Energy Price Rises

Business, Energy and Industrial Strategy – in the House of Commons on 12th July 2022.

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Photo of Rachel Hopkins Rachel Hopkins Shadow Minister (Cabinet Office)

What assessment he has made of the impact of the rise in energy prices on (a) households and (b) businesses.

Photo of Greg Hands Greg Hands The Minister of State, Department for Business, Energy and Industrial Strategy

The Government recognise the impact that increasing energy prices are having on households, which is why we are providing £37 billion in support for consumers this year alone. The Government are in regular contact with business groups and suppliers to explore ways to protect businesses.

Photo of Rachel Hopkins Rachel Hopkins Shadow Minister (Cabinet Office)

Citizens Advice Luton has seen a 119% increase in local people saying they cannot afford their energy bills after April’s price increase, even after cutting back on other essential spending. I heard the Secretary of State say that the issue is talked about constantly in Cabinet, but does the Minister recognise that the energy price cap increase later this year will push even more families into poverty and hardship?

Photo of Greg Hands Greg Hands The Minister of State, Department for Business, Energy and Industrial Strategy

I completely agree with the hon. Lady in her analysis of the underlying issue: the big rise in global energy prices over the past 12 months. That is exactly why we are taking the action we are taking: £37 billion-worth of support for consumers and bill payers over the course of this year. That is a massive amount of Government support going into ensuring that people get the support they need to be able to pay those bills in the coming months.

Photo of Peter Aldous Peter Aldous Conservative, Waveney

I am grateful to my right hon. Friend for outlining those measures. I sense it will be a very bleak winter; the energy price cap will play a role, but it would help if it were augmented by a social tariff. Will he advise on whether there have been any discussions in Government about the introduction of such a tariff?

Photo of Greg Hands Greg Hands The Minister of State, Department for Business, Energy and Industrial Strategy

I thank my hon. Friend for that thoughtful question. Obviously, all these things are under review, but I remind him that we replaced the social tariff with other support schemes for bill payers under the coalition. That remains our position, but we—both the Department and the Treasury, and indeed, the whole Government—study these positions and issues very closely indeed.

Photo of Tim Farron Tim Farron Liberal Democrat Spokesperson (Environment, Food and Rural Affairs), Liberal Democrat Lords Spokesperson (Communities and Local Government), Liberal Democrat Spokesperson (Housing, Communities and Local Government)

It is very clear that the rising price of heating people’s homes will be devastating and go well beyond anything the Government have done to help households so far. For people living off-mains who are reliant on heating oil, for example—19,000 households in Cumbria alone—there is no cap whatever. They have seen their prices more than double over the past 12 months. What will the Minister do to ensure people in rural communities like mine are not hit even harder than the majority?

Photo of Greg Hands Greg Hands The Minister of State, Department for Business, Energy and Industrial Strategy

As the hon. Gentleman knows, we reflected on this issue in an earlier question. The Government are providing support for those who are off the gas grid. For example, those who pay an electricity bill will qualify for the £400 reduction this year. We have also put £1.1 billion into the home upgrade grant, on top of the £2.5 billion already deployed, to make sure vulnerable households, which could well include some of his constituents, are able to profit from the energy measures being put forward by the Government. His question on the price cap is a reasonable question to put. The information I have directly from the trade body UKIFDA—the UK and Ireland Fuel Distributors Association—is that a price cap would be extremely difficult for its members, the people in the retail market for heating oil, because it becomes very difficult for a small business to hedge. However, it is something I discuss with MPs, the industry and the trade body regularly to see what more can be done, and the situation is under constant review.

Photo of Katherine Fletcher Katherine Fletcher Conservative, South Ribble

One thing we can do to bring energy prices down is have an absolutely massive expansion of renewable offshore energy, whether that is tidal or wind. Last week, I met National Grid, which will use Penwortham on the Ribble estuary coast as the point to onshore a lot of the electricity that helps to get our fuel bills down. Does the Minister welcome the fact that National Grid has seen the opportunity of Penwortham, and does he agree that we just need to make sure that the environment and the natural Ribble estuary are protected as the cables and the energy come forward?

Photo of Greg Hands Greg Hands The Minister of State, Department for Business, Energy and Industrial Strategy

I thank my hon. Friend for her question and her constant very good and strong engagement on behalf of her Ribble valley constituents. Renewable energy is, of course, part of the solution. That is why we announced the allocation round for the latest auction of renewable energy last week. It was the most successful ever, with 10.8 GW of renewable energy coming to this country through the contracts for difference mechanism. It has been a huge success, and I welcome my hon. Friend’s interest.

Photo of Alan Whitehead Alan Whitehead Shadow Minister (Department for Business, Energy and Industrial Strategy) (Energy and Climate Change), Shadow Minister (Climate Change and Net Zero)

The Minister knows that, at present, all retail electricity supplies—whether they derive from more expensive gas or cheaper renewables—are charged as though they had all come from gas. He also knows how to decouple prices coming into the retail market, so that domestic and business customers can enjoy considerable reductions in their energy bills by getting the direct benefit of renewable prices. Why is he not legislating to do so?

Photo of Greg Hands Greg Hands The Minister of State, Department for Business, Energy and Industrial Strategy

The shadow Minister raises an interesting and good point about how the UK electricity market is structured. That is one reason why we have launched the REMA—review of electricity market arrangements—process and why we are taking action in the Energy Bill on aspects of the domestic energy system that will yield real gains for consumers, such as the onshore distribution and transmission network, so that there will be more competition in the network. There will be other measures in the Bill, which I very much hope that he and the other Opposition Front Benchers will support in due course.