Energy Update

Alan Whitehead Excerpts

Monday 5th September 2022 Commons Chamber

[Dr Alan Whitehead (Southampton, Test) (Lab)]

I thank the Minister for his statement and for the brief advance notice that we had.

I think that we can all agree that this is a statement of astonishing vagueness and complacency. I had, for example, anticipated that the Minister might have a bit more urgency on the consequences of Russia’s decision to cut off Nord Stream 1 today, and the effects that that will have on gas prices. I thought that he might have come to the House to tell us about that. We are closely tied to European markets. Does he accept that this announcement today puts an even greater sense of urgency on the need to protect the price of gas from outside the UK, both for businesses and for domestic customers, and what measures are the Government undertaking to make that happen?

For domestic customers, there is certainly an energy bill crisis in this country. We need urgent action now.

The Minister talked about funding for the last round of price cap increases, not the one we have now. I know that we have a new Government coming in, but we have heard nothing from the Minister or the Prime Minister about what the plans might be. In fact, all we have heard from the new Prime Minister is that there will be an announcement, but nothing about what the announcement might be. A clear and obvious announcement already exists, however: Labour’s fully funded plan to freeze energy bills this winter, paid for by a further windfall tax on the oil and gas giants making record profits on the back of the energy crisis.

The Minister has an opportunity today to put flesh on the bones of any announcement. He should tell us whether he thinks that the Government should freeze energy prices. Also, does he think that the Government should implement the further windfall tax on the oil and gas giants, and if not why not—and if not, does he want just to protect the profits of the oil and gas industry as a whole?

As well as short-term support for households, we need a long-term answer to this crisis. We on the Opposition side of the House are clear that the best way out of a fossil fuel crisis is to get off fossil fuels. That is why Labour has called for a national clean energy sprint for renewables and a national home insulation plan. The Minister mentioned home insulation and talked about the Government’s existing schemes, but he knows that, in relation to real need, they do not touch the sides. Does he recognise that we urgently need a national warm homes programme to insulate 19 million homes, and is he prepared to commit to that today at the Dispatch Box?

On future energy, the Government could fix many of the problems we face if they decoupled the price of electricity from that of gas. The Minister said in his statement that there is a very leisurely process of consultation and discussion, which I see from the discussion document “Review of Energy Market Arrangements” would not be enacted until 2025. Does he accept that that is a ridiculously long timescale for an urgent change we need now? Is he prepared to commit to decoupling the price of electricity from the price of gas now, particularly given the weight that renewables now have in the market? The Minister talked about offshore wind, but why has he not removed the Government’s ludicrous ban on onshore wind, and does he intend even at this late stage to decide it is time we actually did that?

Finally, the incoming Prime Minister is obviously a fan of fracking, but the Minister told the House on 15 March:

“We are clear that shale gas is not the solution to near-term issues. It would take years of exploration and development before commercial quantities of shale gas could be produced.”—[Official Report, 15 March 2022; Vol. 710, c. 761.]

Does he stand by that statement and will he be communicating this view to the new Prime Minister?

[Greg Hands]

I thank the hon. Gentleman for his engagement, as ever. Let me try to deal with each of his points in turn.

First, on the Russian decision to cut off—or, as they put it, repair—Nord Stream 1, it is worth reminding ourselves that we are not dependent on gas from Russia, as the hon. Gentleman knows. Last year less than 4% of our gas came from Russia, and this year there have been no deliveries of gas from Russia since March—50% of our gas is domestic, and 30% is from Norway. He is right that this has an impact on prices, however, and that is being discussed at the moment and I would expect to hear more from the new Prime Minister and her team in the coming days, as he well knows.

The hon. Gentleman asked about any future windfall tax. Again, I do not want to speculate on what might happen, but I will say what happened when Labour last proposed a windfall tax. The measure that we introduced—the energy profits levy—is projected to raise twice what Labour’s proposal for a similar move would have raised at the time, and it has led to greater support for the most vulnerable customers. Labour’s proposals would have raised about £600, but the Government’s proposals raised twice that amount—about £1,200 for the most vulnerable households—and, as I said in the statement, there will be more to come on this.

The hon. Gentleman asked a very reasonable question about decoupling the electricity price from the gas price. Of course, this is one of the measures being looked at in REMA, as he rightly pointed out, and it will also be something of active interest for the Government. He asked about onshore wind, and he will know that the local partnerships scheme announced in the British energy security strategy in April has exactly mapped out how we see the changes in the onshore wind regime in England. There is no change as yet in Government policy on fracking, but that will obviously be a matter for the soon-to-be new Prime Minister.

Overall, the Opposition seem to make three central points: the Government failed to invest in renewables; the Government failed to invest in nuclear; and the Government failed to invest in energy efficiency. They are wrong on all three. On renewables, under this Government we have quintupled the percentage of electricity generated from renewables, from 7% of our electricity mix when they were in power to 40% in 2021, which is a very strong achievement. On nuclear, the Labour party’s 1997 manifesto said there was

“no economic case for the building of any new nuclear power stations”

in Britain. Twenty-five years later, we have reversed that. We are building Hinkley Point C, and on Friday the Prime Minister was at Sizewell C announcing his support for that power station. On energy efficiency, we have actually increased the percentage of homes that reach the band C level of energy efficiency: we have trebled that from 14% of our homes in 2010 to a strong 46% today. When it comes to matters relating to energy—prices, taxation and energy security—this Government will take no lessons from the Opposition.