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MP slams energy firms' charges

A gas fire5/2/14

By Ian Barnsley

MPs have called for energy companies to limit the charges imposed on customers who do not pay by direct debit.

Nearly 180 MPs, from all the major parties, backed a Commons motion calling on the coalition Government to limit the charges, described by one MP as a "stealth tax on the poor".

The motion states that official government statistics have found the charges add an average of £114 to a bill.

Stating that 45 per cent of customers do not pay their bills by direct debit, it urged the energy industry regulator Ofgem to set up an inquiry into the charges.

'Stealth tax on the poor'

Tory MP for Harlow, Robert Halfon, called for fundamental reforms to the system, including charging late-paying customers, more transparency and a "moderate cap" on direct debit fees.

He also told Parliament that energy firms who were found to be charging disproportionate fees should be fined or subject to a windfall tax, to make sure the cash is passed back to customers.

Mr Halfon said his own inquiry produced "shocking" results, with 17 out of 26 firms which replied charging their customers various rates depending on payment method.

Meanwhile only four charged the same regardless of whether direct debit was used.

He told MPs: "I believe these charges effectively act as a stealth tax on the poor."

The MP continued: "These excessive charges often hit those who should be protected the most.

"Many pensioners do not like paying by direct debit because they want to be in control of their finances and I've been inundated over the last few weeks with letters from pensioners.

"One said: 'I'm from the old school, brought up to put our bills money away every week, never to be in debt. But because we prefer not to have direct debit we are punished."

Direct debit concerns

He cited another example of a person who budgeted for their bills carefully, telling MPs: "This is exactly the sort of fiscal responsibility that we should encourage and is not a feeling exclusive to pensioners.

"Understandably anyone on a low income might be concerned about the direct debit which might come out at the moment when they do not have the ability to pay for it.

"For example, they might be waiting to get paid a day later. But missing a direct debit payment would incur a heavy bank charge.

"It also doesn't even take into account those who struggle getting access to proper banking facilities.

"There are 1.9 million households in the UK who do not have a current account, so that's no facility for them to have an overdraft.

"Half-a-million of these households do not even have access to a basic bank account that can accept a direct payment.

"These households are incredibly vulnerable and they have very little choice over their payment methods, yet they are being penalised for this and they are often the people who can afford it the least."

He added that many people, particularly the elderly, distrust direct debits and enjoyed the social aspect of going to the Post Office to pay their bills.

Shadow energy minister Julie Elliot said: "Tariffs should be cost reflective, any differences between different types of customers or different types of accounts... should reflect only the costs associated with serving those types of customers.

"Of course there can be differences in costs between different payment methods and it is reasonable there can be a small discount for customers who use cheaper payment methods such as direct debit."

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