(2 years, 2 months ago)
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Mr Speaker
Before we start the debate, I want to put on record that I am very disappointed that a written ministerial statement that is relevant to it has only just been made available, in the last five minutes. Such statements should be made available, whenever possible, at 9.30 am. When they are relevant to a debate, as is the case today, it is doubly important for them to be available in good time. I am sorry that this has happened. I consider it to be discourteous to the House, and I hope that is not the way the new Government intend to treat the House. Rather than judging it to be deliberate, I will put it down to bad management or incompetence.
We now come to the general debate on UK energy costs. Before I call the Prime Minister to open the debate—[Interruption.] This is not the day for that, given the way the House has been treated. I am defending Back Benchers and I expect a little more decorum from you.
Before I call the Prime Minister to open the debate, I should point out that the British Sign Language interpretation of her opening speech is available to watch on parliamentlive.tv.
The Prime Minister (Elizabeth Truss)
I beg to move,
That this House has considered UK Energy Costs.
Earlier this week—[Interruption.]
Mr Speaker
Order. Just one second, Prime Minister. We have started the debate, and I do not want to hear any more from that particular Bench. If I do, I will go and get that cup of tea early.
The Prime Minister
Earlier this week, I promised that I would deal with the soaring energy prices faced by families and businesses across the UK, and today I am delivering on that promise. This Government are moving immediately to introduce a new energy price guarantee that will give people certainty on energy bills, and will curb inflation and boost growth. The guarantee—which includes a temporary suspension of green levies—means that from 1 October a typical household will pay no more than £2,500 per year for each of the next two years, while we get the energy market back on track. It will save a typical household £1,000 a year, and it comes in addition to the £400 energy bills support scheme. It supersedes the Ofgem price cap, and has been agreed with energy retailers.
The Prime Minister
I will give way in a few minutes, when I have made some progress.
We will deliver this by securing the wholesale price for energy, while putting in place long-term measures to secure future supplies at more affordable rates. We are supporting the country through this winter and next, and tackling the root causes of high prices, so that we are never in this position again.
The Prime Minister
For those using heating oil, those living in park homes or those on heat networks, we will set up a fund—[Interruption.]
Mr Speaker
Order. I am sorry about this, Prime Minister. Can I just say that I do want a running commentary from Members giving me advice? I certainly do not need it.
I do not want to interrupt you, Prime Minister—it is up to you to give way when you feel it is appropriate—but I just want to let you know that the written ministerial statement has now been printed, and I hope it will be brought into the Chamber for everybody to see.
The Prime Minister
As I was saying, for those using heating oil, those living in park homes or those on heat networks, we will set up a fund so that all UK consumers can benefit from equivalent support.
Alan Brown
National Energy Action estimates that with the cap at the current level, 6.5 million households are in fuel poverty. If the level is raised to £2,500, how many more millions of people does the Prime Minister reckon will end up in fuel poverty?
The Prime Minister
We are taking action to help people on the lowest incomes through universal credit, and we are also supplying £400 through the energy bills support scheme.
Several hon. Members rose—
The Prime Minister
I would like to make some progress, and then I will take more interventions.
We will also support all businesses, charities and public sector organisations with their energy costs this winter, offering an equivalent guarantee for six months. After those six months, we will provide further support for vulnerable sectors, such as hospitality, including our local pubs. My right hon. Friend the Business Secretary will work with business to review where that should be targeted to ensure that those most in need get support. The review will be concluded within three months, giving businesses certainty. In the meantime, companies with the wherewithal need to be looking for ways to improve energy efficiency and increase direct energy generation.
Stephen Crabb (Preseli Pembrokeshire) (Con)
I am grateful to the Prime Minister for giving way and commend her on the speed with which she and her new team have really gripped the challenge that is facing the country. Does that not demonstrate that Conservative Governments do not stand by while millions of people on low incomes are struggling? I strongly support the measures she is announcing today.
The Prime Minister
My right hon. Friend is absolutely right. I recognise that people are struggling with their energy bills and that is why I have brought forward this debate as soon as possible to give people reassurance ahead of the winter that energy bills are going to be affordable.
We will bring forward emergency legislation to deliver the policy. My right hon. Friend the Chancellor of the Exchequer will set out the expected costs as part of his fiscal statement later this month. I can tell the House today that we will not give in to the Leader of the Opposition, who calls for this to be funded through a windfall tax. That would undermine the national interest by discouraging the very investment we need to secure home-grown energy supplies.
Several hon. Members rose—
The Prime Minister
If hon. Members will allow me to make a bit more progress, I may be able to answer their questions before they have asked them.
The Opposition need to understand—
Kevin Brennan (Cardiff West) (Lab)
On a point of order, Mr Speaker. Copies of the written ministerial statement have been made available to some Members, but there are not enough for everybody—[Interruption.] If I might finish my point of order: is it possible for sufficient copies to be made so that we can all see the statement?
Mr Speaker
As we both know, that is not a point of order, but it is certainly a clarification that the copies are now coming out. We are printing them as fast as possible to make sure that all Members have the ability to read them. It is with great disappointment that we are doing so, but that is a matter of fact.
The Prime Minister
Instead of taking the Opposition’s approach, we are taking an approach that is pro-growth, pro-business and pro the investment we need for our country’s energy security.
John Redwood (Wokingham) (Con)
Does the Prime Minister agree that we are too short of energy but have plenty of taxes, and that if we had an over-supply of taxes, as the Labour party wants, we would have less supply of the things we were taxing?
The Prime Minister
My right hon. Friend makes an extremely good point. The reality is that we cannot tax our way to growth. The policy that I am setting out today is all about helping people with their energy costs, as I promised, and making sure that we have the long-term energy supplies that we need for our country.
Richard Burgon (Leeds East) (Lab)
Just six months ago, households faced energy bills of £1,300. We are today being told that fixing prices at £2,500 is the best the Government can do. It is not, so why is the Prime Minister putting private energy profits ahead of people at this crucial time?
The Prime Minister
What we are doing is the important work to help people and businesses get through this winter and next winter while fixing Britain’s long-term energy supply.
Several hon. Members rose—
The Prime Minister
I have already given way on a number of occasions. I will give way later, and ask Members to hold off a bit longer.
This is the moment to be bold. We are facing a global energy crisis and there are no cost-free options. There will be a cost to this intervention.
Robert Halfon (Harlow) (Con)
I strongly welcome this package, which is a marked contrast to the meagre scraps offered by the Opposition. I also welcome my right hon. Friend’s confirmation that schools and colleges will be helped with their energy bills, as colleges face increases of 300%. Will she continue to bear down on fuel duty, because we know that motorists face extortionate bills when they fill up their car at the pumps?
The Prime Minister
I thank my right hon. Friend for his point. I am sure that the Chancellor of the Exchequer is listening intently to his point ahead of the fiscal statement later this month.
Several hon. Members rose—
The Prime Minister
I want to make some progress on explaining how we will defray the cost of this intervention, which I think might answer some hon. Members’ questions before they ask them.
We will defray the cost of this intervention by, first, ramping up supply. Following on from the successful vaccine taskforce, we have created a new energy supply taskforce under the leadership of Maddy McTernan. The taskforce is already negotiating new long-term energy contracts with domestic and international gas suppliers to bring down the cost of intervention immediately.
We are also accelerating all sources of domestic energy, including North sea oil and gas production. We will be launching a new licensing round, which we expect to lead to more than 100 new licences being awarded; and we will speed up our deployment of all clean and renewable technologies, including hydrogen, solar, carbon capture and storage, and wind, where we are already a world leader in offshore generation. Renewable and nuclear generators will move on to contracts for difference, to end the situation in which electricity prices are set by the marginal price of gas. This will mean that generators receive a fair price that reflects their cost of production, further bringing down the cost of this intervention.
Andrew Stephenson (Pendle) (Con)
I warmly welcome the immediate action announced by the Prime Minister on the cost of energy, which will help families in my Pendle constituency and right across the United Kingdom. Next week is nuclear week in Parliament, so will she join me in supporting the roll-out of small modular reactors championed by Rolls-Royce, which has two sites in my constituency? We need this technology now, so will she go further and faster in driving forward the nuclear programme in this country?
The Prime Minister
My hon. Friend is absolutely right that small modular reactors are a very important part of our energy mix. They are produced here in the United Kingdom. They will help to boost growth as well as boosting our energy security.
Several hon. Members rose—
The Prime Minister
I will take a few more interventions in a few minutes, but I ask Members please to let me make progress on my speech.
Secondly, today’s actions will deliver substantial benefits to our economy—boosting growth, which increases tax receipts, and giving certainty to business. This intervention is expected to curb inflation by up to five percentage points, bringing a reduction in the cost of servicing Government debt.
Thirdly, I am announcing today that, with the Bank of England, we will set up a new scheme worth up to £40 billion to ensure that firms operating in the wholesale energy market have the liquidity they need to manage price volatility. This will stabilise the market and decrease the likelihood of energy retailers needing our support, as they did last winter.
By increasing supply, boosting the economy and increasing liquidity in the market, we will significantly reduce the cost to Government of this intervention.
Steve Brine (Winchester) (Con)
It is very kind of the Prime Minister to give way to so many sensible Members.
Today is clearly a big intervention, and the Government are, as she promised, wrapping their arms around my constituents, as we did during the pandemic. Looking to the future, can she confirm that the plans are primarily about domestic supply rather than imported reliance and are therefore in line with the important commitments we made at COP26 in Glasgow and with our commitment to the path to net zero made in our manifesto three years ago?
The Prime Minister
I am completely committed to net zero by 2050 and I will be saying more about how we will be achieving that later in this speech.
As well as dealing with the immediate situation we face, we are also dealing with the root causes.
Ed Davey (Kingston and Surbiton) (LD)
I welcome the Prime Minister to her place and hope she will work with Opposition parties in the national interest. Will she confirm that her announcement today will still see the energy bills of struggling families rising by another £500 next month and that this winter they will be paying energy bills that are twice those they paid last winter?
The Prime Minister
At the same time as introducing the energy price guarantee, we are also providing families with £400 and providing extra support to the vulnerable. Vulnerable families will be receiving that extra support.
I want to move on to why we are in the situation we are in now. The fact is that energy policy over the past decades has not focused enough on securing supply. [Interruption.] I do not know why the right hon. Member for Doncaster North (Edward Miliband) is laughing, as he is partly responsible for this. There is no better example than nuclear, where the UK has not built a single new nuclear reactor in 25 years. This is not just about supply; the regulatory structures have failed, exposing the problems of a price cap applied to the retail but not the wholesale market. All of that has left us vulnerable to volatile global markets and malign actors in an increasingly geopolitical world. That is why Putin is exploiting this situation by weaponising energy supplies as part of his illegal war on Ukraine.
Sammy Wilson (East Antrim) (DUP)
Does the Prime Minister accept that with 150 years’ worth of gas under the ground in Great Britain it is absolute madness to turn our back on that resource at a time when people are facing huge energy bills? Will she also explain how she intends to deliver the support that she is talking about in Northern Ireland?
The Prime Minister
I do agree with the right hon. Gentleman and I am coming to the point about shale gas in a minute. I can assure him that this policy will apply in Northern Ireland and those benefits will be open to the people of Northern Ireland, as part of the United Kingdom.
As well as the action that I am announcing today, we will use these two years ahead of us to make sure that the United Kingdom is never in this situation again. I will be launching two reviews. The first is a review of energy regulation to fix the underlying problems. We want a new approach that will address supply and affordability for the long term. Secondly, we will conduct a review to ensure we deliver net zero by 2050 in a way that is pro-business and pro-growth. That review will be led by my right hon. Friend the Member for Kingswood (Chris Skidmore).
Alberto Costa (South Leicestershire) (Con)
First, on behalf of the people of South Leicestershire, may I welcome my right hon. Friend to her role? She mentions Putin. The measures she is announcing today are incredibly welcome for my constituents and all our constituents, in order to protect in particular the poorest and most vulnerable in society, but will she give an assurance today that her Government will continue to stand firm against the appalling and brutal actions of Putin and his thuggish regime? Will she tell the British people honestly that we are in for a difficult winter, notwithstanding the challenges that face us?
The Prime Minister
My hon. Friend is right: the reason we are in this difficult situation is Putin’s appalling war in Ukraine. But we do need to make sure that our energy supplies are more resilient and secure, so that we are never in this situation again and so that we cannot be subject to global energy prices and the actions of dictators.
We are delivering a stable environment that gives investors the confidence to back gas as part of our transition to net zero. It is vital that we take steps to increase our domestic energy supply.
Several hon. Members rose—
The Prime Minister
I will make a bit more progress and then I will give way.
We will end the moratorium on extracting our huge reserves of shale, which could get gas flowing as soon as six months from now where there is local support for it. We will launch Great British Nuclear later this month, putting us on a path to deliver up to a quarter of our electricity generation with nuclear by 2050.
Stephanie Peacock (Barnsley East) (Lab)
I am grateful to the Prime Minister for giving way. Last September, I asked the then Business Secretary, the right hon. Member for Spelthorne (Kwasi Kwarteng), why the Government signed off on the closure of the Rough gas storage facility. He dismissed it as not relevant and accused me of stoking panic and alarm. The Government are reportedly now reopening that facility. That does not suggest that the new Chancellor is a man of foresight and strategy, does it, Prime Minister?
The Prime Minister
We are in a very difficult situation and I am committed, as Prime Minister, to doing everything it takes to resolve the situation, to helping people with their energy bills and to making sure we have security of supply for the long term.
Several hon. Members rose—
The Prime Minister
I have taken a lot of interventions and need to make progress on the speech.
As a result of these steps on shale and nuclear, and the acceleration of renewables, I am today setting a new ambition for our country. Far from being dependent on the global energy market and the actions of malign actors, we will make sure that the UK is a net energy exporter by 2040. My right hon. Friend the Business Secretary will set out a plan in the next two months to make sure we achieve that.
I know that businesses and families are very concerned about how they will get through this winter. That is why I felt it was important to act urgently to provide immediate help and support, as well as to set out our plan for how we will secure the UK’s future energy supplies. This is part of my vision for rebuilding our economy. Secure energy supply is vital to growth and prosperity, yet it has been ignored for too long. I will end the UK’s short-termist approach to energy security and supply once and for all. That is what I promised on the steps of Downing Street. Today, we are acting decisively on that pledge. This will help us build a stronger, more resilient and more secure United Kingdom. I commend the motion to the House.
Several hon. Members rose—
Mr Speaker
A lot of Members wish to get in, so think of others once we have got through the Front Benchers.
Keir Starmer (Holborn and St Pancras) (Lab)
I thank the Prime Minister for advance sight of her opening speech.
We are in the middle of a national emergency. People are really scared, families do not know if they can warm their homes this winter and businesses ask if they can keep the lights on. That is why the Labour party spent the summer fighting for a price freeze, so that no household would pay a penny more on their bills. When we called for it, many people said we were wrong. They pretended that this crisis was something that just affected the poorest, as if working families on average wages could easily shoulder astronomical bills. They dismissed our call for support as “handouts”. But those objections could never last; the Prime Minister had no choice. No Government can stand by while millions of families fall into poverty, while businesses shut their doors and while the economy falls to ruin. So I am pleased that there is action today and that the principle of a price limit has been accepted, but under our plan there will be not a penny more on bills; under this plan, there will be a price rise.
Several hon. Members rose—
Keir Starmer
I will just make some progress and then I will give way.
This support does not come cheap. The real question before the House today—the real question the Government face; the political question—is who is going to pay. The Treasury estimates that energy producers could make £170 billion in unexpected windfall profits over the next two years. Let me repeat that: £170 billion in unexpected windfall profits over the next two years.
Several hon. Members rose—
Keir Starmer
I will give way in just a moment.
The head of BP has called this crisis “a cash machine” for his company. Households are on the other end of that cash machine—their bills are funding these eye-watering profits. That is why we have been calling for a windfall tax since January, and it is why we want to see the windfall tax expanded now, but the Prime Minister is opposed to windfall taxes. She wants to leave these vast profits on the table, with one clear and obvious consequence: the bill will be picked up by working people. She claims that a windfall tax will deter investment. That is ridiculous. These vast profits are not the reward for careful planning. They are the unexpected windfall from Putin’s barbarity in Ukraine. There is no reason why taxing them would affect investment in the future.
Do not just take my word for it. Asked which investment BP would cancel if there were a windfall tax, the chief executive said, “None”—his word, not mine. The Prime Minister’s only argument against the windfall tax falls apart at first inspection, laying bare the fact that she is simply driven by dogma, and it is working people who will pay for that dogma.
Jacob Young (Redcar) (Con)
Does the right hon. and learned Gentleman accept that this Government have already introduced a windfall tax, and energy companies today are paying 65% on their profits? What would he rather see that tax set at?
Keir Starmer
We are talking about what happens this winter and next. If the hon. Gentleman does not understand—[Interruption.] I will tell him something. Every pound the Prime Minister’s Government refuse to raise in windfall taxes, which is leaving billions on the table, is an extra pound of borrowing. That is the simple, straightforward argument. Every pound that she leaves on the table is an extra pound of borrowing, loading the burden of the cost of living crisis onto working people who will have to pay back for years to come.
Barry Gardiner (Brent North) (Lab)
The Prime Minister has been careful to frame her guarantee in terms of her refusal to tax, but will she not have a problem explaining to the British people how a levy on their bills in the future to repay the borrowing is not actually a tax?
Keir Starmer
This is the basic political divide. The Government want to protect the excess profits of the oil and gas and energy groups; we want to protect working people.
Mr Perkins
This Saturday, I and many members of Chesterfield Labour party will be out meeting voters in Chesterfield. If any of those voters have not been paying attention this week, they might still say, “You’re all the same.” But is it not absolutely clear now that there is a clear divide? When I knock on doors, every voter will know that political parties have a choice. The Government have chosen to be on the side of the energy generators; we have chosen to be on the side of bill payers.
Keir Starmer
I would be absolutely amazed if Government Members have not picked that up. Ask voters whether they think it is fair that they pick up the bill, rather than those companies that made profits they did not expect to make. There is only one answer to that question. It is a very simple question of whose side are you on.
I am afraid this is not a one-off. Not only is the Prime Minister refusing to extend the windfall tax; she is choosing to cut corporation tax—an extra £17 billion in tax cuts for companies that are already doing well. That means handing a tax cut to the water companies polluting our beaches, handing tax cuts to the banks and handing a tax cut to Amazon. She is making that choice, even though households and public services need every penny they can get. Working people are paying for the cost of living crisis, stroke victims are waiting an hour for an ambulance and criminals walk the streets with impunity. It is the wrong choice for working people; it is the wrong choice for Britain.
Mr Dhesi
The Government appear to have decided to deal with this energy crisis on the backs of ordinary hard-working Brits, and to load huge levels of debt on to future generations, rather than properly taxing the billions of pounds of excess profits of the energy companies. Why are the Government on the side of big corporate rather than ordinary hard-working Brits? Is it because the Prime Minister is a former employee of Shell and is therefore on the side of oil and gas companies instead of protecting ordinary working British people?
Keir Starmer
I am grateful for that intervention. It comes down to this basic point. All hon. Members recognise that profits are needed for investment in all businesses, but in this case these are profits that the companies did not expect to make. When the chief executive of BP says that the windfall tax would not deter any investment, it is a bit rich for Government Members to say that he is completely wrong. He is the chief executive of BP. He has made his case and it is the complete opposite of the case the Prime Minister is trying to make.
The immediate cause of this energy crisis is Putin’s grotesque invasion of Ukraine. We stand united in our support for Ukraine. If we are to defend democracy, defeat imperialism and preserve security on our continent, Putin’s aggression must fail. Whatever our political differences, the Prime Minister will always have my full support in that common endeavour. But we must ask ourselves why we are so exposed to changes in the international price of oil and gas. Why are we so at the mercy of dictators able to pull the plug on wells and shut down pipelines? Why is there such a fundamental flaw in our national security?
Several hon. Members rose—
Keir Starmer
I will make my argument and then I will give way.
It is about a failure to prepare, a failure to increase our energy independence and a failure to rapidly decrease our reliance on fossil fuels. The Conservatives banned onshore wind in 2015, and that cost us clean energy capacity equivalent to all our Russian gas imports in recent years—a policy disaster. The Prime Minister has been consistently opposed to solar power, the cheapest form of energy we have, and she has been consistently wrong. It is not just what the Prime Minister said in the heat of her leadership campaign this summer. When she was Environment Secretary, the Government slashed solar subsidies and the market crashed.
Alex Chalk (Cheltenham) (Con)
The Leader of the Opposition is being completely misleading, if I may say so. It is under this Government that the United Kingdom has the second highest offshore wind generation capacity of anywhere in the world. How is that created? It is through investment by companies, and this Government will allow for that to happen.
Keir Starmer
I take it from that intervention that the hon. and learned Gentleman does not quarrel with me that the ban on onshore wind since 2015 has been a policy disaster, along with the opposition to solar power.
Keir Starmer
I will of course take the former Prime Minister’s intervention.
Keir Starmer
I am grateful for that intervention and I will deal with it in full, because it is a very important point. Nuclear is vital to our future, and a new generation of power plants should have been built by now. Yesterday, the Prime Minister desperately tried to blame Labour, and that intervention goes to that point. I remember the exchange across the Dispatch Box in 2006 when Prime Minister Blair said that he was pro-nuclear, and the Leader of the Opposition, David Cameron, did not know where to look. If Members have not seen the clip, they should have a look. The uncomfortable truth for Members opposite is that the last Labour Government gave the go-ahead for new nuclear sites in 2009. In the 13 long years since then, not one has been completed.
Mr Mark Harper (Forest of Dean) (Con)
Tony Blair may have said that he was pro-nuclear, but he did not actually build any nuclear power stations.
On the windfall tax and the £170 billion that the Leader of the Opposition mentioned, it is my understanding that most of that is not profits of UK companies but from energy supplied to the UK, and it is not within our ability to tax it. We already have a windfall tax that taxes those profits at 65%. How high does he think a windfall tax should go?
Keir Starmer
What was the Conservative party’s position on nuclear when David Cameron was asked the question in 2006? He did not have a position on it. I think the right hon. Gentleman is wrong about the £170 billion. If there is any doubt, I invite the Treasury to disclose the documents so that we can all evaluate them.
Chris Bryant (Rhondda) (Lab)
Is not the bigger point that there is a simple choice about how to pay for this? It either all goes on borrowing, ordinary families and the never-never, or at least some of it is paid for by a windfall tax on unearned and unexpected income which Putin has put into the pockets of Shell and BP. That is the fundamental choice.
Keir Starmer
That is the fundamental choice and the fundamental divide in the House. Let the Conservatives defend their position of protecting those excess profits, and we will defend our position of standing up for working people.
Several hon. Members rose—
Keir Starmer
I will make some progress: I have taken a lot of interventions.
Let me turn to home insulation, which reduces energy consumption like nothing else. We have the draughtiest homes in Europe. The last Labour Government set about fixing that. Then the Conservative party said, “cut the green crap”, and the whole project all but collapsed. Installation rates fell by 92%—utterly short-sighted, and costing millions of households £1,000 a year on their energy bills right now.
The Prime Minister is right to recognise that immediate support needs to be combined with longer term action. Fracking and a dash for gas in the North sea will not cut bills, nor strengthen our energy security, but they will drive a coach and horses through our efforts to fight the looming climate crisis. The Prime Minister should listen to her Chancellor, who is sitting next to her. What did he have to say on fracking just a few months ago? I see him leaning forward. This is a long quote, and I have tried to cut it down, but every sentence is worth repeating.
“Those calling for its return misunderstand the situation we find ourselves in…if we lifted the fracking moratorium, it would take up to a decade to extract sufficient volumes—and it would come at a high cost for communities and our precious countryside.”
Those are his words. I will go on, because this is so good. He said, just a few months ago:
“Second, no amount of shale gas from hundreds of wells dotted across rural England would be enough to lower the European price any time soon.”
He went on:
“And with the best will in the world, private companies are not going to sell the shale gas they produce to UK consumers below the market price. They are not charities”.
Spot on, Chancellor.
What did the Chancellor have to say about North sea gas at the same time? He said that,
“additional North Sea production won’t materially affect the wholesale price”.
Indeed, earlier this year his previous Department helpfully put out a series of Government myth-busting documents. Here is one of them—Chancellor, your document:
“MYTH: Extracting more North Sea gas lowers prices.”
Answer:
“FACT: UK production isn’t large enough to materially impact the global price of gas”.
I have a copy for the Prime Minister.
We do need to carefully manage our existing resources in the North sea, and the industry has an important role to play in our future as we transition to a different form of energy, but doubling down on fossil fuels is a ludicrous answer to a fossil fuel crisis. If all countries took the approach advocated by the Prime Minister’s new Energy Secretary of squeezing “every last drop” out of their fossil fuel reserves, global temperatures would rise by a catastrophic 3°. That would be devastating for our planet and for future generations, and it is totally unnecessary.
Keir Starmer
I am going to make some progress, because other speakers need to get in.
New wind and solar power are now nine times cheaper—nine times cheaper! We need a clean energy sprint, urgently accelerating the rollout of offshore wind, onshore wind, solar, nuclear, hydrogen, and tidal. Last year, I set out a new national mission to insulate 19 million homes and cut bills for good. If the Government had taken me up on that challenge, 2 million homes would already be insulated by this winter.
Britain needs a fresh start. We need a Government who will never leave working people to pick up the tab for excess profits in the energy industry. We need a Government who plan for the long term rather than leaving us badly exposed to the whims of dictators, and we need a Government who will drive us forward to energy independence rather than doubling down on fossil fuels. The change we need is not the fourth Tory Prime Minister in six years; it is a Labour Government.
Mrs Theresa May (Maidenhead) (Con)
I refer the House to my entry in the Register of Members’ Financial Interests.
I congratulate my right hon. Friend the Prime Minister on acting so swiftly to bring forward a package of support for people with their energy bills. There is no doubt, as every Member of this House knows, that that is a matter of real concern for people in my constituency and every other constituency, who have been worried about how they will heat their homes, and businesses that have been worried about how they can continue to operate.
I also welcome the fact that my right hon. Friend has coupled action on energy bills with action on energy security. The vicious further invasion of Ukraine by Russia has indeed shown the necessity of our having our own energy security, although it makes sense anyway. We have made important progress on that over recent years; I refer, of course, to the investment in Hinkley Point C, and I again welcome the commitment that my right hon. Friend and the Government have made to continuing that support for nuclear energy. As I pointed out in my intervention—
Mrs May
Just wait a second—or perhaps more than one second. As I pointed out in my intervention on the right hon. Leader of the Opposition, and as was emphasised by the excellent intervention by my right hon. Friend the Member for Forest of Dean (Mr Harper), in 13 years of Government, whatever the then leader of the Labour party might have said, they did not build any new nuclear capability.
Alan Brown
Hinkley Point C will be at least four years late, possibly five. It is nearly 50% over budget and EDF has an eye-watering 35-year contract for a strike rate at £92.50 per MW, compared with roughly £40 per MW for just 15 years in onshore and offshore wind. The right hon. Lady should have scrapped Hinkley Point C when she had the chance, should she not?
Mrs May
It is high time that Scottish nationalists came up with some practical solutions to these issues, rather than rejecting everything the Government suggests.
Ian Blackford (Ross, Skye and Lochaber) (SNP)
We are all trying to find energy security, so I say to the former Prime Minister and to the Government Front Bench that we should be prioritising tidal. There is an excellent Royal Society report from last year that indicates that we can get 11.5 GW. I ask the Government to enhance the ringfenced pot from £20 million to £50 million; they will get the baseload they need, and they will not need nuclear energy.
Mrs May
This is rather strange point in my political career, because I agree with the right hon. Gentleman on the importance of tidal. When I was Prime Minister I looked very closely, over a significant period of time, at proposals for the Severn estuary in particular. Unfortunately, at that time the price that would have had to be guaranteed in relation to the cost to the consumer was too high. Of course, looking at it today, it could be a very different picture.
My right hon. Friend the Prime Minister outlined a number of steps the Government are taking, and I look forward to seeing the full details of those. However, I suggest there are some other measures that would both address energy prices and energy security while capitalising on our high-growth tech sectors, and help us to meet our domestic and international climate change obligations. There are measures that will save people money that will also help to save the planet.
The UK has already shown that we do not have to choose between low emissions and economic growth. We can have both. To achieve net zero we will need to remove the country’s dependence on fossil fuels. My right hon. Friend announced a net zero review; perhaps when he sums up this debate the Secretary of State could indicate how that net zero review will fit in with the net zero strategy that the Government published in advance of COP26, and which many are already working on.
While my right hon. Friend the Prime Minister has acted swiftly and correctly to help people over these difficult times, it makes sense to accelerate our transition to a low-carbon energy system. That can be done by speeding up the roll-out of low-cost, home-grown renewable technologies.
Kevin Brennan
The former Prime Minister says that the Government have acted correctly, but the Government’s case is that energy prices are going up because of the war in Ukraine. Therefore, those profits are being earned because of the war in Ukraine. Why is it right to prioritise war profiteering and instead have a stealth tax on households?
Mrs May
What is right is to provide support for households who are worried about their energy bills, and that is exactly what the Government are doing.
Of course, if we are going to increase our use of renewables, it is important that the price people pay for their electricity reflects the cost of that production and not the cost of gas. I welcome the fact that my right hon. Friend—
Mrs May
I am going to make some progress. I am pleased that my right hon. Friend the Prime Minister has indicated that she will take action in relation to that particular matter, but getting full benefit from that does mean upgrading the UK’s power grid infrastructure. Alongside that, we need to improve the energy efficiency of homes, which would not only reduce demand for energy, saving people money, but is an element that would help to save the planet. We need to consider rolling out a significant home insulation programme.
Mrs May
I will give way first to my hon. Friend the Member for Gloucester (Richard Graham), and then to the hon. Member for Rhondda (Chris Bryant).
Richard Graham
My right hon. Friend’s Government did indeed look very closely at the prospect of a tidal lagoon off Swansea bay. It is quite correct, as she says, that at the time it was too expensive—although the price now looks relatively attractive. Does she agree that the real opportunity now, which the current Chancellor was very supportive of when he was at BEIS, is for marine energy to come from tidal stream? The new renewable auction is supporting that, but there is much more that can be done, especially if we can affect the planning regulations around the pipeline of opportunity. Does she agree that there is more this Government could do on that?
Mrs May
I absolutely agree with my hon. Friend. I welcome every opportunity to increase the diversity of our supply of energy, and looking at these new opportunities is absolutely a way to do that.
Chris Bryant
I am grateful to the right hon. Lady for giving way. I completely support the tidal lagoon in Swansea and hope that is now a real possibility for us—I hope the Prime Minister would accept that—and I agree with the right hon. Lady about insulation. I think I understood the Prime Minister to say earlier that there would be protection for public services for just six months. Many local authorities, hospitals and schools are facing dramatically increased bills already. Are they not going to need more support than just six months?
Mrs May
I think the public sector will be very pleased to hear that the Government have taken their concerns on board and are providing support for them.
There is another step that the Government need to take: they should look at building regulations. We are still building homes with gas boilers. Does it not make sense to change the regulations? Those gas homes will have to be retrofitted in just a few years’ time, so surely it is more cost-effective to take action now.
Mr Speaker
Order. The hon. Gentleman has had one intervention. What I am bothered about is that there are a lot of people who want to get in. I do not want to stifle the debate, but I do want to make sure that everybody gets a voice.
Mrs May
I apologise, Mr Speaker, for being generous in taking interventions.
The Government are also key to driving greater private sector investment in low-carbon solutions, for instance by de-risking investment in early-stage technologies—we have already heard about some early-stage technologies—and emerging sectors such as hydrogen production. Greater investor certainty cuts the cost of new technology, drives innovation, creates jobs and boosts economic growth. The Government’s unequivocal support for this agenda would be a positive signal not just for our green tech industry, but for the ambition of the UK economy more broadly.
Mrs May
I am just about to finish.
People need help with their bills today, and that is what the Government are providing. But Britain led the world through the industrial revolution. If we grasp the opportunity now, we can lead the world in a cleaner, greener form of growth.
Mr Speaker
We now come to the leader of the SNP, Ian Blackford.
Ian Blackford (Ross, Skye and Lochaber) (SNP)
It is a pleasure to follow the former Prime Minister, the right hon. Member for Maidenhead (Mrs May). If I may briefly reflect back on the way she behaved when she was Prime Minister, I have to say that she showed courtesy to Opposition leaders, whether it was the then leader of the Labour party or ourselves as the third party. If I may gently say so to the Prime Minister, some of the protocols to make sure that we have advance sight of statements, and indeed are aware of when the Prime Minister will be coming to the Chamber to speak, are important—I do not know whether she was listening to any of that, but it would be helpful if it could be passed on.
At the start of the year we were faced with an energy crisis. By the summer it was an emergency. Right now, today, we are at the precipice of a humanitarian disaster, because it is no longer a question of whether to heat or eat when many households can no longer afford to do either.
Ian Blackford
Let me make some progress and then I will.
This cost crisis puts livelihoods and lives at risk. All the while, as this disaster deepened, all summer the Tories spent all their time desperately fighting among themselves, and the public were left desperately waiting for a real cost of living plan. We finally—finally—have a plan today, but I fear that when the public absorb the details, it will fall far short of the help we need.
We have heard today that the green levies are being scrapped. That is of deep concern to those of us on these Benches, particularly given that the green levies fund the warm home discount scheme and, of course, energy-efficiency measures for low-income households. I ask the Government to make sure that that support will remain in place for those who need it. But the sheer scale of the soaring energy bills meant that there was never any question but that households and businesses would not be able to pay the cost of energy bills. They were, and they are, unaffordable. If these prices were not frozen, the bills simply could not have been paid, so freezing prices was not really a choice. It is the only political option.
When the current price cap stands at £2,000, with a 54% increase since spring, and when many people are already unable to pay, setting the cap at £2,500 is not an actual freeze. We know, too, that businesses, especially SMEs, are facing even sharper cost increases than households, and an avalanche of insolvencies and redundancies is forecast. Many businesses simply could not have afforded to stay open.
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
I thank the right hon. Gentleman for giving way. Reids bakery in my constituency, which supplies biscuits to the four corners of the world, is in danger of going bust by Christmas. May I appeal to the Government, in a spirit of inclusivity, to please look at the letter that I have been sent by Reids bakery and see what could be tailored to help a vital business in a remote part of the UK?
Ian Blackford
I agree with my hon. Friend and neighbouring MP. Indeed, over the course of the last few weeks I have visited businesses in Ayrshire with my hon. Friend the Member for Kilmarnock and Loudoun (Alan Brown). We visited another bakery, Brownings, and met with the industry body. It is clear that bakers in particular are facing real struggles with the rise of energy and other costs. It is critical that the Government give the details of what they are intending in order to support businesses.
Steve McCabe
I am grateful to the right hon. Gentleman. On the question of the cap, the Prime Minister indicated that one of her reviews will be of regulation. Does the right hon. Gentleman think it is time to take a serious look at the operations of Ofgem and how much support it is giving as a regulator to consumers, whether domestic consumers or businesses?
Ian Blackford
I think it is fair to say that the current regime is not fit for purpose, which is why we are in this situation today, so an urgent review of that is absolutely required.
Let me make some progress. Good, profitable businesses seeing a tsunami of cost increases, with energy costs at its core, are quite simply facing a fight for survival. It is clear that today’s plan does not go nearly far enough to mitigate the expected cost increase facing employers. The UK Government need to grasp the scale of this emergency.
Mr Speaker
Order. I wish to say something about the announcement that has just been made about Her Majesty. I know that I speak on behalf of the entire House when I say that we send our best wishes to Her Majesty the Queen, and that she and the royal family are in our thoughts and prayers at this moment. I am not going to take any contributions on this now; if there is anything else, we will update the House accordingly.
Ian Blackford
Thank you, Mr Speaker. Let me say, I am sure on behalf of all colleagues, that we are saddened to hear the announcement that has been made. The thoughts and prayers of us all will be with Her Majesty the Queen and indeed with the royal family.
In reality, the one big political question—the real question—was how today’s plan would be paid for and who would pay for it. Ever since the new Prime Minister took office, we have been waiting for these answers, but after all the waiting it could not be any clearer. She set it out very brazenly: the Prime Minister’s plan means that the public pay. She has made the political choice to tax families instead of companies—to put profit over people. Instead of a windfall tax, she has chosen a new Tory tax: the Truss tax—the Truss tax that means that, in the months and years ahead, households and businesses will be punished with higher bills, higher interest rates and higher mortgage costs. A Truss tax means cuts to the vital public services that people rely on and that are used to support the most vulnerable. A Truss tax means a threat to the Scottish budget, which the Scottish Government are using to protect our population and shield workers and public services as best they can.
Jacob Young
I am grateful to the right hon. Gentleman for giving way. He seems to be making an argument for a windfall tax on the oil and gas companies. They already pay 65% on their profits. Given that the Leader of the Opposition was not able to answer this question, what would he rather see that tax set at?
Ian Blackford
I am grateful for that intervention. If the hon. Member just bears with me, I will come to that specific point, but the issue of who pays is important, because there is no—[Interruption.] Well, actually I will do, and the right hon. and learned Member for North East Hertfordshire (Sir Oliver Heald) might actually show some respect, if he does not mind. At the end of the day, oil and gas producers are making windfall profits. Our constituents, and his constituents, are suffering. It is right that we look at the contribution that those making windfall profits will make, and I will come to that.
Ian Blackford
I am going to make a little progress, because I am conscious that others want to get in.
The frightening thing is that the new Prime Minister made that choice on day one in the job. On day one, we saw the pound slip to a low not seen since the Thatcher years, knocked by the UK’s worsening economic outlook. Her first major decision as Prime Minister will prioritise big business profits over family budgets, and we can already predict that the Truss tax, which will be paid for by households for years to come, will be her enduring legacy. It will eat away at household budgets long after she and her party have been voted out of office. If day one was that bad, we cannot blame people for fearing that the worst is yet to come.
The decision not to bring in an additional windfall tax is the biggest and worst political choice in the plan. Let us look at Shell and BP as an example. I want corporates to be profitable and to be able to invest to create jobs and to finance a green transition, but there is a difference between a fair profit and an excess windfall or excess profit. Shell’s first half profits were up by 177% to $25.2 billion. It made excess profits to such an extent that it bought back shares worth $8.5 billion and declared that it would buy back a further $6 billion of shares between July and September. If we want an example of where excess profit is, it is there. In total, that means that $14.5 billion of excess profits will not be invested in green energy projects—money that has been generated from the high energy prices that our constituents and our businesses have to pay. That is the reality.
BP’s quarter 2 profits were up from $3.1 billion to $9.2 billion, and there is a share buyback for this quarter of $3.5 billion. It will frankly disgust our constituents that that money is being given back to shareholders when people simply cannot afford to put their heating on. They are global corporates, but we can and should fairly tax their UK activities, so why on earth is the Prime Minister failing to bring in a fair windfall tax? Why will ordinary people across these islands ultimately have to foot these bills? Why does her plan not address that real issue?
This energy plan is defined not only by the choice to make the public pay, instead of the excess profits of massive corporations, but by its glaring omissions. There is no proper plan to help those who are already struggling. Support needs to be targeted to low-income households and those negatively affected by spiralling costs, such as unpaid carers, larger households and disabled people.
In Scotland, we are already prioritising support to the most vulnerable. The Scottish Government are doing what they can by freezing rents, banning evictions, freezing train fares and expanding free school meals to primary 6 and primary 7. That is a Government acting with compassion.
Chris Law
I thank my right hon. Friend for making the most valid point that for generations to come, working people across these islands will be paying for this borrowing for excess greed. The UN Secretary General has described it as utterly “grotesque” and “immoral” to be making excess profits on the back of fossil fuels. What I have heard from the Government is more of the same. My question is whether the Government have, despite their ideology that profits must be made regardless, put any conditions on those excess profits and on what those companies will do to invest in a rapid transition to save future generations from the climate catastrophe.
Ian Blackford
My hon. Friend is absolutely right. In that context, we are doing what we can with the devolved powers that we have.
I say to the Government that one thing we have done is to introduce the game-changing Scottish child payment, which will increase to £25 a week and lift 50,000 children in Scotland out of poverty.
Several hon. Members rose—
Ian Blackford
I need to make progress.
We are all too aware, however, that that is nowhere near enough to mitigate the effects of the crisis, because most of the key economic levers lie here in Westminster. If the new Prime Minister is serious about helping everyone through the winter, she should at least lift universal credit by £25 a week. Although I welcome her remarks about those who are off grid, we must be given clarity about support for those across swathes of rural Scotland who rely on oil heating and are not subject to the price cap.
Clarity is also needed for those who have accepted fixed-term contracts at a higher rate in a bid to weather the storm. They must be allowed to switch to benefit from the support that has been put in place. Crucially, vital support for the most vulnerable must go hand in hand with the UK Government increasing the budgets of the devolved Administrations, or granting them greater powers to borrow, so that they can do more to help all public service workers and the most vulnerable.
Barry Gardiner
I am grateful to the right hon. Gentleman, who is making a broad and apposite speech. He was challenged on the rate of tax that he believes is appropriate, but he will know that prior to the introduction of the windfall tax, the UK had the lowest tax rate of any oil and gas producer in the world. He was challenged on 65%, which is actually 6% below the average of all producers in the world. If he were prepared to go to the global average, it would still mean that relief could be given to taxpayers in this country.
Ian Blackford
The hon. Gentleman’s intervention makes an awful lot of sense. We should reflect on the fact that oil and gas companies are making additional profits not because they are improving their businesses or investing, but simply because oil and gas prices are higher. It is right in that context that our consumers and businesses are compensated. Why on earth are we sitting back and allowing the oil and gas companies to engage in billions and billions of dollars of share buybacks?
Several hon. Members rose—
Ian Blackford
I will make progress, because I am conscious of time and those who want to speak.
I will briefly deal with another prominent point in the Prime Minister’s speech. She blames the cost of living crisis on the war in Ukraine and I believe that that is worth expanding on. Of course, there is no doubt that what has happened in Ukraine has played a major role in spiralling wholesale prices, and we have rightly come together across the Chamber in condemnation of Putin’s horrific war and his actions to thwart European energy supplies. I look forward to continuing to work with the new Government in a spirit of consensus on this issue. We all stand together against Putin’s horrible actions and the war in Ukraine.
As we have rightly helped Ukraine, however, we must also help citizens at home. Indeed, we owe it to them to do so; I hope that the Prime Minister will reach consensus with me on that point. Where we divide is my belief that we must recognise that other countries in Europe, which are far more reliant on Russian gas than the UK, have weathered the economic storm far better than the United Kingdom. We must therefore recognise the UK Government’s role in creating the circumstances for the crisis. Shameful mismanagement by successive Tory Governments, topped by a Tory Brexit, means that the UK has the highest inflation in the G7 and the lowest growth in the G20, and that we are marching headlong into a recession. UK household electricity prices have surged ahead of those of our European peers, and the UK is now in a deeper state of crisis than most, because of the damaging choices that have been made.
Patricia Gibson
For my constituents in North Ayrshire and Arran, who live in difficulty, the most important aspect of today’s announcement is that they were waiting to hear of help with their fuel bills, but they were instead told that their fuel bills will rise. They will be bitterly disappointed by that. Nothing has been offered to them today. Does my right hon. Friend agree with their disappointment?
Ian Blackford
Yes, I do. We need to reflect that energy bills are rising in an energy-rich Scotland. The damage done by the UK Government’s choices—choices that have been imposed on us—make the choice about Scotland’s future ever clearer. Scotland is energy rich, so we simply should not be facing an energy emergency. It may surprise some in this House, but Scotland produces six times more gas than we consume and almost 100% of our entire electricity production comes from renewables. That is not attention-seeking, I would say to the Prime Minister; these are the facts. Scotland has the energy, but we just simply do not have the powers. We are stuck in a UK market that prices our electricity on the basis of the price of wholesale gas, and the power to change the system lies with Westminster.
Carol Monaghan
My right hon. Friend will also know that, although we are producing almost 100% of our energy from renewable sources, the grid connection charge—£7.36 per megawatt-hour compared with 40p per megawatt-hour in England—does not help further investment. We need these grid connection charges to be reduced, because my constituents want to know, when they can see wind turbines outside their windows, why their prices are going up.
Ian Blackford
Again, my hon. Friend makes a very important point. We are being ripped off on Scotland’s ability to deliver green renewable energy, but it is even worse than that. For those of us who live in the north of Scotland, because we have a regional distribution market, we pay a premium for the electricity that is sent south and then have to pay the highest prices to get it back. That is the cost to people in Scotland of Westminster’s control of our energy market.
What is needed—this is most crucial of all, and it is glaringly lacking in this energy plan—is a fundamental overhaul of the energy market to break the link between the cost of gas and the price of renewable and low-carbon electricity. The reality is that an independent and energy-rich Scotland with the normal powers to act in our own interests could have cushioned our economy from this cost of living crisis. Through independence, Scotland could use our energy well for the benefit of our people, so for households and businesses in Scotland the cost of living crisis is literally the cost of living with Westminster. It is a cost we can no longer afford and it is a price we are no longer willing to pay. It is why Scotland’s people will choose independence.
Several hon. Members rose—
Mr Deputy Speaker (Mr Nigel Evans)
Order. There is a lot of interest in this debate, so we are introducing forthwith a three-minute time limit.
Mr Robin Walker (Worcester) (Con)
I welcome the Prime Minister and indeed all her colleagues to their places on the Front Bench, and the rapid action that has been announced today. I wanted to see action for consumers in my constituency, but also for businesses, charities and the public sector, and I am delighted to hear all of that included in today’s statement. Over the summer, I have heard from hundreds of constituents about their concerns—people who are vulnerable, the elderly, students and people with illnesses and disabilities—about how they will not be able to turn down their heating in the upcoming winter. The action that has been announced today will be extremely welcome in all of those quarters, and the fact that there is a two-year cap in place is particularly welcome in my constituency.
I have also been hearing from businesses, and I have been very concerned about some of the costs facing pubs, hospitality businesses and manufacturers in my constituency. Indeed, as long ago as last year, I wrote to the then Business Secretary—now the Chancellor—about high-energy manufacturers such as aluminium extrusion businesses Superform and Aeromet in my constituency and about some of our largest manufacturers such as Worcester Bosch and Mazak in relation to the impact of energy costs on them, so I am delighted that today’s announcement also means help for businesses with energy. Of course, that help for businesses with energy is also, in the long term, help for consumers.
I look forward to hearing more about the urgent work going on to support the hospitality sector, which is so important in all our constituencies, and even retailers have been affected by these issues. Toys & Games of Worcester, a wonderful independent retailer in my constituency, expects its energy bills to go up by as much as 400% later this year. Following today’s intervention, I hope that will no longer happen and that that business can continue to thrive.
As a former schools Minister, I am delighted to hear of the help for schools. It is vital that we help them to address the challenges they face with energy pressures. On that front, the intervention is important, as it is for charities. In the last week I have visited my wonderful hospice in Worcester, St Richard’s, and this week I will be visiting the children’s hospice, which were both concerned about the impact of energy bills. We have seen correct interventions in all those spaces.
There is much to welcome in this statement: the new energy supply taskforce; speeding up the deployment of clean technologies, including, crucially, hydrogen; the reduction in inflation by up to five percentage points, and the new Bank of England scheme to support liquidity in the wholesale market; and the review to ensure that net zero can be met in a way that supports business and is pro-growth, which I am delighted to hear is taking place under my right hon. Friend—and sometime lookalike—the Member for Kingswood (Chris Skidmore). I welcome the statement, and I want to make sure that we go further. In particular, I urge Ministers to consider the opportunities provided by hydrogen in helping to ensure that gas central heating continues to be delivered to our constituents’ homes in a clean, low-cost and energy-efficient way.
Clive Efford (Eltham) (Lab)
Although the solutions to this crisis may sound complicated in this debate, the choice is straightforward for the Government: who pays at the end of the day? Let us be clear what a windfall tax is. It does not tax profits that energy companies had planned for and could have expected in all reason. This windfall has come about, as the Government have said themselves, as a consequence of what is happening in Ukraine and the aggression by Putin. The question that I have and my constituents will have is: how can the Government reasonably come to a conclusion that it is okay for those energy companies to make these huge profits on the back of that aggression by Putin?
No matter what we do over the windfall tax, there will be a cost to the taxpayer because the Government are under pressure in other areas of expenditure. We only have to look at the newspapers today to see how, yet again, the number of people waiting for operations in the NHS has gone up to 6.8 million; and how the cost of living is forcing teaching assistants to question whether they can commit themselves to supporting children in schools or should move to higher-paid jobs, such as in supermarkets. Everywhere we look, the Government are under pressure over public expenditure on our vital public services. Yet they are prepared to wave aside the potential to pay for these increases through a windfall tax.
Matt Rodda (Reading East) (Lab)
I am grateful that my hon. Friend mentions teaching assistants because one contacted me recently. Many low-paid workers and others on moderate incomes be staggered by the Government’s decision to put the interests of energy companies ahead of those of normal families.
Clive Efford
Absolutely. My hon. Friend is absolutely right. The Government are morally wrong to turn their back on a windfall tax when they are clearly under financial pressure in other areas of public expenditure.
In my brief contribution, I want to raise one specific issue relating to my constituency. I have a craft bakery that has survived for 100 years and is about to celebrate its centenary. It has been run by six generations of the same family. It kept feeding people in my constituency—I was not the MP at the time, I hasten to add—during the second world war, so even the Luftwaffe could not shut down this bakery. It employs 20 members of staff, in an industry where energy use is really heavy, and faces cost increases of 300% or 400%, so it is trying to renegotiate its energy contracts. As the statement published by the Government says—I have it here; on such an important crisis, its sheer length is 200 words—there will be assistance for businesses equivalent to that given to individuals, guaranteed “for six months”. The Prime Minister said—I wrote these words down—that businesses would be given some idea of what assistance they will get “within three months”, but they are negotiating now. We had no clarity from the Prime Minister in her statement. It was as though she was making a Queen’s Speech—“My Government will”—but she gave us no detail on what Ministers will be doing.
One thing I want a guarantee on is that, if we are to get a financial statement from the Government next week or before the conference recess, we will have a proper debate in this Chamber, as we are required to have. Or will the Government avoid scrutiny—as has been a repeated action—yet again?
Mel Stride (Central Devon) (Con)
I rise broadly to welcome these measures. We know that we live in terribly difficult times. Yesterday the Treasury Committee took evidence from the Governor of the Bank of England and other members of the Monetary Policy Committee, and the point was made that the impact of the energy price rises on households is about four times that which occurred in the 1970s. These are truly frightening times, and I am pleased that my right hon. Friend the Prime Minister has come forward with such a bold package of measures for consumers and, critically, for businesses over the next six months, with a review after three months. I was pleased to see the Bank of England liquidity facility for energy businesses totalling £40 billion, which I think will be important for the functioning of the marketplace, as well as the critical commitment to review the way that the pricing of our electricity is determined, whether in relation to gas or to the underlying costs of alternative means of energy production.
I also want to focus briefly on the macroeconomic issues, which are easy to overlook. This is a huge intervention. The Prime Minister detailed that the Chancellor will come forward with costings at the emergency fiscal event that he is soon to present to the House. Alongside the tax reductions that have been mooted, plus other pressures on the public finance, it means that debt will almost certainly increase, as will the deficit. It has been stated that inflation will be assisted by these measures—that is true; inflation is just a measures of price rises relative to a previous period at a particular point in time. Although downward pressure on the consumer prices index from these freezes will be positive, it will be a stimulus to the economy and, through time, net inflation may increase. That will require a response from our central Bank, which might see interest rates increase in the more medium term, with increased servicing costs for our debt. We must see this very much in the round, and that is where the debate on the windfall tax should at least be considered. The Treasury Committee will be looking at that in some detail.
My final point, in my remaining 30 seconds, is that when it comes to the emergency fiscal event, it is critical that we have an Office for Budget Responsibility independent forecast to take into account all those issues—the great uncertainty we are talking about, and the huge fiscal interventions for which the costings have not yet been presented to us. We must see what the impact of that will be on the public finances in order to reassure the markets.
Carolyn Harris (Swansea East) (Lab)
Everyone will be affected by the rise in energy prices and will be looking for ways to cut back by being more careful with the appliances they use, or opting for alternative ways to keep warm and prepare meals. It is a worrying time for many of my constituents and for others the length and breadth of the country.
For some, however, the worry and fear is even greater. More than 60,000 people across the UK are in need of renal replacement therapy in the form of dialysis or a transplant. My daughter-in-law, Hayleigh, is one of those. Hayleigh suffers from kidney failure, and has done since she was 11. A transplant at 15 gave her seven years of freedom, but for the past 11 years she has been back on dialysis. Home dialysis allows Hayleigh to spend more time with her family, and has even given her the opportunity to attend university, and go to work rather than spending three days a week in hospital. However, running the machine for 10 hours at a time, six nights a week, comes at a price. The approximate cost for electricity to run the home dialysis machine is currently almost £80 per month, and with energy prices set to soar, those costs will only increase, threatening the ability of many patients to continue their life-saving treatment at home.
The charities Kidney Care UK and Popham Kidney Support in my constituency have recently contacted me about their concerns for patients, and the lack of support they are being offered by energy providers. In Wales, patients like Hayleigh are reimbursed by the Welsh Renal Clinic Network, but with the cost of extra energy needed for home dialysis machines expected to increase to £2,000 a year, the level of financial support will fall far short. The situation is even worse in other parts of the country, where reimbursement amounts vary considerably, with some patients receiving no help at all.
The cost of kidney failure and other chronic conditions should not be borne by patients. It is not only dialysis patients who are affected. Many people depend on home electrical medical equipment—oxygen concentrators, nebulisers, artificial ventilators, stairlifts, or bed and bath hoists. Add to that the additional costs for heating and lighting, and many vulnerable people will be feeling the pain of this winter. No one should be in a position where they have to cut back their use of vital equipment for fear of paying their bills. For my daughter-in-law, and for all the Hayleighs out there who are looking at uncomfortable and unaffordable increases to their bills, will the Government ensure that sufficient financial support is made available to cover that essential electrical medical equipment?
Mr Mark Harper (Forest of Dean) (Con)
I will keep the scope of my comments brief, Mr Deputy Speaker, given the time available. The written statement included confirmation—the Prime Minister also confirmed this—that the Chancellor will set out the expected costs as part of the fiscal statement. Will those costs include the Government’s assumptions for how wholesale prices will move over the coming months and years? Yes, it is an estimate, but we have to make assumptions to calculate the cost. Secondly, and importantly, will the estimates of the cost of that package be independently scored by the Office for Budget Responsibility, or will they simply be the Government’s assessment of costs? It would be helpful if the Minister could confirm which of those it will be when he responds to the debate.
I welcome wholeheartedly confirmation from the Prime Minister that people who are off the gas grid will be protected by this announcement. A full 40% of my constituents are off the gas grid, and I believe the number is broadly similar in the Prime Minister’s constituency. It is great to have confirmation that they will be helped, but a bit more detail on process is important. People who buy oil or liquefied petroleum gas tend to buy it in lumps—they have to fill a tank. If they were to place an order today, for example, to ensure they have sufficient energy, they will need to know whether the costs of that order will be covered by the price guarantee, or whether that will be only for deliveries that take place after 1 October. Although the details may need to be worked through, confirmation about that is incredibly important. It would be terrible if someone on a low income made a very expensive purchase today, and then discovered that they had inadvertently cut themselves out of help. Equally, we do not want people running out of energy by delaying those purchases.
My final point is to flesh out what I said in my intervention on the Leader of the Opposition. My understanding is that over half of the £170 billion excess profit includes profits made by foreign companies on energy supplied to the United Kingdom. It is not within the scope of the Exchequer to tax that. Secondly, we already have a windfall tax. We are already taxing excess profits at a total rate of 65%. That windfall tax has been legislated for by this House, and it will stretch forward to December 2025. I do not really know what the Labour party is arguing for, and I noticed that after my intervention, the Leader of the Opposition would not say what rate he thought a windfall tax should raise—65% seems quite high to me, and it would be helpful if Labour could confirm what it believes it should be.
Ed Davey (Kingston and Surbiton) (LD)
Following the earlier statement from Mr Speaker, I think our hearts, thoughts and prayers will be elsewhere, but I wanted to contribute to the debate and to agree with the right hon. Member for Forest of Dean (Mr Harper) and his questions on heating oil. That is a critical issue for people in rural communities, and we need answers immediately.
What the Prime Minister has announced is not a freeze on people’s energy bills. In the middle of a cost of living emergency, the Conservatives are choosing to put energy bills up by another £500 for struggling families. That hike in people’s energy bills comes on top of the £700 rise we saw last April. Struggling families will be paying twice as much for energy as they were last year, and people will still be desperately worried about how they will keep warm this winter. Last May’s £400 discount will simply not make up for the enormous rise in energy bills. So where is the new support for families and pensioners who are struggling? Under the Prime Minister’s plan, fuel poverty will get worse, not better.
I turn to how we think the Prime Minister is proposing to pay for the package. Why does it seem that the Government will be handing an eye-watering bill to taxpayers in the form of higher borrowing? We all know that that ultimately means higher taxes for taxpayers, and particularly for our children. That does not seem conservative, and it does not seem right. Why has she rejected the alternative of a windfall tax on today’s oil and gas giants, who are raking in enormous, unexpectedly high profits thanks to President Putin’s invasion of Ukraine? How is it fair to take money from future taxpayers—from our children—and hand it to today’s oil and gas barons? How is it responsible to borrow so much to pay for consumption when our economy is already in such a mess, with the pound falling so dangerously?
The fair and responsible energy policy would be to increase investment massively in the cheapest and most popular forms of energy available to us: wind and solar. I was absolutely shocked that the Prime Minister did not announce a massive, fast expansion of renewables to bring people’s energy bills down.
The Prime Minister has made some alarming choices today by rejecting cheap wind and solar power, raising energy bills even higher than they are now, refusing to give extra support to struggling families and pensioners, and paying for a policy with higher taxes on our children instead of a windfall tax on fossil fuels. Those are the wrong choices.
Dame Andrea Leadsom (South Northamptonshire) (Con)
I start by saying: may God bless our Queen. [Hon. Members: “Hear, hear!”]
I sincerely welcome the announcement—it is fantastic that we have seized the massive problem that is facing us—which will give relief to so many households and businesses who have been terrified by the prospect of what was to come. I am convinced that that reassurance will be greatly pleasing to them.
I want to take a couple of minutes to talk about some really low-hanging fruit that I do not think we have made enough of yet. With energy prices where they are, we as a Government could do a lot more. We could, for example, go house to house—through energy suppliers; not as Government officials—to assist people with looking at how they can reduce their energy bills. There are many practical ways and great ideas for doing that, not least of which are turning down boiler thermostats—people should not do that themselves at home—to make more effective use of energy and turning down the hot water tap pressure. Those things are really low-hanging fruit that could be done tomorrow, and forecasters suggest that they could save up to 10% off energy bills.
Most important of all is insulation. Current energy prices are a game-changer for insulation. Recent research suggests that £1,000 could pay for basic cavity wall or loft insulation for the average household and that the sector could insulate up to half a million homes this winter and 1 million homes next year. That could be cost-neutral to the Treasury as it would not be paying the excess for the price cap. With energy prices at current levels, it is worth looking again at massively ramping up household insulation.
Dame Andrea Leadsom
I will not give way because there is so little time.
Finally, as Business Secretary and then as chair of the 1922 Backbench committee on business, energy and industrial strategy, so many businesses have said to me, “We cannot get a grid connection for our solar panels, so there is no point in doing it.” I would say to them that, with energy prices where they are, they could get themselves a battery and have some internal energy independence. Many businesses should be looking at that. The Government’s role should be to provide advice through the energy suppliers.
Florence Eshalomi (Vauxhall) (Lab/Co-op)
I echo the comments of my hon. Friend the Member for Swansea East (Carolyn Harris) with regard to dialysis patients. My late mum was on dialysis due to her sickle cell—she dialysed three times a week—and one reason why she did not want to switch to home dialysis was its cost. Many sickle cell and dialysis patients who will need to have their heating on this winter will be worrying so much about how they will pay their bills.
On what the Prime Minister announced this morning, without the right action from this Government, the next few years will be fraught with so many difficulties for my constituents in Vauxhall. The decisions that the Government have made today will impact them for many years to come. I hope that the Prime Minister and the new Government will have that in mind as they make decisions about the next few years.
Solving the energy crisis is the first test of the new Government. Will they make the big decisions on the oil and gas firms who are making record profits while people up and down the country continue to suffer? Will they be fiscally responsible and do everything in their power to lower the burden on future generations? Will they support families who are already making desperate choices between putting food on the table and heating their home? I am afraid to say that, on the basis of the Prime Minister’s announcement and what we have heard from the Government, the answer is a resounding no.
For many of my constituents, the cost of living crisis did not start when Ofcom raised the price cap last month. For many, it did not even start when Russia invaded Ukraine earlier this year. The squeeze in their wages, which have not been keeping up with prices, has been a feature of the Government over the last few years. Households have been squeezed relentlessly over decades. Statistics from the Trussell Trust show that, between April 2019 and March 2020, more than 20,000 food parcels were distributed in Lambeth. The shock of the energy crisis has been severe, but we cannot keep ignoring the fact that a number of households have been left in this position as their bills continue to go sky-high.
We cannot ignore the failure to insulate homes due to failed insulation policies and the end of the Warm Front discount introduced by the Labour Government. What do we get from this Government? We get the rulebook on fracking ripped up while people continue to see untapped onshore wind potential. We get attacks on workers’ rights, with people taking to losing a day’s pay—more in some cases—to fight for wage increases and their rights. We see scraps of policy on insulating homes as our homes continue to bleed the energy that they need. That bears the hallmark of the incompetence of the last 12 years of this Conservative Government.
We cannot afford to go on like this. Enough is enough. We need a sea change with the Government recognising the issues faced by people in Vauxhall and up and down the country. We need a sea change, and we need a new Government.
Chris Green (Bolton West) (Con)
I welcome the Prime Minister’s statement, which set out two broad areas. First, we have the immediate support that she will give to so many people around the country as well as to businesses. Like many hon. Members—perhaps all hon. Members—I have had many constituents getting in touch to say how concerned they are about the cost of energy now and how fearful they are about the cost of energy this coming winter. The decisive action that she has taken is therefore incredibly welcome.
Secondly, I would like to highlight the Prime Minister’s longer-term vision. Much of the current problem is caused by the invasion of Ukraine by Vladimir Putin and the Russian army. However, we can also look back to the oil crisis of the 1970s and see that if we are dependent on foreign sources of energy for heating our homes and powering our industry, we will always be in a vulnerable place. I therefore welcome her ambition for the United Kingdom to be a net exporter of energy by 2040. That is a hugely positive ambition for the United Kingdom, for our industry and for the sector.
I would like to emphasise that nuclear needs to form a key part of the United Kingdom’s energy sector. It is reliable baseload energy that we can depend on come rain or shine. In the north-west of England, right across the three counties of Cheshire, Lancashire and Cumbria, there is huge talent in the sector, and by investing in that and giving the sector more security, we will protect and secure those jobs. I think also of the Springfields nuclear fuels plant near Preston. We need security for that plant to ensure that it can maintain itself and maintain its staff, the skilled engineers and skilled apprentices, on that site. We need to secure that site and many other places in the north-west of England. Warrington and the wider area also has an enormous wealth of talent.
Mike Amesbury
Does the hon. Member share my concern about one of the announcements, on fracking? I am quite confident that my community will not accept it. I know the hon. Member’s constituency of Bolton West and the beautiful rural idylls surrounding it. Does he feel that it will accept it?
Chris Green
The Prime Minister is committed to respecting the views and values of local communities, and I support that. However, in the short time I have in which to contribute I am trying to focus on nuclear energy.
We want that commitment in the north-west but also in Hinkley Point C, which is a phenomenal site and a phenomenal investment in our United Kingdom. I want our commitment to nuclear energy and the phenomenal workforce at the Hinkley Point C site in Somerset to go on to the next nuclear project and a whole series of nuclear projects, whether full-scale nuclear reactors or small modular reactors. There is huge potential and ambition, which the Prime Minister will set out and the Business Secretary will give more detail on. That is immensely positive for so many different parts of our country. I also particularly welcome the location of Rolls-Royce SMR headquarters in the city of Manchester.
Several hon. Members rose—
Madam Deputy Speaker (Dame Rosie Winterton)
Order. Just before we move on, I say to Members that there is absolutely no problem with there being interventions. However, I would advise sticking to the three minutes, because not everybody is necessarily going to get in. Interventions mean that the speaker gets an extra minute, and that means an extra minute off somebody else. Please do take interventions, but I would really appreciate it if colleagues then stuck to the three minutes.
Caroline Lucas (Brighton, Pavilion) (Green)
I echo the best wishes to Her Majesty.
The new Prime Minister takes up her role at a moment when the country is facing a series of multiple crises of staggering proportions, including a likely recession and, let us not forget, the accelerating climate emergency, which, in the words of the Intergovernmental Panel on Climate Change, means that there is
“a brief and rapidly closing window to secure a liveable future.”
This moment, therefore, required bold, visionary thinking grounded in compassion, not cold and outdated economic dogma. It called for a retrofit revolution, a massive investment in home insulation and renewable energy upgrades that could finally deliver warm homes and lower bills. I was staggered that the Prime Minister did not mention once the demand-side measures that need to be put into the communities around our country, so that people can finally have lower bills and warmer homes.
What this moment did not call for were measures that would lock us into further dependence on fossil fuels. While Putin’s war in Ukraine has accelerated the crisis, fundamentally it is one caused by our dependence on gas, and it will not be solved by extracting more gas. It certainly will not be solved by a resumption of fracking, which would be a disaster for the climate and a measure which, as her own Chancellor admitted barely six months ago, would do nothing to lower energy bills and would fail to produce enough gas to meet even 1% of our needs for more than the next three years.
Coming on to the detail of the Prime Minister’s support package, I welcome the fact that she has finally acted on a price freeze, but the measures are nowhere near enough. They are poorly targeted, and without a substantial package of additional support they will fail to support millions of low-income families who are already in freefall. They cannot cope with current prices, never mind an increase. That is why my party would return the price cap to its more affordable rate of last October. The measures do nothing to incentivise a reduction in energy demand by those who can do that. Most staggering of all, as we have heard about so much, they allow the oil and gas companies to get off scot-free, despite the Treasury’s own documents showing that energy producers are in line to make £170 billion in excess profits over the next two years.
What we need to do is scrap the shameful investment allowance, put in a windfall tax that is proportionate to the crisis we face and make that the first step towards a permanent carbon tax on oil and gas companies to reach, at the very least, the global average of 70%. That would bring the UK in line with countries such as Angola and Trinidad.
I welcome the fact that the Government have been consulting on decoupling the price of renewables from gas—that would be a game-changing step—but I also want to ask the Prime Minister to make a massive investment in renewable energy. Renewables are a staggering nine times cheaper than gas. There are 650 wind and solar projects oven-ready and waiting. That is the way forward, not putting us into more and more fossil fuels. Finally, will the Government look at measures such as a rising block tariff approach, which would be much fairer in the future?
Stephen Crabb (Preseli Pembrokeshire) (Con)
While the thoughts of the House are first and foremost with Her Majesty the Queen this afternoon, it is important that we take the opportunity to debate these challenges today.
I welcome the speed with which the Government have moved to bring forward a very strong package of measures that have been announced today. I welcome the substance of the package. It provides a very strong platform to help get families through this immediate price crisis. For me, it meets the test of scale, it meets the test of timeliness and it provides certainty for those families who, frankly, have been living in a state of anxiety thinking about the enormous bills coming their way. I welcome the assurance from the Prime Minister today that the package will cover everybody and that there will not be gaps. It will cover the more than 50% of households in my constituency that have homes off the gas grid and rely on heating oil and liquified petroleum gas. I also want to ensure that people who live in park homes can access the support they need and that there are no gaps.
I still think we will need to take further measures to strengthen some of the social protection for those on the very lowest incomes, despite the measures that have been announced today. I think there are some easy wins for the Government on freezing or limiting the deductions we take from people’s social security payments. We should look again at the benefit cap and, most importantly, it would be good for the new Administration to reiterate the commitment of the previous Government to a full social security uprating in the new year.
It is important that the measures also cover businesses. I have heard from so many small businesses in my constituency during the summer, particularly food manufacturers, breweries, and hospitality and tourism businesses. For them, this is an existential issue. These are good businesses, but if prices go the way that are being predicted, then thousands of good companies up and down the country in all our constituencies will be put out of business.
Finally, I strongly welcome the measures announced today on the strategy for improving UK energy supply. A number of Members have raised different energy sources that they want more movement on. I will just flag up the enormous opportunity that is opening up on the Celtic sea, with floating offshore wind. This is a really good, timely moment for the Government, working with the Crown estate, to accelerate progress on those projects. However, none of that, including the new nuclear power stations that some Members want to see, is an immediate answer. There are not many levers immediately available to the Government this winter, with a potential energy supply crisis. We are looking at gas supply, and I encourage the Government to sharpen their strategy on the procurement of more liquified natural gas cargoes, so we can guarantee that we can get the energy coming into our system to keep the lights on this winter.
Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)
Some of the announcements are welcome, particularly the focus on people who are not on the grid. I would like to highlight to the Government Front Benchers—I hope they will go away and seek more clarity on this—the people who resell energy. They are often landlords in blocks who buy the energy on the commercial market and resell it to their tenants. The Government have never explicitly mentioned that. They have talked about heat networks, which is if the landlord is running a boiler, but not about landlords they are supplying the electricity directly to a flat. Those meters are not on the official meter grid and they will not even be eligible for the £400 support from the Government unless action is taken. There needs to be some urgent action to ensure that landlords can purchase at fair prices and that they pass them on. At the moment, the landlord has to pass the cost on at the purchase price. I am not saying that landlords are gouging, but there is a problem that the purchase price is a commercial price, not a residential price. I hope the Government will come back with clarity on that.
The reality is that this package is still a £500 increase on what energy bills are today. This is not a reduction; it is an increase. It did not need to be like this. We could have regulated the wholesale market price, and the Government could have stepped in and offered loans to energy companies to bridge the gap for the gas they are importing. That could have been the offer, with the debt put on the energy companies and not the state, but that is not what has been put forward. The Government could have fixed energy prices at what they are today and made interventions, but we have not seen that either. Therefore, there are real difficulties relating to who pays. Does this come from the profits of the companies or is it done on the backs of the people? I am afraid that the wrong choice has been made, because future generations, and even this generation in future years, will pay for this policy. That does not seem right.
Improvements of efficiencies were mentioned slightly but not enough. We need a house-to-house, street-by-street approach to insulation—as my constituency neighbour, the hon. Member for Brighton, Pavilion (Caroline Lucas), has called for—to get this right. Leaving it to the market does not work. We will not get the efficiencies of scale. Labour has put forward a plan to start that process, but even more ambition is needed.
We also need to look at the production of wind energy not just offshore, but onshore, and having solar panels on our roofs. At the moment, the solar panel feed-in tariff is less than the cost of buying energy directly from the market. That does not work; we need to reverse it. We need to give people the incentive to pay into the grid at a fair market price—
Claire Coutinho (East Surrey) (Con)
All summer, like many Members, I have been hearing from households, businesses, schools and other public sector organisations and community centres that have been worried about their energy bills going up fivefold, in many cases. I therefore warmly welcome the speed and ambition of the package, which will bring much certainty to businesses and peace of mind to households and others.
I welcome the fact that we were clear about the discretionary funding that will be provided for users of heating oil, of which I have many in my constituency. I also welcome the reform of the electricity pricing market, so that non-gas power producers are more fairly priced, which will lower the cost for many users. The clarity that has been provided for those who are switching contracts and will not face exit penalties will, again, be very positive for many.
Instinctively, I would have preferred a targeted support programme. However, from the work that I have been doing over the past 12 months and longer in the Treasury on the cost of living, I will say that there are challenges with that approach. We know where all the people are who use energy and who are on benefits, but we do not know much about middle-income people. We tried, through a council tax band approach, to target this a bit more, but it is imperfect, so I think the universal approach that has been adopted is right, because we cannot let middle-income households go to the wall. The truth is that when energy prices are going up by so much, there are many people outside the benefit system who may be on £30,000 or £40,000 who would be struggling hugely without this programme.
We cannot deny, however, that there are problems when price signals are distorted through price controls. I was therefore very pleased to hear the Prime Minister talk about energy efficiency and energy security and supply, which will be critical if we get through this period.
I want to come back to the windfall tax and the £170 billion that Opposition Members have mentioned multiple times They know that those profits are not being made here and are not taxable. I know they know that because they set out their plans a week ago and they wanted to recoup only £8 billion from the oil and gas companies. If they truly thought that £170 billion was up for grabs—we know how much they love grabbing profits—why did they not set out £20 billion, £30 billion, £50 billion or even £100 billion? It is because they know that that is not possible. Actually, we did introduce an increase in their taxes. Oil and gas companies are paying not the 19% corporation tax that other companies pay, or even the 40% that they pay normally, but 65%. Two thirds of their profits are coming into the tax system. If they can invest as much of the rest of it as possible, that is what we will need for long-term solutions to protect our households, businesses, schools, charities and more.
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
Diolch yn fawr, Ddirprwy Lefarydd. Hoffwn ddanfon dymuniadau gorau i’w Mawrhydu’r Frenhines. I, too, would like to send my best wishes to Her Majesty the Queen.
Today’s announcement shows beyond doubt whose side the new Prime Minister is on. She is prepared to force taxpayers to carry the burden of borrowing billions of pounds to subsidise the shareholders of energy companies that are profiting from Putin’s war. It is shocking that she cannot even tell us how much that burden will cost today. I urge her to think again. Make energy companies pay their fair share. The global energy norm of energy profit taxation is 70%. Norway stands at 78%. Why does the population of the UK have to suffer the combined yokes of higher taxes, worse public services and falling real wages while private profit is protected under her premiership?
We should use that money to return the energy price cap to the pre-April level of £1,277 a year and extend that cap to small businesses and charities. People are struggling now. Even at current prices, 180,000 households in Wales are forced to struggle even to afford items such as heating, food and toiletries. Bills of £2,500 are unaffordable for many, many people.
Anything short of £1,277 as a cap will fail to meet the scale of the crisis that we face. It will require the Prime Minister’s Government—this is important—to introduce additional packages of support for vulnerable households, including doubling the £650 cost of living payment and revising the eligibility criteria to include those on disability benefits who are currently excluded from support. That will cost us more in future if we do not deal with what is genuinely facing us. Instead of pursuing fantasy economics of rampant deregulation and tax cuts for the rich, the Prime Minister must also prioritise a reduction in energy demand and investment in low-carbon sources. That is the only way to bring down energy bills in the medium and long term.
Let me be clear and simple. It is time to unchain Wales’s renewable and low-carbon energy potential by vastly improving our grid capacity; bringing forward small modular reactors at Trawsfynydd in my constituency, Wylfa and other places; empowering the Welsh Government to deliver large-scale, transformative infrastructure projects, such as tidal lagoons; devolving management of the Crown Estate to Wales; and enabling community energy schemes to realise their full potential by selling their power directly to local customers. For us in Wales, it is clear that, in the long term, to fix this crisis for good, we must place our energy system and its huge potential in the hands of the people of Wales, for the benefit of the people of Wales.
Dean Russell (Watford) (Con)
Given the announcement earlier, I also send my best wishes and the best wishes of all those across Watford to Her Majesty the Queen.
The announcement on energy costs today was very important. Over the summer, I spent lots of time volunteering with organisations, from the citizens advice bureau to working in the British Heart Foundation shop, and I heard at first hand about the challenges and fears that people have about the fuel crisis and their bills. We heard today about a significant package that will not only help people immediately, but deal with the long-term challenges, and we are making sure that the proposals work economically. As we all know, windfall taxes are a one-off—potentially a two-off, if we can call them that. However, once we get to the third or fourth try, they will not work, so we need something that works immediately and in the long term and which puts us on a competitive footing around the world.
We heard an important point about the fact that, by 2040, we want to be a net energy exporter. That means many things, including not just, importantly, our fuel security, but investment in jobs, investment in education, investment in skills and investment in business to make sure that we look ahead to the long term, so that we are not in this situation again—we do not want to be—and to help other countries around the world not to be in this position again.
I will make a final point, because I am conscious that you would like short speeches, Madam Deputy Speaker—and if anything, I am short. I studied physics at university—I am probably one of the few MPs who studied nuclear physics as part of my course, not that I was that great at it—and I think that the talk of moving forward with nuclear is so important. There has been a negative image of nuclear over many decades. The opportunity to have small modular reactors across the country that enable us to have safe, green energy that entire communities can rely on is essential. That is also about an infrastructure of skills and education.
I massively welcome this package and think it is the right one. There is more to do, of course—as always—but I welcome this debate. We can be certain of one thing, which we need to say to all our residents who are fearful of what may come: this will support them in the short term. Although people may disagree about the long-term approach, this will support them now and in winter and they should feel reassured that they are going to be okay.
Geraint Davies (Swansea West) (Lab/Co-op)
When people talk about famines, they think of food shortages, but in fact famines are a combination of higher prices and lower wages. We are approaching famine conditions in Britain because after 12 years of UK austerity, with cuts in services, frozen wages and the devaluation of the pound, our people are much weaker facing the tsunami of price rises that we have seen from Putin’s brutal war.
The response from the oil companies, of course, is that their operating costs are just the same but their prices go up. They make windfall profits. They have picked the pockets of British people, and we demand our money back. There is a sort of windfall tax at the moment; as has been said, it should be continued at international rates so that people do not face yet another £500 coming out of their household budgets. Millions of people are in desperate poverty and simply cannot afford that.
The Prime Minister rightly talks about growth, but what she needs to remember is that the OECD has found that there is less growth if there is greater inequality. At the same time, she talks about giving back national insurance so the bottom 10% get an extra £7.60 and the top 10% get £1,800. In other words, she will increase inequality by putting more burdens on households, giving the rich more in tax giveaways, including national insurance, and not taxing the excess and unjustified profits of big corporations.
The OECD has also found that growth is very much linked to the education of the poorest. The Government’s ambition is simply to get education spending up to 2010 levels by 2024, but they will not even achieve that because of inflation. Coretta King famously said that poverty is a child without an education. We have seen education standards falling throughout the pandemic, particularly for the poorest, so we need to invest. Meanwhile, the Government are provoking a trade war with the EU over the protocol, Bank of England rates are likely to go up, and they are provoking strikes with the trade union movement.
What we want is growth. What we saw with the Labour party in the 10 years to 2008 was 40% growth in the economy that allowed us to double investment in education and in health. Had trend growth continued at Labour Government levels, the average income in Britain would have been £10,000 higher, so there would have been more resilience to the external shocks of the pandemic and the energy crisis. We need to think about that, and we need to invest in hydrogen instead of fracking and in renewables instead of more and more oil.
Richard Graham (Gloucester) (Con)
I join all colleagues, here and not here, and everyone in Gloucester in sending the warmest wishes of support to Her Majesty the Queen and to members of the royal family.
Today’s announcement, which was made within 48 hours of the new Government being formed—no small achievement—will bring huge certainty and reassurance to residents in my constituency and elsewhere, to those living in park homes, to charities and to those across the public sector, as well as to the small businesses in particular that are already suffering. It is critical, because it puts a cap on the maximum average energy bill. The crucial word is “maximum” because, as my right hon. Friend the Member for South Northamptonshire (Dame Andrea Leadsom) said, there are huge advantages in a programme of advice and best practice being led by the Government and helping us all to reduce our energy consumption. Schools, for example, could hugely benefit from solar panels that could sell all the energy generated during the long summer holidays into the grid, thereby bringing their annual bills down considerably.
There are lots of good things to welcome in today’s announcement, but there are a few things in particular that I would like to raise with Ministers. First, the green levies that will now be temporarily suspended have already been committed elsewhere. Who is going to pay for them now? Presumably it is the taxpayer in general.
Secondly, the national insurance contribution increase was predicted to raise £36 billion over three years for health and care budgets. How will that be delivered now? The task before our new Secretary of State for Health and Social Care is big on generating better outcomes, but reducing the inputs will surely make that harder.
Thirdly, there is the contribution of energy companies. We have heard a lot today, quite rightly, about how they are already paying some 66% tax in real terms. None the less, there is a huge difference between profits, which are good, and war profiteering, which is bad. The new Secretary of State for Business, Energy and Industrial Strategy could shed light on how the energy companies are to contribute to this national challenge.
The hon. Member for Vauxhall (Florence Eshalomi) said that the rules on fracking would be completely ripped up. I do not think that that is the case, because the crucial barrier is local support, which has been conspicuously absent so far. I doubt that we will see any real change in practice.
There is one last thing to add. A lot has been said about the welcome commitment from this Government to nuclear and renewables,
“to embrace diverse sources of energy.”
May I encourage the new Secretary of State to follow the great example of his predecessor in supporting marine energy?
Stephen Flynn (Aberdeen South) (SNP)
I paid particular attention to the very small note that came out from the Secretary of State for Business, Energy and Industrial Strategy earlier, especially the line that says:
“This will save the typical household £1000 a year.”
One thousand pounds a year? It is almost as if the cap that is being put in place at £2,500 a year is not double what energy prices were just last summer. It is almost as if the Government do not understand the sheer scale of the financial problems facing households right across the country. It is not just about energy prices. Inflation is at a 40-year high, interest rates are at a 30-year high and wages are at a 20-year low, yet we are being told that we should be happy about energy bills being frozen at £2,500 per year. It is absurd.
Obviously it is not just households that will struggle, but businesses. A number of businesses have been spoken about today, and I have spent most of the summer getting emails from businesses that are being utterly crippled by the costs in front of them. Up to now, the Government have not even lifted a finger, and what they are proposing will not go far enough. Businesses will continue to close because of energy prices.
This whole debate really frustrates me for a particular reason, which is that I happen to represent a constituency famed for oil and gas production. Somewhat ironically, it was the Unionist parties in this Chamber that told us in 2014 that oil and gas were running out, yet now they tell us that 100 additional new licences will be given out. Barring that irony, however, is it not absurd that energy-rich Scotland, which produces six times more gas than we use, is even having to face an energy prices crisis? Gas makes up just 14.4% of our electricity production, yet the price of that gas dictates all.
The fact that the vast majority of our electricity comes from low-carbon sources means absolutely nothing. The fact that it comes primarily from renewables means absolutely nothing when it comes to the costs being imposed on the people of Scotland by this UK Government and the continued failure of their energy policy. If the UK Government want to do just one thing, here is a suggestion for the new Secretary of State: will this Government finally decouple renewables from gas prices? That would make a huge difference, and it would not cost a single penny.
Dame Maria Miller (Basingstoke) (Con)
Following Mr Speaker’s announcement, I join other hon. Members in passing on my warmest wishes, on behalf of the people of Basingstoke, to Her Majesty the Queen and her family.
I warmly welcome the rapid action that the Government and the Prime Minister have taken since the new Government’s formation earlier this week—not only the short-term support that has been announced today, but the focus on long-term solutions to the problems we face. Clearly the energy price guarantee will provide enormous certainty and reassurance to many, many families, including those who have contacted me over the summer months.
I think that, following what some Members have said today, the Government will want to take some time to ensure that there is clarity about how the new energy price guarantee will sit alongside the existing energy bills support scheme, which will already be providing a great deal of support for many of the vulnerable groups to which Members across the House have referred. Both schemes will ensure that people have the support and certainty that they need in these difficult times.
Following representations that I have received from people who live in park homes and are on heat networks or who, like many of my constituents, use heating oil, I was especially pleased to hear that they would receive support. However, may I echo the comments of my right hon. Friend the Member for Forest of Dean (Mr Harper) and suggest that it would be useful to know exactly how that support will come into play?
I was extremely pleased to hear from the Prime Minister about the support for businesses, charities and public services, which will be equivalent to the support for residential properties for six months, although, again, it would be helpful to understand quickly how that might work in practice. Charities, in particular, will be planning up to 12 months ahead for how their operations will work. Many of them operate in community centres and village halls, providing childcare facilities that are essential for our residents.
Finally, may I take this opportunity to broaden the debate by encouraging the Government to bear in mind industries that have been hit by the increase in gas prices? I am thinking particularly about the fertiliser industry. As you will know, Madam Deputy Speaker, gas is used to create fertiliser, which is why it is relevant to the debate. The scaling back of production throughout Europe means that many farmers, particularly those in my constituency—I met some of them on Friday—are sowing seed for harvesting next year without knowing whether fertiliser will be available. Perhaps the Government could make an early statement on how we will provide surety of supply, given the impact of gas prices on their production.
We are in a difficult situation, and I am pleased that the Government have acted so speedily.
Several hon. Members rose—
Madam Deputy Speaker (Dame Rosie Winterton)
Order. May I just point out that if Members speak for less than three minutes, we will get more of them in? I call Imran Hussain.
Imran Hussain (Bradford East) (Lab)
We must not forget that for months this Tory Government saw the oncoming tidal wave of rising energy bills this winter, but chose to do nothing about it. For months they callously and deliberately left people in limbo, creating unimaginable uncertainty for those who face colossal energy bills this Christmas, and for months they let fear spread among those preparing to make a desperate choice between heating their homes or putting food on the table. What is worse, however, is that for months the current Prime Minister, who was a Minister in this Government for a decade, was content to go along with this grossly negligent plan of inaction, wasting valuable time when we could have been protecting people.
Today we heard the Prime Minister, at the Dispatch Box, refer a number of times to “immediate” and “urgent” support. That is disingenuous, frankly. The Prime Minister cannot suddenly pretend that she entered the Government just today. She has been a senior Minister in previous Governments for the last decade, and she could have taken action—along with the previous Government—months ago, rather than putting people through this uncertainty.
As is customary among Conservative Members, there have been a number of instances of smoke and mirrors. We have heard numerous references to a price freeze, but it is simply not true that prices are being frozen. As has been pointed out by other Members, what we are seeing is a rise of at least £500 in the price that people are currently paying, and a rise of hundreds of pounds more in the price that they were paying originally—hundreds of pounds more than my constituents can afford to pay.
There has also been silence from the Prime Minister on who will actually pay for this. What is crystal clear—the Prime Minister has spelled it out—is that those who will not pay for it are the corporate oil and gas barons who have made a profit of £170 billion. In this, her first week as Prime Minister, she has made her direction of travel absolutely clear: she will go on driving a wedge between those who continue to become wealthier and those who continue to suffer poverty, and she will always side with the big corporations rather than with ordinary working people.
Marco Longhi (Dudley North) (Con)
May I, too, send my deepest thoughts and good wishes to Her Majesty the Queen and her family? I am sure that the people of Dudley North will want to send theirs as well.
We know that too many people have borne the brunt of covid in recent times, and that too many are bearing the brunt of the cost of living crisis in which we now find ourselves. Some of them say to me, “Marco, what are you doing to help us? I am going to have to choose whether to turn on my hot water or feed my children.” As for local businesses, a local business owner contacted me this week saying they are having such extreme difficulties with energy prices that they feel they have no choice but to streamline staff in order to continue trading and paying their bills.
No one should ever find themselves in a position in which they have to make such choices, whether they are a business or a household. Ordinary hard-working people should not be suffering with anxiety about how they will make ends meet this winter. Like our new Prime Minister, I want to ensure that my constituents—indeed, all our constituents—have the support they need and have certainty for the months ahead. I am therefore pleased that the Prime Minister is taking immediate action to provide support and peace of mind for so many.
Madam Deputy Speaker, the words that I would like to use to describe Vladimir Putin are not appropriate for the polite company of the House, but it is because of him that we are having this debate. Of course, covid did play a large part in the cost of living crisis, but it is Putin’s bully-boy tactics that are cutting off Europe’s energy supply and plunging us into the freezing waters that we are facing. Putin does not care whether Jenny in Gornal can feed her children and get them to school. Putin does not care whether Dorothy in Sedgley can heat her home in her old age. Putin does not care whether John in Dudley has to close his business and lay off all his staff because he cannot pay his energy bill and continue to employ them. Putin just does not care—but I do, and I know that all of us here do.
Winter is coming and we know what could come with it, but it does not need to be an inevitability, and now, thanks to our new Prime Minister, it will not be. The long-term plan to strengthen and secure Britain’s energy supplies, reopening the North sea, opening up fracking and investing in nuclear, will ensure that our children and grandchildren do not face these issues as they reach our grand old ages. The new support being pledged today goes a long way to reassure individuals, families and our local businesses. Our new Prime Minister is on our side, not just in the short term but in the long term.
Daisy Cooper (St Albans) (LD)
Earlier this week I raised the plight of households, small businesses and care homes in my constituency. I am sure that, like me, many of them will be truly shocked that it is the British public who will have to bear the burden of paying for this energy crisis while energy companies continue to make their millions. Today, however, I have a number of specific questions to put to Ministers, and I ask the Minister who will sum up the debate to address them.
The written ministerial statement refers to an equivalent guarantee for businesses. Does that include care homes, and what additional support will they be given in view of the pressure that they are under? I also want to raise the subject of women’s street safety. I have received an email from my local council, Hertfordshire County Council, saying that the bill to keep streetlights on has increased by 60% in just a few short months, and it already costs an extra £2.3 million a year to keep them on after dark. The council is not yet talking about turning the lights off, but if it does, will there be contingency measures in place to ensure that we keep crime down and that people—particularly women—are safe on our streets after dark?
I welcome the announcement of a fund to cover park homes, and people on heat networks and those who use heating oil, but how will the fund work, how big will it be, and will there be an information campaign aimed at those who can benefit from it? The Government’s own estimates suggest that one in every 100 households is impacted by that non-conventional relationship. By my calculations, that is more than a quarter of a million properties. For each of them to receive £400, there would need to be at least £100 million in that fund.
We need a revolution in renewables. RES is the world’s largest independent renewables company and is based in my constituency of St Albans. It has more than 40 years of experience and expertise. RES tells me—and Friends of the Earth agrees—that footnote 54 of the national planning policy framework stops it from installing new onshore wind farms even in areas where there are no objections from local residents. I am absolutely no fan of fracking, but it is absolutely obscene and absurd that this Government are saying that it is okay to reopen fracking if communities are okay with it, but not onshore wind. I asked them please to review that footnote.
Finally, on solar panels, in January I asked the Housing Secretary to make it a requirement for all new suitable buildings to have solar panels. The Government have not conducted the assessment of how much roof space is available, but I urge BEIS to go further than looking at the floor space that is available in these non-domestic buildings and work out precisely how much roof space is available right now to have solar panels installed.
Several hon. Members rose—
Madam Deputy Speaker (Dame Rosie Winterton)
I call Virginia Crosbie, but let me emphasise again that if everybody spoke for just two minutes, we would have a much better chance of getting everybody in.
Virginia Crosbie (Ynys Môn) (Con)
I share in the thoughts and prayers for our Queen and her family.
The energy crisis has hit rural communities such as mine on Ynys Môn particularly badly. On Ynys Môn, schools, shops and employment are often too far away for walking and public transport is sparse. A car is not a luxury; it is a necessity. As our farming community relies on vehicles and fuel-driven equipment, their production costs have risen significantly. We have a larger than average elderly population who need to stay warm in our sometimes harsh winters, and many of my constituents are reliant on liquified petroleum gas and gas to fuel their homes. That is common in rural communities, but there is often little local competition. With no price cap, families are vulnerable to steeply rising costs, and I am pleased that that is being addressed.
My Ynys Môn constituents need help, and they need help today and over the coming months to heat and power their homes and businesses. Our Prime Minister has now outlined her plans, and I am hugely proud of the support that we are providing to help with the immediate problem, which is on top of the £37 billion committed by the former Chancellor. We need to do more to protect the UK from such crises in the future. I know that our Prime Minister has not lost sight of the longer term while providing support in the short term, and I welcome her enthusiasm for nuclear. She has already spoken about the need to take back control of our energy security, invest now in large-scale energy production and incentivise communities to support energy production in their area.
The people of Ynys Môn, which is also known as energy island, already welcome that local production. Companies such as Morlais and Minesto have received Government backing to set up tidal energy systems off our shores. We are home to stretches of offshore wind and solar farms thanks to Government subsidies and support. We have Wylfa, once a flagship of British nuclear power with all the potential to reclaim that position following this Government’s commitment in the British energy security strategy and the new Nuclear Energy (Financing) Act 2022. The Holyhead hydrogen hub received £4.8 million of funding in last year’s Budget. With companies such as Bechtel and Rolls-Royce keen to re-establish nuclear production at Wylfa and BP Mona looking to Ynys Môn to support large wind farms in the Irish sea, my constituency can be at the forefront of UK power generation for decades to come.
A new large-scale nuclear plant at Wylfa on Anglesey could generate enough power for every home in Wales and more, and small modular reactors could provide cheap energy to local families and businesses in shorter timescales. On behalf of my Ynys Môn constituents, let me say that it is important that the Government take into account the unique energy demands of rural communities’ in short-term support plans and that we grasp the benefit of incentivising communities to welcome local energy production so that we can secure our long-term domestic energy supply swiftly.
Richard Burgon (Leeds East) (Lab)
Six months ago, households faced energy bills of £1,300. Today, we are told that doubling that and fixing prices at £2,500 is the best we can do to help. It is not. People were struggling with their energy bills last winter and many more will struggle this winter, too, with prices doubled. Private energy profits are being put before the needs of people all while energy firms are set to make £170 billion in excess profits. This is a huge transfer of wealth with big corporations hoovering up even more of the wealth in society, paid for by millions of ordinary people. The new Prime Minister, a former Shell employee, has been frank: energy firms, in her view, should be able to keep those undeserved excess profits.
A different principle should guide us. The companies should not be allowed to make a single penny from excess profits in this crisis. That will require a package of measures from public ownership to full windfall taxes and caps on the prices at which North sea oil and gas can be sold. That should all be guided by the principle that energy should be run for the public good. The public support these policies. There are growing movements for them. The debate is not going away; today has not solved this crisis.
Today’s announcement on energy prices, without a windfall tax, does not limit the profits of the North sea oil and gas companies, and it is at great social cost. The claim that we need to protect the profits of North sea oil and gas firms to guarantee their investment is completely bogus, because they were investing when they were making their normal profits just a few months ago. They were never expecting this windfall. Taxes on oil and gas companies overseas, including in Norway’s North sea fields, are much higher than they are here, even at current windfall tax rates.
Energy security cannot be achieved by making ourselves more dependent on the expensive fossil fuels that have driven this crisis. We do not need more North sea exploration. We do not need fracking. Let us be clear: that gas will not be cheaper. It will be sold at world prices and, anyway, gas is nine times more expensive than renewables. Retrofitting would save people money and reduce our gas use, so the greater reliance on fossil fuels is quite simply ideological. The Government are using the crisis to undermine their own inadequate climate responsibilities.
The profits of fossil fuel companies are being put before the people and before the planet. This approach is quite simply failing people who are today hit by higher bills, and I am afraid that it will also fail future generations hit by climate catastrophe.
Mike Wood (Dudley South) (Con)
The speed and scale of the support announced by the Prime Minister is hugely welcome and, obviously, hugely necessary for the many households that simply could not have afforded energy bills of £3,500. Together with the £400 payments to each household, the £650 to those on low incomes and the £300 to pensioner households, it will make a real difference. I hope that we can have some clarification on the position of those residential properties that are on commercial meters, perhaps because they were converted from commercial businesses.
The support will also make a real difference to many businesses, whether they are energy-intensive businesses, such as those in ceramics and glassmaking in my constituency, or whether they are in hospitality. Similarly, perhaps we can have further clarification on the position for those businesses that have recently had to enter into new contracts. Will they still be able to switch to the new price cap or the support that has been announced?
Let me deal with the criticisms that have been made. There is some superficial political attraction to extending the windfall tax—of course, we already have a windfall tax set at 25% on top of the 40% tax already paid by British oil and gas producers. The attraction is more superficial and political than real and effective, because the revenue that an extension would raise would be small in comparison with the cost of the necessary support. It would affect less than half of the oil and gas we use in the UK, because that is what is produced in the UK. Making UK oil and gas production less competitive will, in the medium and long term, reduce our energy security at the worst possible time. That is something that we cannot afford.
It has also been suggested that the package will affect price signals. As a reformed economist, I know that economists can sometimes dwell a bit too much on good theory and ignore the real world, but I find it hard to credit that people would be less careful with their energy when the price cap is at £2,500 than they would be if it were £1,000 higher. Clearly there would be a huge impact if energy were free, but we are already at a level at which people are being very careful with what they use.
This is the right package, and it is an effective package. We need to get it into the pockets of households and businesses—
Kenny MacAskill (East Lothian) (Alba)
Although any help is welcome, this package is insufficient by far for the poor and generous in the extreme for the rich. The perversity of having an energy-rich Scotland and fuel-poor Scots remains, and it is clear that not only will people grow cold this winter but some may well die. There should have been a full freeze, and it should have been funded through a windfall tax. There should have been action on VAT, and there are other omissions that have not been addressed and where a lack of clarity remains. We need to change the dysfunctional energy market, not just accelerate nuclear or fracking, and address the iniquities that still exist and that have not been touched, or at least made clear.
First, the injustice of prepayment meters remains: the poorest and most deprived, who are often most dependent on power and energy, are paying higher standing charges and higher tariffs. That has not been touched, while support has been given to the very wealthy, and it must end. It is easily done through a direction to Ofgem, and we all know the energy companies are capable of delivering it.
Similarly, although there is a welcome announcement that some action will be taken on unregulated fuels, a discretionary fund would be inadequate. That is especially the case in the north of Scotland, but it is also the case in my constituency. People who are off the gas grid depend on heating oil, biomass and other fuels. Those fuels should not only be covered by a fund that people might be able to dip into; the fuels should be regulated. The Secretary of State should ensure action is taken, because people in the coldest areas are the ones who will suffer.
Our dysfunctional electricity system remains. It is tied to the price of gas, yet 97% of Scotland’s domestic electricity supply is produced from renewables. We are paying sky-high prices that depend on foreign gas prices, as opposed to the price of the renewables on our doorstep and of which we have a surfeit. That is perverse, especially when, as others have said, Scotland is self-sufficient in gas.
This package simply rewards the rich; it does not address the problems of the poor. It is inadequate, and enough is enough. This is not enough to end the crisis, nor is it enough to end the action that people will take.
Laura Trott (Sevenoaks) (Con)
My thoughts and prayers, and the thoughts and prayers of everyone in Sevenoaks and Swanley, are with Her Majesty the Queen and the royal family at this time.
I warmly welcome today’s announcement. It will relieve a huge amount of anxiety for my constituents, for businesses such as Donnington Manor that are worried about being crippled by prices, and for schools such as Dunton Green Primary School whose energy bills are going up by 500%.
I am glad that heating oil and heat networks are included in the announcement, although I question whether those prices will be frozen. The prices have gone up extensively this year and have tripled in some cases, such as for the Bourchier Court heat network, so it would be helpful to have clarification on whether that price will be frozen or whether it will be allowed to go up, with compensation provided later.
I have previously spoken in this House about how it is illegal to cut off a household’s water supply. A water company can recoup its costs through the courts, but it cannot cut off a household’s water supply for reasons of non-payment. We should consider extending that to energy supply. There are some protections in place, and energy companies are not allowed to cut off a customer’s supply during the winter months if they live on their own, if they are of state pension age or if there is a child in the house.
However, there is not enough protection. Ofgem has shown that one in seven households on a prepayment meter disconnected in 2019, so we should look at this seriously. We cannot have that number of disconnections, and the number is likely only to go up, when there is something we can do to send a very clear message that energy consumers will be safe this winter, so they do not need to worry, if it really comes to it, that their energy supply will be cut off. There would still be the mechanism by which costs can be recouped, but there would be a safety net for everybody. I think that would go a huge way towards reassuring people.
I welcome today’s announcement, as it will really help my constituents. I hope to see further effort and work on ensuring the energy supply to households.
Dame Nia Griffith (Llanelli) (Lab)
I, too, send my best wishes to Her Majesty and her family.
We all recognise the need to help people with their fuel bills, and there is huge support among the public for a further windfall tax on oil and gas companies. As the companies have explained, they would still have plenty of money for future investment even after paying an additional windfall tax. The point is that the money is on the table now for the Government to use to help the people of the UK with their fuel bills. Under the Government’s plan, however it is worked out, the help will be paid for by taxpayers. It is utterly disgraceful that the Government are not imposing a windfall tax to cover these energy costs.
I welcome that the Prime Minister mentioned those who are off the grid and who rely on heating oil, and those living in homes with arrangements such as the park homes on Poplar Court in Cross Hands, who are not directly billed by an energy company. All these households need to know, as soon as possible, how and when they will receive support and exactly how much it will be.
The Government have an appalling record on home insulation, energy efficiency, renewables and the transition away from fossil fuels. We have repeatedly called for a massive investment programme to insulate 9 million homes, 2 million of which could already have been done by this winter.
Investment in renewables is vital to tackling climate change and increasing energy security, but the economic case is ever stronger with these rapidly rising and unpredictable gas prices. The Tory Government have wasted years of precious time for the development of renewables, including through the moratorium on constructing onshore wind farms in England and the reduction in support for solar panels. We should have been far further ahead by now in our production of electricity through renewable means, and the fact we are not is due to this Government’s abject failure to stimulate the production of renewables.
Luckily, we have devolved powers in Wales and we were able to continue with the development of wind power, but the Conservative Government were reluctant to look at the Swansea tidal lagoon. Now, thanks to the initiative, imagination and hard work of the Labour-controlled city and county of Swansea, the project will go forward.
The Government also cut the plans to electrify the railway line from Cardiff to Swansea, and they have no plans to electrify further into west Wales, on the grounds that it would not shorten journey times. If we generate electricity from renewables, electrification would not help to tackle climate change but would bring price stability.
Words are not enough. We now need the Government to make a massive effort to increase the production of electricity from all forms of renewables: onshore and offshore wind; tidal and other marine technologies; and solar. Importantly, they also need to invest in the national grid to ensure that we can all benefit from this renewable production. We want action.
Several hon. Members rose—
Madam Deputy Speaker (Dame Rosie Winterton)
Felicity Buchan has one minute.
Felicity Buchan (Kensington) (Con)
I warmly welcome this bold, decisive and comprehensive measure, which is exactly the right thing to do. I particularly welcome the measures on communal heating networks, which are huge in my constituency with all my mansion blocks.
I like that we are focused on self-reliance. I tried to intervene on the Leader of the Opposition, because he rightly talked about self-reliance when it comes to energy, but part of the reason why we are not self-reliant is because, between 1997 and 2010, the Labour party failed to invest in renewables and other sources of energy, so our dependence on gas went from 32% to 46%.
All the measures announced today are welcome. I welcome the commitment to net zero, and I welcome the investment in renewables.
Madam Deputy Speaker (Dame Rosie Winterton)
I call the shadow Secretary of State, Edward Miliband.
Edward Miliband (Doncaster North) (Lab)
Before I address the issues in this debate, I send my best wishes to Her Majesty the Queen and her family. I know that all our thoughts, and the thoughts of the country, are with them at this time.
There are two central questions at the heart of this debate: have the Government responded to the emergency that we face in a way that is fair, and do they recognise the fundamental truth that the only way to end this crisis in the long term is to get off fossil fuels? I am afraid that, on today’s evidence, the answer to both questions is no.
Let me start by discussing the plan unveiled by the Prime Minister earlier. Labour led the way on the energy price freeze. We called for it, despite doubts, including from the Prime Minister. I am glad that she has admitted she was wrong about that, because even though there have been disagreements, we have heard throughout this debate—I thank all right hon. and hon. Members who have spoken—agreement about the scale of the emergency facing families. That is why we spent the summer fighting for the energy price freeze. However, the devil will be in the detail and people will want to see the small print. The problem is that bills still seem to be rising by at least £129 a year.
The even bigger problem, and the fundamental issue in this debate, has been who pays. The right hon. Lady has been clear that she is against a windfall tax. We know the effects of that: it means that all the costs are loaded on to the British people. Let us dispose of the argument that this issue is somehow not about higher taxes; in the end, this intervention will have to be paid for by the British people in higher taxes. So the question is not whether we are going to tax to pay for it, but whom we are going to tax.
Let us take the arguments we have heard in this debate against the windfall tax and take them apart one by one. First, we have the argument that a windfall tax will reduce investment. Is there any truth to that? As my right hon. and learned Friend the Leader of the Opposition said in his eloquent speech, the BP boss says that it will not have an effect on investment; when asked what investments it would affect, he said, “None of them.” So even BP does not believe the argument the Prime Minister is mounting in defence of BP.
Next, we have heard the argument that a windfall tax cannot raise extra money beyond what the former Chancellor announced. Let us dispose of that argument, too. I gather that there is a dispute about the figure of £170 billion in excess profits. The current Chancellor is not here, but I say to the Prime Minister: publish the Treasury’s estimate of excess profits. If it is not £170 billion—we have it on good authority that it is—the estimates should be published so that we can all see them for ourselves.
Edward Miliband
I am not going to give way, because I have little time for the wind-up.
In any case, we know that tens of billions could be raised. First, there are significant resources from the windfall tax on the oil and gas companies, including through abolishing the absurd £5 billion loophole proposed by the Chancellor.
Next, we come to the electricity generators. We need to de-link the price of gas and electricity, but that will not happen for a number of years. In the meantime, these companies are making enormous profits. Onward, a conservative think-tank, said this week that up to £10 billion a year can be raised, while the Tony Blair Institute gave a figure of £14 billion. We could even have a cross-party consensus on this. Why would we leave this money in their pockets when it could help to pay for the action on energy?
The alternative that the Government appear to have adopted is to have a voluntary agreement whereby companies decide to opt in to reduce prices. I say to the House that that is a terrible proposal—it came originally from Energy UK—because in exchange for giving up some profits now, the deal will lock in higher prices over the next 15 years. This is not a good deal for consumers. A chart published by Energy UK—I am a nerd, so I read these charts—precisely sets out the fact that consumers will pay through the nose over the 15 years ahead.
The third and final argument we have heard in this debate, and indeed from the Prime Minister, is that a windfall tax is somehow unfair to business. Let me take advantage of her being present to recommend that she reads an article by Mr Irwin Stelzer, a long-time confidant of Rupert Murdoch. In my experience of Tory leaders, it is worth their while to stay on the right side of him. Mr Stelzer wrote:
“Now is the time for a windfall profits tax”.
He continued:
“People who believe in capitalism believe that private sector companies should be rewarded for taking risks...not be rewarded for happening to be around when some disruption drives up prices, producing windfalls.”
In this case, we are talking about the barbaric invasion of Ukraine.
What principle is the Prime Minister defending here? What is the hill on which she stands? Is the principle she really wishes to defend that oil and gas companies should pocket any scale of profits, however bad the political instability; that however large the crisis and however gigantic the windfall, taxation must not change; and that the British people must take the strain? That is the effect of her argument. The argument I am making is not one simply made by leftie suspects such as me: Margaret Thatcher, her heroine, imposed a windfall tax in 1981; George Osborne, whom the Prime Minister worked for, imposed one in 2011; and the right hon. Member for Uxbridge and South Ruislip (Boris Johnson), her very close friend—[Interruption.] I think she is disavowing George Osborne, but I can understand that. As I was saying, the right hon. Member for Uxbridge and South Ruislip imposed a windfall tax two months ago. So the Prime Minister is flying in the face of logic, fairness and common sense, and is engaging in tens of billions of pounds of borrowing that she does not need to engage in. Let us never, ever hear again lectures from the Conservative party on fiscal responsibility after the decisions it is making today.
That brings me to the longer term. Let us face facts: the only way out of this crisis is to get off fossil fuels. I can do no better than quote the words of Lord Deben this week. He said that
“if you want to deal with climate change and you want to deal with the cost of living crisis and oil and gas prices, you have to do the same things. Renewable energy and energy efficiency, they are the answers.”
I would add nuclear to that, but the central point is that solar and wind energy are nine times cheaper than gas. We cannot solve the fossil fuel crisis by doubling down on fossil fuels, but that is what the Government have done today with this announcement on fracking. My right hon. and learned Friend the Leader of the Opposition quoted the words of the new Chancellor that fracking would make no difference to prices and would take years to come on stream. I do not know where the Prime Minister got the six months she mentioned in her statement, but the Chancellor was saying only a few months ago that it would take 10 years to get anything out of the ground on fracking.
This is where I come to the Business Secretary, whom I congratulate. He and I have known each other a long time and we have had a good personal relationship—perhaps we can form an unlikely alliance on the issues that we face. I want to make a serious point to him about some of what he has said in the past, because it relates to these issues. He has said a number of things about climate. I have been part of the work done on building a cross-party consensus on climate for getting on for 20 years in this House, and we have to look at some of what he has said about climate. He has questioned the modelling and whether there is anything we can do about the climate crisis. In 2017, he said:
“If we were to take action now, to try and stop man-made global warming, it would have no effect for hundreds or thousands of years”.
He went on to say that the cost of climate action is “probably unaffordable”. I quote those words because this is flirtation with climate denial. Never in the past 20 years have we heard these words from someone in charge of tackling the climate crisis, and we should not normalise it. The bipartisan consensus on climate change has been hard won. We have worked across parties over two decades to secure it and there is a heavy responsibility on the Business Secretary to be part of maintaining that consensus, not destroying it.
The problem for the Business Secretary, and the reason he faces that challenge, is that this problem is not just about the climate crisis, because not taking action on green energy is a recipe for higher bills. The ban on onshore wind is driving bills higher and gas imports higher, and it is terrible for the climate. The blocking of solar, which the Prime Minister supports, is driving bills higher and gas imports higher, and it is terrible for the climate. The refusal to act on energy efficiency is driving bills higher and gas imports higher, and it is terrible for the climate. There is nothing more anti-business than scaring off investors in renewables with climate denial.
In conclusion, here is the truth about this new Government, only two days in. They have revealed their true colours. We face a social and economic emergency. In such an emergency, what matters is who you stand up for, who shoulders the burden and the choices you make. The Government have chosen to stand up for the oil and gas companies, not the British people, who will pay for this action in the long-term. The Government cannot answer the challenges of energy security. They cannot answer the challenges of energy bills. They cannot answer the challenges of the climate crisis. And they have the wrong priorities for Britain.
The Secretary of State for Business, Energy and Industrial Strategy (Mr Jacob Rees-Mogg)
May I begin by adding my voice to those of other right hon. and hon. Members in wishing Her Majesty the Queen well from this House? It is a matter of the gravest concern to all of us when our sovereign is unwell.
I congratulate my right hon. Friend the Prime Minister not only on her appointment, but on the way she has chosen to meet this energy challenge: with immediate and decisive action. I thank her for introducing this debate, for ensuring that the contents of her speech were not leaked beforehand, which shows a proper respect for Parliament, and for seeing that her policy is robustly debated in this Chamber.
I thank the Chancellor, my predecessor at BEIS, for paving the way for this announcement. I look forward to working very closely with him to ensure that households and businesses are protected this winter and beyond. I also thank the right hon. Gentleman the shadow Business Secretary for his kind words about me in his opening comments. Indeed, we have had a friendly personal relationship over some years. I hope we can continue that while having, no doubt, some less friendly debates on these fundamental issues.
We need to understand why we are here. We are here because Vladimir Putin has weaponised energy supply as part of his barbarous attack in Ukraine. Last week, he turned off the main pipeline to Europe. It is a deliberate blackmail tactic against the west. Britain’s energy system must be strengthened and diversified to protect our homes and our businesses.
As we have heard over the course of this debate, our plan comes in two parts. First, we must get our constituents safely through this winter. We know how concerned people are about expensive energy bills. Some of the projected figures have been truly alarming and we are intervening to stave off an unprecedented crisis. It would be wrong to stand by as people struggle. I give the assurance to the hon. Member for St Albans (Daisy Cooper) that our plan for businesses will include care homes. That is fundamentally important. It would be madness to ignore other businesses too, as they see their bills spiral out of control.
The new energy price guarantee will ensure that bills are kept down, remaining at around £2,500 a year for the average consumer. This intervention reflects the severity of the situation we find ourselves in. The Government-funded support will take effect from 1 October, saving the average household around £1,000. That will be combined with the original support we announced.
I reassure the hon. Member for Kilmarnock and Loudoun (Alan Brown), who raised this question first, that we will act to help people on the lowest incomes. The Government have already announced a package of support that will see 8 million of the most vulnerable households receive £1,200 of one-off support to help with the cost of living, and all domestic electricity customers will receive £400.
We know that from biscuit makers to bars, businesses are worried about their bills. The Government’s price guarantee for businesses, which will be announced shortly, will bring down energy bills for the acute phase of the crisis. All businesses on variable contracts, whose fixed-price contract is coming to an end or that have agreed a fixed-price contract recently will be eligible to enter the new Government-guaranteed contract. That will apply to businesses of all sizes and include schools, nurseries and care homes, as well as manufacturers and retail. That is the short term.
Quite rightly, Opposition Members, particularly the Leader of the Opposition, asked who is going to pay for this. The energy bills guarantee is not a direct loan to customers or to energy suppliers. However, as the price stabilises in due course, the Government will need to consider when and how to recoup at least some of the cost of the scheme. The Opposition are all for taxation, Madam Deputy Speaker. That should not surprise you, as you know the inner workings of the Labour party better than most. None the less, all we get from the other side is tax, tax and tax again. It may be that we are at the highest rate of taxation in 70 years, but the answer is always more tax. It is their only answer to any question. Even the right hon. Member for Ross, Skye and Lochaber (Ian Blackford), the leader of the SNP, who used to be a very successful businessman, and therefore may know a thing or two about this, was advocating higher taxes. Now that he is a humble crofter, perhaps he thinks that is easier.
Ian Blackford
I am grateful to the right hon. Member—we go back a long way. He is, of course, right that I have a background in the City. No doubt he has read Shell’s quarterly figures, as I have done. Off the top of my head, the return on capital employed has gone up from 3% to 13%. By anyone’s definition, that is excess profit. It is right at times such as this that we take our share of that.
Mr Rees-Mogg
That is structurally wrong. Taxes need to be certain. If we are to encourage investment—and we need investment in this country—the tax policy has to be set for the long term. We cannot retrospectively pick people’s pocket; we need to tell them what the charge will be beforehand and keep it clear.
John Redwood
Would the Business Secretary like to remind the House that the Republic of Ireland deliberately chose much lower corporation tax rates than the rest of the advanced world and collects a far bigger proportion of its economy in taxes on business than we do?
Mr Rees-Mogg
My right hon. Friend will be glad to note that the Chancellor of the Exchequer, from a sedentary position, is agreeing with him. My right hon. Friend is a higher authority on this than I am, but we know that the cut in corporation tax led to an increase in receipts. Higher taxation is not the answer.
Looking at the long term, we must fix our broken energy system. We must have energy independence and become a net exporter of energy by 2040. We cannot be held captive by volatile global markets or malevolent states. We must tackle the root causes of the problems in our energy market by boosting domestic supply. We will invest in renewable energy with vim and vigour, accelerating the deployment of wind, solar and—particularly exciting, I think—hydrogen technologies. To reassure my right hon. Friend the Member for Pendle (Andrew Stephenson), we will invest in nuclear technologies, which also provide us with cheap and clean electricity.
I note that my hon. Friend the Member for Ynys Môn (Virginia Crosbie) said that her constituency is known as energy island. That is exactly what we need in this country. My hon. Friend the Member for Gloucester (Richard Graham) noted that not just Ynys Môn but the whole of the United Kingdom is energy island. We must use all the resources available to us, including tidal energy, as my right hon. Friend the Member for Maidenhead (Mrs May) said. This is a great opportunity.
Mr Rees-Mogg
I would love to give way, but time is very short.
We are fully committed to green growth and the green industrial revolution, and to net zero by 2050, but we have to get there, and to get there we are going to need oil and gas. We are therefore going to have a new oil and gas licensing round, which we hope to launch in October. I reassure the right hon. Member for East Antrim (Sammy Wilson) that we will work with communities and individuals to use shale gas as well, with the support of those who may be affected. The pause on extraction is being lifted through a written ministerial statement and will come into effect immediately. This will allow us to gather further data on seismic safety. It is fundamentally important, as any economist knows, that pricing is set at the margin. If you have more, it helps bring prices down. That is fundamental. It is not in any way contradictory to what we have said before. We will also have legislation to support people in Northern Ireland, which is fundamentally important. We must be one United Kingdom in how we do this.
I am very grateful for the many contributions that were made in the course of the debate, including by my hon. Friend the Member for Worcester (Mr Walker), my right hon. Friends the Members for Central Devon (Mel Stride), for Forest of Dean (Mr Harper) and for South Northamptonshire (Dame Andrea Leadsom), my hon. Friend the Member for Bolton West (Chris Green), my right hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb), my hon. Friends the Members for East Surrey (Claire Coutinho), for Watford (Dean Russell) and for Gloucester, my right hon. Friend the Member for Basingstoke (Dame Maria Miller), and my hon. Friends the Members for Ynys Môn, for Dudley South (Mike Wood) and for Sevenoaks (Laura Trott). I commend the motion on the Order Paper to the House.
Madam Deputy Speaker (Dame Rosie Winterton)
Before I put the Question, I am very sorry that all right hon. and hon. Members were not able to get in to speak in the debate. It was very oversubscribed. I remind Members that it is important to get back in good time for the wind-ups in order to hear the responses to what people have said.
Question put and agreed to.
Resolved,
That this House has considered UK Energy Costs.
Madam Deputy Speaker
Before we move on to the next business, I wish to pass on my thoughts and best wishes, and those of the people of Doncaster Central, to Her Majesty the Queen and her family.
Social Security (Special Rules for End of Life) Bill [Lords] (Allocation of Time)
Ordered,
That the following provisions shall apply to the proceedings on the Social Security (Special Rules for End of Life) Bill [Lords]—
Timetable
(1) (a) Proceedings on Second Reading and in Committee of the whole House, any proceedings on Consideration and proceedings on Third Reading shall be taken at today’s sitting in accordance with this Order.
(b) Proceedings on Second Reading shall (so far as not previously concluded) be brought to a conclusion two hours after the commencement of proceedings on the Motion for this Order.
(c) Proceedings in Committee of the whole House, any proceedings on Consideration and proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion three hours after the commencement of proceedings on the Motion for this Order.
Timing of proceedings and Questions to be put
(2) When the Bill has been read a second time:
(a) it shall, despite Standing Order No. 63 (Committal of bills not subject to a programme order), stand committed to a Committee of the whole House without any Question being put;
(b) proceedings on the Bill shall stand postponed while the Question is put, in accordance with Standing Order No. 52(1) (Money resolutions and ways and means resolutions in connection with bills), on any financial resolution relating to the Bill;
(c) on the conclusion of proceedings on any financial resolution relating to the Bill, proceedings on the Bill shall be resumed and the Speaker shall leave the Chair whether or not notice of an Instruction has been given.
(3) (a) On the conclusion of proceedings in Committee of the whole House, the Chair shall report the Bill to the House without putting any Question.
(b) If the Bill is reported with amendments, the House shall proceed to consider the Bill as amended without any Question being put.
(4) For the purpose of bringing any proceedings to a conclusion in accordance with paragraph (1), the Chair or Speaker shall forthwith put the following Questions in the same order as they would fall to be put if this Order did not apply:
(a) any Question already proposed from the Chair;
(b) any Question necessary to bring to a decision a Question so proposed;
(c) the Question on any amendment, new Clause or new Schedule selected by the Chair or Speaker for separate decision;
(d) the Question on any amendment moved or Motion made by a Minister of the Crown;
(e) any other Question necessary for the disposal of the business to be concluded;
and shall not put any other questions, other than the question on any motion described in paragraph (13)(a) of this Order.
(5) On a Motion so made for a new Clause or a new Schedule, the Chair or Speaker shall put only the Question that the Clause or Schedule be added to the Bill.
(6) If two or more Questions would fall to be put under paragraph (4)(d) on successive amendments moved or Motions made by a Minister of the Crown, the Chair or Speaker shall instead put a single Question in relation to those amendments or Motions.
(7) If two or more Questions would fall to be put under paragraph (4)(e) in relation to successive provisions of the Bill, the Chair shall instead put a single Question in relation to those provisions, except that the Question shall be put separately on any Clause of or Schedule to the Bill which a Minister of the Crown has signified an intention to leave out.
Subsequent stages
(8) (a) Any Message from the Lords on the Bill may be considered forthwith without any Question being put; and any proceedings interrupted for that purpose shall be suspended accordingly.
(b) Proceedings on any Message from the Lords shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement; and any proceedings suspended under sub-paragraph (a) shall thereupon be resumed.
(9) Paragraphs (2) to (5) of Standing Order No. 83G (Programme orders: conclusion of proceedings on further messages from the Lords) apply for the purposes of bringing any proceedings to a conclusion in accordance with paragraph (8) of this Order.
Reasons Committee
(10) Paragraphs (2) to (6) of Standing Order No. 83H (Programme orders: reasons committee) apply in relation to any committee to be appointed to draw up reasons after proceedings have been brought to a conclusion in accordance with this Order.
Miscellaneous
(11) Standing Order No. 15(1) (Exempted business) shall apply to proceedings on the Bill.
(12) Standing Order No. 82 (Business Committee) shall not apply in relation to any proceedings to which this Order applies.
(13) (a) No Motion shall be made, except by a Minister of the Crown, to alter the order in which any proceedings on the Bill are taken, to recommit the Bill or to vary or supplement the provisions of this Order.
(b) No notice shall be required of such a Motion.
(c) Such a Motion may be considered forthwith without any Question being put; and any proceedings interrupted for that purpose shall be suspended accordingly.
(d) The Question on such a Motion shall be put forthwith; and any proceedings suspended under sub-paragraph (c) shall thereupon be resumed.
(e) Standing Order No. 15(1) (Exempted business) shall apply to proceedings on such a Motion.
(14) (a) No dilatory Motion shall be made in relation to proceedings to which this Order applies except by a Minister of the Crown.
(b) The Question on any such Motion shall be put forthwith.
(15) (a) The start of any debate under Standing Order No. 24 (Emergency debates) to be held on a day on which the Bill has been set down to be taken as an Order of the Day shall be postponed until the conclusion of any proceedings on that day to which this Order applies.
(b) Standing Order No. 15(1) (Exempted business) shall apply in respect of any such debate.
(16) Proceedings to which this Order applies shall not be interrupted under any Standing Order relating to the sittings of the House.
(17) (a) Any private business which has been set down for consideration at a time falling after the commencement of proceedings on this Order or on the Bill on a day on which the Bill has been set down to be taken as an Order of the Day shall, instead of being considered as provided by Standing Orders or by any Order of the House, be considered at the conclusion of the proceedings on the Bill on that day.
(b) Standing Order No. 15(1) (Exempted business) shall apply to the private business so far as necessary for the purpose of securing that the business may be considered for a period of three hours.—(David T.C. Davies.)