Energy Support for Farms

Alan Whitehead Excerpts

Tuesday 21st March 2023 Westminster Hall

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

I congratulate the hon. Member for Upper Bann (Carla Lockhart) on securing the debate. It is on an important and usually forgotten part of our current energy debates. We talk generally about domestic customers and industry and commerce and what they get in the various energy bill support schemes and discount schemes and so on, but we very rarely talk about farming or agriculture.

We tend to think that there is not much energy going into these rural buildings. We completely overlook just how much energy is used by farms, particularly in intensive industries such as poultry farming and horticulture where an enormous amount of energy is used in many parts of the process. It is rather hidden behind the seemingly low-cost, low-energy appearance of the rural environment.

It is important to concentrate on the farming sector’s problems with energy costs and what they mean for the ability of such businesses to sustain themselves. We must also think about what that means for the on-costs for everybody else, such as effects on the cost of food production. Many farms are pushed between the prices they are going to get for their end products from further up the chain and their own costs coming in. We must consider how they are going to make a living between those two points.

The hon. Member for Upper Bann gave examples of just how much energy costs have gone up for relatively small farms in her area. Those costs are, of course, replicated across the United Kingdom. She made a strong case for the question of energy support for farms to be looked at with a far wider lens that encompasses not just the small contributions that have been made to farms through the energy bill support scheme and others—though I know Northern Ireland has a slightly different scheme from the rest of the UK, where the payments are lumped together. There has been a considerable debate in Northern Ireland about the extent to which farms that are both domestic properties and farms get the full amount of payment through the scheme. Indeed, I have discussed with Ministers in Delegated Legislation Committee proceedings the rather complicated nature of that process.

The hon. Member for Upper Bann put forward the case that, notwithstanding Northern Ireland’s scheme, farms ought to be treated as part of an energy-intensive industry. I am sure hon. Members will be interested to know what actually is classed as an energy-intensive industry. The starting point for being treated as an energy- intensive sector is to fall in the 80th percentile for energy intensity—meaning it must fall in the top 20% for energy intensity across the UK—and the 60th percentile for trade intensity. So there is a formula as to what gets on the list of energy-intensive industries and can then receive additional support from the EBRS and be substantially exempted from environmental levies on the whole industry. The exemption has been 85% for quite a while, and there are discussions about whether it should be increased to 100% in the not-too-distant future. Categorisation as an energy-intensive industry is important, in a number of ways, to getting support with energy.

It is curious that poultry processing, for example, is on the list of energy-intensive sectors, but poultry production is not, and that things relating to ornamental plants are on the list, but horticulture is not. I suspect that may be because of the NACE—nomenclature of economic activities—classes, which define sectors. It may be that what look to us like sectors—poultry and horticulture, for example—are lost in the wider definition of a class such as agriculture and farming.

The Government should review fairly urgently how sectors are defined for energy intensity purposes. Seventy-one sectors come under the definition of energy-intensive industries. Is farming simply losing out because, as the sector is defined, its relatively lower-carbon elements dilute the elements with greater energy intensity? Such a review is well overdue. If the sectors were drawn a bit more closely, I think farming—or at least substantial elements of it, in the way that the hon. Member for Upper Bann described—would come under the definition.

Curiously, coalmining is defined as an energy-intensive industry and therefore 85% exempt from environmental levies, when we might think that that activity has something to do with the raising of those levies in the first place. There may be a wider case for redefining what counts as an energy-intensive industry.

This is a very important issue, and the Government could do something about it, not simply by providing a larger cash amount to farms, but by defining much more clearly what it is to run a farm and how energy use affects such definitions. The Government can look again at those definitions, and I hope that the Minister will commit to doing just that.