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Prepayment Meters
23 January 2023
Lead MP
Graham Stuart
Debate Type
Ministerial Statement
Tags
Justice & CourtsEnergyBusiness & Trade
Other Contributors: 23
At a Glance
Graham Stuart raised concerns about prepayment meters in the House of Commons. A government minister responded. Other MPs also contributed.
How the Debate Unfolded
MPs spoke in turn to share their views and ask questions. Here's what each person said:
Government Statement
The Government acknowledges the importance of protecting customers, particularly those using prepayment metres. The Secretary of State introduced a five-point plan to support consumers facing payment difficulties. This includes urging energy suppliers to offer additional credit, debt forgiveness, and provide tools like debt advice. Suppliers have been asked to commit to reducing the use of prepayment metre installations and disclosing details on warrant applications for disconnections. The Department is collaborating with Ofgem and the Ministry of Justice to ensure fair and transparent court processes for disconnection warrants. The Government has published a list showing suppliers' redemption rates of vouchers under the energy bills support scheme, highlighting areas needing improvement. A meeting will be held later this week involving key stakeholders to further discuss these issues. Additionally, the government is exploring new consumer protection measures, including social tariffs and retail market reforms.
Ed Miliband
Lab
Doncaster North
Question
The Labour Party questions the Government's actions, arguing that a temporary ban on forced installation of PPMs is necessary to protect vulnerable consumers from hardship this winter. It also raises concerns about higher energy costs for those using prepayment metres and calls for an end to such penalties.
Minister reply
The Minister responds by emphasising the effectiveness of current measures involving engagement with suppliers, Ofgem, and ongoing regulatory oversight. He acknowledges the need for further examination of social tariffs and fair pricing mechanisms but asserts that abrupt bans could lead to unintended consequences like increased debt and court involvement.
Question
Concerned about slow redemption rates of energy bill support vouchers, especially by companies like ScottishPower, the MP asks for urgent action to ensure these financial supports reach vulnerable consumers.
Minister reply
The Minister acknowledges the issue and highlights transparency efforts through public lists. He encourages competition among suppliers and societal awareness campaigns to increase voucher uptake.
Question
Criticising court processes where warrants are granted without proper review of individual circumstances, she calls for an immediate ban on forced prepayment metre installations.
Minister reply
The Minister confirms ongoing work with the Ministry of Justice to ensure that court processes provide maximum protection. He reiterates that suppliers must exhaust all other options before resorting to such measures.
Question
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 metre 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?
Minister reply
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.
Wera Hobhouse
Lib Dem
Bath
Question
Prepayment metres enforce a poverty premium on some of the most vulnerable in society. My Pre-Payment Metres (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?
Minister reply
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.
Question
I am incredibly concerned to hear reports of a number of vulnerable customers being moved on to prepayment metres 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?
Minister reply
Suppliers are required to provide emergency and friendly hours credit to all prepayment metre 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.
Hilary Benn
Lab
Leeds South
Question
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 metre 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?
Minister reply
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.
Question
I thank that the Minister for his statement. I have a number of constituents who use prepayment metres. Should energy companies not be using all their efforts this winter to focus on supporting those constituents with their energy costs, such as with the voucher scheme he has already mentioned, rather than trying to transition them forcibly on to prepayment metres?
Minister reply
My hon. Friend is right, as ever, and that is an important part of the message we are sending out today. I think this urgent question helps to strengthen that message to suppliers and others to ensure that people who are in a vulnerable position are supported to the greatest extent possible.
Question
Seeing as the Minister is all about encouraging and asking companies to do things rather than enforcing any action, perhaps he might encourage or ask the energy companies to publish how much interest they earn from money that is loaded up-front on to prepayment metres, before it is expended on electricity and energy?
Minister reply
I thank the hon. Gentleman for that question and will write to him with an answer.
Question
Too many people in my constituency are on prepayment metres. The forced installation of prepayment metres in places such as Peterborough, so that the most vulnerable have to pay more, needs to stop. What more can the Minister do to ensure that energy companies look at every possible avenue so that those in my city who are least able to pay are not paying the highest energy prices?
Minister reply
My hon. Friend is absolutely right. The system that we inherited and that exists today reflects the cost of supply, and Ofgem supervises that to ensure it is the case. Alongside him and others across the House, I would be interested in looking at that again to make sure we get a system with the right balance.
Emma Hardy
Lab
Kingston upon Hull West and Haltemprice
Question
It is fundamentally unfair that people with a prepayment metre pay more for their energy. Whether they have chosen that prepayment metre or not, they have the same energy coming into their homes as everybody else. The argument from the energy companies that somehow, “This is justified because it is more expensive” falls completely flat when we find out that many people are being moved from smart metres straight over to prepayment metres. So will the Minister look at taking enforcement action to stop those on prepayment metres being charged more?
Minister reply
I thank the hon. Lady for her question. Switching any customer from smart credit to smart prepayment can take place only after an energy supplier has gone through a prescribed process, in the same way as if they were going to fit a prepayment metre to replace a traditional credit metre. The energy regulator, Ofgem, has rules in place that restrict the forced fitting of a prepayment metre or the switching of smart metres to prepayment mode for those in arrears except as a last resort.
Question
I do feel that the Government need to offer a clearer explanation as to why those on prepayment metres have higher energy charges—that is the least we can do. What help and support is being given to those who were on prepayment metres but, finding themselves in better financial situations after the Christmas period, are now trying to transfer back across to credit metres? In some instances there are penalties for doing this. It should not be right that any energy company is imposing a penalty for those who wish to transition away from prepayment metres.
Minister reply
I agree with my hon. Friend and it is important to make sure that people do not find themselves caught in a cul-de-sac. He asked about the Government laying out the rationale for higher costs. I believe I have said this on two occasions, so I hope I have at least set out the rationale, whether or not people agree with it. The one that we inherited and that subsists today is that this is cost-reflective. Ofgem, the regulator, supervises this and ensures that no charges are imposed that do not reflect the additional costs of providing energy through that particular methodology. Whether we should change that is a separate matter, but I hope I have at least been clear in explaining the rationale that we inherited from the right hon. Member for Doncaster North (Edward Miliband) and others previously.
Dwyfor Meirionnydd
Question
People living in north Wales are at the sharp end of the cost of living crisis. Last year, many of them paid the highest electricity prices in the UK, and the costs for those on prepayment metres was higher still. Recent figures from Citizens Advice show how precarious access to energy is for prepayment metre customers in Wales, with 32% being disconnected last year because they could not afford to top up. We have heard that the Minister will not ban the forced installation of prepayment metres, so will he give the Welsh Government the power to step in and put people before private energy profit?
Minister reply
I entirely reject the premise of the right hon. Lady’s question. We are not putting people behind the private energy company profits—quite the contrary; we are trying to ensure that we have a system that stops vulnerable people getting caught in debt, having bailiffs coming to the door and being further impoverished by a system that does not help them. That is what we are seeking to balance. As I have said, we are going to consider this in the round going forward, because the system and, most of all, people such as those she refers to are under a stress that has never been seen before.
Rachael Maskell
Lab Co-op
York Central
Question
The scrutiny and support that the Minister says the energy companies should be putting in place is not happening, so there is no point in hiding behind the words because 600,000 people were flipped over to prepayment metres last year. So why will he not—can he give a real reason for this—put in place a moratorium, until this mess is sorted out, on anyone moving over to prepayment metres? Will he also reverse things for those people who have been forced on to these high tariffs?
Minister reply
The speediest way this winter to make an alteration to this is to call on the companies to do everything possible to avoid doing it. Some have already managed to do it. That, of course, throws up the question of whether we should seek a long-term moratorium, and that is something to look at. However, right now, by publishing the data and urging the companies to cease using this except as an absolute last resort, which is supposed to be the requirement in any case, I hope to see those numbers collapse as soon as possible. This is the fastest way we can make a difference now.
Catherine West
Lab
Hornsey and Friern Barnet
Question
The Minister needs to get a grip. A constituent has written to me saying that she has cut back to having one shower a week. Another says: 'I am mostly washing in cold water, but I’ve recently started getting the beginnings of painful arthritis in my fingers as a result.' How low do people have to fall before the Government get a grip, take back control and get on top of this problem so that our constituents can have the basics of a good life?
Minister reply
Of course, the Government are providing an unprecedented three layers of support for consumers: the cost of living support for those on benefits, the £900 reduction in energy bills this winter and the additional £400 energy bills support scheme, as well as help for those on alternative fuels. The Government are bending over backwards, within an unprecedented and tight situation, precisely to help constituents such as those the hon. Lady mentioned, because we have to bear in mind the most vulnerable—those who are struggling, especially on a day like this when it is so horribly cold.
Question
Legacy prepayment metres number about 300,000 in Scotland and 2 million in the UK. Many have a credit limit of only £99, which with the perverse higher tariff and standing charges does not go far, especially in cold times such as now. That requires multiple top-ups, and often people who are on legacy prepayment metres live in either rural areas or deprived urban areas devoid of public transport, or have restricted mobility. Will the Minister also undertake to address this other injustice, heaped upon those who are already the poorest and most vulnerable?
Minister reply
The hon. Gentleman is right to highlight people in rural areas, including the remote highlands and islands, which I am sure the right hon. Member for Orkney and Shetland (Mr Carmichael) will question me about if he gets the chance. The hon. Gentleman is absolutely right that we need a system that recognises the geographical and proximity challenges that affect people such as those he has mentioned, and—while under unprecedented stress, as I say—works at that granular level for ordinary families, often in remote areas. They need help and we need a system that supports them.
Gerald Jones
Lab
Merthyr Tydfil and Aberdare
Question
Figures from Citizens Advice show that in Wales 81,441 people are being disconnected at least once a month, and 24,432 people are being disconnected at least once a week. In October, Ofgem warned suppliers that not enough was being done to identify customers in vulnerable circumstances before installing a prepayment metre, but analysis of calls to Citizens Advice’s consumer service just in the past month suggests that that practice is ongoing. Voluntary action is not working, so I repeat: will the Government implement a total ban on forced prepayment metre installations until new protections are brought in?
Minister reply
We have called on suppliers to voluntarily stop the practice of switching to prepayment metres as the answer to households struggling to pay their bills, and they should also make a greater effort to help the vulnerable. We are going to look at this whole system, not least following Ofgem’s investigation that found failings by energy suppliers when dealing with the most vulnerable.
Dawn Butler
Lab
Brent East
Question
We must thank Dean Kirby from the i newspaper for his campaign—he called me because of my 2016 campaign on prepayment metres, and I also informed him of my experience as a magistrate. I am disappointed that it has taken so long to ensure that people on prepayment metres do not pay the extra tariff. An elderly constituent of mine who had had a stroke had no gas in their home. The unintended consequence of smart metres is that they can be switched remotely, and the Minister cannot rely on energy suppliers to do the right thing. Can he please take emergency action, and will he please realise that winter deaths have increased by 20% this winter?
Minister reply
One of the issues raised by the right hon. Member for Doncaster North (Edward Miliband) was the fact that redemption of the energy support vouchers that provide help for people on prepayment metres is at about 71%, as opposed to the higher level that we would like. That is something we need to address, because in this freezing weather it is more important than ever that those with prepayment metres look out for and redeem their vouchers, as a contribution to helping them get through this challenging time.
Toby Perkins
Lab
Chesterfield
Question
With respect, the Minister’s response to this urgent question has been utterly pathetic. The truth is that the voluntary approach the Government have taken is not working, as has been said by Members on the Government Benches as well as on ours, so the question for the Minister is this: will he take action to prevent people from freezing to death this winter, or will he continue to have reviews when the emergency is now? Will he please show the urgency and the scale of response that is needed, and tell us that he will take the approach laid out by my right hon. Friend the Member for Doncaster North (Edward Miliband)?
Minister reply
As I have said to the House, we are urging suppliers to desist from using prepayment metres and to do everything possible to make sure that they are avoided, but we recognise that, as a final and last resort, having exhausted everything else, they can be a way of helping people to control what might otherwise be an unmanageable debt.
Clive Efford
Lab
Eltham and Chislehurst
Question
The entire debate around fuel costs when prices were spiking was about the impact on vulnerable people and people who would have to make the choice between heating and eating, and sometimes not being able to make a choice about either. Why, then, did it take Citizens Advice to expose this scandal and the fact that the Government have been asleep at the wheel? The only way to sort this out, when forced entry warrants have been issued on an industrial scale by magistrates courts, is to impose a moratorium, so that we make sure that no one who has a prepayment imposed on them is forced into a situation where they cannot afford to pay fuel costs. That is surely the minimum that the Government should do.
Minister reply
As I have made clear to the House, the Government are absolutely calling for suppliers to do everything possible to avoid doing this, and I think that we are already seeing movement as a result of that call.
Tan Dhesi
Lab
Slough
Question
You will be aware, Madam Deputy Speaker, that prepayment customers, many of whom are the least well off in society, are charged a higher rate for their energy. Does the Minister recognise the huge injustice being forced on thousands more households as they are shifted on to prepayment metres and higher rates? What will he do to correct that injustice urgently, including, hopefully, issuing a moratorium?
Minister reply
I have explained that the system that Ofgem enforces, and has long enforced, is strictly based on the cost of delivery. We will look at that again to make sure of that. We have to ensure that the existing conditions on compliance on which Ofgem works with suppliers are right, but we also need a future system that learns from current pressures.
Alistair Carmichael
Lib Dem
Orkney and Shetland
Question
In Orkney and Shetland, we have the highest rates of fuel poverty anywhere in the country. The premium paid by the poorest people in my constituency takes the advance situation and risks making it catastrophic. We have another problem on top of that, as we cannot get any energy company to install metres in new-build houses in the northern isles. When the Minister next speaks to the energy companies, and when he has stopped them installing metres that people do not want in the rest of the country, can he ask them to send some engineers to the northern isles to install the metres that new house owners need?
Minister reply
The right hon. Gentleman has raised this with me. There are issues, and the Government have intervened to make sure that the distribution costs in the far north of Scotland and the islands are not fully reflected in the price, so a special exemption has been made. However, he is right—I have heard about the difficulty for builders of getting a metre installed, and it should not be beyond the wit of man for people to align and work together to make sure that the system runs efficiently and people get a metre when they should. I share his frustration.
Shadow Comment
Ed Miliband
Shadow Comment
The Labour Party acknowledges that the Government has recognised a national scandal concerning prepayment metres but argues that their actions will not be sufficient to address the issue. The party calls for an immediate ban on forced installation of PPMs, highlighting issues such as unclear criteria for last resort installation and high energy costs for those using these metres. It raises concerns about vulnerable consumers being disconnected without proper consideration of their circumstances.
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