The Government recognise that this is a deeply worrying time for households and businesses, as we see renewed highs in energy prices. These are of course largely a result of Vladimir Putin’s illegal and barbaric invasion of Ukraine, as we discussed at the G20 meeting of Energy Ministers on Friday. The surge in the global wholesale price of gas meant that Ofgem announced on
The future outlook is uncertain, but we know that we need to support UK energy consumers to manage the impacts in both the short and longer term. That is why the Government have taken decisive action, including introducing a £37 billion package of support, which is targeted at those who are most in need of support. This includes a £11.7 billion energy bill support scheme, which is worth up to £400 for around 29 million households. In addition, targeted support includes more than 8 million households on means-tested benefits receiving a payment of £650. Over 8 million pensioner households that receive the winter fuel payment will also receive a £300 cost of living payment. Six million households that receive disability support will receive a £150 disability cost of living payment, and there is a £144 million discretionary fund for local authorities to distribute to those identified as being in need.
The Government are also focused on delivering a programme of work to tackle energy efficiency in order to target longer-term energy bill reductions. We are investing £6.6 billion in energy efficiency and heat decarbonisation over this Parliament. We will deliver upgrades to over half a million homes in the coming years through our social housing decarbonisation fund, home upgrade grant schemes and energy company obligation scheme, delivering additional average bill savings of £300.
We must continue to decarbonise, reducing our dependency on expensive, imported fossil fuels and bolstering our energy security through clean, home-grown energy. A net zero economy is not just critical to tackling climate change; it is also in our strategic interest as a means to reducing our reliance on global energy markets. That is why the Government’s British energy security strategy, published in April, set out a series of bold commitments, which put Great Britain at the leading edge of the global energy revolution.
The Government are delivering on this, for example, in our latest renewables auction, awarding contracts for difference to a record 93 new renewable energy projects, which will total almost 11 GW of new generating capacity for Great Britain—enough to generate sufficient electricity to power around 12 million homes. The UK is already a world leader in offshore wind, with the biggest installed capacity in Europe, generating 12.7 GW of electricity, enough to power around 10 million homes. We are continuing to increase this with another 6.8 GW in construction and a further 7 GW in preparation. We are increasing our nuclear ambition with the construction of Hinkley Point C and Government investment into Sizewell C, both of which could power 6 million homes. We are also launching Great British Nuclear, a body tasked with developing a resilient pipeline of new build nuclear projects. We have launched a major review into Britain’s electricity market design, to radically enhance energy security, and to help deliver our world-leading climate targets, while reducing exposure to international gas markets.
We have facilitated the uptake of new products and services such as time of use tariffs, which reward consumers financially for using energy when demand is low or when excess clean electricity is available—for example, on sunny or windy days and nights. The Government also recognise the impact that rising energy prices will have on businesses of all sizes. We are in regular contact with business groups and suppliers, to understand the challenges they face, and explore ways to protect consumers and businesses.
We are determined to secure a competitive future for our energy-intensive industries, which are, of course, most vulnerable to energy price rises. We have therefore extended the energy-intensive industries compensation scheme for three years, and are considering further measures to support businesses, including increasing the renewable obligation exemption to 100%.
However, this Government recognise that we need to go further still. These measures were brought forward when estimated annual energy costs were expected to rise to £2,800. It is now clear that we are looking at a challenge on a greater scale. The Government are working closely with Ofgem and other stakeholders to ensure that consumers and businesses are protected from the volatile energy prices this winter and beyond. I know that tackling this issue will be at the top of the incoming Prime Minister’s inbox, as we look to address both the short-term shocks and longer-terms needs of the UK energy system.
When it comes to energy security, this Government have an excellent record. When it comes to energy prices, we will once again be rising to the challenge of ensuring that British consumers and businesses are given the support that they need for this winter. I commend this statement to the House.
I thank the Minister for his statement and for the brief advance notice that we had.
I think that we can all agree that this is a statement of astonishing vagueness and complacency. I had, for example, anticipated that the Minister might have a bit more urgency on the consequences of Russia’s decision to cut off Nord Stream 1 today, and the effects that that will have on gas prices. I thought that he might have come to the House to tell us about that. We are closely tied to European markets. Does he accept that this announcement today puts an even greater sense of urgency on the need to protect the price of gas from outside the UK, both for businesses and for domestic customers, and what measures are the Government undertaking to make that happen?
For domestic customers, there is certainly an energy bill crisis in this country. We need urgent action now.
The Minister talked about funding for the last round of price cap increases, not the one we have now. I know that we have a new Government coming in, but we have heard nothing from the Minister or the Prime Minister about what the plans might be. In fact, all we have heard from the new Prime Minister is that there will be an announcement, but nothing about what the announcement might be. A clear and obvious announcement already exists, however: Labour’s fully funded plan to freeze energy bills this winter, paid for by a further windfall tax on the oil and gas giants making record profits on the back of the energy crisis.
The Minister has an opportunity today to put flesh on the bones of any announcement. He should tell us whether he thinks that the Government should freeze energy prices. Also, does he think that the Government should implement the further windfall tax on the oil and gas giants, and if not why not—and if not, does he want just to protect the profits of the oil and gas industry as a whole?
As well as short-term support for households, we need a long-term answer to this crisis. We on the Opposition side of the House are clear that the best way out of a fossil fuel crisis is to get off fossil fuels. That is why Labour has called for a national clean energy sprint for renewables and a national home insulation plan. The Minister mentioned home insulation and talked about the Government’s existing schemes, but he knows that, in relation to real need, they do not touch the sides. Does he recognise that we urgently need a national warm homes programme to insulate 19 million homes, and is he prepared to commit to that today at the Dispatch Box?
On future energy, the Government could fix many of the problems we face if they decoupled the price of electricity from that of gas. The Minister said in his statement that there is a very leisurely process of consultation and discussion, which I see from the discussion document “Review of Energy Market Arrangements” would not be enacted until 2025. Does he accept that that is a ridiculously long timescale for an urgent change we need now? Is he prepared to commit to decoupling the price of electricity from the price of gas now, particularly given the weight that renewables now have in the market? The Minister talked about offshore wind, but why has he not removed the Government’s ludicrous ban on onshore wind, and does he intend even at this late stage to decide it is time we actually did that?
Finally, the incoming Prime Minister is obviously a fan of fracking, but the Minister told the House on
“We are clear that shale gas is not the solution to near-term issues. It would take years of exploration and development before commercial quantities of shale gas could be produced.”—[Official Report,
Does he stand by that statement and will he be communicating this view to the new Prime Minister?
I thank the hon. Gentleman for his engagement, as ever. Let me try to deal with each of his points in turn.
First, on the Russian decision to cut off—or, as they put it, repair—Nord Stream 1, it is worth reminding ourselves that we are not dependent on gas from Russia, as the hon. Gentleman knows. Last year less than 4% of our gas came from Russia, and this year there have been no deliveries of gas from Russia since March—50% of our gas is domestic, and 30% is from Norway. He is right that this has an impact on prices, however, and that is being discussed at the moment and I would expect to hear more from the new Prime Minister and her team in the coming days, as he well knows.
The hon. Gentleman asked about any future windfall tax. Again, I do not want to speculate on what might happen, but I will say what happened when Labour last proposed a windfall tax. The measure that we introduced—the energy profits levy—is projected to raise twice what Labour’s proposal for a similar move would have raised at the time, and it has led to greater support for the most vulnerable customers. Labour’s proposals would have raised about £600, but the Government’s proposals raised twice that amount—about £1,200 for the most vulnerable households—and, as I said in the statement, there will be more to come on this.
The hon. Gentleman asked a very reasonable question about decoupling the electricity price from the gas price. Of course, this is one of the measures being looked at in REMA, as he rightly pointed out, and it will also be something of active interest for the Government. He asked about onshore wind, and he will know that the local partnerships scheme announced in the British energy security strategy in April has exactly mapped out how we see the changes in the onshore wind regime in England. There is no change as yet in Government policy on fracking, but that will obviously be a matter for the soon-to-be new Prime Minister.
Overall, the Opposition seem to make three central points: the Government failed to invest in renewables; the Government failed to invest in nuclear; and the Government failed to invest in energy efficiency. They are wrong on all three. On renewables, under this Government we have quintupled the percentage of electricity generated from renewables, from 7% of our electricity mix when they were in power to 40% in 2021, which is a very strong achievement. On nuclear, the Labour party’s 1997 manifesto said there was
“no economic case for the building of any new nuclear power stations” in Britain. Twenty-five years later, we have reversed that. We are building Hinkley Point C, and on Friday the Prime Minister was at Sizewell C announcing his support for that power station. On energy efficiency, we have actually increased the percentage of homes that reach the band C level of energy efficiency: we have trebled that from 14% of our homes in 2010 to a strong 46% today. When it comes to matters relating to energy—prices, taxation and energy security—this Government will take no lessons from the Opposition.
The Minister said that the rise in price was a result of the attack on Ukraine. It is much more than that: it is a deliberate part of the attack on Ukraine. Is not the essential ingredient of any scheme that the Government bring forward that it encourages customers to reduce their consumption?
My right hon. Friend of course makes a very strong point about Russia’s deliberate weaponisation of energy in this conflict, which we wholly deplore and our international partners also very strongly deplore. On our energy use, my job is to make sure that we have the energy supply that this country needs, and I am confident in our energy supply and the energy security measures we already have in place.
The only aspect of this rehashed statement to welcome is the acknowledgment from the Minister that the current proposals are insufficient to avoid a catastrophe. What we should be getting today is a proper updated statement on energy security and a net zero update that would reflect additional investment in renewables such as pumped storage hydro, Peterhead carbon capture and storage, what is happening with the Rough gas storage facility, the decoupling of renewables from gas, and grid upgrades.
The reality at the moment is that 6.5 million households are in fuel poverty, and if the energy cap increase goes ahead as planned, then 9 million households will be in fuel poverty. What is the Minister’s red line for the acceptable number of households that will be left in fuel poverty? What does he say to the businesses that have had no support to date? Does he agree with Make UK, which says that 60% of manufacturing businesses are now at risk? What assessment has he made of the impact on agriculture and the food and drink industry, and does he agree that the tax cuts proposed by the incoming Prime Minister will adversely help the rich and do nothing for the lowest-paid workers? The incoming Prime Minister has talked of scrapping the green levy. Has he explained to the incoming Prime Minister that there is no single green levy, and that doing so would not actually be a solution for reducing household bills?
On nuclear, will the Minister confirm that Hinkley Point C is now nearly 50% over budget and is years late, and that EDF now wants a delay to the payment start dates? For Sizewell C, will he confirm that the upper estimate for construction and finance is £63 billion? That is £63 billion to be added to bill payers’ bills, and it will not actually reduce energy bills in the future. In 2019, the Nuclear Decommissioning Authority’s estimate for the nuclear clean-up cost was £131 billion. When will we get an updated figure? Surely that in itself indicates that we need to end this nuclear folly and madness.
Finally, does the Minister agree that his Government need to introduce a freeze in the energy cap and urgent support for businesses, and to review budget allocations to councils and devolved Governments, so that energy cost pressures on schools, the NHS, transport and care services can be properly funded during this time of emergency?
I commend the hon. Gentleman on his ability to squeeze in so many questions. On additional investment in renewables, the Government are moving to annual allocation rounds on our renewable options. That is a strong achievement. The Government have invested a huge amount in renewables, particularly through the contracts for difference system, which I would urge him to support. He will know that we made an announcement recently on where we are with Centrica and Rough gas storage, and that continues to proceed.
I remind the hon. Gentleman that fuel poverty is a devolved matter, so he may wish to have a word with the Scottish Government, which I have reason to believe he may be close to. He also mentioned businesses, and I remind him that the cost of energy for businesses is right at the top of the in-tray of our new Prime Minister. He mentioned the food and drink sector, and I am sure that is also the case for that sector. He asked about tax, and that will be a matter for the Treasury and for future announcements.
The hon. Gentleman mentioned nuclear budgets, and I am getting a bit fed up with the SNP’s obsessive anti-nuclear behaviour. It is exactly that kind of no-saying that got us into the problem of not having enough nuclear power in this country. Thankfully, earlier this year the Prime Minister rectified that with the British energy security strategy, making sure that we get to 24GW of nuclear power by 2050. As for the cost of Hinkley Point C, the hon. Gentleman will find that the strike price, which was negotiated by the then Chancellor of the Exchequer, George Osborne, and by me, as Chief Secretary to the Treasury, compares very favourably with energy prices today.
Finally, I think I heard a complaint from the hon. Gentleman about budget allocations to councils, which was extraordinary, coming from the SNP. It is the party that has been hammering council budgets in Scotland, and then expecting them to collect the rubbish with vastly decreased levels of budgetary contribution. I again urge him to have a word with his friends in Edinburgh who are running the Scottish Government, to see whether they might be able to do something to improve the budget allocations for Scottish councils.
I welcome the Minister’s statement and the support for individuals and businesses, but may I raise with him the issue of schools? Southend West is home to 30 excellent schools, and many heads have been in contact with me, concerned that they will not be able to pay the utility bills. One has even trailed in the local press the possibility of opening for only four days a week. Can he assure me that it is the Government’s priority to make sure that our children’s education does not suffer as a result of the energy crisis, as it did as a result of the coronavirus crisis?
I thank my hon. Friend for that contribution. Schools are certainly at the forefront of our thinking for the coming winter. She is right that we need to make sure that schools are properly supported, and there are lessons to be learned from the pandemic as to how that was done. I am sure that her words will be well heard by Ministers, HM Treasury and the Department for Education.
A year ago I asked the Government why they had closed the Rough gas storage facility off the Yorkshire coast, leaving the UK with just 1.7% of storage for annual demand. The Secretary of State for Business, Energy and Industrial Strategy, Kwasi Kwarteng, told me that the question was irrelevant, and accused me of inducing panic and stoking alarm. Given the reports that the Government are to U-turn and reopen the facility, will the Minister now admit that the closure was a mistake?
The Energy Minister has a well-deserved reputation for getting things done, and I thank him for the prompt responses he has given to inquiries that I have made to his office, especially in respect of businesses. I sense that he understands the challenges, such as for the small engineering business I visited last week whose energy bill is £13,000 a year currently, and which has had a range of quotes between £37,000 and £68,000 for the renewal of its contract. The staff tell me that means that in the coming year they may not be able to replace a machine or take on a couple of apprentices as they would like to do. He has told us about the details that will be coming on short-term support—I am sure businesses will welcome that when it arrives—but I wonder whether he would say a little more about the long-term proposals to decouple the electricity bills from the gas price.
I thank my hon. Friend for that question. He is truly a champion of businesses in his constituency and across the country; I know the important work he does on the Select Committee on Business, Energy and Industrial Strategy, for example. He is right, in that most of the energy of businesses in this country is dealt with through long-term contracts. That is an advantage in giving certainty, but when it is time for the long-term contract to be extended or renewed that can lead to a very concerning rise in the price of that contract. The Government are keenly aware of that and it is absolutely something that our new Prime Minister and the team overall will be looking at.
The Minister’s statement was nothing but full of hot air. In the midst of a cost of living crisis, the worst in living memory, many of my constituents are struggling to pay their energy bills, as are others across the country. The words of wisdom from the outgoing Prime Minister were for people to buy a kettle for £20 and save £10 a year. Does the Minister agree that the Government are out of touch with struggling families and that the suggestion of a new kettle is not only insulting, but derisory?
Look, that is not what the Prime Minister said; he did not say that the answer to the energy crisis was to buy a new kettle. He used the new kettle to provide an analogy as to how we have dealt with nuclear power in this country, further to the points I raised earlier, with the failure to have a long-term view as to how to save money on energy costs overall. The hon. Gentleman is wholly misrepresenting what the Prime Minister said—I suspect he is wilfully misrepresenting it—in his speech on Friday.
Pubs, grassroots sports clubs and an indoor play centre are examples from the local hospitality and leisure sector that have been in touch with me in the past few weeks to highlight the astronomical price rises they are expecting, putting their businesses in a perilous situation. These sectors are often an afterthought for Government support, yet their importance in our communities should not be underestimated. So will the Minister place on the record that this Government recognise the value of the hospitality, leisure and indoor play sectors, and that they will be given the support they need to survive the winter?
I thank my hon. Friend, an extremely well-regarded former Sports Minister, for her commitment to the sector. She is right to say that pubs, the hospitality sector in general, sports facilities and outdoor play facilities are vital parts of the social and economic fabric of this country. The Government are keenly aware of the importance of the impact of rising energy prices on businesses, and, as I have said, I am sure this is right at the top of the new Prime Minister’s in-tray as we go forward.
Last Wednesday, the Business Secretary tweeted his winter energy security update, a plan that fails even to mention energy efficiency, despite the BEIS Committee, the CBI and charities all calling for immediate action on insulation to keep homes warm and to cut bills. The Minister did at least mention efficiency in his statement, but there is still no sense of urgency and no plan at the scale required. We need a retrofit revolution. Why are the Government not tackling demand-side measures with far more urgency? Will he finally get on with a local authority-led, street-by-street home insulation programme?
On energy-efficiency, the Government have extensive programmes in place, which I outlined in the statement. We have £6.6 billion going in over the course of this Parliament. It is important to recognise not only the amount of money going in, but the results we have had. In the 12 years of this Government, the percentage of homes rated A to C for energy efficiency has increased from 14% to 46%, which is a trebling of the amount of homes rated energy-efficient. Of course there is further to go, because 54% are insufficiently energy-efficient. A lot of work is still to be done, but the trebling of the number of homes well rated for energy efficiency is a real achievement of this Government.
I thank my right hon. Friend for visiting my constituency to meet industrial energy users. It is good that the energy-intensive industries compensation scheme is being extended, but firms in many sectors, such as engineering, glassmaking, ceramics or hospitality, do not qualify for the scheme despite relying on large amounts of energy for their core business, with many facing bill increases of 500%, 600% or 700%. What can be done to help them survive and to protect the jobs that my constituents rely on?
I had a helpful and productive day in August, partly spent in my hon. Friend’s constituency, and he and I ran a session for industrial energy users with Andy Street, the brilliant Mayor of the West Midlands Combined Authority. It is important to recognise that many businesses in this country are not in classic energy-intensive industries and therefore do not qualify as such, but are nevertheless big users of energy. We need to ensure that support is available so that such businesses can get through this coming winter. That is exactly the opinion that I have reflected within Government as we move forward.
According to Electric Radiators Direct, Bradford ranks highest in the country for the difference between average resident income and average yearly energy bill. Friends of the Earth claims that 52% of neighbourhoods in Bradford are among the worst affected across England and Wales.
Everybody in the country knows and we in this House know that the energy profits levy is in fact a windfall tax—a Labour idea. We have another suggestion for the Minister: freeze energy prices. The Government can name it what they want. We have the ideas, and we are handing them over. What is stopping the Minister freezing energy bills?
I am not quite sure about Labour’s position. On the one hand, it says that we copied its windfall tax proposal, but it also says that what we have done is somehow inadequate. The energy profits levy is projected to raise twice what Labour’s proposal was ever projected to generate.
When it comes to Bradford, that is exactly why we are ensuring that the assistance is as targeted as possible and goes to the most vulnerable and in-need households. That is why we have offered the one-off payment of £650 to more than 8 million households on means-tested benefits, the cost of living payment to 8 million pensioner households, and the £150 disability cost of living payment to 6 million households. In addition, we have the £144 million discretionary local authority fund for distribution to those identified as being in need. A huge amount of Government action has already taken place, and more is to come.
My right hon. Friend will be aware of Blackpool residents’ strong objections to fracking, which has already been explored at the Preston New Road site a few miles outside my constituency. Fracking should take place only where it is supported by local communities and only if people can feel the benefit directly in their pockets. Does he agree that a few thousand pounds off energy bills would be quite an inducement for people living close to a fracking site?
My hon. Friend, as ever, makes a telling contribution on Blackpool’s behalf that I am sure the Government will study closely. We are also studying the British Geological Survey report into this matter, to which the Government will respond in due course. Over the past year that I have been Energy Minister, I have heard my hon. Friend stick up for and make a strong case for Blackpool on several occasions in relation to fracking.
Lewisham Council’s energy bill has already doubled from £7 million to £14 million a year, with bills set to go up further. But instead of setting out a plan of support, the Tories have spent this summer fighting among themselves and have even claimed that rising costs should be found from existing public sector budgets—budgets that have already been decimated over the last 12 years. We need serious leadership and a plan now, so will the Minister commit that, in any emergency Budget, public services will be properly supported with rising energy costs?
Public services have always been well supported by this Government throughout the 12 years that we have been in power. When it comes to future taxation, that is, of course, a matter for the Treasury and the Prime Minister.
I am grateful to the Minister for his answers on support for energy-intensive industries such as those in my area. He knows that Teesside is the centre of the green industrial revolution in the UK, with our nuclear power station at Hartlepool, wind power manufacturing on both the north and the south side of the river, and large-scale carbon capture, utilisation and storage and hydrogen production in Redcar and Cleveland. As well as looking at new measures to increase such supply, we must tackle demand. Does he agree that we should invest further in energy efficiency and retrofitting homes, as many families could save hundreds of pounds on their energy bills by simply insulating their homes properly?
My hon. Friend is always a strong voice for Redcar and Teesside. I think that every single question he has ever asked me has included hydrogen somewhere. He is auditioning, I think, to be the UK’s Mr Hydrogen. He has mentioned CCUS as well, which is a big priority of ours, and he is absolutely right to say that energy efficiency is so important. If we can reduce the amount of energy that is used to create the same level of heating in people’s homes, clearly that is a massive gain. That is why we have invested £6.6 billion over the course of this Parliament in energy efficiency.
The annual energy costs of a bar on my patch in Shoreditch—it is part of a large chain—have gone up from £30,000 last year to £120,000 this year. All energy contracts are now being renegotiated, with some experiencing an uplift of at least 300%, and since the pandemic some electricity suppliers are refusing to supply the hospitality sector. The Minister has given warm words, but there are two issues there. Will he give us comfort that he will act on at least one of them by talking to the energy suppliers about making sure that more of them can at least compete for the business of these important hospitality businesses?
As ever, the hon. Lady raises an important and telling point. It is worth reminding ourselves, as I said earlier, that businesses tend to have long-term contracts for their energy bills. Prices were lower but they are now rising. There is an advantage in being locked into lower prices for a longer term, but there is, of course, a disadvantage when that long-term contract rolls off and they have to replace it. She is quite right about that. I am happy to look into the specifics of the bar that she mentions. There is no obligation currently on energy suppliers to supply businesses, unlike their obligation to provide to consumers, but I am happy to look into the specifics of the bar that she mentions in her constituency.
There is clearly consensus across the House about the need to decouple the price of electricity from the cost of gas. I very much welcome the Minister’s remarks that that is being actively looked at in government. May I encourage him to go a little further, given that we are in this little moment of an interregnum, exploit his licence and tell us what might be the obstacles to doing that quickly and, if we wanted to do it, how fast it could be done?
My hon. Friend invites me to go down a road of policy speculation. What I will say is that many markets and many countries are looking at this specific issue. There are various proposals out there. We are looking carefully at this issue domestically, and we are also looking to see what other countries, other markets and other jurisdictions are doing in this space.
I met a range of organisations during the recess. Most recently, I met David Findlater, the managing director of Calder Millerfield in Dalmarnock, which has been making bakery and butchery products in the area and employing local people for over 60 years, supplying supermarkets and fast food establishments. Its annual prices have gone up from £160,000 for electricity and £30,000 for gas to £712,000 for electricity and £80,000 for gas. It does not know how it will keep going as a business and meet those bills. It wants to hear urgently from this Government that help is coming. Will the Minister give it that assurance?
I thank the hon. Member for her question. I share, and I think we all share, the concern about the rising prices facing not just consumers, but businesses up and down the UK. The Government are keenly aware of the issue, as I said; it is right at the top of what the Prime Minister will be looking to do, and I am sure that announcements will be forthcoming.
I listened to Edwina Currie this morning telling people to put foil down the back of their radiators to improve energy efficiency. She seemed to miss the point that many of my constituents are not even thinking of switching their radiators on in the first place. I just wonder about those in the left-behind neighbourhoods—the very poorest. In my patch, in Orchard Park, 29% of households are in fuel poverty before we even start, against the national average of 13%. What will the Minister do for those people on Orchard Park who are not able to switch their radiators on this winter?
Obviously, we are very concerned to make sure that consumers are supported through the coming winter. That is absolutely at the heart of the existing Government’s policy, and I am sure it will be part of the incoming Prime Minister’s policies as well.
I ask the hon. Member to tell her constituents to have a look at what the Government have already done—the £39 billion-worth that we have already announced this year, not all of which has taken effect yet. For example, the £400 payment for 29 million households has not yet actually come in. I urge the hon. Member to relay to her constituents that the Government are on their side, have already committed large amounts of public funds to this and, I am sure, will be committing more in the coming months.
I thank the Minister, his officials and Treasury Ministers and officials for ensuring that the discount on electricity bills will be paid directly to consumers in Northern Ireland rather than having to go through the Assembly and the Departments, which quite frankly would not have been capable of administering it.
I am disappointed, however, that in the Minister’s statement today there was no mention of exploiting the resources that we have on our doorstep, namely the abundant supply of gas in the north-east of England, which could give a very quick supply of additional gas to the UK network. Is he not concerned that his increasing dependence on renewables—for which much of the infrastructure is dependent on the supply of rare earth metals, 60% of which are controlled by China—will leave us as dependent on China in future as Europe is on Russia today?
I have a more immediate question. The Minister has announced 93 contracts for difference. How will he ensure that the companies that get those contracts will not simply—as they are doing at present—refuse to activate them and sell electricity as if it were generated by the most expensive gas?
I thank the right hon. Member for that list of important questions. He will know that the new taskforce has already started meeting to extend the energy bill support scheme, or provisions thereof, to Northern Ireland; that is welcome news.
I think the right hon. Member said that fracking would lead to quick supplies. I am not as convinced that he is that it would be quick, but as I said, we will be responding to the British Geological Survey in due course.
On dependence on renewables, the right hon. Member is right that a number of elements used in creating renewable energy resources are dependent on critical minerals, but that is exactly one of the reasons why the Government have recently launched the critical minerals strategy. We will be talking to all our international partners, as I do, about critical minerals and making sure that we have a diversity of sources of supply for them going forward.
I do not get any sense of urgency from the Minister about the plight of businesses negotiating energy contracts. I have been contacted by a family-run independent craft bakery that is about to celebrate its centenary and has been run by six generations of the same family. It employs 20 people in my constituency, but is facing at least a 300% increase in the energy costs in its contracts. We cannot leave businesses in that situation hanging. We have no date yet for the Government to come forward with a set of proposals. When will those businesses have some idea what support they will get from this Government? Businesses in that situation are just not going to survive for very long.
Let us be absolutely clear: the new Prime Minister has said that there will be announcements very shortly on the support that will be there. The hon. Gentleman throws his hands up in the air, but he was first elected, if I am not mistaken, under the last Labour Government. When it comes to acting quickly, it took that Labour Government more than 10 years to reverse their policy on nuclear energy, so perhaps he might like to reflect on how quickly Governments can move, and see that this Government have moved incredibly fast to react to changing circumstances on both energy prices and energy supply.
To continue the theme, small businesses will be among the worst hit by the soaring energy bills. Bath Aqua Glass is one of many businesses in my constituency that have told me their energy bill will go up 10 times—not 10%, but 10 times. The company’s bill will go from £14,000 to £130,000. The whole energy sector is completely out of control. We Liberal Democrats have called for emergency covid-style support for small businesses. What are the Government doing, not just in the short term to support small businesses, but in the long term to fix the broken energy sector?
I have already said that this is a priority for the new Prime Minister, and I would expect there to be announcements shortly on what is being done. Businesses are the core of our concern here in relation to energy prices. There is of course no energy price cap for businesses, and we recognise the challenges that businesses—particularly small and medium-sized enterprises that do not qualify as energy-intensive industries but nevertheless use a lot of energy—face at this time. That is exactly the sort of thing the Government are actively looking at.
On Friday, I visited a pub called the Ring ‘O’ Bells in the Frodsham area of my constituency. I spoke to Phil, the landlord, whose projected bills are going up by several thousand pounds per month. Then I went along to the Devonshire Bakery, a family business that has been operating in my constituency for a considerable number of years, and which is facing a 400% rise in its energy bills. I say to the Minister that we need now to urgently step up and support businesses, not only in my constituency, but up and down the country, and we certainly need to hear that urgently from the new Prime Minister.
I have already said that I think we will be hearing very soon from the new Prime Minister and her team, but the hon. Gentleman could say to Phil the landlord that this Government has had an excellent track record, when it comes to the pandemic, of providing support for businesses. I think that has been universally acknowledged as being an extremely strong element of support—£40 billion overall for businesses over the pandemic—and, if I were the hon. Gentleman, I would say to Phil, “Judge the Government on their actions.” There will be more to come, but I ask him to report to Phil the confidence that he should have in the Government’s excellent record of supporting businesses through the pandemic.
The incoming Prime Minister has promised to deliver a plan to address the energy price crisis and is now thought to be considering freezing energy bills. In my Birkenhead constituency, however, people are already struggling to pay their bills, with many fearing that they will be plunged into destitution this winter. Does the Minister agree that urgent action is needed to cut energy costs now and that no option should be off the table in tackling this crisis, including renationalisation, which has allowed the French Government to cap rises at 4% while bills in the UK have risen by 54% already this year?
The French analogy is a bit of a misnomer, and the hon. Gentleman and I probably disagree on it. I think he is celebrating the nationalisation of the French energy industry, but I am not sure that is a good answer either for this country or for others. He says that further action is needed, and that is what I have pledged at this Dispatch Box. I ask him to look at the amount of money—£37 billion—that this Government have already put in to assist consumers with energy bills; I think it compares favourably with other European countries, up until the previous rise in prices.
In Scotland, we produce six times as much gas as we consume, yet the energy price cap has already increased by 40%. In Scotland, gas accounts for just 14.4% of electricity production, yet the energy price cap is about to increase by a further 80%. In Scotland, our annual electricity production comes almost entirely from renewables, yet households and businesses are being crippled. Surely even the Minister must accept this blatant failure of UK energy policy. Is it not time we recognised that Scotland does not just have the energy; we badly need the power?
The hon. Gentleman will not be surprised to hear that I strongly disagree. When it comes to energy, it is the UK Government’s reserved energy policy that is working well for the people of Scotland. Had we followed the SNP’s energy policy of being against both nuclear and Scottish oil and gas, we would be in a terrible position and would probably be dependent on the good will of Vladimir Putin.
Forgive me, Minister, but it is already too late for some businesses. Alexandros, a very popular restaurant in my constituency, has announced that it is closing while it assesses whether it can afford to carry on with a £13,000 increase in its energy costs. This is going to be brutal for small businesses on our high streets, isn’t it, Minister, without appropriate intervention?
I have already said that this is a matter of very active consideration by the Government and that it is right at the top of the new Prime Minister’s in tray. I remind the hon. Gentleman of the amount of support the Government have given businesses during the pandemic and over other matters recently. We have an incredibly strong record of supporting businesses, which is one reason we have such an excellent record on creating jobs and making sure that, by working with businesses, we have a robust employment sector in this country.
Mr Deputy Speaker, if you, I, the Minister or anyone on these Benches were to stop paying our energy bills, we could be cut off or disconnected from gas and electricity, but it would take a long time because the company would have to go through a number of different procedures and we have rights. Not so those people on prepayment meters. In the statement, the Minister has talked repeatedly about those most in need of support. If people are on prepayment meters, it is almost always because they are on a low income and need more support. They already pay more than the rest of us, but all they can do is get into £10 of debt. The minute they go over that £10 emergency credit, they are disconnected. Is that fair? If he does not think it is fair, will he join my campaign to outlaw so-called self-disconnection? If not, are we to believe that he thinks we deserve better rights than our constituents who are really struggling financially at the moment?
The hon. Lady is right to raise the matter of prepayment meters and prepayment customers. She is, of course, right to raise the issue of the most vulnerable, which is exactly where the Government’s overall package is targeted. The £37 billion goes hugely to disadvantaged people and households.
Ofgem has taken a number of actions on prepayment meters in recent times. It warned suppliers in June 2018 that prepayment meters should be installed only as a last resort for debt collection. It banned forcible installation for vulnerable customers in 2017. In December 2020, it introduced new licensing conditions, including an ability-to-pay principle and the obligation on suppliers to identify self-disconnection and self-rationing by prepayment meter customers proactively. A number of measures have been taken by Ofgem. Of course it will keep these things under review, and I am sure the Government will look at them as well. If there are more actions the hon. Lady thinks should be taken, I am happy to hear from her.
Many industries on Teesside and beyond that are dependent on natural gas as a feedstock are being ruined. CF Fertilisers has already ceased ammonia production in Billingham, while a second major local company told me that a decision could be taken within weeks unless something comprehensive is done, and it will close. The company has written to the Prime Minister. I await a response to my urgent letter to the Business Secretary on Friday, telling him that hundreds of jobs are at risk at that one company. The Minister spoke of some support to help energy-intensive industries, but it is totally inadequate to meet the needs of industry on Teesside and beyond. Will he please outline what assistance will be available for non-qualifying energy-intensive industries? Will he go away again and find another way to help the balance of industries, or is he prepared to see thousands of people lose their jobs?
The Government are never prepared to see thousands of people lose their jobs, which is why we have taken such strong action in the last few years to make sure that our employment situation remains as robust as it is. Beyond that, the hon. Gentleman is asking me to make commitments that will be made by the incoming Prime Minister. He mentions CF Fertilisers, which is a company that we are keenly aware of. We have interacted with the company over a long period of time and will continue to do so.
Like many Members of this House, I am receiving desperate messages not only from individuals, but from hospitals, care homes, schools and small businesses. The energy bill for one pub in my constituency, Dylans-The Kings Arms, is due to rise from £22,000 to £124,000—a sixfold increase, or an increase of £100,000. One care home in my constituency emailed me today and said its gas bill alone will have a 15-fold increase, rising from £40,000 to £600,000. If a pub has no heating, patrons will not visit. If a care home does not have heating, vulnerable people become ill and possibly die. The Minister has already indicated that he does not know when an announcement will be made, but will he please give us an assurance that straight after this debate he will go straight to the new Prime Minister and encourage her and her new Cabinet to make an announcement this week—not just for individuals and households, but for businesses, care homes and schools?
I do not think that the hon. Lady will have long to wait. I say to her that we absolutely share those concerns. All Government Ministers, at least in the Commons, are obviously constituency MPs as well, and we have these kinds of cases in our constituencies, including in my constituency. We are well aware of the big rises in energy prices being faced by many businesses at the end of their contract when taking up a new contract.
Manufacturing in this country is facing a truly terrible crisis. For example, OGM Moulding Innovation employs 220 people in England and Wales, including in my constituency of Caerphilly, and it faces a massive increase in its energy costs. Unless something is done urgently, it faces closing three factories. It does not qualify for special support, because it is not deemed an energy-intensive company. Nevertheless, it uses a huge amount of energy. My plea is very simple and straightforward: will the Government give a commitment that they will come forward in the next few days with comprehensive packages to help companies such as OGM Moulding Innovation?
I thank the hon. Gentleman for his question and for his concern for his constituency-based business. As I said in answer to the previous question from Daisy Cooper, we are all keenly aware of the difficulties that many businesses are in. On the other engagement that we have had with the sector, the Secretary of State has been meeting energy suppliers. The Chancellor of the Exchequer has heard loud and clear from the Confederation of British Industry, the Federation of Small Businesses, Make UK and others. The Government are of course keenly aware of the situation, and I do not think the hon. Gentleman will have long to wait to hear the response.
About three hours ago I spoke to Deborah Linton, who is the operations director of Dentec Hillington, which is a body repair shop just off London Road in my constituency. Its energy bills alone will rise by £54,000 this year, and the message that she wanted me to bring to the Minister is that businesses need action and need it now. I have a simple question for the Minister: will the Government have announced action when I visit the company on Friday?
The hon. Gentleman is inviting me to speculate on the date of future Government announcements, which I am not able to do, but I will say that I do not think he will have long to wait.
The issue around energy costs for businesses was a key priority for businesses I met in July. We know that business insolvencies are at a 60-year high at the moment. I am also getting a lot of feedback on the doorstep, when I meet constituents, who are concerned about how they will manage with the forthcoming energy price increase. We know that the new Prime Minister is not keen on handouts, but if there is not a reasonable offer from the new Prime Minister, what would be the Minister’s assessment of the increase in debt, homelessness and insolvencies and, as a consequence of all that, the increase in excess deaths?
I thank the hon. Lady for that question. I have already said how well aware we all are of the increase in costs for businesses, but I think she paints an unhappy picture that goes beyond the reality of what businesses are facing in this country. If we consider the amount of support that the Government gave during the pandemic, and the level of employment in this country, including a record high in payroll employment, we see some really good economic figures coming out of that. Of course, we recognise that businesses are facing those big increases in energy costs, which is why I expect announcements to be forthcoming quite soon.
I am grateful to the Minister for his update on the £400 payment to households in Northern Ireland. Of course, if we had had an Executive going back as far as February, we could have done that ourselves. As he knows, the Northern Ireland energy market and system is very different from that in Great Britain, so in the event that the next phase of Government support has large elements that apply only to Great Britain, but with large Barnett consequentials for Northern Ireland, what contingency steps are the Government taking to ensure that, in the absence of a functioning devolved Executive, businesses and households in Northern Ireland have the same access to support as their counterparts in Great Britain?
The Chancellor of the Exchequer convened the Northern Ireland taskforce with the specific objective of making sure that Northern Ireland does not miss out on UK Government support for consumers and businesses in future. I cannot give the hon. Gentleman more of an update than that, but it is a strong area of Government action to ensure that Northern Ireland, quite properly, is treated as part of the UK when it comes to all these matters, including, especially, Her Majesty’s Government support for consumers and businesses.
In the Minister’s statement and in many of his answers he has focused on what the Government have already announced, but does he recognise that that does not come close to meeting the depth of the crisis that we now face? Does he accept the need for a freeze on domestic bills and action to match his words on businesses? Across my constituency, hundreds of small businesses, particularly in the hospitality sector, are at risk. Thousands upon thousands of jobs are threatened without decisive action. When can we expect it?
The Government have provided enormous levels of support for exactly those kinds of businesses. The hospitality sector was a strong recipient of Government support during the pandemic. The hon. Gentleman is right to point to the £37 billion of support to consumers so far this year. He will not have to wait long to hear what the Government will be doing, but I ask him to judge the Government on their excellent track record in this space—in supporting businesses, particularly in the last few years. As I say, he will not have to wait too long to see further measures.
Housing associations that I have spoken to in Glasgow North are, first and foremost, concerned about the wellbeing of their tenants who cannot afford to heat their homes this winter, but leaving the heating off is also bad for the housing stock: damp and mouldy houses will be bad for future generations and will cost more to repair in the long run. Does the Minister understand that as well as a price freeze now, we need a long-term preventive approach to energy security, efficiency and insulation?
That is one of the reasons we are investing £6.6 billion over this Parliament in energy-efficiency measures, which will include the ECO4—energy company obligation—measures that we debated in this House in July. We will have to see what energy-efficiency measures may be forthcoming from the Prime Minister in the coming days.
Many of my constituents are already cancelling their contracts with their gas companies. They are absolutely terrified. Churches and charities want to step in, but they are exposed to the commercial rates, with charities often seeing a tenfold increase. They want to provide warm banks to keep their communities safe, warm and well fed this winter. What steps are the Government taking to support charities and churches to ensure they can provide the warmth their communities need?
The hon. Lady makes a strong point that this is not just about consumers and businesses; everybody is being affected by the global rise in energy prices. This is not just a UK phenomenon, but a worldwide one. If she has cases of charities and others being unable to take out contracts or cancelling contracts, I would be happy to look into them with her to find out what is going on and to ensure that those vital services continue to get an energy supply.
Rising energy prices will disproportionately hit those on the lowest incomes, while tax cuts will disproportion- ately favour the highest earners. Considering the scale of the financial problems about to hit families, with some experts indicating that energy bills could hit £7,000 per annum by next year unless there is some firm Government action, social cohesion should be the cornerstone of Government policy. Would not one way of doing this be to ensure that the broadest shoulders pay their fair share, by increasing the burden on higher and additional rate income taxpayers to support those in need?
The hon. Gentleman is tempting me to go down the road of Her Majesty’s Treasury announcements on tax and other matters, which I am afraid I will have to resist doing. I think he will hear before too long what the Government propose to do on these vital matters.
People are really frightened about how they are going to get through this winter. One of my constituents, who is a widow with long-term health issues, has written to me to say that she will have to cancel insurance for her pets—so if her pet becomes ill she will not be able to take them to the vet—and will get rid of her car, which is vital for her to get to medical appointments. She says that her gas and electricity bill was originally about £85 a month, but she has now received a direct debit statement saying that it will go up to more than £255 a month; her energy costs will basically triple. She is terrified about how she will manage this winter, as are many of my constituents. Will the Minister give us an assurance that he will impress on the new Prime Minister the scale of the catastrophe we face if the Government do not come forward with a major increase in support for people facing these bills?
I am concerned to hear about the hon. Lady’s constituent. Indeed, many of all our constituents are facing difficulties and prospective difficulties at this time. In relation to her constituent’s car, the Government have reduced fuel duty at the cost of about £5 billion to the Exchequer, and that will help people to run their cars. We are acutely aware of the difficulties faced by consumers, but we have risen to the challenge. The £37 billion package announced for this year so far is a considerable amount of public spending to help consumers with bills, and there will be more to come.
Many people across rural Scotland depend on heating oil to heat their homes. Today I spoke to someone who was quoted 110p a litre, with a minimum delivery of 500 litres. Of course, once heating oil is gone—when the tank is empty—it is gone. If people cannot afford to refill the tank, they cannot heat their house. With winter approaching, that is a potential death sentence for vulnerable people in an already economically fragile part of Scotland. What will the Government do to help those people, and what reassurances can the Minister give to those who rely on heating oil that they will be protected from skyrocketing fuel prices this winter?
I thank the hon. Member for that question because many consumers, up and down this United Kingdom, are dependent on heating oil. They are off the gas grid and heating oil is the principle means of heating their home. We need to be keenly aware of that, as the Government are.
It is worth recognising that there is a competitive market for heating oil. I often speak with the UK and Ireland Fuel Distributors Association, which is a trade body, and with consumer groups in relation to heating oil. Obviously, prices have risen; they are closely related to the price of kerosene, for example, which has been quite volatile this year.
I remind the hon. Gentleman that households that have an electricity charging point will benefit from the £400 payment, and others will benefit from the payments to the more vulnerable, so it would not be right to suggest that those who use heating oil are not recipients of Government assistance. There is also the £1.1 billion home upgrade grant, through which the Government have committed to improve funding for energy efficiency and clean heating upgrades for those dependent on heating oil and other liquid fuels.
Some 60% to 70% of our energy is domestically produced. The price of producing it has not increased at all, so 60% to 70% of the bill increase is theft by the energy companies charging international rates to domestic companies. It is time we had wholesale market reform, to ensure that domestically produced energy is sold at production prices and not inflated prices for fat cats in the City.
May I ask the Minister specifically about the £144 million discretionary fund? Many of my constituents are use remeterage, whereby their landlords have a commercial contract but they are remetered at a higher price and are ineligible for any support. Will the Minister write to councils to confirm that they must offer parity for those people, if they can show they use remeterage and therefore are not eligible for the £400 support?
I might have to write to the hon. Member on the question of remeterage. The £144 million discretionary fund is supposed to be disbursed at the discretion of local authorities, in the right way. I think his question is more about heat networks. In the British energy security strategy, we announced that heat networks will in future be regulated by Ofgem—I say that on the assumption that he supports the Energy Security Bill that is making its passage through Parliament at the moment.
The hon. Gentleman’s point that somehow the UK can declare some kind of unilateral declaration of independence from global energy prices is, I am afraid, simply fanciful. Even Norway, which is one of the world’s biggest domestic producers and almost certainly the largest surplus energy producer in the world, is facing these same challenges of rising domestic energy prices. It is simply not possible for the UK to isolate itself from these global trends. [Interruption.]
The energy price cap is set to double. Businesses have received no support with energy costs, households have simply not received enough and those in park homes have been completely ignored so far. On top of that, the cost of supplier failures means that the poorest, who use less energy, will continue to be disproportionately impacted by punishing standing charges. Today the Minister has said nothing about any of these issues, because today’s statement is about a zombie Government giving the illusion of activity. When will we see urgent and decisive action to tackle this increasingly painful and in some cases life-threatening crisis for businesses and households on the brink?
There is a lot in that question. The hon. Lady raised a new issue, not raised in these questions so far—the issue of park homes. That is a serious concern, because around 1% of households in this country are not reached by the current £400 scheme, although they are being reached by other schemes. We have said clearly that we will announce measures to assist those living in park homes, houseboats and so on, which are not covered because they do not have a meter point. There will be a scheme announced this autumn to help them, with funding attached, as part of an additional scheme.
Like many Members, I already have a great number of distressed constituents getting in touch with me desperate for some sort of help. Today, though, I want to focus my comments more specifically on businesses, which we have been hearing about from Members around the Chamber. Last Thursday I met with farmers, who might be readily overlooked; it is essential that all sectors across our economy are considered. They have to keep their grain at a certain temperature, for example, to make sure that it is not affected by moisture and so on. I ask the Minister to ensure that all categories of businesses—care homes, farmers and so on—are considered. Specifically, I spoke to pub owners at a roundtable meeting last Friday. There were seven of them. Frankie, Phil, Ricky and Jake joined me. Several of them will be out of business in three weeks when their contracts end. I ask the Minister to implore the Prime Minister to act with absolute urgency on this issue.
On farming, we are interacting regularly with the National Farmers Union, NFU Scotland, NFU Cymru, the Farmers’ Union of Wales and the Ulster Farmers Union to make sure that the voice of farming is heard loud and clear within this Government, including on energy prices. When it comes to wider announcements, as I have already said, I do not think that the hon. Gentleman will have too long to wait.
I thank the Secretary of State for his statement. Like others, I want to make my point on this. On Sunday, just yesterday, one of my constituents closed his family shop, café and restaurant that he had owned for a number of years. It was a family enterprise that employed some 68 people. He said that he had spent much of his life in the village in which he had grown up, but he said that energy costs were so high that he could not continue to trade there. That is a fact of life. It is also a fact of life for butchers’ shops, and I wish to make a plea for them. I have spoken to three butchers in the past 10 days. One of them said that his energy costs will go from £1,850 to £4,000. The contract runs out in September. A second one said that his electric costs will go from £2,350 to £4,500. His contract runs out in October. The third one says that his costs will go from £3,000 to £6,000. Refrigeration is important to them. The costs are already high, and they say that they will not stop there. I just ask the Secretary: what can we do for those people?
I hear the hon. Gentleman loud and clear. Northern Ireland is very much at the forefront of our discussions and our considerations. As I said in answer to an earlier question, the Chancellor of the Exchequer launched a new taskforce in relation to Northern Ireland, recognising its difficult position of not having a Northern Ireland Executive and also recognising that electricity is a devolved matter. We are actively on that case to make sure that Northern Ireland consumers and businesses do not miss out on the support being given by the UK Government, quite properly treating the United Kingdom as a whole.