by the back door. It is not enough for the Government to express regret, write letters and have meetings; only a ban will do.

We have today already seen a response from suppliers to the Government’s calls. We must look to be as effective as possible in effecting change now, and we believe that the Government’s calls on and engagement with suppliers, alongside that of Ofgem, is the right approach. Suppliers must exhaust—as they are required to do—all other alternatives before forcing the installation of a prepayment meter.

We, too, were once in opposition, so I understand the desire to come up with superficially popular policies, but we do not want to create a system where, in fact, more people are forced into debt, end up with bailiffs and are drawn into the court system. That is exactly what we wish to avoid. For many consumers, prepayment meters are a useful tool to allow them to manage their credit and ensure they do not get drawn into the court system in that way. [Interruption.]

If the right hon. Member for Ashton-under-Lyne (Angela Rayner) were to stop chuntering even for a moment, she would hear my response to the right hon. Member for Doncaster North (Edward Miliband), who asked me about the penalty, as he put it, of higher costs. The standing charge is a fixed charge that covers the cost of live supply, and it is controlled by Ofgem. The system, which I think was in place when the right hon. Gentleman was a Minister, is that the cost should reflect the actual cost of providing the service. Ofgem manages that, but I agree with him that this is something we should look at. That is why we are going to look at social tariffs and why we want to look at whether those costs should be socialised. This is a long-standing situation that we are seeking to address. The whole energy supply system is under stress right now because of the energy crisis, and it is right that we make moves sensibly, without perverse outcomes, to ensure that we protect the most vulnerable.

On the question of not forcibly cutting people off, I am always open to looking at these issues, but of course a lot of people will manage the way they use heat and electricity, and it is somewhat different from water. We want to ensure that we get the balance right by protecting the most vulnerable and making sure that we have a system that builds on the unprecedented protection for consumers that we brought in this winter.

Energy consumers on prepayment meters are among the most vulnerable energy consumers. In the face of the biggest ever hike in domestic energy prices, getting financial support to those people is more important than ever. While it is good news that 99% of energy bill support payment vouchers have been issued, it is alarming that only 71% have been redeemed. ScottishPower has redeemed only 64%. Other companies such as Bulb have redeemed 79%. Will the Minister put a rocket under companies such as ScottishPower to ensure that this money gets into the hands of vulnerable consumers as quickly as possible?

My hon. Friend is absolutely right, and that is one of the reasons we have published the list today. Transparency is the best form of disinfectant. We expect the suppliers’ chief executive officers to have conversations with their teams and to ask, “Why are we at the bottom of this list?”. We want competition between suppliers, but all of us have a role to play. It is up to the whole of society to ensure that people are aware of the vouchers. People in the greatest difficulty might be the least likely to open the envelope, for example, so we have looked at the design of the envelopes and at every front. We want to get the message out there to people on prepayment meters that the vouchers are there and that they are entitled to support. Like my hon. Friend, I would like to see the take-up increase.

Recently, the i newspaper reported that Wigan magistrates court had been granting around 2,000 disconnection warrants each month. On one day in December, 496 were granted in under four minutes without magistrates even knowing the names and addresses of those people, let alone their circumstances or vulnerabilities. Forcing customers into a situation where they pay the highest rates for energy and are at risk of self-disconnection without any discussion of their circumstances is patently wrong. Will the Minister ensure that this travesty of justice does not continue any longer, and implement a ban on the forced installation of prepayment meters?

I thank the hon. Lady for her question. Of course, before the suppliers get to that stage, they are required by Ofgem to ensure that it is absolutely the last resort. That is before they get to the court stage. As I said in my opening statement, we are working closely with the Ministry of Justice to ensure that the court process, as part of the overall system, is fit for purpose and provides the maximum protection possible.

Mortgage providers now do well in engaging with customers, managing difficulties and greatly reducing the number of repossessions. Does my right hon. Friend agree that energy companies should do likewise, rather than turning to prepayment meter warrants on the slightest pretext? If the numbers of warrants do not come down, does he agree that more should be done to have specific reduction targets?

My hon. Friend is absolutely right. We have to make sure that all suppliers are fulfilling the requirements set by Ofgem. Ofgem’s inquiry into the treatment of vulnerable customers by energy suppliers found weaknesses across the board, and it is engaging with suppliers on compliance. The Secretary of State wrote to Ofgem again in the last few days to reiterate the importance of ensuring that that compliance work has real teeth and that suppliers fulfil their obligations to protect these people.

Prepayment meters enforce a poverty premium on some of the most vulnerable in society. My Pre-Payment Meters (Temporary Prohibition) Bill would prevent their installation during one of the worst winters in living memory. In just over 30 days, the Government will allow my Bill to fall—but it is not too late. Will the Minister consider supporting it?

I thank the hon. Lady for her question. As I have said, we are looking at the treatment of vulnerable customers overall, including on the issue she raises through her Bill.

I am incredibly concerned to hear reports of a number of vulnerable customers being moved on to prepayment meters and to hear energy companies quoted in the media as saying that higher energy prices are here to stay, implying that the fall in wholesale prices will not be passed on to our constituents. I welcome the Government’s actions on both issues, but can my hon. Friend set out what steps are available to the Government if energy suppliers do not play fair, and reassure my constituents that he will take those steps if needed?

Suppliers are required to provide emergency and friendly hours credit to all prepayment meter customers, and where a supplier identifies that a customer in a vulnerable situation has self-disconnected or is self-disconnecting, it must offer them additional support credit where it is in the customer’s best interest to do so. Ofgem warned suppliers way back in June 2018 that PPMs should only be installed as a last resort for debt collection and banned forcible installations for vulnerable consumers in 2017. We are watching to ensure that we have the right steps in place and will take further steps if required to make sure that suppliers live up to their obligations.

What possible justification is there for forcing people to sit in the cold and the dark because they have been required to have a prepayment meter connected that they cannot afford to top up? Twenty-five years ago we had the same debate over water disconnections, and society decided it would no longer be lawful to deny any human being access to water. Have we not now got to the point where, similarly, our constituents should be entitled in all cases to light and to warmth?

Heat and light, not least as driven by the current energy prices, constitute a significant cost to families and to the nation. We have to work with the system to provide additional credit and support for people, but, having had 30 suppliers close business, with high costs imposed on the system and thus on consumers, we must get the balance right, so that we have a system that encourages people to pay their bills but also protects those who most need help.