Energy Costs for Businesses

Lord Hunt of Kings Heath Excerpts

Tuesday 17th December 2024 Lords Chamber

[Lord Evans of Rainow]

To ask His Majesty’s Government what plans they have to reduce the cost of energy for businesses in the United Kingdom.

[The Minister of State, Department for Energy Security and Net Zero (Lord Hunt of Kings Heath) (Lab)]

My Lords, the Government believe that the only way to protect bill payers permanently, including businesses and non-domestic organisations, is to speed up the transition away from fossil fuels and towards homegrown, clean energy.

[Lord Evans of Rainow (Con)]

I thank the Minister for that Answer, but Britain’s energy cost for business is the highest in the G20, with Russia, China and the United States having the cheapest. Gary Smith, general secretary of the GMB union, says that Labour’s green strategy is “naive”, displays a

“lack of intellectual rigour and thinking”

and will lead to job losses. Does the Minister agree with Gary Smith? If not, why not?

[Lord Hunt of Kings Heath (Lab)]

My Lords, that is not how I recognise our energy policy. The noble Lord will have seen our action plan towards clean power, published at the end of last week, which sets out how we intend comprehensively to move towards clean power by 2030. I just say to the noble Lord that the highest price that businesses paid for electricity was in 2023, under the Government in which he was a member. What that shows is that, if we remain dependent on the volatility of international fossil-fuel prices, we will always be vulnerable to the kinds of spikes we have seen. That is why we need clean power and homegrown energy.

[Baroness Winterton of Doncaster (Lab)]

My Lords, the Clean Power 2030 Action Plan is clear, on page 81, that nuclear power has a role to play in achieving clean power by 2030. Will my noble friend the Minister give a little more detail on what the Government are doing to support the development of the technology around small modular reactors, so that they can eventually be built in this country, support British jobs and reduce costs for businesses?

[Lord Hunt of Kings Heath (Lab)]

My Lords, my noble friend is right to explore the contribution that nuclear will play in the lead up to 2030, but of course beyond, which is why we have the building of Hinkley Point C, then Sizewell C when we get to a financial investment decision next year, then the SMR programme and then the AMR programme. As far as small modular reactors are concerned, Great British Nuclear is conducting a technology exercise at the moment; it is in financial discussions with four of the companies concerned. We will come to the issue of spend and public support in the multiyear spending review that is taking place over the next few months.

[Earl Russell (LD)]

My Lords, I am sure the Minister will agree about the importance of making sure that we continue to make efforts to reduce the costs of energy for industry. Some 56% of UK businesses would like to increase their on-site power generation, so what are the Government doing to help industries undertake such actions to help with their renewable energy?

[Lord Hunt of Kings Heath (Lab)]

My Lords, first, of course I very much agree with the noble Earl in wishing to see a reduction in the cost of energy, particularly electricity, for our businesses. We believe that in the long term—and in the medium term, to 2030—clean power is the way to do it. He raises a very important point: one of the responses, as he will have seen in the US, is the linking of heavy energy users, which can be companies such as Amazon, with their data centres, to nuclear power generation through advanced modular reactors. Of course, the other very important issue is getting connections to the grid, which is why the clean power action plan is so important in relation to speeding up those connections.

[Lord Alton of Liverpool (CB)]

My Lords, following the very helpful reply which the Minister gave during the earlier stages of the Great British Energy Bill on the subject of slave labour, can he say what further consideration he has given to the dilemma of purchasing solar panels that have been made in a state accused by the House of Commons of committing genocide and using slave labour in the Muslim areas of Xinjiang?

[Lord Hunt of Kings Heath (Lab)]

My Lords, as ever, I am very grateful to the noble Lord for raising these very serious matters and particularly the plight of the Uighurs in Xinjiang province, which we have debated. He knows from my response in the Great British Energy Bill that we are looking at this very carefully. He is right that there is a tension, and clearly many of our solar panels come from China with all the attendant issues that this involves. But we have established the Solar Taskforce to look into the issue of supply chain, and we will be taking very seriously the points that the noble Lord has raised.

[Lord Geddes (Con)]

My Lords, I have berated my own party over many years on this subject; I shall now enjoy doing so to the noble Lord’s opposite. What is the Government’s attitude to tidal power, which is indefinite, utterly predictable and costs nothing once installed?

--- Later in debate ---

[Lord Hunt of Kings Heath (Lab)]

My Lords, I always enjoy the noble Lord’s interventions. I recognise that there is a potential in tidal power, and the noble Lord, Lord Alton, is—can I say—badgering me on this and has had a debate already in the Great British Energy Bill about its potential. At this stage, we remain open to discussions about how that can be taken forward.

[Lord Rooker (Lab)]

Could I ask my noble friend: is fusion energy still 20 years away, as it was 20 years ago?

[Noble Lords]

Oh!

[Lord Hunt of Kings Heath (Lab)]

My Lords, we are putting some resources into the fusion programme. The years that I have in mind are the 2040s, which are a little less than 20 years away. This reflects our belief that there is very much potential now, and that the UK is in a very strong leadership position on it.

[Lord Teverson (LD)]

My Lords, one of the ways that large businesses reduce their energy costs is by signing up to power purchase agreements, or PPAs. That is only possible for large businesses. Is there a way that Government could make sure that those benefits of more competitive pricing could come down to medium or small businesses, maybe by clustering or some other method, so they can get the advantage as well?

[Lord Hunt of Kings Heath (Lab)]

My Lords, I am very happy to give that consideration. The noble Lord will have noted that we are looking at whether we should introduce a regulatory regime for the third-party intermediaries, because some businesses are affected both by mis-selling and other problems with the current system. The other point I would make is that the Energy Ombudsman’s remit is being extended to small businesses within the next few days, and I hope that will also be of advantage to those companies that he mentioned.

[The Earl of Effingham (Con)]

My Lords, the UK is importing record amounts of electricity from Europe. We understand that the EU is to propose limiting access to its electricity markets. How can the Minister ensure that businesses can transition to net zero over time without facing prohibitive energy costs during this process? Surely if supply goes down, costs will go up.

[Lord Hunt of Kings Heath (Lab)]

My Lords, we should not speculate about this until we see actual evidence that it may come to pass. The real way to ensure continuity of supply is to do what we are doing, which is to move as quickly as possible to ensuring that we have homegrown, clean energy. This is what we are seeking to do.

[Lord Watts (Lab)]

My Lords, are we not in a time warp? The problems we now face were created 14 years ago by not having a Government that invested in clean power. Is it not time for them to take responsibility for the mess that they have left for Labour to clear up again?

--- Later in debate ---

[Lord Hunt of Kings Heath (Lab)]

My Lords, I think there is rather something in what my noble friend says. We inherited a parlous situation in relation to the public finances and a failure to invest in essential infrastructure. One example was their dithering about nuclear power. Not one nuclear power station came close to being opened in 14 years under the last Administration.

[Baroness Finlay of Llandaff (CB)]

My Lords, following the discussions about tidal power, what discussions have been had with the Welsh Government about using the very high tides in the Severn estuary? Linked to that, what discussions have been had with the Scottish Government about the potential for hydro-electric power?

[Lord Hunt of Kings Heath (Lab)]

My Lords, right at the start of our new Government’s Administration, my right honourable friend the Prime Minister signalled that we wanted to reset relationships with the devolved Governments. That is happening. We are in regular discussion with the devolved Governments on energy policies. In the Great British Energy Bill, the consultation requirements are set out in relation to those countries.