Bulb Energy: Administration
Kwasi Kwarteng Excerpts(3 years ago)
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Edward Miliband (Doncaster North) (Lab)
(Urgent Question): To ask the Secretary of State for Business, Energy and Industrial Strategy if he will make a statement on Bulb Energy entering administration.
The Secretary of State for Business, Energy and Industrial Strategy (Kwasi Kwarteng)
As many people in the House will know, when energy suppliers leave the market, the regulator, Ofgem, runs a competitive supplier-of-last-resort process. Last week, Bulb informed the Government and Ofgem that it would be leaving the market. Ofgem has advised that the supplier-of-last-resort process is not viable for Bulb because of the size of its customer book. Ofgem has, with my consent, applied to the court to appoint energy administrators. If appointed by the court, the administrators will continue to operate Bulb under what is called the special administration regime, which is set out clearly in legislation.
We will update the House once the court has made its determination, but I wish to clarify a couple of points. First, a special administration regime is a temporary arrangement that provides an ultimate safety net to protect consumers and ensure continued supply. The special administration regime will keep bills at the lowest cost that it is reasonably practical to incur while ensuring that the market remains stable. The House should understand that we do not want the company to be in this temporary state for longer than is absolutely necessary. Supplies remain secure and credit balances will be protected. Finally, all domestic customers in Great Britain are, of course, protected by the energy price cap, which remains firmly in place.
Edward Miliband
It is right that the Secretary of State has been forced to come to the House: 18 companies have gone bust since he last came to the House in respect of this issue, in September, and reassured us that there was nothing to worry about.
I have a series of questions. First, what is the Secretary of State’s estimate of the scale of costs the taxpayer faces as a result of the Bulb bail-out? That was not clear from his statement, but this is a taxpayer bail-out and the public deserve to know. Will he level with people about the costs that bill payers are going to have to pick up from all the other companies that have failed since September? How much will bills increase as a result?
Secondly, we are now in a position in which companies have banked profits but losses stretching to hundreds of millions incurred by those same companies are being borne by taxpayers and bill payers. So many companies going bust in just two months—something not happening anywhere else in the world—points to a systemic failure of regulation. Firms took risky bets and were allowed to do so, and the Government and Ofgem significantly deregulated the conditions of operation in 2016. Will the Secretary of State now take responsibility for this clear failure of regulation? Does this not suggest that there needs to be a proper review of the regulation of the market?
Thirdly, there is a global dimension to gas price rises but the truth is that we are more exposed as a country because of failures on onshore wind, solar, energy efficiency and gas storage, which is just 2% of our annual demand compared with 25% in other countries. Will the Secretary of State admit that Government inaction over the past decade has left us more vulnerable?
Finally, on the cost-of-living crisis, with further energy price rises coming, why are the Government making the situation worse with cuts to universal credit, by raising national insurance and by refusing to bring some relief by cutting VAT on energy bills? With businesses being hit, too, where is the support that he indicated was coming more than a month ago for energy-intensive industries?
We have seen a failure of policy over a decade, a failure of regulation and the Government making the cost-of-living crisis worse. Is not the truth that this Government cannot be the answer to this energy crisis because it is their crisis? It is businesses and families who are paying the price.
Kwasi Kwarteng
On a point of fact, the number is actually 22 companies, not 18, and I refer back to that—[Interruption.] No, that is the figure. That shows the incredible resilience of the systems that we have in place. We have the supplier of last resort, which has worked very effectively, and, as I outlined in my statement, we also have the special administration regime, which was designed precisely to deal with situations such as the one we are now in.
On regulation, Ofgem has launched a review of the retail market and how it operates. I will be directly involved in that and will study it very closely.
The right hon. Gentleman talks about the global market and the situation we are in post covid; he and his party predicted record levels of unemployment and recession, and of course they were completely wrong—they were absolutely wrong. We are growing the economy stronger than any other country in the G7. We are also creating jobs and creating investment, so the right hon. Gentleman’s prophecies of doom were completely misplaced, and he is completely without any firm arguments over our response to what was a global pandemic.
John Redwood (Wokingham) (Con)
What action has the Secretary of State taken to ensure that, in future, there will be more UK domestic gas to replace unreliable and expensive imported gas, and what action is he taking to expand the capacity of our generating system for the days when the wind does not blow and the sun does not shine?
Kwasi Kwarteng
My right hon. Friend will know that this is the first Government in about 25 years or more who are firmly committed to nuclear power. He will understand that the Cabinet expenditure—the long-term commitment to nuclear power—will not necessarily bear fruit in a week or a month, but for the first time, we have made a very dramatic 100% commitment to increasing our nuclear capacity. That answers his point about security of supply overall.
In terms of gas, I am pleased to announce that I and the Minister of State, my right hon. Friend the Member for Chelsea and Fulham (Greg Hands), are driving the North sea transition deal. The key to that is transition—about trying to transition to net zero while securing jobs and security of supply from gas in the UK Continental Shelf. These are things of which we are apprised.
Alan Brown (Kilmarnock and Loudoun) (SNP)
In 2018, there were more than 70 companies in the energy retail sector, but now there are fewer than 30—a reduction of 60%. Bulb is the 23rd company to go bust since August, a statistic that, somehow, the Secretary of State seemed to be happy about when he was at the Dispatch Box earlier. When are this Government going to get a grip on what is now a cost of living crisis and an energy supply crisis? As energy bills soar, the Treasury gets extra VAT, extra income on fuel duty, and, on top of the £350 billion-worth of oil and gas revenues from Scotland that it gets to squander, an extra £1.1 billion more that it predicted this year alone, because gas prices have increased, so when will it reinvest some of that money to support consumers and the sector?
Bulb was the seventh largest company, with 1.7 million customers. What is the plan for coming out of special administration, because the Secretary of State has still not told us that? When EDF, Scottish Power, Octopus Energy, Utilita and Good Energy all say that they cannot afford new customers, what will happen with these customers? Can the energy companies actually refuse to take new customers, and what discussions is the Secretary of State having on that?
The Secretary of State says that the energy cap is here to stay, but what will be the effect on consumers in fuel poverty when the cap invariably goes up by £400 to £600 in April? It is a disgrace. The Government have allocated £1.7 billion of taxpayers’ money to develop Sizewell C to final investment stage. Why not invest that money in energy efficiency and renewable energy and do stuff that actually brings down energy bills, rather than committing consumers to a 10 to 15-year contract for nuclear and six years on top of that? When will they get a grip on energy policy as a whole?
Kwasi Kwarteng
This is where the hon. Gentleman and I disagree. We are firmly committed to nuclear power; he is against it. We can do two things: we can commit to renewables, as we are doing with our 10-point plan, and commit to 40 GW of offshore wind. I hope that he recognises that we are committed to tidal for the first time in many decades—that is something that he should appreciate. He should also remember that we have the warm home discount and lots of mitigations protecting the most vulnerable customers across the winter and in the next few months.
John Penrose (Weston-super-Mare) (Con)
I welcome the Secretary of State’s commitment to making sure that this temporary measure is indeed temporary, and I encourage him to make it as short as possible. I also welcome his commitment to the ongoing use of the price cap, but I urge him when the price cap legislation comes up for renewal in the next 12 months to think very carefully about reform in order to make the price cap much more fit for purpose. At the moment, it is not doing what we need it to do. We have companies going bust and an ongoing problem with the loyalty penalty, which was, after all, one of the key reasons for introducing it in the first place.
Kwasi Kwarteng
My hon. Friend will appreciate that Ofgem, as I alluded to in my statement, has already launched a consultation on precisely the issue of the retail price gap. It will be driving that forward and I am sure that his input will be welcome. We have had lots of mitigations to protect the most vulnerable consumers, but we clearly need to have a discussion about the retail market. Ofgem is leading that discussion and my Department is supporting a closer look at the retail market.
Jessica Morden (Newport East) (Lab)
The Secretary of State mentioned the particular arrangements for Bulb customers, but constituents who have been moved from other energy suppliers that have collapsed—there were 21 when I mentioned this issue at business questions last week—are now facing long delays in being set up with suppliers of last resort, so they do not know what their bills are going to be, they face accumulating debt and they may miss out on the warm home discount. What are the Government doing to address that?
Kwasi Kwarteng
I am happy to talk to the hon. Lady about specifics in her constituency. The supplier of last resort process was set up for precisely this process. Generally, it is working, and customers have been successfully transferred to new suppliers.
Bob Blackman (Harrow East) (Con)
I welcome my right hon. Friend’s attention to detail on this issue. One of the problems is that gas prices have dramatically increased across the world and we have to cope with that. What is he doing to ensure that we increase the supply of gas so that the market then reduces overall prices?
Kwasi Kwarteng
The House should understand that we have a security of supply. For example, in 2020, 50% of the gas was from the UK continental shelf, 30% was from Norway, 18% was essentially shipped and 2% came from interconnectors. That is a diversity and security of supply that other countries in the EU and on the continent frankly do not have. My hon. Friend will also appreciate that the supplier of last resort process and the energy price cap have protected consumers considerably through this difficult period.
Alex Sobel (Leeds North West) (Lab/Co-op)
Hundreds of my constituents have been in touch with me over the last few months as their energy suppliers have collapsed. As the Secretary of State said, 22 suppliers have now collapsed. We are moving back to an oligarchy of energy companies that are increasing their profits, while the supplier of last resort is socialising losses. What is he going to do to fix the broken energy market? This winter we are going to have a perfect storm of rising wholesale prices and collapsing companies. How is he going to resolve that, so that people do not end up in fuel poverty?
Kwasi Kwarteng
I do not agree with the hon. Gentleman’s characterisation; I do not think that we are going back to an oligopoly, as he said. I have always maintained that competition is essential in this market. As my hon. Friend the Member for Harrow East (Bob Blackman) alluded to, there has been a huge mismatch between the wholesale price and the retail price cap. The retail price cap is there to protect consumers, otherwise we would have seen a huge increase in consumer prices and the hon. Gentleman’s constituents would have been under even more pressure.
Craig Mackinlay (South Thanet) (Con)
I have been on something of an energy nomadic experience over the last few months. I started with Avro Energy a few months ago, but that went bankrupt and I was converted domestically to Bulb, and I am now in the support scheme within the space of three months. There was a 12% energy price rise at the last round, in August. Who knows what it will be in April next year? The policy of trying to sell ten pences for sixpence does not last very long. What we are going to see over this winter is the Treasury—that is, the taxpayer—making up the difference for these spot prices versus the reality of what energy is being sold for to domestic users. Will my right hon. Friend please see the vision that the only bridging energy supply, of which we have a lot domestically, is gas? We all want net zero sometimes, but it is not going to happen tomorrow; it is going to take a generation to get there. We have a domestic supply that can bring us the two key planks of energy: security of supply and affordability. Domestic users and the industry need that immediately.
Kwasi Kwarteng
I have two points in response to my hon. Friend. First, I am not embarrassed about the retail price cap. It has protected consumers effectively and we are proud to maintain it. On the security of gas, I could not agree with him more, but he should be addressing his comments to other Members of this House, who want essentially to shut down the UK continental shelf. We had a North sea transition deal precisely because we recognised that the transition would take a number of years.
Layla Moran (Oxford West and Abingdon) (LD)
The fact that another energy supplier has gone under is causing huge anxiety for constituents everywhere, who will be equally concerned that the supplier of last resort process has not worked in this case. Will the Secretary of State reassure them: how many other energy suppliers is he concerned about this winter and how many customers would that represent? If this process is not working, is he considering a Northern Rock-style energy company to take on customers of companies that have gone under, given that the process has not been working in this case?
Kwasi Kwarteng
As I have maintained, there are two forms of remedy to deal with this sort of situation: the supplier of last resort, and a special administrative regime. In the particular instance that is the subject of the urgent question, it was felt by Ofgem, not the Government, that the supplier of last resort mechanism was inappropriate, and we are therefore looking at the special administrative regime, as I said in my statement—but both the structures are working.
Mary Robinson (Cheadle) (Con)
This will be a worrying time for Bulb customers, who will be concerned not only about the continuity of their supply, but about the protection of the payments that they have already made. Many of my constituents were with Avro and have been in touch with me, concerned about whether the payments that they have made by direct debit will be translated into future payments. Will the Secretary of State give them some reassurance that their payments have been and will be protected?
Kwasi Kwarteng
I mentioned in my initial response to the urgent question that consumer balances will be protected throughout the process.
Chris Bryant (Rhondda) (Lab)
The Secretary of State keeps on saying that it is all working, but to be honest, it does not feel like it is. I do not think that I have ever seen such an example of Government complacency at the Dispatch Box as bad as this. The truth of the matter is that millions of people are worrying about what their bills are going to be, businesses are going to struggle and 22 companies have gone under. How on earth is that, “Yes, it’s all working perfectly”? Will he please answer one simple question, to which taxpayers will want to know the answer: how much is the Government bail-out going to be in the end?
Kwasi Kwarteng
I will answer the hon. Gentleman’s latter question. There is no Government bail-out; the poor, failing companies have not been bailed out—I want to reiterate that. If he knows anything about the energy market, he will know that over the last few years, six or seven companies have exited the market and were dealt with through the supplier of last resort process. The stresses of this particular gas price situation—which, I remind hon. and right hon. Members, quadrupled in the last six months—meant that there was more pressure this year, but the system and structure of the supplier of last resort process and the special administrative regime are working.
Mr Philip Hollobone (Kettering) (Con)
The Kettering parliamentary constituency generates enough renewable energy from wind and solar to power all 45,000 local homes, and is one of the greenest constituencies in the whole country. If we are to reduce our exposure to volatile international gas prices, is it not crucial that we do more to diversify our source of supply?
Kwasi Kwarteng
Absolutely. My hon. Friend will be happy to realise that that is exactly what we are doing through the 10-point plan, with commitments to offshore wind, solar power, nuclear power and other technologies. It is a huge imperative for us—and for me as Secretary of State—to ensure that we have a diversity of supply.
Peter Grant (Glenrothes) (SNP)
Bulb was the seventh largest energy supplier in the United Kingdom. How much bigger does a supplier have to be before it is too big to be allowed to fail? What are the Secretary of State and his Cabinet colleagues going to do to ensure that the cost of this market failure is not borne by ordinary families, who are already struggling to pay their fuel bills this winter?
Kwasi Kwarteng
The hon. Gentleman makes a point about Bulb. It was a very large company, which is precisely why the supplier of last resort was not felt to be an appropriate mechanism in this instance. [Interruption.] Hon. Members chunter from a sedentary position. The solution is the special administrative regime, which I outlined—I hope, clearly—in my initial statement.
Karl MᶜCartney (Lincoln) (Con)
My right hon. Friend the Secretary of State has made various references to nuclear power and it is great to hear that there is a mix and a commitment to nuclear power. How long is it since the latest round of commissioning of nuclear power stations that the last nuclear power station was commissioned and how many more are planned in the future?
Kwasi Kwarteng
Being a close student of the energy White Paper, as I am sure he is, my hon. Friend will know that we have had a commitment to invest in one more large-scale nuclear project before the end of the Parliament. He will also know that we have committed to small modular reactors. I was very pleased to go to Sheffield to make that announcement only last week. Nuclear is clearly a big part of our energy mix and will help us in the future.
Sammy Wilson (East Antrim) (DUP)
The Government’s headlong rush to net zero is already showing through in people’s fuel bills and levels of fuel poverty in the United Kingdom. Despite what the Secretary of State has said about licences to help through the transition period, we will still be reliant for 50% of our gas on outside sources, which does not give us energy security. At the same time, we have enough gas under the ground in the UK to keep us totally supplied for the whole country for 150 years, which could help the levelling-up agenda in the north-west of England, and help my constituents who currently find themselves at the end of a very expensive pipeline and are very vulnerable. Why are the Government not prepared to exploit the resources that we have to deal with fuel poverty and fuel security and to help the levelling-up agenda in poorer parts of England?
Kwasi Kwarteng
I do not apologise for the net zero agenda. We saw big strides at COP26. We could have gone further. That is an area in which we are showing leadership and that is something we should be proud of. On, as the right hon. Gentleman put it, exploiting gas resources, we looked at fracking. There were issues with regard to the Richter scale, earthquakes and that sort of thing. People objected to that and we imposed a moratorium. But I am very happy to discuss this issue with him if he wishes.
Alex Davies-Jones (Pontypridd) (Lab)
The UK Government are responsible for families facing a cost of living crisis due to the triple whammy of rising gas prices, looming tax rises and cuts to universal credit. Thankfully, in Wales, our Labour Government are providing an additional one-off cash payment of £100 for vulnerable households to support them in paying their fuel bills this winter. This Government are more concerned with bailing out energy companies like Bulb than supporting the most vulnerable. Will the Secretary of State do the right thing and follow Wales’s lead in supporting the most vulnerable in fuel poverty?
Kwasi Kwarteng
Supporting the most vulnerable is exactly what we are doing through the warm home discount and the extension to it. That is exactly why we have maintained the energy price cap, which many of the companies have protested against. We are always mindful to protect consumers and to protect the most vulnerable.
Alison Thewliss (Glasgow Central) (SNP)
The Federation of Small Businesses has found that 77% of Scottish businesses have seen an increase in their overheads since this time last year, and fuel costs make up a huge proportion of that. What assessment has the Secretary of State made of the likelihood of these costs being passed on to consumers, who are also paying higher prices at the tills because of inflation and Brexit?
Kwasi Kwarteng
One word that the hon. Lady did not mention was covid. As a consequence of covid, my right hon. Friend the Chancellor of the Exchequer has put £400 billion into the economy to support the very businesses that she refers to. Many, many of the businesses in Scotland have been supported by that.
Catherine West (Hornsey and Wood Green) (Lab)
Just since the Budget, several companies have gone under. Will the Secretary of State inject some urgency into this matter and look again at the suggestion, now that the Treasury has the freedom to do so, to lift the VAT burden both on households and on small businesses, so that we could have an immediate lift that will happen in this country regardless of what is happening to global prices?
Kwasi Kwarteng
The hon. Lady will appreciate that matters to do with taxation, VAT and all those things are subject to the Chancellor of the Exchequer’s departmental policy. She will also know that there is urgency about this. I speak to Ofgem every day. We monitor the market extremely closely. We are looking at how the supplier of last resort process is working—it is working reasonably well. As I have said, we are looking at the special administration regime with regard to Bulb.
Clive Efford (Eltham) (Lab)
This is not happening in other countries. If this is evidence of the system working, I would hate to see it if it was not working. The Government have ruled out any bail-out from the Treasury. Will the Secretary of State give the same undertaking that customers will not be forced to pay huge bills in order to pay for the Government’s failure of regulation?
Kwasi Kwarteng
I would like to point out that an energy price cap such as we have does not occur in other countries, so consumers here are being protected. Many of those who are actually bearing the brunt of this crisis are the very firms that, for whatever reason, have had to leave the market. The structure is working. It is protecting consumers, and companies that have fallen foul of these very high prices have been forced out of the market.
Innovation Loans
Kwasi Kwarteng Excerpts(3 years ago)
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The Secretary of State for Business, Energy and Industrial Strategy (Kwasi Kwarteng)
Innovation is central to tackling the largest challenges the world faces, from climate change to global pandemics. The UK must be in the vanguard of the response to these challenges. That is why the Government have placed innovation at the heart of our Plan for Growth including through our Innovation Strategy.
The UK has a long and illustrious history of world-leading innovation, from the industrial revolution to the vaccine development of the past year. Now we have left the EU, we can move even more quickly to respond to emerging challenges and global opportunities, and cement the UK’s position as a world leader in science, research and innovation. That is why the Government committed to public R&D spending reaching £22 billion in 2026-27. This represents the fastest ever sustained uplift in R&D funding, increasing R&D funding to £20 billion per annum by the end of the SR period, £5 billion more than 2021-22.
Following a successful extended pilot with businesses including those in clean growth tech, Innovate UK will deliver a new programme of £150 million in flexible, affordable and patient innovation loans over the next three years. Innovation loans will help SMEs to take their late-stage R&D, including in support of net zero, to commercial success so that they can grow and scale through innovation.
[HCWS408]
Oral Answers to Questions
Kwasi Kwarteng Excerpts(3 years ago)
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Stephen Metcalfe (South Basildon and East Thurrock) (Con)
The Secretary of State for Business, Energy and Industrial Strategy (Kwasi Kwarteng)
The “Life Sciences Vision” outlined our bold ambition to bring scientific excellence and the dynamism of industry together to solve the most pressing health challenges. I am delighted to say that since the strategy was published we have already launched a £200 million life sciences investment programme and established the life sciences scale-up taskforce.
Stephen Metcalfe
I welcome the record research and development settlement for my right hon. Friend’s Department that was delivered during the spending review, a good chunk of which will, I hope, support investment in health and life sciences. Does he agree that our world-class life sciences base has been and will be our defence against future pandemics? Will he comment on his Department’s plans to locate more life sciences manufacturing facilities in the UK, so that we are less reliant on a global supply chain?
Kwasi Kwarteng
I fully agree with my hon. Friend that world-class life sciences are vital, and I am pleased to confirm that we have already allocated £354 million in the spending review to strengthen the UK’s life sciences manufacturing base, with particular emphasis on preparing for future pandemics.
Darren Jones (Bristol North West) (Lab)
It has been reported that the Prime Minister is minded to split up the Secretary of State’s Department so that he can better deliver on the Department’s priorities. Does the Secretary of State agree on that?
Kwasi Kwarteng
I think it is absolutely vital that the net zero agenda—the climate change action agenda—is situated firmly in a Business Department, and I am delighted to head that Department.
Mark Logan (Bolton North East) (Con)
I have two questions for the Secretary of State. What role can life sciences play in the Advanced Research and Invention Agency? What role can Bolton play in ARIA?
Kwasi Kwarteng
My hon. Friend smuggled a leading question into his first question. He knows that ARIA is a key part of our strategy to become a science superpower, and he and I can discuss the role that Bolton will play in that exciting future.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
The “Life Sciences Vision” has dementia as its first mission. The Conservative manifesto committed to doubling research funding in a dementia moonshot, but the Budget ignored it. The UK Dementia Research Institute called this
“a major blow to UK neuroscientists racing to find cures for these devastating diseases”.
Alzheimer’s Research UK said that this
“lets down the nearly one million people in the UK affected by this devastating condition.”
So will the Secretary of State now set out a clear timetable for doubling dementia research funding, as Labour has? Or is the “Life Sciences Vision”, like the R&D road map, the industrial strategy, the innovation strategy, the grand challenges and Northern Powerhouse Rail, all talk and no action?
Kwasi Kwarteng
I completely refute the hon. Lady’s allegation that those things are all words. The innovation strategy is the first of its kind. It has been broadly welcomed across the sector, and she will know that dementia is one of the seven technologies in engineering and biology that we are pursuing in the innovation strategy.
Ian Levy (Blyth Valley) (Con)
Lia Nici (Great Grimsby) (Con)
The Secretary of State for Business, Energy and Industrial Strategy (Kwasi Kwarteng)
The Government recently announced £380 million for our world-leading offshore wind sector, which is boosting jobs and investment across the UK. My hon. Friend will know that the allocation round 4 opens in December, and we are very much looking forward to the bids in that round.
Ian Levy
The House has often heard me talk about Blyth Valley being at the heart of the green industrial revolution. Catapult, in the Port of Blyth, has tested the largest windmill blades in the world for years. We need to continue to be at the forefront of blade testing, to hold our No. 1 position on the global stage. Will my right hon. Friend agree to meet me and the management team from Catapult to make sure that we continue to lead in the race to a greener future?
Kwasi Kwarteng
I would be delighted to see my hon. Friend and the great people who are working on the Offshore Renewable Energy Catapult in Blyth. It is a fantastic development and the people working there will surely allow us to hit the 40 GW target for offshore wind in 2030.
Lia Nici
As the Secretary of State knows, Great Grimsby is the UK’s largest centre for offshore wind operations and maintenance. The £160 million announcement for floating offshore wind was very welcome. Does he believe that the time is right to increase our ambitions for that power supply to above 1 GW, which would increase investors’ confidence?
Kwasi Kwarteng
I am delighted to see my hon. Friend, who I accompanied in her constituency shortly after her stunning victory in 2019. She will know that I and the Department are fully committed to ensuring that we have increased ambitions. We are always looking to increase our ambitions.
Tim Farron (Westmorland and Lonsdale) (LD)
I welcome what the Secretary of State says about wind power—we are proud in Cumbria to be at the heart of offshore wind—but does that not contrast negatively with the Government still sitting on the fence about commissioning a new coalmine in west Cumbria? Given the incredibly disappointing outcome on coal from COP26, is this not a moment for the UK Government to take a lead and say that the coalmine will not open?
Kwasi Kwarteng
First, the hon. Gentleman will understand that the coalmine is a matter of an independent planning decision. Secondly, I completely deny his assertion that somehow COP26 was a failure. It was not. It was a great success, thanks to the COP26 President, my right hon. Friend the Member for Reading West (Alok Sharma). Huge commitments were made, which everyone is supporting.
Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
Tapadh leibh. Scotland’s offshore islands could produce as much energy each day as some EU countries are sending to the United Kingdom. When will we see contract for difference levels match interconnector requirements? The Secretary of State knows about this subject. Will that come soon, especially for the Hebrides? I say gently to him that, as he knows, probably no other country in Europe would be squandering this opportunity.
Kwasi Kwarteng
The hon. Gentleman knows that I am fully committed to remote island wind. In fact, when I was Energy Minister, I spearheaded the move to have a separate pot for renewable island wind. He lobbied successfully, and I am happy to speak to him about that at any time of his choosing.
Paul Howell (Sedgefield) (Con)
Does my right hon. Friend agree that the recent comprehensive spending review and Budget announcement shows that the Government are delivering an historic increase in R&D investment to build back better with a high skill and wage economy for all of the UK? That is very much reflected in NETPark in Sedgefield, which he had the pleasure of visiting recently.
Kwasi Kwarteng
I was delighted to see my hon. Friend in his constituency and to see the wonderful businesses that he is promoting. He will know that the CSR is fully committed to driving our science superpower status through unprecedented investment.
Darren Henry (Broxtowe) (Con)
The Secretary of State for Business, Energy and Industrial Strategy (Kwasi Kwarteng)
We are holding the largest ever contracts for difference round next month, as my hon. Friend is aware, and only last month we confirmed up to £160 million to support investment in the floating offshore wind industry.
Darren Henry
The Government have quite rightly taken action to accelerate uptake of electric vehicles by both subsidising those purchasing a new electric car and banning the sale of petrol and diesel vehicles from 2030. However, in my capacity as co-chair of the all-party midlands engine group, I recognise that vast areas of the midlands are insufficiently served with charging infrastructure. The Midlands Engine’s 10-point plan for green growth looks to tackle this issue. Will the Minister meet me to discuss how we can support the Midlands Engine Partnership, deliver greener transport, create jobs, and cut emissions?
Kwasi Kwarteng
I would be very happy to meet my hon. Friend and the Midlands Engine Partnership to discuss how we can decarbonise our economy. I know he does a fabulous jobs as co-chair of the APPG. I have always enjoyed my engagement not only with him but with the Midlands Engine Partnership.
Sammy Wilson (East Antrim) (DUP)
Does the Secretary of State at least accept that immediate environmental damage is being caused by the pursuit of renewable energy, with 13 million trees cut down in Scotland for wind farms, forests devastated across the world to produce ethanol for petrol, and Drax power station importing millions of tonnes of wood from America each year? Does he not accept that in an attempt to control the world’s climate, we are actually damaging the environment right now?
Kwasi Kwarteng
The right hon. Gentleman and I have exchanged differing views on this subject over many years now. What I do accept is that our drive—our push—for renewables is leading the world in pursuing a decarbonised economy.
Jacob Young (Redcar) (Con)
The Secretary of State is well aware that Teesside is the centre of the green industrial revolution. In building new renewable energy capacity, can he confirm that he is happy to visit Teesside to see our plans for linking that renewable energy with green hydrogen production to power our homes in Teesside?
Kwasi Kwarteng
Perhaps to the surprise of the House, I can confirm that I am always delighted to visit my hon. Friend. I have done so on many occasions and I look forward to doing so whenever he wants and whenever my diary permits.
Matthew Pennycook (Greenwich and Woolwich) (Lab)
In a speech last month to the Energy UK conference, the Secretary of State made the case for a decisive shift towards clean energy and away from what he termed “volatile fossil fuels”, on which he said
“we are still very dependent, perhaps too dependent”.
Will he therefore explain how a decision by the Government to permit Cambo, an oilfield whose anticipated lifespan would see it still producing oil four years before we are legally bound to reach net zero, would be anything other than fundamentally at odds with that vision?
Kwasi Kwarteng
The hon. Gentleman will understand that the licences under which Cambo was permitted were actually granted when his own party was in government. He will also appreciate that I have always said that there will be a transition. He and his Labour associates want to shut down the industry and cause mass unemployment among the 250,000 people in this country who work in the sector.
Paul Bristow (Peterborough) (Con)
Munira Wilson (Twickenham) (LD)
The Secretary of State for Business, Energy and Industrial Strategy (Kwasi Kwarteng)
We are decarbonising heat through the renewable heat incentive, with an estimated £1 billion this year, and we have announced the boiler upgrade scheme, the green heat network fund and the launch of the green gas support scheme later this month.
Munira Wilson
Zero carbon homes was a Liberal Democrat policy that the Tories scrapped after the coalition. That means we now need to retrofit a million new homes. Will the Secretary of State commit to a zero carbon homes standard once again for all new homes built in this country?
Kwasi Kwarteng
I am pleased to inform the hon. Lady that we have a heat and building strategy that sets out clear plans and clear ambitions for decarbonising heat, particularly sources of heat in buildings and in homes.
Robert Largan (High Peak) (Con)
Robert Largan (High Peak) (Con)
The Secretary of State for Business, Energy and Industrial Strategy (Kwasi Kwarteng)
First, I congratulate the COP26 President, my right hon. Friend the Member for Reading West (Alok Sharma), on his adept handling of the COP26 negotiations in Glasgow. My Department’s priority now is to turn all that ambition into concrete action. We will continue to attract private investment into green projects, and I am happy to announce that in recent weeks we have seen nearly £10 billion of new commitments at the Global Investment Summit, with £1 billion from SABIC on Teesside, and £230 million announced by Ford on Merseyside. We are getting on with the job of delivering a stronger economy for the UK.
Robert Largan
I have recently been contacted by Prisma Colour, another fantastic local business in High Peak that does really important work. Unfortunately, it has been hit by a more than doubling of its energy bills in recent months, which is simply not sustainable. I welcome what the Government are trying to do in the long run to ease supply pressures and help energy-intensive industries to bring down bills, but what can be done in the short term to help fantastic employers such as Prisma Colour?
Kwasi Kwarteng
I pay tribute to my hon. Friend for the excellent work he has done in a short time, representing his constituency. He knows that across Government we have regular conversations about how to help energy-intensive industries, and I would be happy to meet him and his constituents to discuss what we are doing.
Edward Miliband (Doncaster North) (Lab)
I join the Secretary of State in commending the COP26 President on the progress made at COP26, but we know much greater action is required, and it is the Secretary of State’s job to ensure that every part of our Government acts. There is an immediate test with the UK-Australia trade deal: yesterday, the Australian Government reaffirmed their 2030 target, which is consistent only with 4° of warming, and there are reports that our Government have allowed the watering down of temperature targets in that deal. Surely, if we are serious after Glasgow about not letting big emitters off the hook, the deal must be rewritten to enshrine in it a proper plan for Australia as well as the UK, including for 2030, to keep 1.5° alive.
Kwasi Kwarteng
The right hon. Gentleman is absolutely right: we have a duty to ensure that we put net zero at the centre in treaties and in our international obligations. Where I dispute with him is that the Australian deal does mention Paris climate ambitions and does commit to decarbonisation. Lastly, for the first time ever, the Australian Government have committed to net zero. That is a huge achievement, which I wish he would support and endorse.
Edward Miliband
The Secretary of State should not be defending the Australian Government’s 2030 target. It is he who said about the negotiations:
“There may have been an issue about specifically putting the 1.5° on the face of the negotiating mandate.”
It is time for the Government not only to talk tough, but to act tough, because we must put pressure on countries such as Australia. There is a clear pattern of behaviour here on climate. Too often, this Government face both ways: the Cumbria coal mine, the Cambo oil field, cutting overseas aid for the most vulnerable countries, cutting air passenger duty for domestic flights and failing to invest in green recovery at home. He is the man supposed to be in charge of ensuring the Government speak with one voice. Why does he think he is failing to do so? Is that the reason why people are calling for the COP26 President to take back control of energy and climate change?
Kwasi Kwarteng
The COP26 President did a marvellous job, and the person speaking with two voices is the right hon. Gentleman. On the one hand, he says COP was a great success, and then on the other hand, he is saying the Government have failed. It is inconsistent and it is implausible.
Simon Jupp (East Devon) (Con)
Gareth Thomas (Harrow West) (Lab/Co-op)
Kwasi Kwarteng
The hon. Gentleman will know, from his long experience in this House, that many of these issues relate to financial disclosure, which is obviously in the remit of my right hon. Friend the Chancellor. I am particularly interested in this deal. I think he is absolutely right that people who are shareholders and people who are customers have every right to transparent data, and I would very much support that.
Lee Anderson (Ashfield) (Con)
Kirsten Oswald (East Renfrewshire) (SNP)
Kwasi Kwarteng
I remind the hon. Lady that this Government are the first UK Government to commit to a North sea transition deal. That deal is a world first; it is leading the world and showing how we can decarbonise a historically very productive sector to drive new technology and new economic opportunity.
Dr Jamie Wallis (Bridgend) (Con)
Joanna Cherry (Edinburgh South West) (SNP)
As my hon. Friend the Member for East Renfrewshire (Kirsten Oswald) said, Scotland’s world-leading carbon capture and storage project at St Fergus was snubbed by the Government in favour of their pork-barrel interests in the red wall. Will the Secretary of State guarantee the Acorn team funding in the next round, or should we conclude that Scotland can only decarbonise with independence?
Kwasi Kwarteng
Again, I have to completely refute what the hon. and learned Lady says. The position is absolutely clear: Acorn was an excellent project and is on the reserve list, and I am looking forward to working with her constructively to make sure we land this very exciting project.
Jerome Mayhew (Broadland) (Con)
The sooner the offshore transmission network is constructed in the southern North sea, the better. It will save money for consumers and limit the damage to local communities and the environment. So will the Minister commit to restarting the previously planned consultation on a regulated asset base finance model for renewables and low-carbon energy-generating assets as soon as possible?
Peter Aldous (Waveney) (Con)
In Suffolk and Norfolk, investment in research and development is vital to making the most of the opportunities emerging in such sectors as low carbon and life sciences, as well as to tackling pockets of deprivation, particularly in coastal areas. It is thus concerning that, in the Budget Red Book, the east of England is coupled with London and the south-east as an area from which spending on R&D will be diverted and in which it will be discouraged. Will my right hon. Friend work with his colleagues across Government to ensure that this discrimination against Suffolk and Norfolk is removed and is not included in the levelling-up White Paper?
Kwasi Kwarteng
I pay tribute to the fantastic work that my hon. Friend has done representing his constituents over 11 and a half years. He will know that I personally, as a Minister, have always been committed to the east of England. I have visited him in Lowestoft, I have visited offshore wind projects, and I would be very happy to speak to him about how we can drive the R&D programme and how East Anglia and his constituents can benefit from the UK’s science superpower status.
Ian Paisley (North Antrim) (DUP)
Is it not the case that the most exciting industrial development in the UK at present is hydrogen production? Does the Secretary of State welcome the pioneering work by JCB, under Lord Bamford’s direction, along with the partnership with Queen’s University Belfast, to produce the first working hydrogen combustion engine, which has made the past the future? What support will the Secretary of State give to capitalise on that engineering excellence to ensure that British jobs and British tech flow from it?
Kwasi Kwarteng
The hon. Gentleman will be well aware that I am fully conscious and fully supportive of the great work that Mr Bamford and his colleagues are doing driving Wrightbus and driving the hydrogen economy. The hon. Gentleman may know that I am very shortly to visit to Northern Ireland to see that great work on the ground.
National Security and Investment Act 2021: Call-in Power
Kwasi Kwarteng Excerpts(3 years, 1 month ago)
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The Secretary of State for Business, Energy and Industrial Strategy (Kwasi Kwarteng)
The National Security and Investment Act 2021 protects the public from potential risks. It bolsters the UK’s status as an attractive place to invest by providing more efficient clearance processes for relevant acquisitions and more certainty and transparency for investors and businesses. It is a proportionate response to modern developments in international investment.
It will also ensure foreign direct investment projects can continue to boost jobs and stimulate the economy in every corner of the UK, as the vast majority of deals will be able to proceed without delay.
The Act provides for a call-in power which enables the Government to screen qualifying acquisitions for national security risks. In order to use the call-in power, the Secretary of State must—in accordance with section 3 of the Act—lay before Parliament, and publish, a statement on the expected use of the call-in power. This will provide clarity and certainty for businesses and investors on the circumstances in which national security risks are considered more likely to arise from qualifying acquisitions.
The Government consulted on a draft of the statement from 20 July to 30 August, in line with the commitment to consult given during parliamentary passage of the Act. I am grateful for the constructive responses which we received from businesses, investors, law firms and others.
I am today laying the statement before Parliament and publishing it alongside the Government’s response to the consultation. This fulfils the requirements of the Act and enables the call-in power to be used once the Act fully commences on 4 January 2022.
The statement should be read alongside other guidance documents which the Government have published about the NSI system, and further guidance will be published in the coming weeks.
I will place a copy of the Government response to the consultation on the draft statement for the purposes of section 3 in the Libraries of both Houses.
[HCWS368]
Income Tax (Charge)
Kwasi Kwarteng Excerpts(3 years, 1 month ago)
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The Secretary of State for Business, Energy and Industrial Strategy (Kwasi Kwarteng)
It is great to see you in the Chair again, Madam Deputy Speaker. I thank the right hon. Member for Doncaster North (Edward Miliband) for his congratulations on my becoming a father for the first time at the youthful age of—well, I will not say what my age is. I am pleased that that has happened.
I am also pleased to see the right hon. Member, in his usual way, give a comprehensive speech that lasted for nearly half an hour. The downside was that I had heard it all before. I was particularly gratified to see him at Prime Minister’s questions. It was great: a trip down memory lane. I remember being a humble Back Bencher, as he put it, when he did that same thing at PMQs. There was that same litany of doom and gloom, and it will prove no more effectual in 2021 than it did in 2015, when many of my hon. Friends were returned with enhanced majorities.
The Budget was an extremely successful occasion. It demonstrated clearly that there is continuing support for the economy. It demonstrated the immense, unusual and unprecedented interventions in the economy because of the dangers we faced from the global pandemic. The right hon. Member will remember that only a year ago people were prophesising that we would have record unemployment or early-1980s levels of unemployment. What happened? Because of the Chancellor’s interventions, well-crafted policy and the plan for growth, there was no employment disaster. Unemployment is very low by historical standards. The economy is growing faster than it has done for decades, and none other than the OECD says that the UK will be the fastest growing country among the G20 next year.
Catherine West
May I congratulate the Secretary of State on the happy news in his family? How many businesses does he think will go out of business this autumn because they owe the Government money from covid loans, cannot pay their energy costs and are worried about the weight that the increase in wages from the national minimum wage and national insurance contributions will put on their 12-month forecasts?
Kwasi Kwarteng
I thank the hon. Lady for her congratulations. However, I am surprised that she should express concern about the increase in the national living wage. I never thought I would live to see a Labour MP denigrate and decry that. We want to see a higher-wage, higher-productivity-based economy, and we are working hard to ensure that.
Ms Karen Buck (Westminster North) (Lab)
Will the Secretary of State give way?
Kwasi Kwarteng
Let me make some progress. To intervene so soon after an intervention is unusual. I will come back to the hon. Member.
During the pandemic, people and businesses have demonstrated remarkable levels of resilience. I fully agree with the right hon. Member for Doncaster North when he says that business has been heroic and people have been heroic. I am also immensely proud of the work done by the British Business Bank, for which my Department is responsible. Its schemes supported people and our economy to the tune of £80 billion, with Government-backed finance for 1.7 million businesses. That comes to the point made by the hon. Member for Hornsey and Wood Green (Catherine West). When it comes to the fundamentals of the economy, the Government are securing our economy and getting Britain back to work.
Contrary to all the prophecies of doom and gloom that recently came from Opposition Members, the Office for Budget Responsibility now expects our recovery to be quicker and the economy to return to its pre-covid level at the turn of this coming year. As the OECD and the International Monetary Fund show, there is considerable expectation that the UK will rebound strongly. In that context, our task turns to ensuring that our people and our businesses have ability and opportunity. They will not simply look back and complain about the situation that we have come through. They are positive and forward-looking. They believe in their country—unlike many Opposition Members, dare I say. We will achieve a strong rebound not by splashing cash indiscriminately as a number of Labour Chancellors did, dare I say, but by spending taxpayers’ money wisely to foster an environment that encourages innovation and growth.
I turn to the net zero agenda. I fully appreciate that many years ago the right hon. Member for Doncaster North was Secretary of State for Energy and Climate Change—I do not think I was in the House at that time—and I know that he shares the view that net zero is absolutely one of the most important strategic objectives of any Government.
Wera Hobhouse (Bath) (LD)
If the climate emergency really is the most important thing for the Government, why did the Budget not mention it once?
Kwasi Kwarteng
It did mention a huge amount of investment in the net zero agenda. The hon. Member should know by heart the Prime Minister’s 10-point plan, and that was 100% backed by yesterday’s Budget.
Anna McMorrin (Cardiff North) (Lab)
Will the Chancellor say in his speech at COP next week that, in his Budget, he made high-carbon domestic flights cheaper?
Kwasi Kwarteng
I gently suggest that the hon. Member looks at the work of the Jet Zero Council, which my right hon. Friend the Chancellor and I have been pushing. We want the UK to be the head of very low carbon emission flying. I am very enthusiastic about that. We will be leaders in that technology, and I do not think it makes sense simply to penalise and turn our backs on aviation. We should be trying to enhance aviation and decarbonise it, and that is exactly what we intend to do.
Rachael Maskell (York Central) (Lab/Co-op)
Will the Secretary of State give way?
Kwasi Kwarteng
I have to make progress. I know that hon. Members are springing up and down because they wish to make interventions, but I am sure they will be making speeches later in the debate.
We on the Government Benches understand what has sadly eluded the grasp of Opposition Members: we must create competition. We must back business and incentivise innovation in a free-market economy, not go back to a state-run, Soviet-style command economy.
The Labour party manifesto has been mentioned. I remember reading it. Like the right hon. Member for Doncaster North, I am somewhat of an insomniac—more so now, I dare say—so sometimes I have to read lots of these things. It said that we should get to net zero by 2030. As my hon. Friend the Member for Crewe and Nantwich (Dr Mullan) observed, even the unions that Labour is supposed to represent and that bankrolled it, rejected that proposal as completely unrealistic and destructive to our economy. That manifesto said not only that we should get to net zero by 2030, which is completely unrealistic, but that the state would own 51% of offshore wind farms. Imagine that. The right hon. Member for Hayes and Harlington (John McDonnell) said that, as Chancellor, he would nationalise 51% of offshore wind. I remember speaking to the industry, and it said, “Why on earth would we want to own 49% of what the right hon. Member for Hayes and Harlington owns 51%?” It was a completely absurd and unrealistic policy. On the green agenda and the net zero agenda, the Government have far more to offer the country than a souped-up, half-heated, Soviet-style approach to solving what is a fundamentally difficult problem.
For one year—so far—businesses in the retail, hospitality and leisure sectors will get a 50% discount on business rates. That is why my right hon. Friend the Chancellor decided that the business rates system should be more responsive and agile, with more frequent revaluations taking place every three years. That is a good, positive step that will give much more flexibility to the system.
I am also delighted to reflect on how the Budget told a great story about innovation. Innovation is a huge driver of productivity and progress, and unleashing innovation is a fundamental duty for my Department and for me as Secretary of State. We have launched Help to Grow, which will drive small and medium-sized enterprise productivity. We have also started a new co-investment venture capital fund that will be used to drive innovation and provide scale-up capital for businesses in need of that. The Budget confirms the eligibility criteria for our new scale-up visa, which all businesses I speak to, and small businesses in particular, say they need help in pursuing. We will unlock greater private sector innovation. We are reforming research and development tax reliefs to support modern research methods and to focus our minds specifically on the problem and challenge of innovation. Increasing R&D investment to £22 billion will confirm the UK as a science and technology superpower. We must make sure our small businesses, which after all are the heart of the British economy, have the support they need, which is why my right hon. Friend the Chancellor strengthened the British Business Bank in yesterday’s Budget, increasing its regional financing programmes to £1.6 billion and expanding its coverage, helping innovative businesses across the country get greater access to the finance that they need.
Catherine West
I welcome the British Business Bank and the fact that it has a regional focus, but what advice does the right hon. Gentleman have for businesses that are still in debt due to the covid loans they are struggling to pay back and therefore do not want to take on any more debt?
Kwasi Kwarteng
The hon. Lady makes a sensitive point. Nobody engaged in business wants to take on unsustainable levels of debt, but she will appreciate that the credit was offered in totally unusual circumstances; my right hon. Friend the Chancellor had to make decisions very quickly and we used the BBB to distribute that credit. No one is suggesting—not even anyone in the hon. Lady’s party—that the interventions and credit that was provided on good terms should not have been offered to many businesspeople. I am fully aware of the nature of the debt overhang and I am engaged with trying to think of ways of softening that, but the intervention was absolutely the right thing at the time. I must remind the House that many predictions of doom and catastrophe were mercifully avoided thanks to the timely and wise interventions of my right hon. Friend the Chancellor.
As well as supporting businesses, the Budget will protect the health, wealth and livelihoods of the British public. Under this Government, the proportion of people in low-paid work has fallen to its lowest level in 30 years. That is why I was so surprised to hear the hon. Member for Leeds West (Rachel Reeves) suggest that an increase in the national living wage was something to be regretted.
Stephen Timms (East Ham) (Lab)
Before the right hon. Gentleman leaves the business part of his speech, will he update the House on the latest provision of support for energy-intensive industries?
Kwasi Kwarteng
That is a very direct question and, as I have said, conversations are ongoing. I speak to the CEO of Ofgem on a daily basis and we are always looking at the situation in terms of gas and electricity prices and how we can mitigate those risks.
Edward Miliband
The right hon. Gentleman was asked a very direct question, as he said, by my right hon. Friend the Member for East Ham (Stephen Timms). The right hon. Gentleman acknowledged two weeks ago the very difficult situation of the energy-intensive industries and said that he had submitted a formal request to the Treasury. What has happened?
Kwasi Kwarteng
We are not ignoring anything. We are in active conversations, as we always are, on dealing with the situation. [Interruption.] Absolutely, we are completely as one on this, and we feel that, as my right hon. Friend the Chancellor said, we cannot simply bail out every single company—but we can provide a general context in which risks are mitigated.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (George Freeman)
We are not going to nationalise anything.
Edward Miliband
It is hard to follow that response from the Secretary of State; he said, “a general context in which…something, something.” Can he just answer the question: when are we going to know what help is available for energy-intensive industries, if any, and what kind of help is it going to be?
Kwasi Kwarteng
All I would say to the right hon. Gentleman is watch this space and let’s see what happens.
Kwasi Kwarteng
The hon. Gentleman chunters from a sedentary position. I have visited his constituency—I have seen Teesside—and the picture of gloom, misery and devastation he paints is a total rejection of the optimism, dynamism and enthusiasm I see in Teesside. His negative attitude shows precisely why my friend the Mayor of the Tees Valley got 73% of the vote in the last election. [Interruption.] I am being told I am speaking loudly, but I am outraged that the hon. Gentleman should characterise his constituency in such poor and uninspiring terms; it is a disgrace.
Alex Cunningham
The right hon. Gentleman makes an attack then will not give way.
Alex Cunningham
I am grateful to the right hon. Gentleman for giving way. He talks absolute nonsense: I have spent 11 years championing energy-intensive industries in my constituency, trying to ensure people keep their jobs. He knows that, because I have met him and talked about it time and again, and what do I see? I see very little action. It is about time he got on the right horse, got down to Ofgem and started talking seriously about how we can put things right for energy-intensive industries in my constituency.
Kwasi Kwarteng
I was not making a personal attack on the hon. Gentleman’s role. If he had listened to what I said, he would know I was not commenting on his record as an MP; I was simply saying that the tone and negativity he expressed in that particular intervention in this debate did a disservice to his constituents. I was making a specific point.
Richard Fuller
To bring my right hon. Friend back to what the Opposition spokesperson, the right hon. Member for Doncaster North (Edward Miliband) was saying about the haste with which money can go to support my right hon. Friend’s plan for energy-intensive industries, is this not the same Labour Front Bench that was urging my right hon. Friend to give money to a business that is now under review by the Serious Fraud Office? Is my right hon. Friend’s prudence not therefore wiser than the rashness of the Opposition Front Bench?
Kwasi Kwarteng
That is a very good intervention. Labour Front Benchers were urging that £170 million from the UK taxpayer be given to a business that we now know has been recapitalised, has money from private creditors and is still operating. It would have been a disaster to sign away £170 million directly in the way they urged.
In conclusion, the Budget is a blueprint for a stronger Britain: a country where those with innovative ideas will get the support they need to turn them from dream to reality; a country where those whose talent is nurtured and whose skills are honed will get support, ongoing interest and strong engagement from the Government; a country where those who do an honest day’s work will receive a decent wage. We have every right to be confident about our future. We have listened to the litany of woe and despair for too long and, as my right hon. Friend the Chancellor said yesterday, we are optimistic and excited about the future of our country. Only a week ago at the global investment summit, people from across the world were desperate to invest in the UK; they believe in their bones that the UK is a great place to do business.
Jim Shannon (Strangford) (DUP)
Minister, my hon. Friend the Member for North Antrim (Ian Paisley) and I hope to have a meeting with you shortly on hydrogen and how it can be used to advance this great United Kingdom. Can you confirm exactly how it will benefit every part of Great Britain and Northern Ireland?
Madam Deputy Speaker (Dame Eleanor Laing)
Order. I remind the hon. Gentleman that he cannot address the Minister as “Minister”; he has to address him as “the right hon. Gentleman” or say “would the Minister?”, because when he says “Minister” that is second person, vocative case. He cannot say “Minister.” Other Members might know that the hon. Member for Strangford (Jim Shannon) and I have been having this conversation now for several years and it is my ambition that he will get it right, and one day he will.
Kwasi Kwarteng
We are very grateful for the long-forgotten grammar lessons administered from the Chair.
Hydrogen is important, and we have had debates on it in Westminster Hall and this place. I look forward to engaging with the hon. Member for Strangford (Jim Shannon) on this; I am due to visit Northern Ireland and I am sure we will have very constructive conversations.
The global investment summit was a huge success, and it was proof that, contrary to the picture of devastation, gloom and pessimism painted by Opposition Members, we are open for business as a country and attracting investment to a degree we have never seen before. It showed in the Budget yesterday that, as we race towards a new and brighter future, the Government will make driving economic recovery through private investment—that is central to this—a top priority. That is something I certainly commend to the House.
Development Consent Application under Planning Act 2008: AQUIND Ltd
Kwasi Kwarteng Excerpts(3 years, 1 month ago)
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The Secretary of State for Business, Energy and Industrial Strategy (Kwasi Kwarteng)
This statement concerns an application for development consent made under the Planning Act 2008 by AQUIND Ltd for the construction, operation, maintenance and decommissioning of the UK elements of a 2,000MW bi-directional subsea electrical power interconnector between Normandy in France and Lovedean in Hampshire.
Under section 107(1) of the Planning Act 2008, the Secretary of State must make a decision on an application within three months of the receipt of the examining authority’s report unless exercising the power under section 107(3) of the Act to set a new deadline. Where a new deadline is set, the Secretary of State must make a statement to Parliament to announce it. The original deadline for the decision on the AQUIND interconnector application was 8 September 2021. This deadline was previously extended to 21 October 2021.
I have decided to set a new deadline of no later than 21 January 2022 for deciding this application. Following receipt of the report from the examining authority, I required clarification from the applicant on several issues. Interested parties were given the opportunity to comment on the applicant’s response. I have decided that further work is necessary to consider the application in detail including whether further information is required, and this requires an extension to the deadline.
The decision to set the new deadline for this application is without prejudice to the decision on whether to grant or refuse development consent.
[HCWS348]
Gas Prices and Energy Suppliers
Kwasi Kwarteng Excerpts(3 years, 2 months ago)
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Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Edward Miliband (Doncaster North) (Lab)
(Urgent Question): To ask the Secretary of State for Business, Energy and Industrial Strategy if he will make a statement on rising gas prices and the collapse of energy suppliers.
The Secretary of State for Business, Energy and Industrial Strategy (Kwasi Kwarteng)
I came before the House on Monday to update colleagues on the action we are taking, and I appeared before the Business, Energy and Industrial Strategy Committee yesterday to discuss the matter in greater depth. The Government have been clear that protecting consumers is our primary focus and shapes our entire approach to this issue. We will continue to protect consumers with the energy price cap.
The global gas situation has had an impact on some energy suppliers, and I have been in touch daily with Ofgem. As it set out yesterday, there are more than 50 suppliers in the domestic market, and we may, unfortunately, see more suppliers exit the market in the coming weeks. However, it is not unusual for energy suppliers to leave the market, for various reasons, particularly when wholesale global prices are rising. Ofgem and the Government have clear, well-rehearsed processes in place to make sure that all customers are supplied with energy.
Our approach will be informed by the following principles: protecting customers, especially vulnerable ones, from price spikes. The solution to this crisis will be found from the industry and the market, as is already happening, and I repeat that the Government will not be bailing out failed energy companies. We would like to see a competitive energy market that can deliver choice and lower prices. The energy price cap, which continues to protect millions of customers, will remain in place. Consumers come first, and that has always been the centrepiece of our approach.
Edward Miliband
On Monday, I said to the Secretary of State that he was being far too complacent about the situation we are facing. Events since have, unfortunately, borne that out: complacent about the crisis in the market; complacent about the impact on families; and complacent about the cost of living crisis. He pretended on Monday and again today that it was normal for a number of suppliers to go down each winter, but what we are dealing with is far from normal: 800,000 customers losing their suppliers yesterday alone and 1.5 million in the last six weeks. So will he now answer the question he has so far failed to answer: does he believe taxpayers’ money will be necessary to stabilise the market? If so, how will he ensure value for money and that we do not simply end up with greater concentration of the big six suppliers?
Next, I have a letter here that Ofgem wrote to the Secretary of State when he was the Energy Minister 18 months ago during covid, warning about
“systemic risk to the energy supply sector as a whole”.
It said the usual Ofgem mechanism, the supplier of last resort, may not be possible. It went on:
“The failure of medium and large suppliers would need to be handled via a special administration regime placing significant burden and costs on government.”
So will he answer the question of what planning was done for this eventuality following that letter? Surely the Government should be in a position now to know exactly what needs to be done where there is systemic risk to suppliers. Have they not left the country dangerously exposed, with them scrabbling around for solutions?
Finally, we are seven days from the cut to universal credit. This is the last time a Government Minister will be in the House explaining to millions of families why they are plunging them further into fuel poverty. Instead of warm words or platitudes, can the Secretary of State now tell the British people how he can possibly justify this attack on their living standards? Is it not the truth that there can be no defence of it, and that the only right, proper and fair thing to do is to cancel the cut?
Kwasi Kwarteng
Obviously, as usual, the right hon. Gentleman raises a number of issues. We have not been complacent. The whole point about the supplier of last resort process, which was interrogated last year, is that it is an organised, well-established process that can allow existing strong companies to absorb customers and failure. [Interruption.] If he would desist from chuntering from a sedentary position, he might actually hear my answer.
I remember the letter last year. We interrogated, all through the covid process, the systems we had in place. During that period, the supplier of last resort was found to work. So far this year, it has been found to work, so I am not going to try to talk ourselves into exacerbating the crisis.
With regard to the special administration regime, that is something that is in place. Thankfully, we have not had to use that, but the right hon. Gentleman knows as well as many people in this House that it is there should the case arise.
With respect to universal credit, I will say what I said earlier in the week. That is a matter across Government in terms of budgetary responsibility. There will be a Budget at the end of October and there will be plenty of time to discuss that then.
Mr Mark Harper (Forest of Dean) (Con)
May I press the Business Secretary a little on the Government assumptions on pricing? In his evidence to the Business, Energy and Industrial Strategy Committee yesterday, the head of Ofgem appeared to suggest that he expected these high prices to continue for some time. I accept that the Government do not have a crystal ball, but in making policy choices the Government must be making some assumptions about what they think is the most likely path for prices. Can the Business Secretary set those out for the House please?
Kwasi Kwarteng
As I have said repeatedly, I do not have a crystal ball, as my right hon. Friend has suggested, and I do not make predictions about the price but clearly, we prepare for every eventuality. The biggest help for consumers and customers at this current time is the energy price cap, which I have repeatedly stated is staying in place.
Alan Brown (Kilmarnock and Loudoun) (SNP)
This is not market failure; it is Government and regulator failure. Ofgem all along had the financial and hedging information to know which companies were at risk, so why are we now in crisis management phase?
The Tories promised us cheaper energy bills post Brexit, but right now electricity wholesale prices in the UK are the highest in the whole of Europe. Meanwhile, as gas prices increase, the Treasury gets extra VAT receipts and increased oil and gas revenues. Surely, there must be a redistribution of that increased Treasury income to help hard-pressed bill payers. At the moment, it is those bill payers who cover the additional cost of transferring customers to other energy suppliers. They cover the credit of customers with failed companies and then have to pay increased tariffs when transferred. The cap might stay but the cap does not stop energy bills going up, so why should bill payers pay even more money when the Treasury is getting increased revenue out of this? What is the additional estimated cost for bill payers?
A quarter of our electricity bills consist of levies, so as we move away from our reliance on fossil fuels, we need a fundamental shift in how that concession is paid for. That is something that the Treasury needs to address. It means ending the grid charging regime so that Scotland does not have the highest charges in Europe, and it means giving the go-ahead to pumped hydro storage in wave and tidal.
Finally, is the Secretary of State happy to sit by while the cost of living crisis is ongoing? Is he happy to plunge 500,000 extra people into fuel poverty, or will he fight the Treasury to end the universal credit cut and release extra money to help hard-pressed bill payers?
Kwasi Kwarteng
Clearly there was a lot in that question and statement. I will deal with a couple of issues, if I may.
With respect to universal credit and wider budgetary considerations, I have repeatedly said that they are matters for my right hon. Friend the Chancellor. We will have ample opportunity to discuss these things in the House. With respect to the move away from fossil fuels, the hon. Gentleman and I are in agreement: I think that we need a diverse supply of decarbonised sources of energy.
Finally, I dispute the idea that we are ill-prepared. We have the SOLR and SAR processes in place and we stress-tested them throughout the whole covid period, when I was in constant contact with the industry. I feel that so far we have managed to accommodate such supplier failure as we have seen with existing structures.
Joy Morrissey (Beaconsfield) (Con)
Will my right hon. Friend confirm that the cold weather payment scheme will remain in place?
Kwasi Kwarteng
Again, there are further budgetary issues, but I have always said that we are absolutely focused on customers, particularly the most vulnerable customers. The warm home discount is staying and we are looking to protect the most vulnerable customers, particularly prepaid customers, from the worst effects of the energy price spike.
Stephanie Peacock (Barnsley East) (Lab)
On Monday, the Secretary of State dismissed our lack of gas storage as “not…relevant”. It has clearly left us vulnerable, so will he now admit that the closure of the Rough storage facility was a mistake?
Kwasi Kwarteng
I do not think that it is relevant, because there is no way that any storage in the world will mitigate the effect of a quadrupling of the gas price in four months, as we have seen. The answer is actually getting more diverse sources of supply and electricity through non-carbon sources—through nuclear, on which I am still very unclear as to the Opposition’s view, and through other sources of decarbonised energy.
Sir Christopher Chope (Christchurch) (Con)
Why do we not reduce VAT on fuel as a temporary measure? We did it for the hospitality industry, which was badly affected by covid-19. Why do we not abolish VAT for consumers on fuel now?
Kwasi Kwarteng
My hon. Friend is quite right: we did a whole range of interventions to alleviate the burden on consumers and on businesses. Those were fiscal interventions that the Chancellor pursued last year, and I am sure that he is looking at a range of things this year, but that is a matter for him to decide ahead of the Budget.
Mr Alistair Carmichael (Orkney and Shetland) (LD)
What are the implications of the situation for the exploitation and extraction of gas within the UK continental shelf?
Kwasi Kwarteng
The right hon. Member will know that, in 2020, 48% of our natural gas came from the UK continental shelf, so that is clearly a strong, sustainable source of gas to this country. However, I suggest to him that gas is a transition fuel: in our pursuit of net zero by 2050, we want to transition away from it. That is why we are developing carbon capture and hydrogen, as he knows very well.
Robert Halfon (Harlow) (Con)
Further to the question that my hon. Friend the Member for Christchurch (Sir Christopher Chope) asked, surely the Conservative answer—I raised this the other day—is to reduce VAT on energy bills, as was pledged by those who supported Brexit in the EU referendum. I know that the Secretary of State will say that it is up to the Treasury to decide, but he is very persuasive. He is a tax-cutting Conservative—he believes in tax cuts—and I know that, if he went to see the Chancellor, he would ensure that we got a VAT cut on energy bills.
Kwasi Kwarteng
I see the Chancellor on a regular basis, as my right hon. Friend knows, and I am delighted to inform him that those conversations tend to be confidential.
Matt Western (Warwick and Leamington) (Lab)
The UK suffers from higher costs both for consumers and for our businesses and industries. Why then, to follow the point of my hon. Friend the Member for Barnsley East (Stephanie Peacock), is the UK’s storage capacity just 2% of annual demand versus an average of 25% in Europe? Is that part of the reason why we do not have energy price resilience?
Kwasi Kwarteng
A conference of EU Energy Ministers took place only yesterday to discuss that very problem. Mitigating a quadrupling of the gas price is not a function of storage—that is a complete red herring. One reason why we have less storage is that we have a greater diversity of energy supply, and that is a strength, not a weakness.
John Penrose (Weston-super-Mare) (Con)
The Secretary of State is absolutely right to focus on consumers and not to bail out energy firms that got things wrong or are too fragile. However, will he explain how he is dealing with customers currently on capped tariffs with suppliers that have gone bust? Is he encountering any resistance from the firms being asked to take on those customers, who may be arriving as a loss to the acquiring firm?
Kwasi Kwarteng
As I have said, we have a supplier of last resort process that has worked well in the past couple of years. It is not my job to state the terms on which customers are absorbed by other companies—
Kwasi Kwarteng
No, not ahead of the process. However, most of these prices are at or just below the price cap, and that is fundamentally what will protect consumers in this period.
Janet Daby (Lewisham East) (Lab)
This Government are responsible for families facing a cost of living crisis due to the triple whammy of rising gas prices, looming tax rises, and cuts to universal credit. Will the Secretary of State finally acknowledge and accept that it is completely and utterly immoral to cut universal credit?
Kwasi Kwarteng
What I do acknowledge is that there has been a quadrupling of the gas price, and that we have an energy price cap that will protect customers from such spikes. Schemes such as the warm home discount will also protect the most vulnerable customers. That is what I acknowledge.
Alexander Stafford (Rother Valley) (Con)
What assessment has my right hon. Friend made of this country’s structural dependency on gas, which was created by the last Labour Government’s sidelining of green technologies, such as nuclear and even hydrogen?
Kwasi Kwarteng
My hon. Friend is absolutely right. For example, the last Labour Government did absolutely nothing to drive nuclear power, which is a fundamental ingredient of security of energy supply.
Tommy Sheppard (Edinburgh East) (SNP)
The figure of £139 a year has been floated in the press as the increase in the energy price cap this year, but that refers only to the variable rate and does not take into account the changes in bills that people will face if they move from one tariff to another—often against their will in the current circumstances. Will the Secretary of State consider asking the regulator to direct energy suppliers to limit the price increase to any individual customer to a reasonable amount over the coming year?
Kwasi Kwarteng
As I have said, we have a supplier of last resort process, and it would be wrong of me here at the Dispatch Box to interfere in how it works. It has worked effectively over the past two years. As I have said repeatedly to the House, the energy price cap does give some succour, because consumers prices could be exorbitant without the cap. The price cap gives support, and we continue to support the warm home discount for the vulnerable end of the market.
Mr Philip Hollobone (Kettering) (Con)
Customers in Kettering and across the country will be worried that their gas and electricity could be cut off if their energy supplier goes bust. To put customers minds at rest, will the Secretary of State explain in straightforward understandable terms how the supplier of last resort process works?
Kwasi Kwarteng
What happens—and it is happening at the moment—is that there is a process of bidding for the customers of the exiting, failing companies, and the cost of absorbing those customers is taken on by the company that wins the bid and also by the industry at large; so the costs are mutualised, but generally it has been seen that there is always continuity of supply. That is a key element of the system.
John Spellar (Warley) (Lab)
The Secretary of State clearly believes that the invisible hand of the market will solve all this without his doing anything—but when he talks about customers, does he mean only domestic consumers, or will he ensure that supply continues to keep industry going and jobs secure? In that context, does he think it acceptable that Germany has some 90 days of gas storage while we have only nine days’ worth? Will he also commit himself to ensuring that there are adequate supplies under our control for the future by licensing new gasfields?
Kwasi Kwarteng
We protect domestic consumers in the way I have outlined, but it is fair for the right hon. Gentleman to raise the issue of industrial users of energy in business. He will know that we have schemes that which protect industrial users of energy: we have the energy industry incentive scheme, and yesterday we launched a new tranche of the industrial energy transformation fund with up to £220 million, which enables businesses to bid in for further support.
Jacob Young (Redcar) (Con)
I thank the Secretary of State for his tireless work over the last few weeks, not just on the gas price crisis but on the carbon dioxide shortage that followed. I also pay tribute to CF Fertilisers, which has come back online in Stockton, and to Ensus in Redcar for offering to help and come online too. For the benefit of people across Redcar and Cleveland, however, can the Secretary of State outline how we are supporting people and protecting them from these high prices?
Kwasi Kwarteng
My hon. Friend has made an excellent point. The carbon dioxide crisis—or question in hand—we dealt with immediately. I spoke to the CEO of CF Fertilisers twice, on Sunday and Monday, and we had a solution on Tuesday. I am very pleased that, as a consequence of that solution, the company has managed to get production up and running, and to get people back to work at its plant. My hon. Friend will know, after my many visits to Teesside speaking to Ben Houchen, that the Government are resolutely focused on helping his constituents to level up and get well-paid, secure jobs.
Andrew Gwynne (Denton and Reddish) (Lab)
These skyrocketing gas prices will have a devastating impact, not just on the public but on businesses, which will eventually have to pass those rises back on to the public. Does the Secretary of State understand that that double whammy for the public will see even more families being pushed into fuel poverty and consequently into food poverty as well? Apart from cutting universal credit very soon, making it even worse for many of these families, what is he doing? What is he doing to support them?
Kwasi Kwarteng
The hon. Gentleman will have seen reports that energy companies want the Government to lift the energy price cap. I have repeatedly resisted that. I have said explicitly, on the Floor of the House and in other places, that the price cap must stay, while also reaffirming our commitment to the warm home discount scheme and the winter fuel payment. We are absolutely focused on keeping consumer prices as low as possible in the energy market.
Paul Howell (Sedgefield) (Con)
We are all hearing about the number of businesses in this market that are going bust at the moment, but can my right hon. Friend assure me, and my constituents, that this is expected to be a short-term shock and we will come out of it with a robust market and plenty of diversity of supply?
Kwasi Kwarteng
My hon. Friend knows that competition is the key to this market. We had a world that was oligopolistic in this respect, but we have introduced the price cap, and there are plenty of small, nimble entrants driving innovation and a dynamic system. I am absolutely committed to a competitive market, and I am sure that after this process we will still have a vibrant and dynamic energy system.
Kirsty Blackman (Aberdeen North) (SNP)
Too many people nowadays have to watch every single penny, and have to worry about where all the money to pay the bills will come from. Will the Secretary of State have a look at the amount of time that it takes a supplier of last resort to provide people with an accurate forecast for their energy costs, and, if possible, try to reduce the period during which they experience that uncertainty?
Kwasi Kwarteng
I would be very happy look at that, as the hon. Lady suggests. I have said many times, I am in contact with Mr Brearley, the chief executive officer of Ofgem, on practically a daily basis now, and this is something that I can raise with him at our next meeting.
Andrew Bridgen (North West Leicestershire) (Con)
I draw the House’s attention to my entry in the Register of Members’ Financial Interests. I own shares in companies that invest in renewable energy. As the House will know, consumer energy bills are enhanced by climate change levy charges, which are used to support renewable energy producers. Is my right hon. Friend aware, however, that a large number of those renewable energy producers use special purpose vehicle companies to receive those subsidies, and that many of those SPVs are based offshore for tax purposes? Will he meet me to discuss how the Government are going to close that very clear tax loophole?
Kwasi Kwarteng
As my hon. Friend knows, I am always prepared to meet him at any time to discuss any matter he chooses to discuss with me.
Dame Diana Johnson (Kingston upon Hull North) (Lab)
Would the Minister still advise consumers to change their energy supplier, or would they just be better off changing their Government?
Kwasi Kwarteng
They had a chance to change their Government and, as I recall, that did not end so well for the Labour party, although maybe my memory fails me. We have a dynamic, vibrant and competitive market, and consumers should have a choice in order to keep their costs low.
Stephen Metcalfe (South Basildon and East Thurrock) (Con)
Obviously these are disturbing times for our constituents and I welcome the actions that the Government are taking. Can my right hon. Friend confirm that, whatever happens in the markets, no one in Basildon and Thurrock need fear supply failure or sudden hikes in prices this winter?
Kwasi Kwarteng
No one in Basildon and Thurrock, or anywhere else in this country, need fear the eventuality that my hon. Friend describes. As I have said, the supplier of last resort process is absolutely focused on ensuring that customers have continuity of supply. That is a top priority.
Fleur Anderson (Putney) (Lab)
Better insulation of homes is essential for cutting rising fuel bills and emissions. Does the Secretary of State agree that it was a mistake to cut the green homes grant earlier this year, and will he commit to reforming it and bringing it back?
Kwasi Kwarteng
As I have said a number of times, in this role and in my previous one, the green homes grant attempted to do three things. The first was to decarbonise public sector buildings, and that worked very effectively through Salix, the bank that disbursed those funds. The second element, which was disbursed by local authorities, has also worked very well. The third element is the one that we closed, and we want to get a renewed version of it.
Selaine Saxby (North Devon) (Con)
In the final days of the last Labour Government, the UK was near the bottom of the G20 league tables for green investment and renewable energy. I therefore congratulate my right hon. Friend on his Department’s achievements on offshore and floating wind energy. Can he confirm that his Department will continue to invest in this area, particularly close to my North Devon constituency and the Celtic sea?
Kwasi Kwarteng
Absolutely. My hon. Friend will know that we have some really exciting floating offshore wind projects in the Celtic sea that I am very pleased to see being developed. She is also right to observe that during the last Labour Government, we did absolutely nothing whatsoever to ensure security of energy supply or its diversity.
Jack Dromey (Birmingham, Erdington) (Lab)
An Erdington care worker with two children was close to tears when she said to me:
“I worked so hard throughout the covid crisis. Now I am facing my universal credit being cut, a tax increase and soaring energy bills. Jack, why are they going ahead with the cut to universal credit? Do they even begin to understand how difficult life is for people like me?”
Is she wrong?
Kwasi Kwarteng
The massive increase in energy prices is a global effect. I completely understand that people are facing issues this winter that were not foreseen maybe six months ago, but this Government have rigorously focused on protecting the most vulnerable customers in the energy market and we are absolutely focused on getting Britain back to work. That is why our unemployment rate is one of the lowest in the G7 at 4.7%. In France, it is 8%. We are creating jobs and we are keeping the economy going.
Duncan Baker (North Norfolk) (Con)
As my right hon. Friend will know, I have been something of a doughty champion in North Norfolk for the offshore energy grid—[Interruption.] He is smiling; he knows what I am going to say next. Will he work at speed to ensure that the offshore network grid will be implemented as soon as possible to ensure that we stop the dereliction of the countryside with the offshore cable corridors?
Kwasi Kwarteng
Nobody in this House has been as consistent and as focused on this issue as my hon. Friend. He knows that, as Energy Minister, I commissioned the offshore transmission network review, on which we have accelerated work. I would be happy to speak to him and other colleagues about the review’s progress.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
The Secretary of State describes small energy companies such as Green in Newcastle upon Tyne Central as “failures,” but he says nothing of his own failure in structuring, regulating and shaping the energy market. Will he confirm that large energy companies, such as Green, will not receive a penny of taxpayers’ money? What support will he offer to the employees of Green, apart from slashing universal credit?
Kwasi Kwarteng
As I said, it has been a consistent feature over the past few years that energy companies have failed and left the market. We have a process to deal with that, the supplier of last resort. I categorically say to the House that we will not be giving any grants or subsidies to larger companies.
Gareth Davies (Grantham and Stamford) (Con)
I welcome the Government’s market-led approach. The CBI has been clear in saying that Labour’s plans to renationalise our UK energy network would result in higher household bills. Does my right hon. Friend agree that it could also threaten UK energy supplies?
Kwasi Kwarteng
Any Labour plan to nationalise the industry would be a step back into the dark ages and would be a disaster for this country’s reputation as a hub of international capital and investment.
Rachael Maskell (York Central) (Lab/Co-op)
Rising energy prices will disproportionately affect people living in the north, where it is colder during the winter. What assessment has the Secretary of State made of regional disparities, and how will he mitigate against them?
Kwasi Kwarteng
The hon. Lady raises a fair point, and clearly the single most important determinant of gas prices is the weather. That is why we have schemes such as the warm home discount, and it is why we are focused on protecting the most vulnerable customers wherever they are in the UK.
Patricia Gibson (North Ayrshire and Arran) (SNP)
Half a million more people are likely to fall into fuel poverty as a result of this gas crisis. With record increases in inflation, plans to cut universal credit that will hit 37% of Scottish families, supermarket shelves that grow emptier by the day and a regressive national insurance tax hike hitting those on the lowest pay hardest, what has gone so wrong as we face a winter of discontent? Why should anyone have confidence in this Government?
Kwasi Kwarteng
I will tell the hon. Lady why people should have confidence in this Government: we have a vaccine roll-out that is the envy of the world; we have got the economy back up and running; we have 4.7% unemployment, which is among the lowest in the G7; and we have navigated the storms of covid-19 pretty effectively.
Margaret Ferrier (Rutherglen and Hamilton West) (Ind)
A number of my constituents were victims of the green deal mis-selling scandal and have been left saddled with tens of thousands of pounds of debt for a scheme they thought was publicly funded and Government backed. The scheme was supposed to lower their energy bills, but now, on top of having to repay that debt, their bills are set to skyrocket.
In supporting my constituent who discovered that she is a victim only when she recently tried to sell her home, I was informed that the Secretary of State has no obligation to investigate cases more than six years old. Many victims of this scam will not have been aware immediately, so will he explain what recourse exists for victims who come forward later?
Kwasi Kwarteng
We have been dealing with green deal cases on a case-by-case basis. I have not been informed of the specific details that the hon. Lady describes but, with my officials, I would be happy to meet her to discuss the particulars of this individual case.
Jim Shannon (Strangford) (DUP)
This is almost a perfect storm: gas prices that have risen due to the maintenance projects that were rescheduled for 2021 because of the pandemic; lower-than-usual gas supply from Russia; and less liquefied natural gas reaching Europe because of increased deliveries to Asia. How can the Government assist when most of these factors are beyond our control? Is it realistic to hope that consumers will see a reduction in their bills within the next year?
Kwasi Kwarteng
The hon. Gentleman has given a pithy summary of the various causes of the energy price spike, one that is very realistic; it is a global phenomenon. What I have said repeatedly is that what the Government can do is ensure two things: that customers have continuity of supply, through the well-established SOLR process; and that we are resolutely focused on keeping the energy price cap, so that consumers—our constituents—are protected from those exorbitant price spikes.
Subsidy Control Bill
Kwasi Kwarteng ExcerptsWednesday 22nd September 2021
(3 years, 2 months ago)
Commons ChamberRead Full debate Subsidy Control Act 2022 View all Subsidy Control Act 2022 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts
The Secretary of State for Business, Energy and Industrial Strategy (Kwasi Kwarteng)
I beg to move, That the Bill be now read a Second time.
The Government are determined to seize the opportunities arising from Brexit. Now that the UK has left the European Union and we are no longer bound by the EU’s regime, we have the freedom to develop a new, bespoke system of subsidy control for the UK that delivers on our national priorities. Before the UK joined the European economic community, as it was then called, there was no framework at all. That absence contributed, I think, to Governments pursuing a failed economic approach with Whitehall trying to run the economy. They distorted competition, often by bailing out unsustainable industries and attempting to pick winners. The regime that the Government have set out in the Bill will help public authorities to deliver subsidies where they are needed, without facing excessive bureaucracy or lengthy pre-approval processes.
Miriam Cates (Penistone and Stocksbridge) (Con)
One of the industries that I hope will benefit from the Bill is the steel industry. As my right hon. Friend will know from frequent and very welcome engagements with me on the issue, Liberty Speciality Steels in Stocksbridge is a key employer in my constituency. While we were in the EU, the industry had access to the EU’s research fund for coal and steel. Now that we have left, £182 million is due to be returned to the UK. Will my right hon. Friend look into the possibility of ringfencing that money, given that it has been raised from levies on the steel industry rather than through general taxation, so that we can have a UK fund for innovation in UK steel?
Kwasi Kwarteng
In her brief time in the House, my hon. Friend has been an impressive and focused campaigner on behalf of her constituents and the wider industry. As she knows, I am a particular fan of the steel industry, and want to seek a sustainable future for it here in the UK. I cannot give any budgetary guarantees, as she will appreciate, but this system does give us much more flexibility than was the case previously.
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
Will the Secretary of State give way?
Kwasi Kwarteng
May I make a little more progress? Many other colleagues want to speak.
This is a Bill that promotes autonomy, transparency and accountability. It will empower hundreds of local authorities, as well as the devolved Administrations and other public authorities, to take control, allowing them to design subsidies to meet local needs while also meeting national policy objectives.
Liz Saville Roberts
I am grateful to the Secretary of State for giving way to me now. I wanted to pursue his earlier comment. The Conservatives appear to be perpetuating a gift for blaming the EU for everything, to all intents and purposes, and it is no surprise that we have heard a little more of that today. We must bear it in mind that the UK was known for underutilising EU state rules—we were ranked 22nd out of 28 member states in 2018—and it could be suggested that that was due to Conservative ideology rather than to any intrinsic problem.
This Bill will steamroll devolved competence. Does the Secretary of State agree that it reflects a new Conservative ideology, which is deliberately dismantling the powers of devolved Governments and their accountability as elected Governments per se?
Kwasi Kwarteng
That was a rather lengthy intervention, if I may say so, although I do not want to entrench on the Chair’s prerogative. As the right hon. Lady will appreciate, the Bill is a function of our leaving the EU. We are not trying to rehearse the arguments of Brexit; we were doing that long before she was elected to the House. I was certainly involved in those debates.
The Bill sets out a regime founded on seven clear and transparent principles. According to those principles, the subsidy must be designed to remedy a market failure. It must be designed to bring about a change in behaviour. It cannot normally cover costs that would have been funded in any case. It must be appropriate, proportionate, and designed to minimise any distortions to competition and investment in the United Kingdom. Finally, the public authority giving a subsidy must carry out a balancing test, and proceed only if the benefits of the subsidy outweigh any distortions to UK competition and investment, and to international trade.
Those principles will be supported by guidance for all to see. That will ensure that public authorities fully understand their legal obligations, and will make clear which subsidies are permitted and prohibited and under what circumstances.
Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)
As I understand it, the Bill also gets rid of assisted area status, which in the Welsh context includes my county of Carmarthenshire. Can the Secretary of State explain why the British Government are making it more difficult for the Welsh Government to help businesses in Carmarthenshire?
Kwasi Kwarteng
I do not agree with the hon. Gentleman’s description of what the Bill does. If he listens to the rest of my remarks, he may well hear further clarification. Of course, as is always the case, many of these issues will be discussed in Committee if the Bill’s Second Reading receives the assent of the House.
Public authorities will be empowered to make their own assessment of whether a new subsidy meets the requirements of the regime and, in the vast majority of cases, to proceed directly to granting that subsidy. For the first time, the decision on whether to grant a subsidy will always fall to the granting authority itself. For the largest subsidies, or those that present the highest risk of distorting competition, it is worth recalling that the default process under the EU state aid regime could last between nine and 12 months, and that that often determined whether a project could happen or not. Under the new regime, a new body, the UK subsidy advice unit, must publish its report within 30 working days. That is in huge contrast to the nine-to-12 month period under the EU.
Kevin Hollinrake (Thirsk and Malton) (Con)
The right hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) mentioned ideology. One ideology that I hope will always hold firm on this side of the House is that of not wasting taxpayers’ cash. Is the Minister comfortable with the situation in which local authorities and devolved Administrations could grant subsidies of hundreds of thousands of pounds without having to publicly declare them? Would we not be better with a much lower threshold, so that public scrutiny could always be in place?
Kwasi Kwarteng
Local authorities have to declare spending at much lower levels than the figure that my hon. Friend has just put forward. Clearly, transparency is at the centre of what we are trying to achieve. Instead of a year, the whole process will take only a few weeks. It will be a much quicker process and it will allow public authorities to act with far greater agility than before. However, I do not believe that the transparency will be in any way compromised. This is an area that will give more flexibility while not diminishing accountability. In fact, it will enhance accountability because, under the EU state aid regime, there was no way we could change the rules in any way.
At the same time, this is a regime that will provide certainty and confidence to businesses within the UK, and also to those among the foreign investment community who are keen to invest in the UK, by protecting against subsidies that risk distorting competition or causing harmful economic impacts. And of course, the regime will operate alongside our usual, traditional stringent spending controls to ensure the best use of public money.
Sammy Wilson (East Antrim) (DUP)
Does the Minister not see the inherent flaw in his argument about levelling up and treating the whole of the United Kingdom as one, in so far as Northern Ireland will be subject to a dual subsidy regime: the state aid rules imposed by article 10 of the protocol and the Bill that is going through today? So any subsidy that a public authority Northern Ireland wishes to give will be subject to the very one-year scrutiny that he is talking about, whereas a public authority in the rest of the United Kingdom will have it cleared within 20 days, thereby placing any attempt to attract business to Northern Ireland at a disadvantage.
Kwasi Kwarteng
That is precisely why I am addressing this precise point in my speech, if the right hon. Gentleman will allow me. We are setting out the detail of a UK regime that is far from simply adhering to the EU, and it will clearly no longer be necessary for Northern Ireland to be subject to the EU state aid regime. That is precisely why we have proposed the change to the Northern Ireland protocol to bring all subsidies within scope of the domestic regime.
The Bill, as hon. and right hon. Members should know, has been informed by a public consultation, which showed broad support for the Government’s proposals. The Government also held a second consultation with the devolved Administrations as we reached the end of the policy work and the considerable time that we spent trying to get the Bill shipshape. That second consultation showed clearly that the UK Government and the devolved Administrations agreed on the fundamentals of the regime, including the seven principles, the objectives for the regime, and the need to respect the devolution settlements and support levelling up.
Liz Saville Roberts
If the devolved Governments are as content as the Secretary of State is saying, why are the Welsh Government making a legal challenge to this Bill?
Kwasi Kwarteng
As I said, there is agreement on the fundamentals of the regime. The seven principles are not contested; they are agreed across the devolved Administrations and the UK Government. I am not privy to the exact motivation of the devolved Administration in this case but, as far as the general principles are concerned, there is a wide measure of consensus.
It is worth reminding the House that the devolved Governments will have more control over subsidies than they have ever had before. Previously, it was Brussels that made the decisions about which subsidies could be granted to support viable businesses. Now, with this Bill, it will be for the elected Governments in Edinburgh, Cardiff and Belfast to make those decisions.
During the trade and co-operation agreement negotiations and the creation of this new regime, ministerial colleagues, officials and I have worked closely with the devolved Administrations, and I thank those Administrations and the officials and Ministers here in Westminster for their considered and constructive input to the development of this policy.
Daniel Kawczynski (Shrewsbury and Atcham) (Con)
As somebody who has represented a border constituency for the past 16 years, I have become increasingly concerned about the additional levels of subsidy that the Welsh Government can give to businesses on the border, putting our Shropshire businesses at a disadvantage. Will the Secretary of State address that point, please?
Kwasi Kwarteng
As I have stressed, this regime has been discussed extensively with the devolved Administrations. Clearly we have conflicting views, but I believe the Government have worked constructively with the devolved Administrations and we feel that, along with our localism agenda, this is a step in the right direction. Compared with where we were for nearly 50 years in the EU state aid regime, this Bill is a significant improvement and enhancement that represents much greater devolution in this area than we have ever seen before.
Dame Andrea Leadsom (South Northamptonshire) (Con)
Is my right hon. Friend as afraid as I am that the nationalists in Scotland will use any opportunity to be different and will impose big, generous subsidies to artificially support their own businesses simply to try to ensure that the English feel hard done by because it suits their agenda of separatism? That is not, in any sense, in the interest of the taxpayer.
Kwasi Kwarteng
My right hon. Friend makes a legitimate and correct observation about the general obstructionism we sometimes see. There are seven principles outlined in the Bill, however, and one of them is not to distort the UK internal market, so what she says would clearly raise issues.
Our emphasis in this regime is on transparency, accountability and, of course, agility. This all means that we will not simply be replicating the European Commission’s role in the process, requiring a central body in Brussels to sign off on specific subsidies. In other words, the UK Government did not go to great lengths to secure autonomy from the European Union on subsidy control only to reimpose the same old EU rules months later. That is not what this is about. I hope hon. Members will agree that outside the EU we will have the opportunity to do things differently. We did not leave the EU simply to settle back into the old ways of thinking and into the way things were done before. Those days are over.
I strongly believe that making the most of this new regime will need a culture change, not just in public bodies, devolved Administrations and local authorities but in central Government. It will be a culture change to take more responsibility for our own decisions, not simply outsourcing difficult decisions to the European Commission as we did for nearly 50 years. It will mean that we can be more accountable to the electorate for when and how taxpayers’ money is spent, and that we will be more agile in distributing public resources.
The Bill will ensure that our new subsidy system will maintain a competitive, free-market economy that has been central to the UK’s economic prosperity and success for decades. In that spirit, I commend the Bill to the House.
Seema Malhotra
I have given way to the right hon. Lady already and I hope she will not mind if I continue my remarks.
Will the Secretary of State clarify whether it is the Government’s intention that First Ministers, or public interest groups, be considered interested parties for the purposes of being able to bring forward a challenge to a subsidy decision—if so, why will the Government not put that in the Bill?—or will a challenge have to be made via the Secretary of State?
This is not where the devolution challenges end. Perhaps the Secretary of State could clarify his remarks on Northern Ireland, because, as I understand it, under article 10 of the Northern Ireland protocol, EU state aid rules must apply to subsidies that affect trade between Northern Ireland and the EU. This affects not only subsidies granted in Northern Ireland but subsidies granted throughout the UK. There is a risk—unless the Secretary of State wants to correct me—that article 10, taken alongside the new subsidy regime, could cause legal or practical difficulties, particularly if the UK and EU disagree on what affects EU-Northern Ireland trade.
Kwasi Kwarteng
I thought that I could not have been clearer on this precise point in my opening speech. I repeat: it is clearly no longer necessary for Northern Ireland to be subject to the EU state aid regime, and that is precisely why we proposed a change to the Northern Ireland protocol in order to bring all subsidies within scope of the domestic regime.
Seema Malhotra
I thank the Secretary of State. Indeed, I did hear those comments in his opening remarks. I was seeking to clarify the issue because I do not think it is clear across the House, and it is important that it is tested and made clear in the course of the passage of the Bill.
Crucially, what is the Government’s intention if the Bill does not receive legislative consent from Scotland, Wales and Northern Ireland, as has been requested?
Oral Answers to Questions
Kwasi Kwarteng Excerpts(3 years, 2 months ago)
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Karl Turner (Kingston upon Hull East) (Lab)
The Secretary of State for Business, Energy and Industrial Strategy (Kwasi Kwarteng)
The pandemic has shown us just how important and world-leading the UK’s life sciences sector is, and our Government are committed to making it go from strength to strength.
Jason McCartney
As a fellow rugby league fan, Mr Speaker, you will know the brilliance of Rob Burrow on the pitch and now his inspiration off the pitch. Rob is in Parliament today with his friend Doddie Weir to raise awareness of motor neurone disease and of the campaign calling on the Government to invest £50 million in MND research over the next five years for a virtual MND research institute. Will the Secretary of State please commit to meeting the MND Association to discuss this funding proposal further?
Kwasi Kwarteng
I thank my hon. Friend for the work he is doing in this area. He will know that in the last fiscal year, UK Research and Innovation spent £15.9 million on MND research. In the previous Parliament, 2017 to 2019, we announced £20 million to support the work of medical research charities which have now been impacted by covid.
Karl Turner
It has been said already, but rugby league fanatics like you and I, Mr Speaker, have long been inspired by the brilliance of Rob Burrow on the field, but I think we have been blown away by his tireless determination off the pitch to campaign to raise awareness of motor neurone disease. Does the Secretary of State agree with Rob and Scotland’s rugby union star Doddie Weir, who are both watching us, as the hon. Member for Colne Valley (Jason McCartney) said? We need to act now, Secretary of State—now—to increase research funding into this devastating, debilitating and life- limiting disease.
Kwasi Kwarteng
I pay tribute to the hon. Member, who raises an extremely important point. I do not know Rob, but I am very pleased that his tireless work has been raised today. As I said, in the last fiscal year UKRI spent £15.9 million on MND research. We have had a wider offer for medical research charities—we announced £204 million for Research England in the fiscal year 2020-21—but I am very happy to meet him and see what more we can do to pursue this important topic.
Douglas Ross (Moray) (Con)
Lucy Lintott from Moray was Scotland’s youngest person to be diagnosed with MND, aged 19. Eight years on, she is living with fiancé Tommy Smith. They have an 18-month-old, LJ, and, on Hogmanay, they are expecting their second child, a little girl. It is believed that Lucy is the first person in the world to have had two pregnancies after diagnosis. Will the Secretary of State meet Lucy and other campaigners to see what we can do to support her family and so many others in Scotland and across the UK?
Kwasi Kwarteng
I thank my hon. Friend for raising in this House such an inspiring story. I would, of course, be delighted to meet Lucy and him to discuss how we can pursue further progress in this area.
Christine Jardine (Edinburgh West) (LD)
As I am sure the Secretary of State will appreciate, there are very many of us in this House for whom this is a hugely important issue. He has already mentioned the research, but the key to the £50 million over five years is that it is not spread over other research—it is completely targeted on motor neurone disease. Will he take that to the Government and bear that in mind please?
Kwasi Kwarteng
Absolutely right. UKRI is responsible for the budget and I am in frequent conversations with UKRI. We have to work to see what we can do to focus, with laser-like attention, on this debilitating illness.
Mr Speaker
Thank you, Secretary of State. May I just say that everybody in rugby league is aware that Rob Burrow is an inspirational person? He really is that great man and great character.
Mr Clive Betts (Sheffield South East) (Lab)
The Secretary of State for Business, Energy and Industrial Strategy (Kwasi Kwarteng)
Yesterday I updated the House on the UK gas market. As I said in my statement, protecting consumers is our primary focus and is shaping our entire approach to the issue; they must come first.
I welcome the new members of the Business, Energy and Industrial Strategy ministerial team. We had a great team before the reshuffle, but I am pleased that we have a good team with us today.
Over the summer, my Department has been abuzz with activity. We have introduced our innovation strategy and the hydrogen strategy, and outlined the new round for our contracts for difference scheme. It has been an excellent way to start and I look forward to continuing in that vein.
Mr Betts
Thank you, Mr Speaker; for a minute, I thought you were going to miss me out!
I welcome the fact that the Secretary of State launched the Government’s hydrogen strategy in my constituency at ITM Power, which is a leading green hydrogen producer. The German strategy is totally committed to green hydrogen alone, and of course the Germans have put substantially more funding in than we have into this country’s strategy. The Government have an aspiration to replace all fossil fuel boilers in this country by the 2030s. That ambition is important for reducing carbon emissions and for the security of our energy supplies. Does the Secretary of State agree that we can deliver on that ambition only with a much more significant commitment from the Government to develop and install green hydrogen boilers across the country?
Kwasi Kwarteng
The hon. Gentleman is quite right. I make no apology for the fact that we have a twin-track approach in the hydrogen strategy. We have endorsed the production of green hydrogen, as he has described the German Government have done. We have also endorsed the production of blue hydrogen, because in the first instance, as he will understand, blue hydrogen is much cheaper than green hydrogen. In order to kickstart a hydrogen economy, we need a cheap source of decarbonised hydrogen. As such, blue hydrogen represents a transition to an economy that can be driven more by green hydrogen. The twin-track approach that we have outlined is certainly the best one.
Harriett Baldwin (West Worcestershire) (Con)
Kwasi Kwarteng
I know, as a former Treasury Minister, that my hon. Friend is very focused on making the green transition as economically successful as possible. I and others in the Government are very focused on getting a proper electric vehicle charge roll-out, and I would be happy to speak to her to discuss the plans that we have adopted.
Edward Miliband (Doncaster North) (Lab)
Families looking at soaring gas prices will be deeply worried about how they will pay their bills. One of the reasons UK households are particularly vulnerable is the Government’s failure on home insulation. Emissions from buildings are in fact higher today than in 2015. I am afraid to say that the Secretary of State’s record is abysmal, with the fiasco of the green homes grant, cuts to spending, a heat and buildings strategy originally promised for spring 2020 which is still not published, and no proper plan for retrofit. Will he admit that families this winter will be paying the price of the Government’s failure on home insulation?
Kwasi Kwarteng
I will not admit that at all. The right hon. Gentleman got the date wrong—it was to be published in quarter 1 of 2021. I was the Energy Minister who said that.
Kwasi Kwarteng
Yes, it is still late, and I want to publish it as quickly as possible. I can admit that candidly.
The right hon. Gentleman talks about the green homes grant. I remind him that of the £3 billion that was sequestered—ringfenced—for the green homes grant, £1.5 billion was disbursed through Salix for public buildings, and that worked very well, while £500 million was disbursed by local authorities, and that was successful. The owner-occupier bit of it was a six-month programme—a short-term fiscal stimulus—that we have closed, and we are going to have a replacement imminently.
Edward Miliband
It is a complete fiasco. The Secretary of State actually cut the money that was supposed to be allocated to homeowners.
At least half a million families are going to be thrown into fuel poverty by the rise in energy prices. On top of that, along with national insurance rises, millions of families are facing a £1,000 a year cut in universal credit in just 10 days’ time. It is a Tory triple whammy made in Downing Street. Will the Secretary of State stand up for the millions of people who are deeply worried about their bills and tell the Prime Minister that he should cancel the universal credit cut?
Kwasi Kwarteng
I have a sense of déjà vu, as we addressed this issue directly yesterday. The right hon. Gentleman knows with his experience—I was going to say in government but I mean and in opposition—that universal credit is a matter for the Chancellor, in discussion with my right hon. Friend the Secretary of State for Work and Pensions.
Stephen Metcalfe (South Basildon and East Thurrock) (Con)
Martyn Day (Linlithgow and East Falkirk) (SNP)
Kwasi Kwarteng
Absolutely. In relation to this question, I pointed out that UKRI spent £15.9 million in the last fiscal year. The UKRI portion of our Department’s spend is being negotiated in the course of the spending review. I would be very happy to follow the guidance of the hon. Gentleman and make sure that we properly fund research into motor neurone disease.
Cherilyn Mackrory (Truro and Falmouth) (Con)
Jason McCartney (Colne Valley) (Con)
Kwasi Kwarteng
That is absolutely right. I fully recognise, as my hon. Friend appreciates, that we have had huge success in decarbonising our power sector, but we need to accelerate the decarbonisation of our homes and buildings. As I pointed out to the right hon. Member for Doncaster North (Edward Miliband), we have had some success in decarbonising public sector buildings—particularly through Salix—but we now need to focus on decarbonising our dwellings and other buildings.
Caroline Lucas (Brighton, Pavilion) (Green)
The Minister can play accounting games over the Cambo oilfield, arguing that it was licensed 20 years ago, but essentially its emissions will still drive climate change. New research shows that 60% of existing oil and gas reserves must stay in the ground if we are to stay within 1.5° C, and the International Energy Agency has said that there must be no new oil and gas development of any kind. With COP26 in just six weeks, with the Secretary of State trying to have international diplomacy, what message does he think is given out by the Government going ahead with more oil and gas?
Kwasi Kwarteng
With regard to Cambo, the hon. Member will appreciate that the decision has been scrutinised in the normal regulatory way. As an energy Minister I helped to negotiate a North sea transition deal, and key to that was the word transition. We need to transition our existing oil and gas sector to a decarbonised platform. What she and others like her want to see is a complete eclipse and shutting down of oil and gas, with 250,000 jobs vanishing overnight. That would be completely irresponsible.
Matt Vickers (Stockton South) (Con)
Wera Hobhouse (Bath) (LD)
May I press the Secretary of State further on blue hydrogen? The source of blue hydrogen is natural gas, which is a fossil fuel, so how can a Government committed to net zero invest millions of pounds in new technologies based on fossil fuels? The Secretary of State has said several times that it is a “transition”, but since this is not a net zero technology, a transition to what?
Kwasi Kwarteng
We have spoken about this issue many times in this House, and the hon. Member will appreciate that carbon capture is a key part of our net zero strategy. I think that is widely accepted, particularly by the Climate Change Committee. With her knowledge of chemistry, she will also know that carbon capture works hand in hand with the production of blue hydrogen and that blue hydrogen is not particularly carbon intensive. The reason why countries such as Germany have not pursued a blue hydrogen strategy is that they do not have the physical infrastructure in the North sea to do it.
Sally-Ann Hart (Hastings and Rye) (Con)
Renewable energy depends on increasing our grid capacity, so what steps is my right hon. Friend taking to do that?
Margaret Ferrier (Rutherglen and Hamilton West) (Ind)
UK steel producers face dramatically higher electricity costs than our European competitors. How can the sector attract the investment needed to decarbonise when it faces a £50 million a year barrier to investment?
Kwasi Kwarteng
I have discussed with the sector the ongoing issue of electricity prices or energy prices for the steel industry. That is why one of the first things I did as Secretary of State was to resuscitate the Steel Council. We are coming up with ideas to try to create a sustainable steel sector on a decarbonised basis.
Richard Graham (Gloucester) (Con)
I welcome the Minister back re-energised to his place in the Department, and as today is Gloucestershire Day, can I ask him to look very closely at the bid made by Gloucestershire to support the development of a vital new technology—nuclear fusion?
Jim Shannon (Strangford) (DUP)
Renewables are very important everywhere across the United Kingdom, but one of the problems for renewables is getting access to the grid. The Electric Storage Company in Northern Ireland has told me that if that was improved, energy could be stored for access to the grid. Can the Secretary of State tell us what he could do to make that happen?
Kwasi Kwarteng
I would like to hear more from the hon. Gentleman about this, and I am very happy to meet him to talk about it.
Mr David Davis (Haltemprice and Howden) (Con)
It seems that legislation is the only way that the hundreds of postmasters and postmistresses who have had their lives destroyed by the Horizon scandal will get sufficient compensation in a timely manner. Will the Department look at legislation to deliver this?
UK Gas Market
Kwasi Kwarteng Excerpts(3 years, 2 months ago)
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The Secretary of State for Business, Energy and Industrial Strategy (Kwasi Kwarteng)
With permission Mr Speaker, I will make a statement on the UK gas market. As hon. and right hon. Members will be aware, over the weekend I held discussions with Ofgem and energy companies, and this morning I held a further roundtable discussion. Today I will set out the Government’s approach to managing the impact of high global gas prices affecting the UK and countries across Europe.
To begin, I want to make two points extremely clear. First, I must stress that protecting consumers is our No.1 primary focus and will shape our entire approach to this important issue. Secondly, I reassure the House that while the UK, like other countries in Europe, has been affected by global prices, Britain benefits from having a diverse range of gas supply sources. We have more than sufficient capacity to meet demand, and we do not expect supply emergencies to occur this winter. There is absolutely no question of the lights going out or people being unable to heat their homes. There will be no three-day working weeks or a throwback to the 1970s. Such thinking is alarmist, unhelpful and completely misguided.
To begin, I would like to set out some of the context for the global situation we are now witnessing. As the world comes out of covid-19 and economies reopen, we are seeing a dramatic uptick in global gas demand—much faster than many had anticipated. High demand in Asia for liquified natural gas, transported globally by freight, means that far less LNG has reached Europe. Weather events in the US have also affected LNG exports to Europe. Increased demand, coupled with reduced variety of supply globally, has put upward pressure on the price of gas traded globally. High wholesale gas prices have subsequently driven an increase in wholesale power prices, with a number of short-term markets trading at, or near, record levels. While we are not complacent, we do not expect supply emergencies this winter. This is a very important point. It is not a question of security of supply.
The Great British gas system has delivered securely to date and is expected to continue to function effectively, with a diverse range of supply sources and sufficient delivery capacity to more than meet demand. The National Grid electricity system operator has the tools within it to operate the electricity system reliably and to balance that system, and we remain confident that electricity security can be maintained under a very wide range of scenarios. We are not reliant on any one particular source for our gas, unlike many of our friends in Europe.
As right hon. and hon. Members should know, domestic production is our largest single gas supply source. It accounted for about 50% of total supply last year. However, the UK also benefits from an excellent relationship with Norway, one of our most important and reliable energy partners, which delivers nearly 30% of our total gas supply. In the last half hour, I was privileged to speak to the Norwegian energy Minister and welcome today’s announcement from Equinor that its gas production will significantly increase from 1 October to support UK and European demand. Our remaining supply is sourced from global markets via two interconnectors to the continent, and also through our LNG infrastructure, which is, as many hon. Members know, the largest in Europe.
The global gas situation has obviously had an impact on some energy suppliers. We have seen four suppliers exit the market in recent weeks and we may expect to see further companies do so in the coming weeks. I must say, having been Energy Minister for nearly two years before I became Secretary of State, that we often see companies exiting the market at around this time of year ahead of the renewables obligation certificate payment. There may well be more of them this year, but I want to make it clear that it is not unusual for smaller energy suppliers to exit the market, particularly when wholesale global prices are rising. The sector has seen regular entry and exit in the last five to 10 years; indeed, that is a feature of a highly competitive market.
The current global situation may see more suppliers than usual exiting the market, but that should not be any cause for alarm or panic. We have clear processes in place to ensure that all customers are supplied with energy. When an energy supplier fails, Ofgem typically appoints another supplier to take on serving its customers and there is no interruption to supply. I reiterate that our primary consideration is for the customer.
I will stress three principles that are guiding the Government’s approach. First, the Government will not be bailing out failed companies. There will be no rewards for failure or mismanagement. The taxpayer should not be expected to prop up companies who have poor business models and are not resilient to fluctuations in price. Secondly, customers, and particularly vulnerable customers, must be protected from price spikes. Thirdly, we must ensure that the energy market does not pay the price for the poor practices of a minority of companies and that the market maintains the competition that is a feature of the current system. We must not simply return to the cosy oligopoly of years past where a few large suppliers simply dictated conditions and pricing to customers.
I reassure all right hon. and hon. Members’ constituents that the energy price cap, which saves 15 million households up to £100 a year, is staying. It is not going anywhere. As I said earlier, our priority in this situation has to be the consumer—the Great British public—and the cap effectively protects, as it has protected, millions of customers from sudden increases in global prices this winter. We are committed to that price cap and it will remain in place. Meanwhile, our warm home discount, winter fuel payments and cold weather payments will continue supporting millions of vulnerable and low-income households with their energy bills. It is absolutely vital that the energy supply sector remains a liberalised competitive market in order to deliver value and good service to consumers.
As a result of high global gas prices, right hon. and hon. Members will perhaps have read that two fertiliser plants in Teesside and Cheshire shut down last week. They suspended the production of CO2 and ammonia. That decision has surely affected in the short term our domestic supply of carbon dioxide, which, as everybody knows, is used in the food and drink sector, as well as in the nuclear and health sectors. Yesterday, I met Tony Will, the global chief executive of CF Industries. We discussed the pressures that the business is facing, and we have explored quite thoroughly possible ways to secure vital supplies. Work is ongoing across Departments in Whitehall and across the Government to ensure that those sectors impacted and affected by this announcement have appropriate contingency plans in place to ensure that there is indeed minimal disruption. To maintain our domestic supplies of CO2, we are in constant contact with the relevant companies that produce and supply CO2, and we are monitoring the situation minute by minute.
Over the past few days, as has been widely reported, I have held several discussions with chief executives of the UK’s largest energy suppliers and operators and also with Ofgem to discuss this vital issue. Just this morning, I chaired a roundtable with UK energy companies and the representatives of consumer groups, in which I reiterated, as I have on the Floor of this House, the need for all of us in Government and across the industry to prioritise customers—in short, to protect the consumer. Meetings are continuing across Government today and throughout the course of this week. In terms of further actions and statements, this afternoon, shortly after the statement presented here, I will be making a joint statement with Ofgem, setting out the Government’s next steps following the healthy and in many cases illuminating discussions with it and suppliers.
Our security of gas supply is robust, but it is the case that the UK is still too reliant on fossil fuels. Our exposure to volatile global gas prices underscores the importance of our plan to build a strong, home-grown renewable energy sector to strengthen our energy security into the future. Thanks to the steps we have taken as a Government, renewable energy sources have quadrupled in gigawatts of capacity since 2010—far more than quadrupled, in fact—but there is still clearly a lot more we can do in this area. That is why we have committed to approve at least one large-scale new nuclear project in the next few years and are backing the next generation of advanced nuclear technology with £385 million, helping to attract billions of pounds in private capital and to create tens of thousands of jobs.
To conclude, consumers come first, and we must protect our constituents.
Several hon. Members rose—
Edward Miliband (Doncaster North) (Lab)
I thank the Secretary of State for his statement and agree that we should not be alarmist on the issue of security of supply, but I fear his statement was much too complacent on the price and economic impacts of the current situation.
First, on continuity of supply, we support the Secretary of State taking all necessary measures to ensure that families and businesses continue to have access to energy and that we secure the issue of CO2 supplies. The Secretary of State says that there are mechanisms in place to ensure that customers of failing companies get taken on, but the scale of the problems in the market will provide an unprecedented test of those mechanisms, so does he believe that taxpayer support will be necessary to deal with the problem? If it is, we must ensure value for money. I welcome his caution about outcomes that lead to taxpayer subsidy for big companies to further concentrate their market share, but can he therefore explain the alternatives and what he proposes happens to the customers of suppliers that do not get through this crisis? He is making a statement later this afternoon, and it would be good to know what he is going to say.
Secondly, on the impact of price rises on businesses and industry, can the Secretary of State set out his plans to support businesses, particularly energy-intensive industries? Has he considered with his colleagues the provision of Government support, including possibly loans, to help businesses facing difficulties? On consumer support, he is right to keep the price cap in place—it is a measure I have long supported—but the rise in the price cap of £139 means half a million more families will be plunged into fuel poverty. At a minimum, he should be looking at making the operation of the £140 warm home discount automatic and possibly extending it, but even that will not be enough. Families are facing a triple whammy: rising energy prices, national insurance rises, and, at the end of this month, the £1,000 cut in universal credit. These energy price rises turn the indefensible decision on universal credit into an unconscionable one. If he really wants to put consumers first, if he really wants to help working people, and if he really wants to tackle fuel poverty, is it not time, even at this late stage, to cancel this terrible decision on universal credit?
Thirdly, we need to learn longer-term lessons from this crisis about the lack of resilience in our energy system that has contributed to very large price spikes. The Secretary of State is right that there are global issues, but the UK is facing particular difficulties. Let me give some examples of Government decision making. In 2017, the gas storage facility, Rough, then 75% of our storage, was planned for closure. The Government could have acted to keep it open but did nothing. Our lack of gas storage was raised by industry, the GMB union and the Chair of the Business, Energy and Industrial Strategy Committee in 2019, my hon. Friend the Member for Leeds West (Rachel Reeves). A Minister said in reply that
“the UK’s gas system is secure and well placed to respond effectively to unexpected changes in supply and demand”.
Were the Government not, then as now, far too complacent on the issue of gas storage?
Next, energy efficiency could significantly cut the demand for gas, but we have had the fiasco of the green deal followed by the fiasco of the green homes grant and then the delayed heat and buildings strategy, and emissions from buildings are today higher than in 2015. When is the Secretary of State going to have a proper retrofit plan?
Our new nuclear programme is stalled, and while the Secretary of State is right that we have made progress on renewables, the truth is that we need to go further and faster, with a more diverse supply. Above all, there is not yet enough of a clear plan from Government for how we meet net zero with affordability and security. People have read what the Climate Change Committee said in its most recent progress report this summer:
“It is hard to discern any comprehensive strategy”.
Is not the truth that there is a direct line from the delay, dither and failure to the issues we face today?
I therefore urge the Secretary of State in the midst of this crisis to use this autumn’s net zero strategy—delayed—the net zero review, also delayed, and the comprehensive spending review to finally put in place a proper plan. Households, businesses and energy suppliers are looking to the Government for support and direction as we face this crisis; it requires not words but action and delivery. It is long past time for Government to get a grip.
Kwasi Kwarteng
I apologise, Mr Speaker, for issuing such a lengthy statement.
The right hon. Gentleman talks about a plan, but we have plans and strategies galore. We have the energy White Paper, which was widely well received and which I was very happy to present as Energy Minister, and we also have the Prime Minister’s 10-point plan. I was struck by the fact that when former US Secretary of State John Kerry came to the UK he publicly said that the UK’s plans for decarbonisation were more advanced than those of any other country.
The right hon. Gentleman has a legitimate concern about vulnerable customers, and I have made it very clear to the industry and to Ofgem that they are absolutely our No. 1 priority. We are looking at the warm home discount. As a Government, we have always focused on protecting the vulnerable and people in fuel poverty, and we will continue to do so.
Stephen Crabb (Preseli Pembrokeshire) (Con)
The Secretary of State is entirely right that the UK is far better placed than most other European countries when it comes to the sources and diversity of its gas supplies, not least thanks to the two major liquefied natural gas terminals in my constituency at Milford Haven. Will he join me in paying tribute to the teams working at the South Hook and Dragon LNG terminals and also make a commitment today to work with me, the port authority and the industry on the Haven to make the transition to the next stage of our energy development and see a new generation of floating offshore wind and other renewable energy sources there?
Kwasi Kwarteng
My right hon. Friend will be well aware that there is a commitment to floating offshore wind in the energy White Paper and the 10-point plan. We have explicitly set a 1 GW target for 2030 and I fully expect and hope that that will be exceeded. I am also very pleased to be able to tell him that I am very keenly focused on Dragon LNG. I have not yet visited it in my two years as Energy Minister and Secretary of State, but I would be very happy to accept his invitation.
Stephen Flynn (Aberdeen South) (SNP)
The Secretary of State almost brought himself to say it. Decades of underinvestment in renewable technologies, the barriers put in place by Brexit, 11 years of Tory austerity, a national insurance tax hike, the plan to rob £20 a week from those claiming universal credit, rising food prices, emptying shelves and now energy consumers facing skyrocketing, eye-watering bills—let us call this what it is. It is a cost of living crisis, and one created on the watch of this UK Government.
So what now? What is the plan? I do not, with all due respect, think that the Secretary of State’s warm words quite cut it. He mentioned the energy price cap, but what he failed to acknowledge was the fact that in just a matter of weeks the cap will be at its highest level ever. Will he therefore back new financial support for those in the lowest-income households, and of course, will he call on the Chancellor to scrap his cut to universal credit?
The Secretary of State acknowledged that, of course, it is not just households that are being hammered by these rising gas prices but businesses, too, particularly those that produce and transport goods. He did not say what specific support he intends to provide to those businesses.
On renewables, one of the key solutions to our supply issues lies not in nuclear—of course not in nuclear—but in the Scottish Munros, with hydropumped storage. When will the Secretary of State finally introduce a mechanism to make that technology come to the fore?
Finally, it would be remiss of me not to ask the Secretary of State what message he would have for the likes of the Prime Minister, who of course told us in 2016 that if we voted to leave the European Union energy bills would be reduced.
Kwasi Kwarteng
I find it extraordinary that the hon. Gentleman is still re-litigating the so-called Brexit wars. This is a serious issue, and it is not the time to re-fight the battles of five years ago.
I am fully conscious of the outstanding contribution of hydroelectric power. In fact, I was just speaking to the Norwegian Minister, and that country has 96% of its electricity derived from hydropower. The geography of our country means that we cannot reach that level, but I have absolutely asked officials to look into it, and the hon. Gentleman will know, given my record both as Energy Minister and as Secretary of State, that I am a very keen supporter of renewable energy. As I have always said, and as I said to the right hon. Member for Doncaster North (Edward Miliband), the Government’s focus on safety, consideration and protecting vulnerable customers is absolute.
Dame Andrea Leadsom (South Northamptonshire) (Con)
My right hon. Friend is absolutely right to reassure consumers that energy security in the UK is safe, but does he agree that, as we transition away from fossil fuels towards renewables, we need to move urgently towards far greater electricity market reform? We urgently need an independent system operator, and we need much more local generation and local energy pricing to encourage consumers to use plentiful wind and solar energy, when they are being generated, for their optional energy use.
Kwasi Kwarteng
I thank my right hon. Friend very much. I remind the House that when I was appointed as Energy Minister, she was the Secretary of State in the Department, and she pushed a great deal of reform and innovation in this area. I reassure her that conversations about an independent system operator and how we can modernise the way we balance the electricity system are happening all the time, and I would be very open to hearing her suggestions about how we can bring that about. I think that energy security in this country, thanks in part to her efforts when she held the post I currently hold, is good. We have a diversity of supply, we have considered a wide range of renewables, and in fact we are pioneering and leading the world in the development of renewable technology.
Darren Jones (Bristol North West) (Lab)
I am grateful to the Secretary of State for an advance copy of his statement. There are, of course, a whole range of important questions to be answered to ensure that we do not face similar energy crises in the future. The Business, Energy and Industrial Strategy Committee will be asking Ministers to answer those questions over the coming days and weeks, but may I ask the Secretary of State a specific question today? Can he guarantee that the warm home discount rebate will continue to be paid to consumers who are forced to change energy supplier?
Kwasi Kwarteng
The hon. Gentleman tempts me on to dangerous ground. Of course, any guarantee of that kind has a fiscal implication, which, as he will no doubt be aware, is also a matter for the Treasury. We are in constant discussion about that. I look forward to seeing him in his usual place at the Business, Energy and Industrial Strategy Committee on Wednesday. I know that he takes these matters very seriously, and I am sure that we will have a fuller discussion of these subjects then.
John Redwood (Wokingham) (Con)
Will the Secretary of State talk to the industry urgently about having more gas storage capacity? We have tiny capacity compared with most advanced countries, and that would provide a buffer to smooth supplies and keep prices down if this turns out, as we hope it will, to be a short-term interruption to supply from Russia and America.
Kwasi Kwarteng
My right hon. Friend, with his characteristic acuity, hits the nail on the head. Gas storage is definitely an issue, but the fact he points out is that we do not know how long this spike in the gas price will last. We must not precipitate a rush or, through any alarmism, instigate panic. There is no cause for that at all, but clearly this is a situation that needs to be reviewed. I am very happy to speak to him about particular solutions. I know that he has various views on interconnectors, and I look forward to discussing with him very frankly the way ahead.
Stephanie Peacock (Barnsley East) (Lab)
The right hon. Member for Wokingham (John Redwood) referred to our “tiny capacity”. The UK cut its strategic gas storage to 1.7% of annual demand, when a former Government adviser suggested that it should be closer to 25%. In the light of that, why did the Government allow the Rough storage facility off the Yorkshire coast to close without taking action?
Kwasi Kwarteng
As I have said repeatedly, we have a wide source of energy supply. We have by far the largest offshore wind capacity in the world. There is no reason why we should be inducing panic because of the closure of gas storage facilities. It is something that I said we should look at, but I do not think it is right for hon. and right hon. Members to stoke alarm simply by focusing on questions that are not really relevant to today’s debate.
Alun Cairns (Vale of Glamorgan) (Con)
I declare an interest as chairman of the all-party parliamentary group on energy security. I pay tribute to the Secretary of State for the action he is taking to protect consumers and to calm the concerns that some commentators and some Members have expressed. Does he agree that diversity is key to reducing the long-term risk of such volatility in the markets? That means diversity of supply, diversity in energy generation—be it wind, nuclear, biomass, hydro or other sources—but also diversity in the location that the energy is generated. Some nations, regions and even countries have an excess supply on some occasions and a shortfall on others. The greater the diversity, the less the risk. Is he sufficiently reassured that Ofgem is sufficiently proactive in this field?
Kwasi Kwarteng
My right hon. Friend spoke about three distinct categories. I can assure him that on all three we have a degree of robustness. On the spread of the gas supply, I said that we have a wide range of sources for gas. On electricity generation, I can reassure him that with our work on renewables—onshore wind, offshore wind and solar—there is a much wider range of electricity generation supply in the UK than in practically any other country. On geographical spread, he will notice that a lot of installations and a lot of that capacity are spread very evenly across the United Kingdom. I happen to know that because I spent a large part of the past two years visiting those sites.
Justin Madders (Ellesmere Port and Neston) (Lab)
CF Fertilisers, based in my constituency, is one of the plants that has had to close down in the light of cost pressures. There are obviously many impacts on consumers as a result of this decision, but the employment prospects of my constituents are at the forefront of my mind at the moment. I am pleased to hear that the Secretary of State met the company yesterday. I wrote to the Department over a month ago pointing out the need for urgent action on the cost pressures the company was facing, not just in terms of global gas prices but a number of other factors. I hope that discussions prove fruitful, and not just for my constituents’ jobs. We do not want to get into a situation where we are relying on importing carbon dioxide from other sources, because that will not help us to reach net zero and will put us risk of other fluctuations in world prices.
Kwasi Kwarteng
I thank the hon. Gentleman for his ongoing interest in and passionate support for employment in his constituency. I spoke to him considerably about Stellantis over the last few months. I am very focused on the two CFF plants, one of which is very near or in his constituency. The other, of course, is in Billingham on Teesside. We are looking at both sites and trying to do what we can to support ongoing production in both those places.
Jacob Young (Redcar) (Con)
I thank the Secretary of State for his interest in renewables, hydrogen, new nuclear and CCS. He has already referenced the incredibly difficult situation facing CF Fertilisers in Stockton, which has been forced to suspend production because of gas prices. Is he aware of the knock-on effect that that can have on businesses that CF Fertilisers supplies, such as Huntsman in Wilton, and the further knock-on impact to the rest of Teesside’s chemical industry? Can I impress on him just how interconnected our industry is and how losing one player could lead to a domino effect?
Kwasi Kwarteng
My hon. Friend is absolutely right. He and I have visited a number of those sites together. He is quite right to say that there is a chemical cluster reliant on the ammonia produced out of the CFF plant in Billingham. I say that that is a good cause to argue for the sustainability of the site. It is something we are very aware of and it was brought up in the discussion with the CEO yesterday.
Joanna Cherry (Edinburgh South West) (SNP)
I listened very carefully to what the Secretary of State had to say, which was that protecting consumers, particularly vulnerable consumers, was the Government’s No. 1 priority. Will he then seriously reconsider his position and lobby his colleague the Chancellor to reverse the £20 universal credit cut? Many of my constituents who are in receipt of universal credit are hard-working people on low wages, and they need that money to meet spiralling energy costs and the increased cost of living.
Kwasi Kwarteng
The hon. and learned Lady is aware that we are entering a comprehensive spending review process at this moment. I am speaking to my right hon. Friend the Chancellor all the time about all sorts of things and all sorts of measures that we can bring in to make sure that people are protected from this gas price hike.
David Duguid (Banff and Buchan) (Con)
It is absolutely right that we continue on our energy transition to net zero. I welcome the Government’s ongoing commitment to increasing renewable and low-carbon capacity across the UK, not least in the form of carbon capture and storage, for example, as proposed by the Acorn Project at St Fergus in my constituency, where, at the moment at least, about 30% of the UK’s gas comes ashore. Does my right hon. Friend agree that while we still have a demand, albeit a declining demand, for natural gas, we must ensure that that demand is satisfied by domestic sources as far as reasonably possible?
Kwasi Kwarteng
What my hon. Friend says is entirely reasonable. I pay tribute to him in his role as Under-Secretary of State in the Scotland Office, where he and I spoke about these issues almost continually, it would appear—we spoke about Acorn and we spoke about carbon capture. He will know that I am passionately committed not only to carbon capture but to ensuring that we have a decent domestic supply of natural gas.
Wera Hobhouse (Bath) (LD)
Natural gas is a fossil fuel, and we all know that fossil fuel extraction and consumption have to end by 2050 at the latest. What is the Government’s precise timeline—not a 10-point plan, not imprecise promises, but their precise timeline—to phase out the national gas grid and replace it with renewables, in which case we would not be here in the first place?
Kwasi Kwarteng
The hon. Lady will know that to answer that question we would have to have a much clearer view, in terms of the safety and applicability of hydrogen, for example, in the national gas grid. That is clearly a big part of our ability and the speed with which we can decarbonise the gas grid. She also knows that I am committed to decarbonisation; I am committed to the hydrogen strategy that was published six weeks ago, and there are ongoing trials to see whether we can use hydrogen to decarbonise the gas grid.
Bob Seely (Isle of Wight) (Con)
To what extent is the UK collateral damage in a European-wide crisis caused by the Kremlin’s weaponising of gas supply and its attempts to intimidate the EU into accepting Nord Stream 2, potentially as a precursor to more violence in Ukraine? Should we not see this hybrid war for what it is and plan long term accordingly?
Kwasi Kwarteng
As my hon. Friend knows and has expressed, there are geopolitical elements to this in terms of the reliance of a large part of Europe on Russian gas. I am here to reassure people about a common misconception. We are not dependent at all on Russian gas. The gas sources are as I have described—50% are local, 30% are from Norway and about 18% are from LNG, which comes from all around the world—so I want to minimise the notion that we are somehow at the mercy of Russian gas policy.
Stephen Kinnock (Aberavon) (Lab)
This crisis is causing steelmakers across the country to suspend their operations during periods of the day when the costs of power are peaking at thousands of pounds per megawatt-hour. Can the Secretary of State assure the House that he is engaging with the steel industry to ensure that this crisis does not end up crippling our steel industry, which of course underpins our entire manufacturing sector?
Kwasi Kwarteng
The hon. Member knows that I am constantly engaging with the steel sector—in fact, I resuscitated the Steel Council as one of my first acts when I was appointed Secretary of State—and I am always in ongoing conversations with it. I have, I feel, made a contribution to making sure that we can have this industry on a sustainable basis, but I am very happy to talk to the hon. Member, among other colleagues.
Mr Steve Baker (Wycombe) (Con)
Unlike the Opposition parties, my right hon. Friend knows that we cannot just keep spending billions of pounds every time there is a major problem, but I have to say that he also knows that the keys to prosperity through production are prices, profit and loss. May I ask him now to prioritise affordability and security of supply by removing all fiscal and other disincentives to oil and gas exploration, including shale gas, to increase domestic production levels?
Kwasi Kwarteng
We have rehearsed the shale gas issue many times on the Floor of the House. As Energy Minister, I was confronted with a situation in which the experiments with shale gas induced a reading of 2.9 on the Richter scale and people’s plates were falling off their walls. They wrote to me to say, “We’ve got to stop this,” and there was a moratorium. There is a moratorium, and I have said very explicitly that when the evidence changes we will look at it, but for now there is a moratorium on shale. However, my hon. Friend knows that I understand and fully appreciate the effect of supply and demand as well—perhaps not as well as he does, but better than the Opposition.
Caroline Lucas (Brighton, Pavilion) (Green)
I am very glad to hear the Secretary of State say that protecting consumers is now his Government’s primary focus; it is just a great shame that it has not been in the past. He continues to expose people to high energy prices by refusing to look at the demand side. I do not think that the words “energy efficiency” or “home insulation” have passed his lips once this afternoon. When will he properly learn the lessons of the failed green homes grant, the green deal and the scrapping of zero-carbon homes? When will he put in place the comprehensive street-by-street local authority-led insulation scheme that we know will get emissions down, fuel prices down and jobs up right across the country?
Kwasi Kwarteng
The hon. Lady knows that we have discussed the heat and building strategy, and I have discussed it personally, on a number of occasions. We have said that it will be published very soon, and I look forward to her response when it is.
Virginia Crosbie (Ynys Môn) (Con)
I welcome the Secretary of State’s hard work over the weekend to secure our gas supplies and protect consumers. Does he agree that the long-term solution to energy price spikes is to reduce our dependence on fossil fuels and accelerate the transition to a more cost-efficient and resilient energy system based on renewable energy and nuclear power, through projects such as Wylfa Newydd in my constituency?
Kwasi Kwarteng
I pay tribute to my hon. Friend’s indefatigability on this issue. There never seems to be a moment when Wylfa is not on her lips, and I fully appreciate her passion for it.
Nuclear is clearly a big part of the answer to this, which is why—as Members who have read it will know—it is the third point of the 10-point plan. It is clearly an essential part of our energy mix for the future.
Alex Cunningham (Stockton North) (Lab)
I, too, am grateful to the Secretary of State for his statement, and specifically for meeting representatives of CF Fertilisers, which has stopped production in my constituency, with a knock-on effect on industries needing the carbon dioxide that it generates as a by-product. He will remember my many meetings, letters, parliamentary questions and points made in the House about the perfect storm brewing for firms such as CF Fertilisers—rising fuel prices, a bizarre funding mechanism from Ofgem for gas transportation costs, and the lack of appropriate support for energy-intensive industries to mitigate high carbon emission prices. He says that talks are ongoing, but can he say a little more about what he is doing to get CF Fertilisers producing as soon as possible, and when we can expect policies to make our energy and related costs competitive against Europe?
Kwasi Kwarteng
I would say that our prices are very competitive. Offshore wind, for example, started off at about £150 per megawatt-hour, and at the last auction round it was £39 per megawatt-hour. We have seen the cost of renewables fall considerably over the past 10 years. As for CF Fertilisers, it would be premature of me to say exactly what the Government are going to do. A range of options are being considered, and I hope that the Government will be able to update the House shortly.
Bim Afolami (Hitchin and Harpenden) (Con)
How long does the Department expect these elevated global gas prices to remain at their current level? May I also press the Secretary of State a little on nuclear? I agree with him that it is an essential part of the energy mix, but in relation to large-scale nuclear, what are his plans beyond the one plant that has already been agreed?
Kwasi Kwarteng
It would be foolhardy of me to speculate at the Dispatch Box on what the gas price will be even tomorrow. If I were in a position to know what the prices would be at a later date, I would probably not be a politician; I would probably be a gas trader. That aside, however, I think we have to accept that the prices could be high for longer than people anticipate, just as they could fall very quickly. The marginal dynamics of these markets can shift extremely rapidly. Those of us who followed the oil price last year will have seen that we had an oil price of $20 a barrel, and that in the same year it reached nearly $80. There is a considerable amount of volatility in these markets, and it would be rash of me to predict their course.
As I said earlier, we are committed to nuclear, which is the third point in the 10-point plan, and that means not just large-scale nuclear, but small modular reactors as well.
Neale Hanvey (Kirkcaldy and Cowdenbeath) (Alba)
It is beyond doubt that Scotland is an energy-rich nation, but a quarter of our people live in fuel poverty. If the Secretary of State is a free-marketeer and is not prepared to see taxpayer support go into the market, does he not think it is time for a publicly owned energy company to be brought into being to help us through such difficult times?
Kwasi Kwarteng
I do not really follow the hon. Gentleman’s question. On the one hand, he is saying that I am a free marketeer, but then he is asking me whether I think there should be a state-owned energy company. I think I would avoid the latter outcome, in so far as I can, but as I always say in these things, we are looking at all options. I think that there are market-based solutions. I think that the industry will come together and that, with the Government and Ofgem, we can plot a course through this.
Robert Halfon (Harlow) (Con)
Alongside the increasing gas prices, consumers are facing a double whammy through increasing petrol prices, which, as FairFuelUK has pointed out, have gone up by 9-to-10p over the past six months. Will my right hon. Friend maintain the fuel duty freeze, which is vital for motorists and businesses? Will he also look at reducing VAT on energy bills, which is something that was indicated during the Brexit referendum debate? That would make a big difference to hard-pressed consumers.
Kwasi Kwarteng
I would like to thank my right hon. Friend, but he has been in the House long enough to know that VAT and the fuel duty freeze are beyond my remit. However, as I have said many times, I speak to my right hon. Friend the Chancellor about these issues on a regular basis.
Zarah Sultana (Coventry South) (Lab)
The decision to raise the energy price cap to its highest-ever level will push half a million people into fuel poverty next month. At the same time, an additional 800,000 people will be pushed into poverty by the £20 a week cut to universal credit. On top of that, the national insurance hike will hit low-paid workers the hardest. These are political choices, so rather than relentlessly attacking the working class, will the Minister avert a worsening winter poverty crisis by cancelling the cut to universal credit, raising taxes on the richest and bringing energy companies into public ownership and running them for the public good, not private profit, to slash bills and cut carbon?
Kwasi Kwarteng
I appreciate that these are talking points that have been given to the hon. Lady by the Whips—
Kwasi Kwarteng
I totally understand where that is coming from, but I have said repeatedly that universal credit is an issue across Government and there is no way that I can commit to anything on that in the House. We are absolutely focused on protecting people in fuel poverty. All our policies have been focused on that, and I would suggest that she reads our 2019 manifesto to see the extent of our commitments to help those in fuel poverty.
Alexander Stafford (Rother Valley) (Con)
Interconnectors are vital for our energy security and for reaching net zero, for both gas and electricity. In a White Paper last year, the Government aimed to get 80 GW of interconnectors in by 2030, which is three times what we have now. However, Ofgem, which is leading on this, seems to be dragging its feet. What can this Government do to get these interconnectors going and increase our energy security?
Kwasi Kwarteng
The issue of interconnectors is very important. There were clearly incidents with a couple of the interconnectors last week, so we need to guarantee that they are safe, but my hon. Friend is quite right to say that the 80 GW target is still very much something that we intend to achieve, and I am working with and speaking to Ofgem to be able to get there.
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
As you know, Mr Speaker, this is a bit personal for me because the village of Altnaharra is the coldest place in the UK every year. With the cut to universal credit, far too many people are going to have to make the hellish choice between switching off the electricity and paying for food. Did I hear the Secretary of State correctly? Will he maintain the fuel price cap where it is at the moment? Secondly, will he look positively at a Northern Rock-type of enterprise to pick up the customers of those companies that, perish the thought, might go under?
Kwasi Kwarteng
There are two issues there. I have said that I have committed to the price cap mechanism, but it is not up to me as Secretary of State to determine what the level of the cap is. That is an issue for Ofgem. Secondly, we have made some progress on protecting customers and there is an ongoing need to do that, but I would be happy to speak to the hon. Gentleman and to discuss his ideas on this.
Mark Pawsey (Rugby) (Con)
On Friday, I visited the National Grid gas compressor station at Churchover in my constituency, which is at the centre of both the UK and the network of a resilient system that is distributing a diverse and flexible supply around the UK. Does the Secretary of State agree that, in terms of supply, we are in the fortunate and strong position of having built up a network to supply the current circumstances and to be adjustable for the future introduction of hydrogen?
Kwasi Kwarteng
An excellent question from my hon. Friend. All the conversations I have had over the weekend and today have stated clearly and unambiguously that security of supply is not an issue. That is thanks to the hard work that people in his constituency, in National Grid, in Ofgem and across the system have put in over many years.
Clive Efford (Eltham) (Lab)
The Secretary of State said we have to wait for his plan to find out what he will do to retrofit buildings and reduce dependence on carbon fuels, but local authorities across the country are way ahead of the Government. My local authority in Greenwich is experimenting with air-source and ground-source heat pumps. When he produces his report, does he think local authorities will be front and centre in creating local plans so that we can drill down into local communities to bring about the change we need to achieve zero carbon?
Kwasi Kwarteng
The hon. Gentleman is right that I welcome local initiatives. Only a month ago, I spoke at a forum at which representatives of local government were enthusiastic about getting behind net zero. I welcome all initiatives where local leaders are driving the push to net zero.
Steve Brine (Winchester) (Con)
We have heard a typically reliable and reassuring statement from my right hon. Friend. He mentioned the Ofgem guarantee for when a supplier fails. Will that guarantee protect customers’ credit balances, and how soon will they be able to access them? Will fixed-term deals that customers have negotiated with their current supplier always be respected through the transfer?
Kwasi Kwarteng
My hon. Friend did not mention it in particular, but we have a supplier of last resort process, which has been relied upon over the past few years and involves a transfer of customers in the way he describes. We may well have an updated version of that process in the light of the threats posed to a number of suppliers. I look forward to discussing the details with him when the statement is made.
Steve McCabe (Birmingham, Selly Oak) (Lab)
The Secretary of State says he is working on contingencies, but the meat industry says its CO2 supplies will be depleted within a fortnight. Is he sure that pork and poultry will not be the next items to disappear from our supermarket shelves?
Kwasi Kwarteng
I am working very closely with my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs. We have spoken to the Treasury, and we are keen to push forward plans very soon to make sure there is a consistent and regular supply of CO2.
Dr Julian Lewis (New Forest East) (Con)
As Russia completes its sinister Nord Stream 2 pipeline and tightens its stranglehold on gas supplies to Europe, why are we not fully exploiting Rolls-Royce modular nuclear reactors to decrease our indirect dependence on Russian gas and our direct dependence on French and Chinese nuclear technology?
Kwasi Kwarteng
My right hon. Friend knows that coming up with a fleet of small modular reactors cannot be done overnight. It takes about 10 years to develop the technology. As I have said repeatedly, it is a key part of our nuclear strategy and is the third point of the Prime Minister’s 10-point plan. I frequently speak about this to Warren East, the chief executive officer of Rolls-Royce. As a consequence of the spending review period, it is something that we hope to be able to commit to on the UK balance sheet.
Rachael Maskell (York Central) (Lab/Co-op)
The question my constituents will have today is what the cost will be to them. As we know that serious costs are coming on to some of the poorest people in our constituencies, will the Secretary of State commit to speaking to the Secretary of State for Work and Pensions about cancelling the cut to universal credit and will he speak to the Chancellor about putting additional measures in place to avert fuel and food poverty?
Kwasi Kwarteng
The hon. Lady will appreciate that I speak to colleagues across Government all the time, particularly in respect of alleviating and lessening the burden on very vulnerable constituents.
Dr Caroline Johnson (Sleaford and North Hykeham) (Con)
The Secretary of State spoke of the challenges facing CO2 supply, which is crucial to the food and healthcare industries. What work are the Government doing to ensure there is supply, and can he confirm that there will not be any deficit of CO2?
Kwasi Kwarteng
I spoke to the CEO of CF Fertilisers yesterday, and a number of hon. Members have raised that concern. We are trying to see how we can secure a constant supply of carbon dioxide.
Ben Lake (Ceredigion) (PC)
The loss of the IFA interconnector last week saw the UK lose two fifths of its capacity to import electricity from Europe, further increasing our dependence on natural gas. What pressure are the Government bringing to bear on National Grid to speed up these repairs and to invest the 19% increase to its pre-tax profits to better secure the UK’s energy network?
Kwasi Kwarteng
The hon. Gentleman is right to raise that issue. Clearly, to have interconnectors fail in the way they did last week, in the midst of a global gas price spike, is very concerning. We are looking at what went wrong and seeing what we can do with National Grid to hold it to account and to make sure that the risk of this happening again is minimised.
Dr Matthew Offord (Hendon) (Con)
The rise in the wholesale price of gas began back in January, with it rising by 250% since then. Why did no one in the Department anticipate this scenario?
Kwasi Kwarteng
We have anticipated many scenarios. I alluded to the fact that the oil price went from about $20 a barrel to $80 a barrel within just one year, and we have always been aware that commodity prices, particularly where demand can be very volatile, can be extremely volatile indeed. We look at that on a very regular basis.
Patricia Gibson (North Ayrshire and Arran) (SNP)
The Secretary of State has just talked about the volatility of the market, but there is no denying that the Prime Minister assured us that energy prices would fall post Brexit. As many of my constituents are set to fall further into fuel poverty and as 10,406 of them face a cut of £20 a week in their universal credit, can the Secretary of State tell us what he thinks of the Prime Minister’s irresponsible and wildly misplaced assurances about the future of energy prices?
Kwasi Kwarteng
As I said to one of the hon. Lady’s colleagues, I am not here to re-fight the 2016 battle of Brexit; it should be accepted, in her case with good grace. We have moved on from the Brexit debate, and I am extremely focused on ensuring security of supply and ensuring that vulnerable customers are protected from undue increases in the price of gas.
Mr Mark Harper (Forest of Dean) (Con)
May I just take the Secretary of State back to his statement, where he said he is going to be making a joint statement with Ofgem this afternoon? Assuming that that has in it some announcements that he has not covered in his statement just now, may I ask for an assurance as to when he is going to come to the House to update us? Perhaps Mr Speaker could arrange for that statement to take place tonight at 10 pm, so that we can question the Secretary of State. I ask that because, as he will know, 15% of energy consumers are off the gas grid, with a bigger proportion in constituencies such as mine. They do not benefit from the price cap, so will he set out at the Dispatch Box for those local consumers of mine in the Forest of Dean how he is going to be helping them with this very significant rise in gas prices?
Kwasi Kwarteng
I cannot make any assurances of that kind to my right hon. Friend. As a former Chief Whip, he knows the practices of this House very well. In fact, I seem to recall that in those coalition days we frequently made statements, not necessarily on the Floor of this House. I would be very happy to update him. I do not think—[Interruption.] I have a different memory of it, but we can discuss that later. I would be happy to talk to him about the measures that are being put forward; it is an Ofgem-led thing, but it is also something the Government have worked on—this has been done together.
Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)
Given that Wales is a major net exporter in electricity and came second in the UK growth index for the potential for green development, what are the British Government doing to ensure that the Welsh Government have all the levers they need to reach their potential and ensure that the people of Wales get a dividend from our strength in electricity production?
Kwasi Kwarteng
The hon. Gentleman makes a good point. I am not sure whether we have scheduled this in, but one action point is that I want to do a call with the devolved Administrations this afternoon. After this statement, I will be very much looking forward to seeing some of his colleagues and people in the Welsh Government, as well as those from some of the other DAs.
Simon Baynes (Clwyd South) (Con)
I welcome the steps this Government have already taken to protect energy supply in the UK, specifically the warm home discount scheme and the winter fuel payment scheme. Will my right hon. Friend expand on the ways in which he is working with colleagues across Government to protect the most vulnerable, in Clwyd South and the rest of the UK, during this winter?
Kwasi Kwarteng
We have consistently, in our discussions on net zero and in our attempt to decarbonise the economy, sought to protect the most vulnerable of our constituents. He will know that I am seeking to protect the schemes he mentioned and, if possible, to enhance them.
Jim Shannon (Strangford) (DUP)
Gas users in towns and rural areas throughout Northern Ireland face a 35% increase in the cost of gas. One in five families in Northern Ireland is in fuel poverty. It is clear that this is fast becoming a cold and long winter for the working poor on the poverty line. How will the Secretary of State and the Government give the assistance that will surely be needed for those who need it the most?
Kwasi Kwarteng
My hon. Friend the Member for Clwyd South (Simon Baynes) mentioned the warm home discount and the winter fuel payments; we try to protect the most vulnerable with lots of such schemes. On the call I had earlier, I was delighted to see Citizens Advice, which is particularly aware of such issues. I am very prepared to engage with the hon. Gentleman to see how his constituents and Northern Ireland can withstand what may well be a long and difficult winter.
Mr Philip Hollobone (Kettering) (Con)
I thank the Secretary of State for his statement. On a practical level, will he ensure that Ofgem recruits more customer-facing advisers and has a fully functioning helpline and easy-to-use website, so that those consumers whose energy supplier does go bust, whether in Kettering or elsewhere, do not face a Driver and Vehicle Licensing Agency-type customer service experience?
Kwasi Kwarteng
My hon. Friend can rest assured that I will raise those precise points with the chief executive of Ofgem when I speak to him tomorrow.
Jack Brereton (Stoke-on-Trent South) (Con)
The fluctuations in commercial gas prices particularly affect energy-intensive sectors such as ceramics, and the high price of commercial electricity does not encourage the transition from gas. Will my right hon. Friend look into what more can be done to support energy-intensive sectors and to support jobs like those in the ceramics sector in my Stoke-on-Trent South constituency?
Kwasi Kwarteng
I was pleased over the summer to see the advanced ceramics manufacturers and the great work that is done in my hon. Friend’s constituency and neighbouring constituencies. Having worked with the steel industry, I am conscious that we need a plan to reduce electricity costs.
Mr Tobias Ellwood (Bournemouth East) (Con)
With threats in the grey zone increasing, is Russia playing ball with its gas prices?
Kwasi Kwarteng
It is not for me to comment on Russian energy policy or strategy here, although we can speculate about its motives. My job, and that of the Government, is to ensure that, whatever Russia does, we have security of supply and can protect our most vulnerable consumers. That is exactly what we are doing.
Edward Miliband
Yes, Mr Speaker.
To follow on from the point made by the right hon. Member for Forest of Dean (Mr Harper), I submit that it really is not good practice for the Secretary of State to come to this House and say that he will make a joint statement with Ofgem this afternoon to set out the Government’s next steps, but refuse to tell Members what is in that joint statement. The point of his coming to the House is for him to be questioned on Government policy—including policy to be announced this afternoon.
Kwasi Kwarteng
Further to that point of order, Mr Speaker. I am happy to answer the right hon. Gentleman. He will appreciate that this is an extremely fast-moving and dynamic environment. As of 4.32 today, we have not finalised the statement, so it would be premature of me to make an announcement right now. There will be subsequent House of Commons events—we have oral parliamentary questions tomorrow and I am to appear before the Select Committee on Wednesday—so we can discuss these issues in full detail in the next few days.
Mr Speaker
Can I just say that the ministerial code says that Ministers are answerable to this Chamber, not to anybody outside? It is about being here. I do not think this is acceptable. It is continual. I thought we had got the message through to the Prime Minister when I had a meeting with him, but it is obviously not reaching Secretaries of State and Ministers.
If you want to make some statement afterwards, Secretary of State, I hope you have it covered by somebody making a statement at the same time. This House deserves its respect. People here, on all sides, are elected to hear from you and to be told here first, not to be told second hand by the media and that somebody might come to the House tomorrow if they feel like it. What would have happened if it had been Thursday? It is not right, it is not acceptable and we are going to have to get this right. I am telling you now: I will begin to change the course of what you think the direction is.
Mr Speaker
I go out of my way to ensure that this House hears, but I cannot work on my own; it works two ways. I am saying to you that this House needs to hear. Ofgem is very important, but it is not elected. The people here are elected to serve constituents. The ministerial code needs to be sent to every Minister and every Secretary of State, with the point about where responsibility lies underlined.
Kwasi Kwarteng
Further to that point of order, Mr Speaker. I hear what you are saying, but I have to remind the House that this is part of a cross-Government approach. It is quite right that we are speaking to Ofgem and I cannot tell my right hon. Friend what time that statement will be published.
Mr Speaker
Can we make sure, through the Clerks, that the Secretary of State gets a copy of the ministerial code? Have it underlined and then we will have a discussion. Right, let us see if we can move on a bit.