Energy Social Tariffs

Debate between Alan Whitehead and Steve McCabe

Thursday 23rd November 2023 Westminster Hall

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

I will not go into great detail this afternoon on behalf of the Opposition on the background and the need for a social tariff, or a similar instrument, because the hon. Members who have taken part in the debate have made the case for one excellently. I congratulate the hon. Member for Motherwell and Wishaw (Marion Fellows), who introduced the debate, not only on the debate, but on the comprehensive way in which she presented the case for social tariffs and urged the action that needs to be taken.

I very much commend the contribution—thoughtful, as always—from the hon. Member for Waveney (Peter Aldous). On other occasions, I have said that he is virtually an hon. Friend on these issues. I commend him for the forthright and detailed way in which he not only made the case for social tariffs, but also talked about what we ought to be talking about this afternoon, which is what happens after we have concluded that this is the right thing to do. He covered the fact that the onus is on the Government to take action and what considerations we have to undertake to secure not just a sticking-plaster solution for perhaps one winter, but something that applies long term and targets the right people in society, giving them the help that they need to keep their energy bills affordable.

I also very much commend the contribution of my hon. Friend the Member for Birmingham, Selly Oak (Steve McCabe), my actual hon. Friend. Among other things, he set out the groups of people involved. In particular, he talked about those in very difficult circumstances that have not just arisen from the energy price shock that we had a little while ago, but that affect their daily living requirements on a longer-term basis. They are the people who would very much be eligible and we should think very seriously about ensuring that those people have that long-term social tariff support.

That point is very much underlined by Ofgem’s very recent announcement on the energy price cap. The announcement underlines—if underlining were necessary —just what a difficult situation the people we are talking about continue to find themselves in. The price cap comes to just under £2,000 for a dual fuel tariff. Of course, that is not the actual bill that anyone will pay; it is an average of the sort of bill that people can expect to pay under the price cap. A lot of people—particularly those in disadvantaged and difficult situations—will pay a huge amount more, either because of their need for constant heat, because of their circumstances, or because they have other issues such as a combination of difficult living circumstances, inadequately insulated homes and high heating bills all at the same time. The price cap is the very least indication of where a lot of those people will be. Not only that, but we know from projections that the cap will be something like that for a very long time to come.

The price cap is not a way station in the downward curve of energy bills for the future. All the projections we have, particularly from Cornwall Insight, are that it is likely to remain at the same level, certainly throughout 2024 and probably going into 2025, and that they will not dip much below about £2,000 on average. As recently as April 2021, the price cap was precisely half that amount.

The people we are talking about are faced with the prospect of paying twice as much as they were as recently as two years ago for the next two or three years, with all the affordability issues that that will continue to bring into play. That underlines the point made by hon. Members this afternoon. It would be great if we had a social tariff this winter that could effectively continue the price support that has been applied previously, but that energy price support is coming to an end. After this winter, at the latest, it is not being replaced. That underlines the fact that a social tariff should not just be for Christmas—it needs to endure in providing assistance and help for those groups in society.

That is the problem with the other key point that has been mentioned this afternoon—namely, where is the consultation? It is not that the Government have said that a social tariff is a terrible idea that will never be done by Government ever. It is difficult to remember exactly which Minister of State for Energy it was, because they keep changing, but in January the Minister said:

“we will look at a social tariff and at how vulnerable people are looked after, but we have to look at it in a considered manner.”—[Official Report, 25 January 2023; Vol. 726, c. 1031.]

On 18 April, the then Secretary of State for Energy Security and Net Zero said:

“We do think that things like a social tariff could be very helpful”.—[Official Report, 18 April 2023; Vol. 731, c. 111.]

Then, in May, the Government stated, in response to a petition:

“The Government is considering potential approaches to consumer energy protection post-April 2024. The Government intends to consult on options in summer 2023…Government officials are considering potential options, including discounted tariffs, for a new approach to consumer protection in energy markets that will apply from April 2024”.

They have said all these things. They have said that there will be a consultation. What has not actually happened is a consultation.

It is difficult for us in this Chamber to home in on what a social tariff might look like, because the Government have not said anything about the sort of area that the social tariff would fall into as part of any consultation. We do not need just a consultation; we need to see the substance of that consultation and what the Government are minded to do about the commitments they have already made. That is completely lacking at the moment.

We can speculate to some extent on why there has been no consultation. Personally, I think the Government were rather hoping that this energy price crisis would be completely a thing of the past by now, and that instead of the energy price trajectory going down and flattening out, there would be a more straightforward downward price trajectory so that we would return to the position in 2021, when prices were about £1,000. Then the Government could say, “Well, actually, we don’t need a social tariff because it is much more affordable for everybody now, and we can tweak various other forms of assistance to make sure that life is good.” That has not happened. The data from just the past few days shows that it has not happened and will not happen in the near future, which should concentrate minds about what solutions need to be proposed.

This may be a little bit of speculation, but perhaps the Government are thinking, “Well, maybe we do need a social tariff.” But as hon. Members have mentioned, where will that be funded from? Will it be smeared across customer bills? Will it come from general taxation or some other arrangement? Of course, because there is no consultation, we do not know what the Government are thinking.

I could see the Government thinking, “Ooh, we’ve spent all this money on price support during the height of the crisis. Do we want to commit ourselves to another fairly substantial amount of taxpayer support for energy bills for the future?” Many of us would say the answer is yes, they should. But the Government may have other views and, indeed, there may even have been tension between Departments on the enactment and funding of that policy. I do not know, but that could have been the case.

There are ways of establishing a social tariff—the hon. Member for Waveney alluded to this—that do not actually cost the amount of money that the Government perhaps think it will. They involve changes in how the energy retail market works, but can deliver very solid back-up arrangements for social tariffs on a sustainable basis, which is what we all want, without that necessary and apparently large chunk of money coming from the Treasury. Again, as was the case for the hon. Member for Waveney, it would be inappropriate to expatiate on that at great length this afternoon, but I think that there are interesting ways we can examine it.

[Steve McCabe]

I am extremely grateful to my hon. Friend, who is making a very valuable point. It would be very helpful if the Minister could tell us what discussions the Government have already had with the energy suppliers and the director of Ofgem, since they have both indicated that they are in favour of a social tariff. Some of the work referred to by my hon. Friend must have been done—we just need to hear what has been discussed.

Green Energy in the North-west

Debate between Alan Whitehead and Steve McCabe

Wednesday 23rd June 2021 Westminster Hall

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

We are indeed in strange times: those of us who have been in the House for quite a long time have a Pavlovian reaction every time the bell goes off—we jump up and run down the corridor. To resist doing that, and to resist saying anything in the meantime, is a new skill that we need to get used to.

I congratulate my hon. Friend the Member for Birkenhead (Mick Whitley) on having secured this afternoon’s debate. It is a really important debate that sheds light on two things in particular, and he is to be commended for the excellent way he presented the case for renewable energy in the north-west.

First, we must recognise what an important part of the country the north-west is, in terms of both its renewable resources and their utilisation for the benefit of the country as a whole. Some of those resources have been mentioned in the time permitted to us this afternoon. A number of hon. Members, including my hon. Friend the Member for Wirral West (Margaret Greenwood), spoke about the tremendous tidal resource in the north-west. Not many people know that the tidal range in the Mersey estuary is the second highest in the UK, closely followed by the Morecambe Bay tidal range. Parts of the north-west should be in the driving seat when it comes to utilising tidal energy for the future benefit of the UK. Of course, we already have substantial penetration of offshore wind in the Irish sea and a number of installations close to the north-west coastline, but anyone who has seen the offshore wind projects timeline charts put out by RenewableUK will know that, despite the tremendous offshore wind resource in the north-west, development of offshore wind has essentially stalled in that area. The hon. Member for Vale of Clwyd (Dr Davies) mentioned that some new leases are under way, particularly for floating wind, but performance at the moment is, frankly, very poor when it comes to developing this tremendous asset that the north-west has.

We have also heard from hon. Members not just about the north-west’s physical assets, but its human assets, including the assets of ingenuity and thought that have gone into the HyNet project. I unequivocally commend that scheme to this House for its proactive imagination, its importance, and its ability to bring jobs and skill chains to the north-west, which will benefit the north-west and the country as a whole. It combines carbon capture and storage and hydrogen and brings forward industrial processes, and the developers of that project are to be applauded—[Interruption.]

[Steve McCabe (in the Chair)]

Order. I am conscious that I cannot alter the finishing time, which is still 5.50. I am really sorry about this, Dr Whitehead.

[Dr Whitehead]

I will shout my way through it, Mr McCabe. I am trying to draw our attention this afternoon to the north-west’s rich renewable resources that the north-west has, and how imperative it is that those resources be exploited for the benefit of the whole country as soon as possible. Hon. Members have underlined why that is so important.

The second important point to discuss is what the Government are doing about exploiting the resources and supporting the people, local councils and industries of the north-west in getting those schemes under way. The marks are pretty low here. I mentioned the lack of development of offshore wind, and my hon. Friend the hon. Member for Wirral West said Government support for tidal power was lukewarm. That was extremely kind of her, because as far as I am concerned, Government support has been stone cold. That needs to be urgently reversed, in order to bring the resources for secure, stable, low carbon energy forward in the way we know is possible, in Morecambe, the Mersey and other sites in the north-west, to the benefit of the whole country.

[Steve McCabe (in the Chair)]

Order. I think you will have to wind up there, Dr Whitehead.

[Dr Whitehead]

I was about to, Mr McCabe.

[Steve McCabe (in the Chair)]

Now would be good.

[Dr Whitehead]

It is important to put the two parts of the debate together—what the potential is, and what the Government are doing about it. Those two things need to be in close harness. If the result of this debate is better Government support for renewables in the north-west, that would be a very good achievement indeed.