Energy Costs in Wales

Debate between Jonathan Edwards and Alun Cairns

Tuesday 11th October 2022 Westminster Hall

[Alun Cairns]

I will respond to some of the points that have been made, but we need to recognise that the absolute cause of the challenge is the war in Ukraine and Putin’s aggression. Anyone who seeks to weaponise the increase in energy prices for political ends is undermining the war effort and Ukraine’s right to defend its nation. It is a serious issue, but that does not mean that we do not need to react.

The Government are reacting. We need to recognise some of the things they are doing and congratulate them, but there will be other areas where we want to press for further support. That is an intelligent way to pursue a debate, rather than saying that everything politicians in Cardiff Bay are doing is right and everything those in Whitehall are doing is wrong. That is simply not credible and it is not the case. I am disappointed that the war in Ukraine is being weaponised in this way.

Just weeks ago, we saw the explosions at Nord Stream 1 and Nord Stream 2, which were clearly attacks, although we have no certainty about the reasons for them or their source. They have had an impact on supplies across Europe, but thankfully supplies to the UK do not come from Nord Stream 1 and Nord Stream 2, and are therefore much more secure. I underline my interest as chairman of the all-party parliamentary group for energy security. It would be helpful for us all to recognise that energy is traded at a multi-national, if not a global, level. That is part of the complexity of the situation, rather than the simplicity that has been described.

Constituents want to know exactly what support they will get. Everyone will get a grant of £400 in addition to a council tax rebate of £150 for properties in bands A to D. There are also additional payments, including a cost of living payment of £650 for benefit claimants, a one-off payment of £300 for pensioners for heating, and a disability cost of living payment of £150. Those payments will alleviate the situation and make sure that some people are able to keep the fires burning. They may have formed the impression that they could end up in an extremely unfortunate situation, but they may well be able to avoid that, depending on their individual circumstances.

The energy price guarantee announced a couple of weeks ago is an extremely welcome measure, and it would be helpful for the Opposition to recognise that. I press the hon. Member for Cardiff North to acknowledge that it is the most generous package that has been offered across Europe. I am happy to be corrected if the hon. Lady wishes to intervene, but independent sources say it is the most generous package in Europe, which means that people in similar circumstances in Europe will find themselves worse off. I am not saying that is a good thing; it is not a good thing. More needs to be done to support everyone—not only across Europe, but well beyond—because the conflict in Ukraine has created a global challenge.

The energy consumption of an average property will cost £2,500. There is a lot of misunderstanding about that. People will pay depending on their energy consumption and that figure is an average cost, which is provided as a guide. It is a significant increase, but lower than it would otherwise have been without the energy price guarantee, and the additional payments will support people and allow them to cope with those increases.

I find it difficult to believe that everything the Welsh Government are doing is right and everything Whitehall is doing is wrong. On the one hand, the hon. Member for Cardiff North claimed that people were living in cold, damp and uninsulated homes—and many are and we need to recognise that—but then seemed to champion the insulating programme and schemes that the Welsh Government have been pursuing. It cannot be one or the other; we must recognise that it is a complex situation and that people are finding themselves in difficult circumstances.

I find it difficult that the wider public debate makes such an issue of a public information campaign. This debate could serve as a public information campaign in itself if it were conducted in a reasonable and intelligent way. We need to recognise that this issue is rightly dominating the news and people should be able to interpret that large increases in energy prices will mean consumption needs to be managed to prevent cost of living challenges. In addition, information is being made available by the Energy Saving Trust, Ofgem and so many other agencies and charitable organisations. I would much prefer that the money that would have been spent on a public information campaign is spent on supporting people to reduce their bills, rather than on duplicating and repeating what we could do and what is available freely on the internet.

I ask the Minister for guidance on two points. I have already highlighted the domestic levels of support that are available, and they are significant, but we need further clarity on park homes. It is not clear how they will be able to benefit, because of how their meters work compared with others. I recognise that this is the first day that Parliament is sitting and therefore it has not been easy to communicate all the messages that need to be communicated, but there are a number of park homes in my constituency and across the whole of the UK—Wales possibly has a disproportionate number of park homes—so further clarity would be helpful. Reassuring messages have been given, but it is helpful to have the mechanics of how it should work.

[Jonathan Edwards]

I am grateful that the right hon. Gentleman raised this point because I asked a written question on this issue and was referred to an answer to another Member. That answer was not particularly clear to me, so when my constituents ask me how they will receive the support I am unable to provide that answer. I am sure that, like me, the right hon. Gentleman would like the Minister to clarify that today.

[Alun Cairns]

I am grateful to the hon. Member for underlining that point. I recognise that it is a complex situation. There are so many facets, which is why, again, we need to have a reasonable debate to address these serious issues. Until now people in park homes will not have had much clarity from this debate, and I look to the Minister to provide it, but it is not a straightforward situation.

I seek greater clarity on the level of support and I press the Minister to look again at extending support for off-grid properties. Many residents in my constituency—I declare an interest as one of them—do not have the privileges or benefits of mains gas and therefore depend on either liquefied petroleum gas or oil. We need to recognise that there is a standard volatility in that marketplace, and off-grid properties may have benefited when oil prices were extremely low during the covid period, at less than $20 a barrel of oil—I ensured that I filled my tank up at that time—compared with the 85p, 86p or even 90p a litre that is available now. I was talking about $19 a barrel, but that was also 19p a litre at the time. It is now up to 90p per litre of oil, which people off-grid have to use, and LPG will have a similar volatility. I hope the Minister will give that greater consideration or at least provide some hope that there will be further support.

There is a final area of support to which I hope the Minister will be able to bring some clarity—not necessarily now, because it is quite a complex picture, but certainly by providing greater information or tables online. The Government website sets out examples of different sorts of businesses and how they will benefit, from the average corner shop or pub to larger organisations. It explains the types of approach and savings that they would make. I looked for specific examples of numbers to be provided according to the market rate. One grocery business in a rural area in my constituency was paying 21p per kWh; now, at the market rate, it is paying £1.26 per kWh. When a business seeks to negotiate through a broker for guarantees of the level of Government intervention and how much that will be, the broker makes the case—as do energy providers; I have spoken to some—that they do not know how much the Government discount is specifically until they accept the contract, as that is when they can confirm it. That does not seem to be the most reasonable position.

I am not saying the Government are to blame for that, but I suspect greater clarity over the numbers will help businesses in my constituency and elsewhere to understand what exactly the discount is. It is in the region of 40% in some cases, while it is less in others. It depends on use. Clarity is needed to provide scrutiny and ensure the most understanding. Although the discount is 40%, if someone happens to have come off a fixed-term contract and moved from 21p up to about 80p, that is still a significant increase.