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Wera Hobhouse (Bath) (LD)
I beg to move,
That this House has considered the cost of energy.
It is a pleasure to serve with you in the Chair, Mr Western. I thank the Backbench Business Committee for granting me this debate. The cost of energy is a problem that impacts all areas of our lives, from the homes we live in to the businesses we work for.
For far too many, high energy bills are an immediate daily concern. A recent poll published by Opinium highlighted that, on average, 88% of all adults thought it was important that the Government focus on reducing the cost of energy over the next two years, while 90% remained concerned about the increase in energy prices. The cost of energy has become a key strain for most households. For households in Bath and across the country, bills continue to rise at unprecedented rates, and many struggle to keep up.
Those rises will heap considerable pressure on millions of people who are still feeling the pressures of inflation over the past few years. That is simply unacceptable, and it is a crisis that we cannot ignore. The effects of high energy costs extend far beyond the immediate financial burden; the cost of electricity in the UK is also holding back our efforts to decarbonise the economy and to address the climate crisis, and we must not shy away from that debate.
At present, UK households pay roughly the same for both gas and electricity bills—around £850—despite using more than four times more gas than electricity, making electricity in the UK four times more expensive than gas. That price imbalance is not only creating financial hardship for consumers, but actively deterring them from making the switch to cleaner, more efficient heating systems. The UK currently relies on 25 million fossil fuel boilers to heat its homes, accounting for 16% of the nation’s entire CO2 emissions. Decarbonising our heating sector is a significant opportunity for the UK to cut down on carbon emissions.
Take heat pumps, for example, one of the most advanced and environmentally friendly ways to heat our homes. Heat pumps are four times more energy efficient than gas boilers and could reduce CO2 emissions by 75%, yet just 1% of UK households have a heat pump. Why? Because the UK’s electricity prices consistently undermine the financial incentive to install them. With the current cost of electricity, running a heat pump can be more expensive than running a gas boiler for larger households and as expensive for medium-sized homes, even though heat pumps are far more efficient.
In Sweden, more than 50% of single-family homes have heat pumps installed, while 95% of all new homes are now heated by heat pumps. The success of Sweden’s heat pump adaptation hinges on the country’s price ratio between gas and electricity, effectively incentivising electric heating systems compared with fossil fuel ones.
A range of other heating technologies can work alongside heat pumps. Alternative technologies such as heat batteries are another example where the price of electricity is significantly hindering the UK’s ability to move away from gas. Heat batteries have become a proven solution for about 20% of UK homes for which heat pumps are not suitable. Modern heat batteries can operate at equivalent temperatures to fossil fuel systems; they can make use of the existing pipes and radiators in the home, at a similar running cost to a heat pump, and embed valuable flexibility in the electricity system. Despite having such innovations at our fingertips, the Government continue to drive consumers into the arms of gas boiler manufacturers, because more often than not it is still cheaper to buy a gas boiler.
The disparity in energy prices between gas and electricity is not just a domestic issue; it is part of a broader trend in which the UK is falling behind other nations in the transition to low-carbon heating. In the first half of 2024, gas prices in the UK were 22% below, while electricity prices were 27% above, the EU average. In fact, the UK had the highest ratio of electricity to gas unit prices in the entire EU at that time. That pricing imbalance places the UK at a competitive disadvantage in terms of decarbonisation.
As the rest of Europe steams ahead with its effort to electrify heating, the UK is lagging behind due to our higher costs of electricity, something that not only affects individual households and businesses, but significantly undermines the UK’s position as a world leader of climate action. To achieve our statutory net zero goals, we need to make sure that the transition to clean energy is as affordable as possible for everyone. The current energy pricing structure is holding us back, and that must change.
The first and most urgent step is to reform the policy costs currently placed on electricity bills. The regressive and incoherent stack of levies on electricity bills has inflated the cost of electricity for consumers to the point that it is uncompetitive with gas. The Government’s current energy policies are therefore working against their own objectives, making clean technology more expensive than its fossil fuel counterparts.
As things stand, policy costs and levies currently account for 11% of a typical household’s total energy bill, but they are not allocated evenly. Policy costs account for 16% of a typical electricity bill, but only 5% of a typical gas bill. There is widespread industry and political support for reforming those policy costs and levies, but the argument over how to do so has been going on for far too long. The simplest options for reform would be to remove all levies from electricity and put them into general taxation. That would lower energy bills for every household in Britain, but at a very high cost to the Exchequer, which is currently not realistic.
Another option is to rebalance the levies by moving them from electricity to gas. This option would be good news for the 4.5 million households that do not use gas heating, but for the 22.5 million gas-using households, of which 2 million to 3 million are in fuel poverty, bills would rise by between £15 and £100 a year.
Robbie Moore (Keighley and Ilkley) (Con)
Some 17.6% of those who live in Keighley are in fuel poverty. Right now, Labour-run Bradford council wants to raise council tax by 10% and, with the removal of the winter fuel allowance, 64,000 pensioners across the wider Bradford district will be impacted. Does the hon. Member agree that, for the most vulnerable in our society, there needs to be more support not just with the cost of energy, but with making sure that they can keep warm during this winter period?
Wera Hobhouse
The hon. Member predicts my next point: it is important to emphasise the Government’s responsibility to look after the most vulnerable in our society and protect them during any efforts to rebalance gas and electricity prices. However, I cannot comment on the council tax bill to which he refers; that is, of course, a local matter.
It is imperative that any policy changes prioritise the needs of those vulnerable households, ensuring that they are not left behind as we look to electrify the UK’s heating system. A more focused way to adjust policy funding could be to collect revenue from levy-funded programmes through a single levy control system. Such a system would have two straightforward rates—one for electricity and one for gas—set by Ministers at an appropriate level. These rates would be based on the cost per kilowatt-hour, so more energy-efficient technologies would have lower taxable amounts, making them comparatively more affordable.
Unlike other rebalancing methods, this approach would allow the Government to directly manage the impact on households. As electricity is always more efficient than fossil fuels, its price would go down, encouraging more people to switch. Policy reform is an essential step towards addressing the unacceptable price disparity that currently exists in the UK between gas and electricity. I hope the Minister has listened very carefully to the proposal that I have just put forward.
The impact of Brexit on our energy system has been somewhat brushed under the carpet. The turbulence of covid and the shockwaves from Russia’s invasion of Ukraine have dominated the conversation and masked the quieter, but significant, effects of our departure from the EU’s energy framework. One of the most pressing issues is passive divergence: not following new EU regulations simply because we are no longer a part of the system.
That is not always a deliberate choice, but it is already creating challenges, particularly in electricity trading. The UK was once part of an integrated, efficient energy market with the EU, where electricity flowed freely, reducing costs and improving security. Now, without alignment, we risk inefficiencies, higher prices and reduced energy security. We need strategic decision making. Not all divergence is bad, but it must be a conscious, informed choice, based on clear evidence, not ideology.
When it comes to energy, the benefits of co-operation with the EU are overwhelming. Shared markets bring stability, common rules ensure fair trade and joint planning strengthens resilience against global energy shocks. The EU and the UK share the same fundamental energy challenges in securing affordable, clean and reliable power for the future. Our interests remain aligned and so should our approach. We must ensure that divergence, where it happens, is a decision and not an accident.
In addition, we need to focus on policies for community energy. We Liberal Democrats have long championed the idea of community energy. Community energy currently accounts for less than 0.5% of total UK electricity generation capacity. However, according to the Parliamentary Environmental Audit Committee, with the right Government support, the sector could grow 12 to 20 times by 2030, powering 2.2 million homes and saving 2.5 million tonnes of CO2 emissions every year.
I welcome the Government’s inclusion of the local power plan in the Great British Energy Bill, which marks a welcome step forward for the community energy sector. The plan intends to deliver an ambitious target of 8 gW of renewable energy projects by 2030, in partnership with local authorities and communities across the country. To achieve that target, significant scale-up of local and community-owned energy will be required and we will need a support programme in place for community energy organisations in England, drawing on successful models from Scotland and Wales.
Bath and West Community Energy, a community benefit society, has reduced carbon emissions by an average of 3,300 tonnes per year with its around 31 renewable energy projects. Let us make sure every community across the country has something like Bath and West Community Energy in its patch. As we have repeated many times, community energy reduces bills, creates local jobs and accelerates the transition to a low-carbon future.
Home insulation is another key area to reduce energy costs, particularly in my Bath constituency, where much of the housing stock is old and in dire need of insulation. Insulation remains one of the most effective ways to reduce energy demand, lower bills and cut emissions, but the Government have significantly delayed the implementation of their warm homes grants. The scheme was not implemented this winter and will only operate from next winter. The Government must tackle the efficiencies of these schemes head-on, ensuring that residents receive retrofit measures that provide value for money and stand the test of time. The Select Committee on Energy Security and Net Zero will look into those issues tomorrow, and I hope people will listen very carefully.
To accelerate and de-risk delivery of the warm homes plan, the UK Government should create a national expert advice service for England so that households have the confidence to receive tailored advice to upgrade their homes. Doing so would deliver consistent outcomes across the country and end the postcode lottery in advice services.
I hope the Government consider the points outlined today. We need long-term solutions that will make clean energy affordable for all, meet our net zero targets and lift the pressures on families of rising energy costs.
Matt Western (in the Chair)
I remind Members that they should bob if they wish to be called in the debate.
Mike Reader (Northampton South) (Lab)
It is a pleasure to serve with you in the Chair, Mr Western. I thank the hon. Member for Bath (Wera Hobhouse)—a fellow member of the Energy Security and Net Zero Committee—for introducing this important debate. We have been doing a lot of work over recent weeks in the Committee on energy pricing and the cost to consumers, so it is very timely.
It is clear that the Government have an ambitious plan to achieve clean power by 2030. For families in my constituency and across the country, that mission is really about lowering energy bills. Quadrupling offshore wind, tripling solar, doubling onshore wind and getting projects such as Hinkley over the line and operational are all critical things that will ensure resilience in our energy markets. Importantly, they will also protect UK consumers from volatile foreign markets, taking back control from Putin and petrostates, and placing the power of energy in the hands of British people. Those targets represent the biggest expansion of renewable energy in our history, and could save families hundreds, if not thousands, of pounds a year on their energy bills.
I recognise the great points made by the hon. Member for Bath in her opening speech, particularly on innovation in the sector. I also welcome her thoughts on heat pumps because I, too, believe that more than just heat pumps can solve this crisis, and it was positive to hear her talk about heat batteries. I want to add to the debate by speaking more about the energy cost crisis the Government are tackling, how it started and what we need to do to solve it.
The Select Committee heard evidence that paints a stark picture. Average energy bills are now 43% higher than in 2019, with over 6.1 million people living in fuel poverty. The situation in my constituency reflects the national crisis, with families and businesses struggling under the astronomical weight of energy costs.
However, the crisis did not happen overnight; it is the direct result of years of Conservative failure to properly insulate our homes, diversify our energy sources, reform the energy market and, ultimately, protect consumers. The previous Government’s resistance to onshore wind, their devastating cuts to energy efficiency programmes and their reckless over-reliance on volatile international gas markets has left British taxpayers paying the price.
When the last Labour Government left power, energy efficiency installations were at their peak, with 2.3 million homes upgraded, but the next Government dropped support and the numbers plummeted. As was mentioned, we now have some of the least efficient housing in the whole of Europe. The consequences of those decisions are felt every day by my constituents, who find themselves living in poorly insulated homes. There are 17,000 homes in Northampton South with an energy performance certificate rating of C or below. Those homes waste energy, but also my constituents’ money.
The fundamental issue is clear: we must break our dependence on gas if we want energy bills to come down. As Ofgem’s chief executive officer told the Committee a few weeks ago, unless we transform energy infrastructure we will remain at the mercy of volatile international gas markets. The evidence shows that, in a clean power system, even a major shock of the kind we have seen in recent years would see bills rise by an average of 9%, versus 44% following the gas crisis in 2022. That is why this Government’s mission for clean power is so vital. It is not just about the climate; it is about bringing bills down. Under questioning from our Committee, Ofgem’s representatives agreed that the target, while ambitious, is very achievable. However, they also warned that, without urgent action on planning reform and supply chains, we risk missing that crucial deadline.
We must also acknowledge the historic failures of market regulation. Consumer debt has now reached an astronomical £3.82 billion, which is nearly double what it was two years ago. When we pressed Ofgem representatives on what would trigger serious Government intervention, they could not give a clear answer, but it is clear that something more has to be done. The chief executive admitted that they should have developed much more detailed rules on prepayment meters and market regulation much earlier, rather than relying on broad principles that left vulnerable customers exposed. Even now, Ofgem acknowledges significant gaps in its powers to protect consumers, particularly around data sharing between Government Departments to identify vulnerable households that need support.
The Committee dug into one particular example: the regulator’s handling of supplier failures, which is deeply problematic. We were told that when energy companies went bust, the shareholders were able to walk away with hundreds of millions of pounds of energy hedges, while taxpayers were left picking up the bill. Ofgem admitted to us that it lacks the power to recover those funds on behalf of the taxpayer, so hundreds of millions of pounds have been lost to those who have gambled on our energy market. That is a striking example of how the market has been stacked against ordinary people. The regulator’s director of markets did acknowledge to the Committee that some suppliers are still not compliant with new financial resilience requirements, but he could not assure us as to what actions Ofgem would take if those suppliers fail to meet the deadline by March.
Moving to clean power is essential, and we must take immediate action to protect vulnerable households. That is why I support the move to a social tariff; a discounted energy scheme for low-income households would make sure that we build a fairer, greener and more sustainable energy system for everyone. At its core, a social tariff is a targeted discount on energy for people on low incomes, which would act as a vital safety net and ensure that nobody must choose between heating and eating. A social tariff could provide a guaranteed below-market rate for eligible households, with automatic enrolment for those who qualify. There would be no complex switching around or shopping around, just straightforward help for those who need it.
The evidence shows that 6.1 million households now live in fuel poverty, with many of those who are struggling paying a poverty premium. They are using prepayment meters or are on standard variable tariffs, which is simply wrong. A properly designed and implemented social tariff would be mandated across all suppliers, so that no one misses out; it would automatically enrol eligible households, using existing data to remove barriers to entry; and it would deliver real savings for those most in need.
As one of the richest economies in the world, we should make sure that everyone can afford to keep their homes warm. The technology and the mechanism exist, but now we need the political action to make it happen. Achieving clean power by 2030, combined with proper consumer protection and targeted support, will bring bills down for good. The previous Government’s failures have cost families dearly, and I urge Members on both sides of the House to use their voice to call for greater protection for energy users and greater power for regulators, and to call out the profiteering of energy companies at times of crisis.
Helen Maguire (Epsom and Ewell) (LD)
It is a pleasure to serve under your chairmanship, Mr Western. The cost of energy is a crisis hitting every household in the country; it is not just a crisis of affordability but a crisis of national security, a crisis of climate and a crisis of social justice, but the Government have failed to act with urgency.
Russia’s assault on Ukraine has made clear the dangers of energy dependence, and we can no longer afford to be dependent on fossil fuels. Investing in home-grown renewable energy is about not just cutting bills but safeguarding our energy security to protect ourselves from geopolitical shocks. Climate change is an existential threat, with global temperatures driving wildfires, floods and droughts. With those come food and water insecurity and displacement, which in turn fuels conflict.
We need a Government willing to make tough choices to invest in clean energy and to ensure that the UK is not left behind in the global transition. Many areas require urgent reform. We need incentives that cover the real costs of installing heat pumps, as my hon. Friend the Member for Bath (Wera Hobhouse) outlined. We must also create a rooftop solar revolution by expanding incentives for households to invest in solar panels. That includes a guaranteed fair price for electricity sold back to the grid, which would tackle the twin cost of living and climate crises.
We must get the basics right and invest in insulation: cold, inefficient homes mean higher energy bills, fuel poverty and a staggering £1.4 billion NHS bill for treating cold-related illnesses. The UK has the oldest housing stock in Europe, with one fifth of homes built more than a century ago. A national strategy for retrofitting pre-1920 homes is long overdue, and the Liberal Democrats would launch an energy insulation programme, starting with free retrofits for low-income households.
We must also protect the vulnerable—now. The Government’s decision to axe the winter fuel payment was the wrong choice at the wrong time, stripping support from pensioners just as another cold winter bites. The Liberal Democrats would restore that help by introducing a social tariff for vulnerable households, raising the funds for it by imposing a proper windfall tax on oil and gas giants profiteering from this crisis.
The cost of energy is pushing people into hardship today, and without action it will do for years to come. Just in Epsom and Ewell, 6,518 people are living in fuel poverty. I welcome the work of the many community centres that provide warm hubs, but frankly they should not be needed. We must support households by restoring winter fuel payments, introducing a social tariff and driving a rooftop solar revolution. We must cut bills by investing in clean energy, making homes more efficient and ensuring that those who have done the right thing and gone green are not penalised. This is about security, sustainability and fairness. The Government must act; the cost of inaction is simply too high.
John Milne (Horsham) (LD)
It is a pleasure to serve under your chairship, Mr Western. This country has been in need of a coherent national energy policy for a long time, as the lack of one has left us in a difficult place. Figures from June 2024 show that UK energy prices are 27% higher than those of our EU counterparts. That has made energy-intensive industries unviable and is a major problem for all of us. Many millions of households in England live in fuel poverty, and total energy debt across the country is estimated to be £3.8 billion—indeed, in my constituency, it is one of the biggest causes of people slipping into debt.
The part of the solution that I want to focus on today is community energy. It is welcome that the Government are getting behind renewable energy projects, but they are paying little attention to gaining public consent. The great advantage of community energy is that it is generated locally, requires no unpopular transmission systems and benefits the very people who have to put up with the local infrastructure and the potential loss of green space. The best way to get local consent for a new solar or wind farm is to let local people benefit from the energy directly.
Unfortunately, neither the previous Government nor this one have done enough to encourage the community energy industry. It remains too costly and bureaucratic for community energy companies to become energy providers. There is no sliding scale of fees to reflect the size or capacity of an energy project, which effectively rules out smaller enterprises. Furthermore, community energy companies have to sell the energy they produce at a fraction of its genuine retail value to registered suppliers. Absurdly, local communities are frequently unable to buy energy directly from the solar farm or windmill they can see from their windows. Communities are obliged to sell their energy back to the grid at a low price and buy it back at the marginal rate of gas, with transmission costs that had no need to be included. That is despite the fact that some community energy projects achieve a 75% reduction in per kilowatt-hour pricing.
Those obstacles are part of the reason why Community Energy Horsham in my constituency is struggling to get its solar energy project across the line. It has had council backing for a community-funded project to put solar panels on the Bridge leisure centre for some time, and I am sure it will happen at some point, but it has taken a few years already and the whole process is much more difficult than it needs to be.
We need a community electricity export guarantee to create a statutory right for sites with capacity below 5 MW that generate low-carbon electricity to export their electricity on their terms to an existing electricity supplier. We need a community electricity supplier services scheme to create a requirement on existing larger energy suppliers to work with community schemes so that they can sell the power they generate back to local customers.
Encouraging community energy is the democratic way to determine local land use. When local communities directly reap the rewards from community energy projects, it not only puts power—in every sense of the word—in the community’s hands, but demonstrates the benefits of a greener energy transition, which is important for our net zero targets and the planet.
I urge the Government to put public consent at the heart of their energy strategy—indeed, I could say the same about their planning strategy, but that is a whole other debate. The best way to do that is to empower community energy schemes. Never mind Great British Energy, I want to see Great Horsham Energy and, indeed, Great Everywhere Energy.
Jim Shannon (Strangford) (DUP)
It is a real pleasure to serve under your chairship, Mr Western. I thank the hon. Member for Bath (Wera Hobhouse) for leading the debate. She has been assiduous, enthusiastic and committed on this issue, and we all owe her a debt for setting the scene so very well.
It is a real pleasure to see the Minister in his place. Mr Western, I will tell you what: as Ministers go, this is a hard-working one. He has done the lot—urgent questions yesterday, a statement yesterday, this debate today—all in a matter of hours. We look forward to his contribution to today’s debate. It is also a pleasure to see the hon. Member for Beaconsfield (Joy Morrissey) in her place as shadow Minister. In the last couple of years we have seen massive fluctuations in terms of energy prices, with thousands of households carrying the burden of that for many months. Energy prices have fallen since summer 2023, but there is little prospect of cuts soon. For that reason, it is good to be here to discuss the issue.
I will, of course, give a Northern Ireland perspective, and I have one big ask of the Minister. He probably knows what it is, and knew before we started, but I would be very keen to hear about his discussions with his equivalent in the Northern Ireland Assembly to see how we can work better here together to help our constituents back home. Global prices for gas, electricity and oil have been on the increase from summer 2021 after the pandemic. Furthermore, we witnessed a massive hike in prices after the Russian invasion of Ukraine in February 2022. There are things that the former Government and this Government have had no control over, but there are also things that we can do.
For Northern Ireland customers it has been slightly different, because we are not controlled by the energy price cap in England. However, although Government support was provided, it was withdrawn in July 2023, leading to a very large hike that families are still struggling with. The Minister knows, having responded to my urgent question yesterday, the point that I am going to make about oil: 68% of households in Northern Ireland have oil as their main and primary heating and cooking sources. Since October 2023, the cheapest prices for Northern Ireland’s largest supplier have been higher than prices under the cap in the rest of the United Kingdom.
The cost of energy can be monumental for local businesses, not just for the large chain businesses. The local, family-run small business is the one that will probably suffer the most. After the pandemic, I was approached by countless local businesses in my constituency that were simply unsure how they would survive. After so many years, many were facing the climax of their business. A local coffee shop I frequently used in the town where my office is had to close down as it was no longer sustainable. Energy suppliers back home, such as Power NI, can provide tailored plans for businesses, but the price is no different and businesses can often be forgotten.
It would be remiss of me to participate in this debate without mentioning the impact of the Government’s decision to withdraw the winter fuel payment from pensioners. Many such pensioners in my constituency who have contacted me relied on that payment to get them through the winter. There are concerns not only that this may plunge thousands of pensioners into fuel poverty, but about the massive potential health risks. Older individuals’ struggling to afford adequate heating could increase the risk of respiratory illnesses, strokes and hypothermia. It is not an exaggeration to say that many of the elderly people that I know do not have and cannot afford to heat, so they do not turn it on, but they do put on extra clothes. It is distressing to visit elderly people and see them wrapped up like a polar bear—
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
I thank the hon. Member for giving way; he is making an excellent contribution. The radio frequency network that, as the Minister is aware, controls what many people in remote areas pay for heating will be switched off in June. At present, the replacement infrastructure is not there, so many people could inadvertently end up paying through the nose. I find that very worrying, so will the hon. Member, and perhaps later the Minister, tell us whether they agree that the data communication company needs to speed up its roll-out of cellular coverage as quickly as possible? We are only four months away from June, and it is a deeply worrying situation for pensioners in my constituency and many other remote areas.
Jim Shannon
I thank the hon. Member for that intervention. The Minister has been listening, and I know that he does listen. The hon. Member has outlined a specific issue that is incredibly worrying. The older we get, the faster time goes; I am not sure whether that is right, but it seems to go faster. June will be here tomorrow—it will be that quick—so the crisis must be addressed today. I thank him for raising that and look forward to the Minister’s response.
I will always ensure that the Minister and his Department are aware of the impact that this issue could have—and has had this winter—on health. We look to him for direction and, most importantly, reconsideration for the coming years. Schemes were available under this Government that were available under the previous Government and were set up to support families and households who were struggling, but they have now closed. Similarly, back home, the Assembly has previously taken steps to support people.
It is no secret that people are still struggling. On occasions when the price of energy is out of our hands, there are measures we can take to ease the burden. Despite the general fall in prices since early 2023, typical bills under the January to March 2025 price cap will still be 43% higher than in the winter of 2021 to 2022. The perspective of prices and costs today is really bleak, so I look to the Minister for direction and plans for the rest of the coming year to support our constituents.
Steps can be taken to reduce pressure: perhaps there could be a closer look at the impact of renewable solar energy or better dedication to financially supporting our constituents. Regardless, I look forward to hearing what the Minister has to say, and to hearing about the planned integration between himself and his counterparts back home in the Northern Ireland Assembly, because we need to see the benefits of being a part of this great United Kingdom of Great Britain and Northern Ireland. We are very proud to be part of it, but we also look to Government here centrally to help us in the Northern Ireland Assembly and to help our constituents. I honestly believe that the Minister has a heart for that, and I very much look forward to his response and to seeing how he can help us.
Edward Morello (West Dorset) (LD)
It is a pleasure to serve under your chairship, Mr Western. I thank my hon. Friend the Member for Bath (Wera Hobhouse) for securing this important debate. I declare that prior to being elected, I spent the better part of a decade in renewable energy finance. While I would not claim to be an expert, I hope to bring some useful insights to this debate.
The cost of energy remains one of the largest issues faced by households across the country, and nowhere is that more apparent than in rural communities like West Dorset. Fuel poverty is a dire issue. In 2023, 13% of households were in fuel poverty, and nearly 40% of households were spending more than 10% of their annual income on energy. The situation is even worse for vulnerable families: nationally, nearly 900,000 single-parent households are living in cold homes.
It is a much-cited statistic that the UK has the highest energy prices in the developed world, but that is misleading, and in no small part based on an accounting issue. In 2000, just 3% of the UK’s energy came from renewables; today that figure is 42%. Despite that progress, we are still paying energy bills tied to the price of fossil fuels because of the marginal pricing system, which means that all electricity is charged at the rate of the most expensive source, which is currently gas—a commodity that, like oil, is at the whim of international events and geopolitical fluctuations.
Between 2010 and 2021, the global average cost of electricity generated from a renewable energy source over its lifetime declined by 88% for solar, 68% for onshore wind and 60% for offshore wind. Yet, even as renewable energy has become drastically cheaper to generate, the wholesale cost of energy to consumers remains high. It is simply unacceptable that companies are making vast profits while households, particularly in rural areas, are struggling to afford the basic necessity of heating their home.
The Government could solve this problem by delinking fossil fuels and renewable energy pricing, as other countries do. Our wholesale energy price would then be the weighted average between the two, which would bring us on a par with the energy prices of other nations. Far more importantly, it would also reduce the cost to consumers. The Government must take decisive action to break the link between gas prices and electricity prices. The previous Government promised to review electricity market arrangements, and this current Government should do so. Creating a separate market for renewables and fossil-fuel generated electricity would make energy fairer and more affordable to consumers.
I will make one other appeal for action by this Government. It is a trope often repeated that we need to put more solar panels on roofs and car parks, rather than farmland. I do not disagree, but the trope fails to recognise that doing so is commercially unviable. If utility-scale solar—this is an oversimplification—costs 50p per unit to build, commercial rooftop is double that, and carports double that again. The value paid by energy companies for exported renewable energy is often as little as 5p or 5½ p per unit, so utility scale is the only solar that works as a pure export model. That unit of electricity is then sold under a green energy tariff to consumers at a vastly inflated price. The only people who benefit are the energy companies.
Again, the Government have a relatively straightforward fix at their disposal: mandating a minimum export value. Yes, energy wholesalers will make less money, but I can live with that. More importantly, it would unlock investment in rooftop and carport solar, end the competition between food production and net zero, and ultimately reduce costs for consumers. Those are easy wins for a Government who claim to be committed to fighting climate change. Instead of following the advice of industry, the Government have chosen to axe winter fuel payments, stripping vital support for many of the poorest pensioners at a time when energy bills remain high—a decision that should be reversed.
The UK must take back control of its energy future. We cannot continue with a system where consumers are at the mercy of volatile international gas prices while energy companies rake in massive profits. We must end the outdated pricing model that ties renewables to the cost of fossil fuels, and we must unlock investment in rooftop and carport solar. We must ensure that the benefits of renewables reach the people who need them most and ensure that no family, child or pensioner is left struggling to heat their home when we have the tools to fix this at hand.
Graham Leadbitter (Moray West, Nairn and Strathspey) (SNP)
It is a pleasure to serve under your chairship, Mr Western. I congratulate the hon. Member for Bath (Wera Hobhouse) on securing this morning’s debate. I will not speak for too long, because we have had several debates on this issue; instead, I will focus on the key points that I think need hammering home.
For several years colleagues in the highlands and islands, and now my hon. Friend the Member for Argyll, Bute and South Lochaber (Brendan O'Hara) and I, have worked on the highland energy rebate campaign., which would mean a geographic rebate for people in the highlands and islands affected by higher fuel prices. I am not precious about the mechanism for that. There is a bit of kickback about a geographic mechanism, but it is a very useful debating tool because it hammers home the fact that there is a geographic discrepancy and discrimination for people living in the highlands and islands, and the north of Scotland more generally.
We need a solution from the Government, and we need it urgently. For decades, people in the highlands and islands have been paying more for their energy than those in almost any other part of the UK. They pay more for distribution, and no other part of the UK pays more for transmission. All that people see are wires and pylons. The energy infrastructure, much of it in the highlands and islands, is used to send energy hundreds of miles away, but that is not distributed across bills in the same way as the distribution charges are. For example, in the flat that I live in when I am down here in this place, I pay roughly 40p on standing charges, and at home I pay 60p-plus on standing charges. That is a third extra every single day on that standing charge, and that is the same for people across the whole of the highlands and islands, which puts it in perspective for folk.
For decades, successive Governments have failed to tackle poor regulation. Ofgem has shown little interest in dealing with energy prices in the north of Scotland. Twenty years ago, we were less focused on decarbonisation issues than we are now. We were trying to get people on grid because there were so many people off-grid in the highlands and islands. The authorities would not look at getting gas into more remote areas; that was very low on the priority list. I am not advocating that we should do that now; new technologies have come in since then and we need to focus on decarbonising our energy systems. But it evidences that this has been going on for a long time, and that solutions have not been found.
Governments have always focused on urban areas with big populations to the detriment of rural customers. That is not acceptable, because the highlands and islands of Scotland are the coldest parts of the UK and have the highest levels of fuel poverty per head of population. That major issue needs to be addressed.
I want to highlight a couple of strategic issues about generators. We have wind farms consented to produce many gigawatts, but they are not able to progress because the Ministry of Defence has not come up with a radar solution that will allow them to operate. That is a matter of urgency. It is about capacity within the MOD and the amount of effort that it has been able to put into coming up with a solution; it is not because there is no solution, but because not enough people are working on it.
As a consequence, we have big projects that would generate employment through their construction and would contribute to our net zero goals, but they cannot get over that hurdle, despite being consented and having passed all the other barriers. If they cannot get over that hurdle, those consents will fall and the projects will be lost. That needs to be urgently addressed, and I urge the Minister to do what he can to work with colleagues in the MOD to get some focus on that.
I welcome the work on social tariffs, on which the SNP has a manifesto commitment, and I know from colleagues in the Scottish Government that a lot of close working is going on with the Department, which I welcome. Hopefully we will see a positive resolution to that in the not-too-distant future.
Finally, it would be remiss of me not to mention the winter fuel payment. The £300 winter fuel payment has been lost to tens of thousands of people across the highlands and islands. That combines with the points I have already made—along with the cost of energy going up since the Government came in last July and the promise to reduce energy bills by £300 for the most vulnerable pensioners—so we are now looking for £780. I am not entirely sure how that £780 reduction in bills will be achieved, but that is essentially the position that the Government find themselves in—they need to find that for thousands of people in order to maintain that manifesto pledge, and it will be interesting to know how that is going to happen.
Mr Angus MacDonald (Inverness, Skye and West Ross-shire) (LD)
I congratulate my hon. Friend the Member for Bath (Wera Hobhouse) on securing this important debate. Much of what I was going to say has been mentioned, but I want to reiterate a few things.
How can it be that households on renewable electricity pay four times as much as those who get fossil fuel gas? That is inappropriate, not least because the cost of electricity generation from onshore wind was one third of the cost of generating electricity from fossil fuels, yet electricity bills remain nearly four times the price of mains gas. To put that into perspective, my parliamentary flat in London, which runs on mains gas, costs 5.8p per kilowatt-hour to heat, while my home in the highlands costs 23.7p. That premium is paid not just in the highlands, but across the countryside and in rural Britain, and in high-rise properties throughout cities across Great Britain. It is an enormous and painful gap. We all believe that net zero is the way ahead—we all support that—but we do not think that the current pricing is just.
In England, the level of fuel poverty is 13%, and as the hon. Member for Moray West, Nairn and Strathspey (Graham Leadbitter) said, it is much higher in the highlands at 47%. We have a dramatic problem with fuel poverty in the north of Scotland. In 2021, an estimated 16% of households that used gas for heating were classified as being in fuel poverty, and 41% of those who required electricity. There is a clear link between fuel poverty and lack of access to mains gas. That damages business as well: a hotel in rural Britain is paying £80,000 if it is using gas, but it would cost only £25,000 at most in a city for the same amount of heat. If the hotel was in the United States, the same amount of heat would cost only £10,000.
We have touched on the coupling of renewable energy and gas, and I do not think anybody would disagree that they need to be decoupled. I am sure that the Minister will talk about that. We have also touched on the environmental surcharges that are put on the electricity price, so 20% or more of an electricity bill, but just a fraction of a gas bill, is an environmental tariff. Ironically, it is people using renewable energy who are shouldering those environmental charges, not those using fossil fuels—mains gas.
I am glad that we have had this debate. I hope that the Minister will give an idea of how the enormous injustice of environmental charges, the standing charges and all the excess charges on renewables can be removed to balance things out with people who are relying on gas.
Joy Morrissey (Beaconsfield) (Con)
It is a pleasure to serve under your chairmanship, Mr Western; you were a wonderful shadow Minister, and it is fantastic to see you here today. I praise the hon. Member for Bath (Wera Hobhouse) for securing this debate. Hon. Members will rarely hear me heap praise on another political party, but at the risk of sounding as if I am working cross-party, I commend her for her excellent points.
I do not think any of us can argue with some of the points highlighting the exorbitant cost of electricity bills here in the UK, and I find the regressive levies on electricity bills quite shocking. I thought the hon. Member’s innovative and positive policy solutions for reducing the cost of electricity bills were a welcome breath of fresh air; I hope that we can have further debates to bring forward those important points. I am more on the side of scrapping the levy, but I think we could come to a compromise about how to move forward.
Many Liberal Democrat Members brought up the importance of community-owned energy schemes, and I advocate for Marlow community energy. It is important that hon. Members on both sides of the House are advocating for community energy schemes; that theme ran through most hon. Members’ contributions and is an important aspect of energy to take forward.
It was wonderful to hear contributions from the hon. Member for Horsham (John Milne) about the great Horsham energy scheme and from the hon. Member for West Dorset (Edward Morello) with his expertise in energy. It is always welcome when people bring their professional expertise to the House.
We have also heard about the challenges in the highlands; I am sure that the Minister will be able to give further explanation about the plans and challenges for the highlands. Although they are producing renewable energy, and will probably produce even more, it will be interesting to see what capacity they will have.
Of course, I would be remiss if I did not comment on the wonderful hon. Member for Strangford (Jim Shannon) and everything that he contributes to this House—his wonderful contributions and his praise for Members across parties, not only in this debate, but in every single Adjournment debate. We are lucky to have such a wonderful and hard-working Member.
The cost of energy affects every aspect of our economy; few things are more important for our economic success than the cost of energy. It affects the global competitiveness of our industries and therefore the number of jobs and our constituents’ energy bills. The new Labour Government promised to cut energy bills by £300 by 2030—we are still looking forward to that—to create 650,000 jobs from the £8 billion that they are taking off taxpayers for Great British Energy, and to launch the era of clean, cheap, home-grown power. After more than six months in Government, however, it is clear that they will make energy more expensive, with bills going up, not down, and that they risk shutting down swathes of British industry, with jobs lost to more polluting countries. In short, their energy plans will result in lower growth, fewer jobs, higher energy bills and more carbon in the atmosphere.
We are constantly told by Ministers that renewables like wind and sun are the cheapest sources of energy, but that does not take account of the huge hidden costs of increased reliance on renewables. Again, I thank the hon. Member for Bath for bringing the important aspect of renewables to the forefront of the debate. Industry has already warned that trying to quickly produce a record amount of renewable capacity to meet the Government’s 2030 target will push up the price and cost to consumers. The cost also depends on the generating capacity that we need to have in the background to kick in to keep the lights on when the wind does not blow and the sun does not shine.
Luke Murphy (Basingstoke) (Lab)
From what I am hearing, the hon. Member is making an anti-renewables, anti-action on climate change speech. She mentioned that electricity prices are some of the highest in Europe, but her party had been in government for 14 years when the Government inherited those high prices. Could you confirm on the record that you think it is the Conservative party’s position that all levies on bills to support renewables should be scrapped?
Matt Western (in the Chair)
Order. I remind hon. Members to refer to each other as “the hon. Member” as opposed to “you”.
Joy Morrissey
I welcome the hon. Member’s contribution. It is wonderful to hear his commitment to the climate change emergency. We need to move forward as a country to make sure that our energy costs remain low. We did not commit to a £300 reduction in energy prices, nor did we commit to scrapping the winter fuel payment for pensioners. We went into the election without making those promises. I am simply holding the Government to account right now.
Luke Murphy
We are not talking about what was committed to in the manifestos. My question was about what the hon. Member said a few minutes ago, that she is committed to removing all the levies on bills related to renewables. Could she repeat that pledge?
Joy Morrissey
The hon. Member makes a wonderful point. Personally, I feel very strongly about this, and the glory of being in opposition is that I can hold the Government to account. I can have also a Backbench Business debate or an Adjournment debate of my choosing about my own passion projects. Not to digress, but if the hon. Member looks at the Water (Special Measures) Bill, he will see my passion project flourishing. I do not want to detract from this wonderful debate, but what I am saying is that we can find a cross-party solution to many of these issues. We want to be positive about the UK and its future.
Wera Hobhouse
I, too, would like some clarification from the Opposition. Is the hon. Member saying that renewable energy is a solution to lower energy bills and gets us to net zero, but that we do not really want it because it is too expensive? I was not quite clear whether her argument was for or against renewable energy. Could she clarify that?
Joy Morrissey
The hon. Lady makes an excellent point. The Conservatives have an excellent track record of putting in renewables. We were the first to bring in the coal-free plan to tackle energy, so that is an important way of moving forward. I would like to continue moving forward with cheaper energy bills to make sure that we protect our energy security while ensuring that costs are low for both the consumer and industry.
Sir John Hayes (South Holland and The Deepings) (Con)
I apologise for arriving at the debate rather late, Mr Western. Needless to say, as a former Energy Minister, I take an interest in these matters. Anyone who shares that interest will understand that we need a mix of energy between renewables and non-renewables. Renewable energy has to be tested on the basis of whether it is cost-effective. Some renewables are and some are not; it is as simple as that.
Joy Morrissey
My right hon. Friend makes an excellent point. Some renewables are cost-effective and some are not; and some are a lot less energy-dense than gas or nuclear.
Edward Morello
I am struggling with the argument of renewable energy not being cost-effective. For the cost of the amount of generation that Hinkley C would deliver, we could deliver twice as much renewable energy generation. The strike price for offshore wind is far below any other source of electricity. So I am at a loss—across every single form of renewable energy, the generation price is below that of fossil fuels.
The hon. Lady talks about the previous Government being at the forefront of renewable energy generation, when they signed off new drilling licences for North sea oil. I feel I am living in cloud cuckoo land. There is no connection between what she is saying and the reality of market forces. Ask any wholesale energy price provider what their strike price is for renewables, and they will say that it is lower than for fossil fuels.
Joy Morrissey
I thank the hon. Member for his intervention. I ask that I be allowed to make progress in my speech, during which I will address many of the excellent points he raised. Let me go back to my earlier point about density and some renewables being more affordable than others. For example, acres of agricultural land need to be covered with solar panels to produce a fraction of the power that could be generated by gas power plants or small nuclear reactors.
The time has come to have a much more sensible and serious conversation about the true cost of renewable-based systems, not just repeating again and again that renewables are the cheapest form of energy. That is why the previous Secretary of State, my right hon. Friend the Member for East Surrey (Claire Coutinho), asked the Department to produce a full-system cost of renewable-based systems. If we are intent on decarbonising the entire grid by 2030, as the Government want, we must have a detailed assessment of what it will cost, and what it will do to our constituents’ energy bills and our already high industrial energy prices. Since taking office, however, the current Secretary of State has scrapped that work. He is rushing headlong into renewable-based systems, without any idea of what it will cost the country and the economy.
There is also the issue of trust—trust for consumers and for those in industry. Throughout the general election campaign, the Prime Minister, the Chancellor, the Secretary of State and around 50 Labour MPs promised across the country to cut energy bills by £300. As soon as they got into Government, they refused to commit to that promise. Even worse, they decided to take the same amount from millions of pensioners in poverty. It is difficult to think of a bigger betrayal committed by an incoming Government.
Six months on, Labour voted against an amendment to make the Government accountable for that promise through Great British Energy—their energy company that is not going to generate a single watt of energy. The new chair of that company says that it is not even within its remit to cut bills by £300. Labour cannot spend weeks and months repeating such an explicit, clear and simple promise only to row back on it the second it gets into Government. Perhaps the Minister would like to tell constituents in Beaconsfield and across the country when they can expect to see £300 off their energy bills, and how much their bills will increase to in the meantime.
It is not just households that are worried about the cost of energy, but industry too. The same energy-intensive industries that wrote to the Government to raise concerns about their plans to hike the carbon price to the highest rate in the world also share the despair at the UK having among the highest industrial electricity prices in the world. In fact, the Department’s data shows that we now have the highest industrial energy prices in the world, well above the International Energy Agency and EU average.
More than anything, our heavy and manufacturing industries need cheap energy. They need stable and reliable energy, which does not rely on the whims of the weather. As with the shutting down of the UK oil and gas industry, seeing British industry move overseas will not change demand. It just means that domestic production—with all the tax revenue, British jobs and the investment that it brings—will be replaced by higher-carbon imports from abroad. Ministers say that decarbonisation cannot mean de-industrialisation, but if our industries, which are the hardest to decarbonise, cannot cope with the high cost of energy and therefore move abroad, that will be a disaster for our economy, devastating for our workers and their families, and will do nothing to reduce global emissions.
Ministers say that they want us to be global leaders. They want us to convince other countries to decarbonise, which is a noble goal. Climate change is a global issue, and there is no sense in our going it alone to cut our emissions when we produce fewer than 1% of global emissions. That is exactly why the Government need to change tack and stop our industrial energy prices rising any further. Countries around the world, which care deeply about holding on to their industrial and manufacturing base, are looking to the UK and other western nations to see what happens next. If they look at us and see industries being gutted by a misguided energy policy and see our people suffering from higher and higher energy bills, they will not want to follow us down the path to decarbonisation. We will be a warning, not an example, to the rest of the world.
Our ceramics, automotive, cement, steel, minerals, glass, aluminium and chemical industries need, above all else, cheap energy. I urge the Minister to talk to those businesses that are struggling with high energy costs and ask them what a carbon price of £147 per tonne of CO2 would do to their businesses. The Minister might not like the answer, but the Government need to face the consequences of their policies.
The Government should be asking what arrangements will give us the cheapest, most reliable energy and how we get there. Instead, they are determined to decarbonise the grid by 2030 at any cost to meet a political target, even if that sends people’s bills through the roof, offshores our emissions to polluting countries and leaves us at the mercy of Chinese imports. When facing the electorate at the next election, they will not be able to say that they were not warned.
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Michael Shanks)
Good morning; it is a pleasure to speak in this debate under your chairmanship, Mr Western. May I thank the hon. Member for Bath (Wera Hobhouse) for securing this debate and, actually, for all our engagements over the past seven months? She always helpfully challenges the Government from a place of real passion and commitment, and I appreciate her words of wisdom, even if I do not always entirely agree with them. In fact, we have had countless debates on energy policy with a number of people in this room—it is beginning to become a bit of a weekly club here in Westminster Hall—and I appreciate all the points that have been raised.
May I say to the hon. Member for Strangford (Jim Shannon) that I just cannot get enough of his contributions? Having not spent enough time in the Commons yesterday, we are back again today, but I am appreciative none the less. I will come to his points about Northern Ireland later.
I will start where the hon. Member for Bath started: on the public’s view about the cost of energy. She made an important point about how central energy costs are not just to the cost of living crisis that our constituents are still living through, but to their belief in the Government’s ability to change things, so it is important that we tackle these issues. As the hon. Member for Beaconsfield (Joy Morrissey) rightly said, this Government were elected on a manifesto that contained pledges on energy. I am privileged to have the job of Energy Minister, because for the first time in a very long time we have a Government with a key mission to fix the energy system in this country. The truth is that it needs to be fixed because of what we inherited from the previous Government.
The energy crisis in 2022 was just the peak that highlighted how vulnerable we are to the rollercoaster of the fossil fuel markets. The cost of energy continues to have a devastating impact on our constituents and communities right across the country. Although consumers are protected to a certain degree by the energy price cap, our energy costs are determined by volatile markets outwith our control. As long as we remain exposed to that, the risk to our constituents is that we will face yet another price spike in the future.
My hon. Friend the Member for Northampton South (Mike Reader) made the point well that after 14 years of Conservative Government, we have to not just turn around one bit of the energy system, but deal with the whole series of occasions on which the previous Government failed to make decisions that would grapple with the scale of the problem. That is why I announced yesterday in the main Chamber our transitional support for Drax and biomass. The truth is that we got a good deal for consumers and for sustainability, but we had to make that decision. We had no other options because the previous Government left us with no long-term plan for energy security.
That is why we believe so firmly in our clean power by 2030 mission, which, by creating home-grown renewable energy, will help us to reduce our dependence on volatile fuel markets and will protect bill payers for good. Great British Energy will play a vital role in that mission by accelerating our deployment of clean energy so that Britain can become a clean energy superpower. Crucially, it will also invest in the supply chains that bring manufacturing jobs for renewable energy to our country.
Sir John Hayes
I understand the Minister’s desire to create more economic resilience by ensuring energy independence. By the way, I should refer Members to my entry in the Register of Members’ Financial Interests in respect of this contribution and the previous one. The key thing is transmission and distribution costs, which make up 15% of every energy bill. No Government have looked at that seriously. If we distribute energy production to small solar plants spread right across the kingdom, we will maximise the costs and damage the resilience that the Minister seeks. Will he focus on the concentration of energy production and bring it as close to consumption as possible?
Michael Shanks
I will come to the right hon. Gentleman’s point about transmission costs later, because it is important, particularly when it comes to how we grapple with constraint costs. The truth is that we will have to build more network infrastructure. I hope he will support the construction of that, although I suspect he will not. We also want to review energy market reforms to look at how we deal with some of these issues. I will come back to the important point, which a number of hon. Members raised, of how we build an energy system for the future. The question of balance is key. We do not want a renewables-only system, although renewables will be incredibly important. We announced last week our commitment to rolling out much more nuclear to provide the baseload and the security of supply. We have the ability to place small modular reactors across the country near centres of demand, such as the data centres that we will see in the future.
Edward Morello
The hon. Member for Beaconsfield (Joy Morrissey), representing the former Government, tried to mischaracterise the need to upgrade the grid as a cost of renewables, but does the Minister agree that we need to upgrade the grid regardless of what technology we use? We lose 10% of the energy we generate through transmission. It is an old grid and, regardless of the technology we use, we need to upgrade it.
Michael Shanks
The hon. Gentleman makes a very good point. Upgrading the grid is important for transmitting the clean power that we want to generate in the future, but it is already 50 or 60 years old, and it is creaking under the pressures it has operated under for a very long time.
There is real need to upgrade the grid right across the country. The truth is that the previous Government recognised that that was important. They launched the idea of the great grid upgrade before we did, but they are now running away from a lot of that. That is hugely disappointing, but it will not get in the way of our moving forward to make sure that we build the grid of the future. Yes, we need to meet the demand for now, but we know that by 2050 electricity demand is likely to double in this country. If we do not build the infrastructure now, it will be the weakest part of our economic strategy in the future. It is essential we build it now, but we want to bring communities with us.
Wera Hobhouse
Is it not also true that although we need to upgrade an old grid, the challenge of the future is a decentralised energy system, and that that is so often misunderstood? We had big power stations; now we have decentralised and smaller energy providers. That is a big challenge that we all have to recognise rather than criticising a particular Government—as tempting as it is to just criticise the Government of the day.
Michael Shanks
Never will it be said that I enjoy criticising the former Government.
I would flip what the hon. Member for Bath says on its head: that change also presents a real opportunity to look at the electricity system in a different way—I will come back to that point, particularly on community energy. It is right to say that the days of big cities with power stations right next to them are long gone, so we need to think of a different way to build our transmission system into the future.
On Clean Power 2030, advice from the National Energy System Operator said that the clean power system can be cheaper than today’s system for consumers. Contrary to what some Members have said, we know that renewables are by far the cheapest to run. There is a cost to building them, but there is also a huge cost to building new gas or nuclear power stations that is often not factored into the debate. Renewables come at a cost but are then incredibly cheap to operate on our system.
The hon. Member for Epsom and Ewell (Helen Maguire) spoke very passionately about climate change. That is really important. The mission we are on is about building an energy system for the future that gives us energy security, but it is also about tackling the climate crisis, which we can no longer think of as a future threat. As we look around the world, we can see from just this year alone that it is a present reality. It is increasingly difficult to read the statistics and not think that we should be taking more decisive action.
I gently say to the hon. Lady, as she prods this Government for not going fast enough, that in seven months we have launched the Clean Power 2030 mission, lifted the onshore wind ban in England—which was an absurd policy—and approved more solar than the previous Government did. We have had the biggest renewables auction in history, with 131 projects, we have created the pathway to clean power by 2030 and have already delivered record investment in the supply chains that will deliver some of the infrastructure upgrades we need, including £1 billion by ScottishPower. We launched the solar taskforce and the onshore wind industry taskforce. We are also looking at the Offshore Wind Industry Council and how it can deliver more. I am not sure we could move much faster, but if the hon. Lady has some suggestions, I am happy to take them on board.
Finally, on the point about the rooftop solar revolution, we agree that it needs to be not an either/or, but both. We will need ground-mounted solar, which plays a really important part, but we have rooftops right across the country—in car parks, warehouses and industrial units—that we should be covering in solar panels wherever we possibly can. We will do much more on that. We reconvened the solar taskforce, which the previous Government ran, to try and increase the ambition, and it will report in due course.
Jamie Stone
To return to my earlier intervention about the switch-off of the radio signal, on infrastructure, does the Minister agree that the data communication company must be exhorted and encouraged in every possible way to get on with the roll-out? Otherwise, people who are very vulnerable will pay more for their electricity.
Michael Shanks
I had a segue planned in my speech that was going to get me to the hon. Gentleman’s point, but he pre-empted me, and he is quite right to do so. He is right. This is a real challenge. The switch-off is the right thing for us to do in the long term—I think that everyone agrees that as a system that is outdated—but we do need to be absolutely certain that no one is left behind.
The Minister responsible for energy consumers, my hon. Friend the Member for Peckham (Miatta Fahnbulleh), has already had a number of meetings with Ofgem and with industry to make sure we speed up the roll-out. The service ends in June, as the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) said, and the taskforce that has been put in place to roll it out is now moving at pace. I think it is fair to say that it should have been moving faster up to this point, but they are very aware of the issues and we will keep that under review; it is of course essential that people are not left behind when the signal is switched off.
Moving on to short-term support, we recognise that by 2030 the clean power system will be crucial to bringing down bills in the long term, and to protecting consumers from the price spikes that we have faced in recent years. However, short-term support is important for households that are struggling with their bills while we are in that transition. That is why the Government continue to deliver the warm home discount, which gives a £150 rebate off energy bills for all eligible low-income households, and it is expected to support 3 million households across the country this winter.
The Minster for energy consumers has worked with energy suppliers to agree a £500 million industry support commitment to help specific customers who are struggling this winter. We also extended the household support fund until March 2026 with an extra £742 million, with additional funding for the devolved Governments as fuel poverty is devolved through the Barnett formula.
A number of hon. Members raised the question of a social tariff. My hon. Friend the Member for Northampton South made a passionate case for it, and we are looking at what bill support could look like in the future, including the possibility of a social tariff. I acknowledge that there is a broad consensus on the idea of a social tariff. The challenge is that it means different things to different people. One of the challenges that we are grappling with is how we define a social tariff, and how we can reach, in a very targeted way, the people who need it the most.
Part of that is the issue of data sharing, which a number of hon. Members have raised—that is, how we bring together the information that the Government have about the individual people who could most benefit from such a scheme. The Minster for energy consumers is leading that work, alongside industry bodies such as Energy UK and stakeholders. They are looking at how we can improve affordability and accessibility, and they are working with the Department for Work and Pensions on how we might be able to share some of the data that it has.
The question about levies has been raised by a number of hon. Members, and I think the Conservative party is now pledging to abolish levies entirely. It is an incredibly complex subject, but it is something that we want to grapple with, and we need to be very mindful.
I return to the point made by the hon. Member for Bath at the beginning of the debate. While the wholesale price will come down as we put more renewables on to the system, and as we squeeze off gas as the marginal price, if bills do not come down because levies remain high, people will not see the benefit. It is really important to bring communities with us. The truth is, it is a complex issue. I am not going to stand here and say that we can just abolish levies, or that we can just transfer them entirely on to taxation. Neither option is possible in completion, but we are considering how we look at the future of levies, and we are open to suggestions from all parties on how we do that.
On the point about rebalancing—how we move electricity costs, in particular, on to gas—that is also a challenge. We want the number of people who use gas to decline in the coming years, as we decarbonise. The challenge will be making sure that we do not put charges on to a dwindling number of customers. Potentially and inadvertently, some of the poorest people in the country might be those who are the last to convert from gas to alternatives. I do not, for a second, dismiss the points that have been raised; they are incredibly important. However, I want to be very clear that we are working relentlessly in this Parliament on how we reduce the wholesale costs, and we want to make sure that it follows through on to consumers’ bills.
Related to that, of course, is the point about standing charges on bills, which, as many hon. Members hear from constituents, seem to be such an unfairness because they are not based on consumption or on particular customers’ circumstances. We are committed to looking at the future of standing charges. In December, Ofgem provided an update on reform. It included quite a radical proposal for introducing a new zero standing charge option under the energy price cap, which would give consumers greater choice in how they pay for their energy bills. It is for Ofgem now to consult on that proposal, which it will do this year. The driving force behind that will be making sure that any reforms are fair to all customers.
To underline that this is not straightforward and we cannot just simply abolish levies, I note that there would be unintended consequences if we were to transfer some of the costs on to other people. We could inadvertently find ourselves raising bills for some people without that being the policy intent. We are committed to reforming standing charges, but we want to do it in a way that is fair.
Mr MacDonald
Would the Minister spare a minute to talk about community benefits?
Michael Shanks
I was not expecting the hon. Gentleman to stop at that point. I saw him in his place earlier and knew that I would talk about community benefits. I will turn now to the points about community energy and community benefits; both are important.
On community benefits, in all of this, we want to bring communities with us on this journey. That is important. We have made a very clear case that this Government intend to build the energy infrastructure we need, the transmission infrastructure we need, the homes that people need and the industry that people need to grow our economy, which is important. For far too long, this country has not built the infrastructure it needs. In doing so, we want to streamline the planning process so that applications are dealt with far more efficiently and far faster, but we want to bring communities with us. That is absolutely vital.
We will be saying much more very soon about community benefits on several fronts. The first will be how we expand some of the community benefits for particular technologies. That process is already well established in Scotland, for example with onshore wind. The absurd policy of the onshore wind ban in England means that it has not developed as much, but we can look to Wales and to Scotland for advice on that. We also want to expand that to other technologies, particularly solar, which does not have the same community benefits at the moment, and to network infrastructure. I have always said that, if we build network infrastructure and a community is hosting that infrastructure that is essential for the country, it is doing a favour for the rest of the country and should feel some benefit from it. We will announce a package of community benefits shortly.
On the wider point about community infrastructure, we do not only want communities to benefit—we want them to actually own the infrastructure that gives social and economic benefits as well.
Michael Shanks
I will not, because I am going to come to the point made by the hon. Member. He has made the point about a highland pricing formula in the past—he is very reasonable about the issue—and it is something we will look at. The reform to the energy market will be part of that work as well. I am afraid I do not have time to come to much detail on mitigations on radar, apart from saying that we recognise the problem and we are working on it.
As always, this has been an incredibly useful debate. The passion from hon. Members is important, because this is one of the most important challenges facing our communities. We are committed to ensuring that energy is affordable for households across the country. Our clean power mission will help us deliver on that, but we have much more to do and we recognise that fact. We will work with Members from all parties, with industry and consumer groups, with charities and with individual constituents who raise these issues to make sure that we support everyone with this transition, to bring down bills in the long term and to support families with their energy costs.
Wera Hobhouse
I thank the Backbench Business Committee again for granting this debate, which has been very lively and engaged, and good-natured, despite some disagreements—but where would we be, if we all agreed? We would not need to debate.
I am grateful to everybody for their contributions and for the points that have been raised, and to the Minister for engaging very constructively on those points and concerns.
The bottom line is that energy costs and energy prices are too high for all our constituents and businesses. It benefits us all if we bring them down, not just to get to net zero and to bring costs down for consumers, but for the general prosperity of this country. Where will we be if we cannot make the costs at which we produce things and warm our homes and so on lower than they currently are? This is the beginning of a debate and there is much more to do. I thank the Minister and all Members for their constructive contributions; I am sure we will be here again soon.
Question put and agreed to.
Resolved,
That this House has considered the cost of energy.