Fuel Poverty

Alistair Carmichael Excerpts

Wednesday 6th November 2024 Westminster Hall

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

I beg to move,

That this House has considered Government policies on tackling fuel poverty.

It is a pleasure to see you in the Chair, Sir Roger. A household in fuel poverty is defined as one that commits more than 10% of its income on energy to maintain a satisfactory heating regime. Fuel poverty includes three elements. The first is the household’s income, from which we compute that 10%; the second is the household’s energy requirements, on which the quality of the housing stock and the availability of cheaper tariffs have an influence; and the third is the fuel prices themselves. It is sobering to think that across the United Kingdom as a whole, no fewer than 6 million households are living in fuel poverty. In Scotland in 2022, some 791,000 households were fuel-poor.

[Sarah Dyke (Glastonbury and Somerton) (LD)]

I have recently received more than 200 emails from pensioners in Glastonbury and Somerton who do not know whether they can afford to turn on the heating this winter. Does my right hon. Friend agree that the Government should provide targeted energy discounts for vulnerable households, to reduce the number of people living in fuel poverty?

[Mr Carmichael]

It will be the first surprise of the day for everyone that the answer is yes. I very much agree that we need that—or if not that, something of the sort. Meaningful action that is fit to meet the needs of the different parts of the United Kingdom is long overdue.

While households in fuel poverty are committing more than 10% of their income, households in extreme fuel poverty are committing more than 20% to meet their energy needs and keep their home warm. In Scotland, there were 311,000 such households in 2019. By 2022, the figure had risen to 472,000.

This issue is particularly acute for us in the northern isles. In Orkney and Shetland, 31% of households live in fuel poverty; the Scottish average, which is higher than that of the rest of the United Kingdom, is 24%. It is not difficult to see why fuel poverty is particularly acute in the northern isles. Winters are longer, darker and colder than in other parts of the country. We are off the gas grid. Most of our homes are heated using electricity, oil and sometimes liquefied petroleum gas or solid fuel. Yes, an increasing number of people are able to use photovoltaics and ground or air-source heat pumps, but the bulk of our heating still comes from conventional sources.

[Helen Grant (Maidstone and Malling) (Con)]

I congratulate the right hon. Gentleman on securing this important debate. I recently visited the home of an elderly pensioner in my constituency. I sat in her freezing cold living room with her for more than an hour while I took instructions on a matter. She was wearing two jumpers, a scarf, thick trousers and boots. She was dressed in that way because she was too afraid to put the heating on, as she did not think she would have the money to pay the bill. Does the right hon. Gentleman agree that the Government’s cruel cut to the winter fuel allowance will have a serious impact on the health and wellbeing of some of our most vulnerable people?

--- Later in debate ---

[Mr Carmichael]

I am sad to say that I do agree. I have seen the same thing time after time in houses across my constituency. I have seen people sitting with two, three or four layers on and a blanket over their knees. If there is any heating, it might come from a single bar on an electric fire or something of the sort. With the winter fuel payment, we have to understand that there is a generational difference: the people who were getting that payment were in large part brought up in an age when people did not borrow; they lived within their means. Taking away that money puts them more acutely at risk than people of other ages. When we devise policy, we sometimes have to look at the social and psychological impact as much as at the political and the economic. The hon. Member makes a good point.

In communities such as mine we have older, much less energy-efficient housing stock. Some elements of last week’s Budget may mitigate the worst effects. It did not have the comprehensive strategy that I wanted, but in the interests of fairness we should acknowledge that if the increase in the minimum wage leads to increased household incomes, it will have an impact on some people living in fuel poverty. The retention of the state pension triple lock will also provide some mitigation. To that extent, those things are welcome, but in the context of the wider influences on fuel poverty, they will hardly hit the sides. The energy price cap has now been put up to £1,717, which is an increase of £150, and it seems likely that there will be a further increase come January. The situation among the fuel-poor is only likely to get worse, which is where the hon. Member’s point about the winter fuel payment comes in.

It is true that the mechanism of pension credit is there to mitigate the worst effects, as I anticipate the Minister will say, but we have known for 20 years that there are problems with all the tax credit schemes and with the variation in uptake across the board. Again, it is a generational thing. Knowing the community that he comes from, the Minister will know that among older people in parts of the country there is still a real stigma attached to a means test. They will always be less likely to apply for something that they could otherwise have been given by right. For those who live in fuel poverty, it now feels as though anything given with one hand is being taken away with the other.

What can we do? What tools have we at our disposal? We have the warm home discount and the energy company obligation scheme, to which I will turn in a minute, but I first wish to raise a couple of more specific issues that relate to tackling fuel poverty in communities such as mine.

The Minister has already heard me raise the question of an isles tariff; in fact, we met earlier this week to discuss it. Orkney and Shetland has been at the heart of supplying the nation’s energy needs for the past 40 or 50 years, as we have played host to the oil and gas industry. Shetland now has one of the biggest onshore wind farm developments anywhere in the country, but in the shadow of the turbines are some of the greatest and most acute problems with fuel poverty. That is now generating genuine frustration. As we play host to major energy developments—latterly renewables—there is very little or no community benefit for those who host them.

Serious attention now needs to be given to the question of an isles tariff. It does not need to be an isles tariff; it could be something that applies across the highlands and islands and in other areas that are particularly badly affected. I am pretty sure that Ofgem will not be keen—as far as I can see, Ofgem is never keen on anything that will actually make a difference—but if it can accept the principle of differential treatment through a social tariff, which is now the subject of a consultation, a geographical tariff should also be given serious consideration.

Many of my constituents rely on electric storage heating. Access to “total heating with total control” tariffs, which were designed by the former hydro board specifically with communities like mine in the highlands and islands in mind, still provides them with the best and cheapest available source of heating. However, it does not allow them to take advantage of different tariffs when switching or other ways of saving money are available. It requires two meters, one of which has two readings. As smart meters are rolled out, it appears that although they may be smart, they are not smart enough to do something that the old technology did quite easily.

There is then the question of the radio teleswitch, which is the delivery mechanism for many tariffs. It is due to be switched off in 2025, as the last of the BBC analogue signal is decommissioned. We all need to cross our fingers and hope it lasts until 2025, because it could quite easily fall over at any point. When it does, the string and chewing gum that are keeping it going at the moment will simply no longer be enough.

Will the Minister give me an update? Before the election, his predecessor agreed to hold a roundtable. The election intervened, but I am pleased to hear that the roundtable went ahead and that the different players were brought together in the room. It appears to have made some progress, but my constituents would be keen to hear the details.

The Government’s manifesto promised a strategy with a warm homes plan, whereby £13.2 billion would be committed to address fuel poverty. The Budget last week allocated £3.4 billion over three years. That is a sizeable chunk of money, but it is not the £13.2 billion that we were promised. Presumably the remaining £9.8 billion will have to come in years four and five of this Parliament if the Government’s commitment is to be met.

I have two problems with that approach. First, it will leave a lot of people in fuel poverty for another three years while they wait for the money to come. Secondly, if the money comes at all, we will be shovelling it into wheelbarrows to get it out over the two years, a situation that always brings the law of unintended consequences into play, as we have seen time and again with energy efficiency measures, renewable energy development and so on. There is money that must be spent within a target time, but there is neither the existing labour force nor the skills base to deliver the work, so a whole load of fly-by-night companies are set up that come into our communities from outside, do substandard work, go away and eventually go bankrupt while constituents are left to pick up the pieces.

It is obviously for the Treasury to decide how the money will be spent, but looking towards years three, four and five of this Government, can the Minister give me some assurance that there is a view towards a strategy that will use the money that is currently committed, that we will have a clear idea, and that we can start planning now how to use any money that comes in future?

The two existing vehicles for alleviating fuel poverty—the warm home discount, which reduces bills by £150 a year for those who qualify, and the energy company obligation, which assists people with energy efficiency adaptations, renewable energy adaptations and so on—are both means-tested, which takes us back to the question of cliff edges. Most concerningly of all, those measures are due to end in 2026 unless they are renewed by the Government. The Minister will have an easier conversation with the Treasury if he bears it in mind that the funding for the schemes comes not from the Treasury but from the energy companies.

We need to know that there is a plan for the continuation of those schemes or for something that will seek to achieve the same end. It would be good if that plan could come as part of a Green or White Paper outlining a strategy. That is what is lacking at the moment: we have a scheme here, a scheme there, an idea of this and an idea of that, but there is no overarching strategy to ensure the best possible delivery. At the beginning of this debate, I gave the stat that 6 million homes across the whole United Kingdom are living in fuel poverty. That is not something that we should be prepared to live with.

--- Later in debate ---

[Mr Angus MacDonald (Inverness, Skye and West Ross-shire) (LD)]

Thank you very much, Sir Roger, for allowing me to contribute to the debate. I thank my right hon. Friend the Member for Orkney and Shetland (Mr Carmichael) for securing it.

The two big issues facing rural Scotland, and the highlands in particular, are the care sector and fuel poverty. I am sure hon. Members have not spent too much time worrying about this, but although the mean daily temperature in London is 16°C, it is 9°C on the island of Skye, where God comes from. On Skye we have longer nights, colder weather, windier conditions and older, draughtier houses. In June this year, the daily standing charge for electricity was 61.1p in the north of Scotland and 40.8p in London, so in the north of Scotland we pay 50% more to be connected to our electricity. That is shocking.

[Mr Carmichael]

Standing charges, which vary massively and randomly across the country—from memory, I think the worst area is actually north Wales—are one thing, but just a couple of weeks ago OVO Energy announced that it would start charging its customers £1.50 every time it sends them a paper bill. Is that not just—I say this, Sir Roger, for the purposes of staying on the right side of you—taking the mick?

[Mr MacDonald]

What is absolutely clear is that the electricity companies are not losing money. Their total profits add up to tens of billions of pounds, but the costs are being borne by the poorest people in our society.

--- Later in debate ---

[Andrew Bowie (West Aberdeenshire and Kincardine) (Con)]

It is an absolute pleasure to serve under your chairmanship this afternoon, Sir Roger, and to join so many colleagues here in Westminster Hall for an incredibly important debate. I congratulate the right hon. Member for Orkney and Shetland (Mr Carmichael) on securing it.

It has been great to hear from colleagues. The hon. Member for Shipley (Anna Dixon) spoke about the removal of the winter fuel allowance and how the push to get more pensioners on to pension credit is incredibly important. However, when the figures suggest that the push for pension credit will actually offset the money being saved by the apparent removal of winter fuel allowance, I wonder whether the Treasury and the Department for Work and Pensions have thought their plans through. The comments by the hon. Member for Winchester (Dr Chambers) about the knock-on impact of fuel poverty on the NHS and charities were well made and should have been listened to carefully by all in this room and beyond.

As ever, the hon. Member for Strangford (Jim Shannon), who is a friend, made powerful points about the unique situation facing residents in Northern Ireland, where so many more houses than in Great Britain are off grid and rely on LPG and oil for their heating. Households over there face unique challenges when combating fuel poverty. As he said, the removal of the winter fuel allowance is a crushing blow for pensioners facing a cold winter this year.

The hon. Member for Wokingham (Clive Jones) raised insulation. I completely get his point. We need to go further and move faster to insulate more homes. I am proud of the Conservative Government’s record on that. We inherited a situation in which only 12% of households had an insulation EPC rating of C or above. When we left office earlier this year, it was up to 41%—a near 30% increase. Could we have gone further? Absolutely. Could we have done more? We absolutely should have. But that was a near 30% increase on the situation in which we found ourselves when we came to office, and that is something about which I am very proud.

[Mr Carmichael]

Is EPC not something else that we could reform? The way in which EPC bandings are rated seems to be utterly random and occasionally quite counter-productive.

[Andrew Bowie]

I agree. I would love to see the Government commit to a review of EPC ratings and how homes are judged. Maybe the Minister will speak to that if there are any plans coming through the Department for Energy Security and Net Zero, or indeed any other Departments that would be responsible for that as well.

The hon. Member for Inverness, Skye and West Ross-shire (Mr MacDonald)—it is taking time to get used to that constituency name—raised some very interesting points and concerns that I share, as I represent a vast rural constituency myself. However, he is entirely wrong: God, of course, comes from Aberdeenshire, not the Isle of Skye, although Skye probably comes a close second.

I wonder what the constituents of the hon. Member for Inverness, Skye and West Ross-shire and the right hon. Member for Orkney and Shetland, as well as companies reliant on the oil and gas sector, think of the Liberal Democrats’ support for the extension of the energy profits levy—something also raised by the Liberal Democrat spokesperson, the hon. Member for Mid Dorset and North Poole (Vikki Slade). As we will be voting on the Budget resolutions in a few hours’ time, they may go away and reconsider their support for those Government measures. The Conservatives will certainly be voting against any extension.

Keeping homes warm this winter will be at the forefront of people’s mind in many households across the United Kingdom. We can feel the temperature falling outside as we speak. As a consequence of various pressures such as Putin’s illegal invasion of Ukraine and the ongoing instability in the middle east, the cost of heating homes has risen and has hit many families hard.

Myriad factors contribute to fuel poverty, including energy efficiency, income, housing costs and energy prices. That is why the Conservative Government took steps to support families to keep their homes warm. Through the energy bills support scheme and the energy price guarantee, we supported households the length and breadth of the UK at the height of the energy crisis. The steps we took amounted to approximately £1,500 for a typical household, covering about half the energy bill of every home in Britain. The warm home discount scheme meant support for 3 million households at risk of fuel poverty: that was 3 million families who could afford to keep warm and keep more of their money in their pocket. We stepped up support for our pensioners, delivering up to £600 in winter fuel payments and pensioner cost of living payments to 11.8 million pensioners. Some 1.1 million cold weather payments, worth £29.6 million, were paid out last winter alone. Those were all steps to support some of the most vulnerable people in our society in the cold weather.

--- Later in debate ---

[Mr Carmichael]

This has been an exceptionally good debate, and I have been encouraged by the degree of consensus. We have to approach a subject such as this with humility and recognise that nobody has ever found the answer to these fairly intractable problems.

I did not anticipate that the main point of contention would be where God came from. Of course, as the theologians tell us, God is omnipotent, omniscient and omnipresent, so all those who have claimed that He is from their constituency are able to do so quite accurately. A point that I think is beyond any debate is that He is happiest, if not necessarily warmest, when he is in Orkney and Shetland.

Question put and agreed to.

Resolved,

That this House has considered Government policies on tackling fuel poverty.

Renewable Energy Projects: Community Benefits

Alistair Carmichael Excerpts

Tuesday 15th October 2024 Westminster Hall

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

It is a pleasure to serve with you in the Chair, Dr Huq. I commend my hon. Friend the Member for Inverness, Skye and West Ross-shire (Mr MacDonald) for securing this debate. Once the Backbench Business Committee is up and running, this is a subject that deserves longer and more careful scrutiny.

Speaking from the perspective of Orkney and Shetland, I will keep things simple. Time is short and simple is what I do best. There are two things that I want people to understand about Orkney and Shetland. First, we have the highest level of fuel poverty of any community in the country. I hear what the hon. Member for East Thanet (Ms Billington) says about poor people in all communities, and she is correct, but the truth is that the further north we go, the more we are likely to find people enduring poor housing standards with long, dark, cold winters. That has an impact and it is felt most acutely in Orkney and Shetland.

The second thing I want people to understand is that when we talk about needing to find a template for making these things work, in Orkney and Shetland we have already done that. We have done it since the mid-1970s on our relationship to our oil and gas industry, which we have hosted. We have the two largest onshore terminals for oil and gas in western Europe—now coming perhaps into the autumn, if not quite to the end, of their existence. The reason there is such support for the oil and gas industry in Orkney and Shetland is that for the last few decades it has been a tremendous source of community benefit for us.

If there is an energy generation source, or whatever it is, in a community and the community sees the benefit of it—in a direct financial sense of money going into a trust or just in the availability and reliability of good-quality, high-skilled, well-paid jobs—people will be much more accepting. When, as is the case at the moment, we see Scottish and Southern Electricity Networks turning on the Viking wind farm in Shetland and being paid £2 million in August alone not to generate any electricity, that is where we see a disconnect. Dr Huq, there is a great deal more I could say about this subject—and I hope we will return to it—but just remember this: whatever the question is, the answer is to get yourself to Orkney and Shetland.

Contracts for Difference

Alistair Carmichael Excerpts

Tuesday 3rd September 2024 Commons Chamber

[Ed Miliband]

My hon. Friend asks a very important question, which gives me a chance to advertise the Second Reading of the Great British Energy Bill on Thursday. All are welcome—standing room only! As part of our plans for Great British Energy, we allocated £3 billion of the £8.3 billion that we set out in the election for what we call the local power plan to do what other countries such as Denmark and Germany do as a matter of course: unleash local renewables, with local communities, councils, community groups and co-ops being part of that. That is important, because it is a way to tackle fuel poverty and generate income for local communities. It is also important as a way of winning consent from local people. I look forward to my hon. Friend and others making a contribution on this question in that debate and others.

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

If, as the Secretary of State says, he wants to offer a line of sight for industry, he should look more closely at the opportunities that come from the development of tidal stream, particularly through the creation of a supply chain from the ground up; that is always easier than recovering one that has already gone overseas. But that line of sight has to go in both directions, which is why developers in tidal stream energy are asking the Government to set a 1 GW deployment target. Will he listen to those representations now, and act on them?

[Ed Miliband]

When I came into office and examined the issues around pot 2, which covers tidal, I was very keen to make sure that we increased the tidal minimum, which we did by 50%. These are important discussions to continue. There is a dilemma here, as the right hon. Gentleman will know, which is that tidal remains relatively expensive, but the point of the tidal developers is that many technologies remained expensive until they were deployed at scale. These are hard questions, because they are about value for money and how much we invest in tidal, but my Department needs to have those important discussions.

Clean Energy Superpower Mission

Alistair Carmichael Excerpts

Thursday 18th July 2024 Commons Chamber

[Edward Miliband]

I really welcome my hon. Friend’s advocacy on this issue. The hydrogen economy is a really important part of our future. It is yet another example of where we can succeed as a country and generate good jobs and good wages. I look forward to engaging with him on these issues.

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

May I take the Secretary of State back to the question of tidal power generation? If he speaks to the developers in the sector, they will tell him that they need two things to keep growing the sector. They need an expanded pot for the ringfenced allocation in the next allocation round, and they need an ambitious deployment target for the sector. Can we have an early announcement on that? If he really wants to understand the potential of marine renewables, he needs to get himself up to the European Marine Energy Centre in Orkney. He is very welcome there at any time, but he might want to come in the summer, while the days are still long.

[Edward Miliband]

I thank the right hon. Member for that invitation, and I will very much consider it, because I care a lot about this area. Obviously, I have to make decisions, in a certain capacity, about allocation round 6, but I have heard what he has said.

Energy Rebates: Highlands and Islands

Alistair Carmichael Excerpts

Wednesday 6th March 2024 Westminster Hall

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

It is a pleasure to serve with you in the Chair, Mr Paisley. I warmly congratulate the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) on acquiring this time for a debate on a subject that matters to his constituents, my constituents and the constituents of my hon. Friend the Member for Caithness, Sutherland and Easter Ross (Jamie Stone) and the right hon. Member for Ross, Skye and Lochaber (Ian Blackford).

As the hon. Member for Inverness, Nairn, Badenoch and Strathspey said, this issue goes right across the highlands and islands, where we have longer, darker and colder winters. We have more houses that are older and therefore more difficult to insulate and heat, and we have virtually no access to the gas grid. Those things all contribute to the perfect storm that he rightly outlined, which is the exceptionally high incidence of fuel poverty. I know that because one of the less laudable claims to fame that the northern isles have, along with the Western Isles—Na h-Eileanan an Iar—is higher rates of fuel poverty than anywhere else in the country.

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

Much is often said about the colder temperatures and dark winters that we have in the highlands. However, we also need to give consideration to the fact that it is about not just temperature, but about the driving wind and rain that make it feel colder. There are times when the rain is horizontal, certainly in places such as the Isle of Skye and others. Let us remember that these communities are often very isolated. We are talking about single homes. Little protection is provided, so the impact of bad, cold, windy or wet weather on these communities is enormous, which just increases the need to have the heating on to give some protection from the climate.

[Mr Carmichael]

The right hon. Gentleman is absolutely right. We have to be a little careful about how we describe that to people in other parts of the world: doubtless, in a week or two, we will all be back here telling everybody they should come and have their holidays in the highlands and islands. However, we are by no means unfamiliar with the phenomenon of the rain that comes straight at you. Certainly, it is always the surest sign of somebody who has just recently moved to Orkney or Shetland, or who is visiting, that on a rainy day they go out with an umbrella, which is a spectacularly useless piece of equipment in the communities that we are blessed to call home.

The hon. Member for Inverness, Nairn, Badenoch and Strathspey brings us the interesting and constructive proposal of a standing charge rebate. When it comes to the question of energy costs, I have long taken the view that every little helps. Frankly, it does not really matter whether it is a silver bullet: when families are facing the choice not of heating or eating but of starving or freezing, which might be a better characterisation of the situation in the highlands and islands, if there is some benefit to be had, we should take it. That was the view I took on the alternative fuel payment brought forward by the Government last year: it helped a bit, and a bit of help is better than nothing.

The hon. Member for Inverness, Nairn, Badenoch and Strathspey would probably agree that standing charges are a small part of the equation when it comes to the question of energy costs and the actual cost involved in heating people’s homes. The unit price is where the real action is to be found, and it is there that I would like to focus some attention, not least because I understand that Ofgem is carrying out a consultation on a social tariff. That is an interesting idea, and one that I think would command a fair degree of support across the whole House. I therefore hope Ofgem gets on with it—and quickly. Within that social tariff, there surely has to be some mechanism for geographical variation, because social is not just on the basis of income. It has to bring in other factors as well, such as the fact that we live in places that have longer, darker and colder winters.

[Drew Hendry]

The right hon. Gentleman is right to talk about this as being part of a wider package. I secured the debate today to be specific about the need for a highland energy rebate, but that does not negate the sense of what he says about the collective impact. With the social tariff, the highland energy rebate scheme might give an opportunity to put that geographical difference into the mix, in order to achieve the right hon. Gentleman’s aim.

[Mr Carmichael]

The Shetland Islands Council has promoted the idea of a Shetland tariff for years. I understand what the hon. Member says about seeing the energy development; that is something we have lived with in Shetland and Orkney for the past 50 years, as we have kept the rest of the country supplied with hydrocarbons. We have had some significant benefit, but nothing compared with what we could have had. Yes, there are opportunities here. The real fight comes with the energy unit cost, but in the meantime, if we can do something with standing charges, we should.

I am a wee bit disappointed that we do not have a better turnout for this debate. It seems to me that the hon. Member for Inverness, Nairn, Badenoch and Strathspey has drawn our attention to something that is really severe for the highlands and islands, but not only there. The hon. Gentleman referred to the disparities between a standing charge in London and in the highlands and islands, or in northern Scotland, which is probably the same thing. For somebody in London paying their bill by direct debit, the current standing charge is 38.5p per day, against the northern Scotland figure, which is 59.38p per day, and the southern Scotland figure, which is 62.08p per day. That is utterly random. I am sure that very clever and complicated sums were done to get those figures, but they have produced what we in the highlands and islands, and elsewhere in Scotland, would probably call mince. If ever there was an illustration that the regulation of the energy market has gone fundamentally wrong and requires root-and-branch reform, that is surely it. In north Wales and Mersey, the rate per day is 62.21p, which is even higher than in the highlands and islands and southern Scotland. People in north Wales and Mersey pay 29.57p per unit, compared with 28.48p in the north of Scotland and 28.16p in southern Scotland.

When we drill down into the figures and the regulation of the market, the other injustice is the rate charged to people on prepayment meters, who by definition are under the greatest financial pressure in relation to energy. The rate charged in the highlands and islands is 62.3p per day in standing charges and 27.19p per kilowatt-hour. If people in the north of Scotland pay by direct debit— I do, and I suspect everybody else in the room does—they pay 59.38p per day, whereas somebody who has to rely on a prepayment meter pays 66.23p per day. In what universe is that a sensible and fair system?

[Jamie Stone]

My right hon. Friend is making an excellent speech. He talks about an injustice. When the national health service was set up, people who lived in Lerwick, Tain, Paisley or Bristol had the same right to see a doctor and to get an antibiotic or treatment to make them well; the situation that he describes flies in the face of the notion of fairness, which is important to our democracy.

[Mr Carmichael]

My hon. Friend makes an important point. Like the hon. Member for Inverness, Nairn, Badenoch and Strathspey, my hon. Friend touched earlier on the health aspects of energy costs, which not only impact the family budget for heating the house but have a much wider application. As the hon. Member for Inverness, Nairn, Badenoch and Strathspey said, they impact mental health, and have serious impacts on those who are elderly and so more vulnerable to the cold and on those who have physical health conditions. For those people, the choice between heating and eating actually becomes less difficult, but only in a bad way: they have no choice. Their medical condition means that they have to give priority to heating.

The fact that we are now so far from the idea of a universal, standard price for energy across the whole country shows just how badly wrong the regulation of the market has gone. As the hon. Member for Inverness, Nairn, Badenoch and Strathspey said, responsibility lies at Ofgem’s door. I wish we could see more proactivity from Ofgem, which had to be taken kicking and screaming to get to the point of consulting on a social tariff. If the Minister could instruct it to look at the issue and achieve meaningful change, she would be doing some genuinely good work.

In conclusion, I congratulate the hon. Member on focusing our attention on the question of standing charges. The situation is bad for the highlands and islands, and it seems even worse for other parts of the country, although they might not be as heavily dependent on heat in the winter as we are.

Of course, I could not sit down without making brief reference to the fact that, for many in our constituencies, the real cost of heating their houses comes from the cost of using heating oil, as that is the only way that they can. There are no standing charges for that, and it is much more difficult to get money into the pockets of people who rely on it. That is baked into the system, and it will not be fixed easily.

[Drew Hendry]

I realise that the right hon. Gentleman is concluding his speech, but it is important to point out that this is an issue that I and others, and possibly even himself, have raised in the past. Ofgem has been delinquent in not regulating for those off the gas grid as well. We need to appreciate those who are reliant on LPG and fuel oil because they need protection as well. Again, when they are using fuel oil and LPG, they also tend to use more electricity, which brings us back to the main thrust of the debate. I thank the right hon. Gentleman for his patience.

[Mr Carmichael]

I am grateful to the hon. Gentleman; as one would expect, there is not a great deal of difference. The one thing I would start with, if I were in Ofgem, would be multi-rate meters, such as Economy 7 and “Total Heating with Total Control”, which many of our constituents use. The standing charges on those are 69.32p per day in northern Scotland and 69.17p in southern Scotland. Again, we see the disparity. That is one standing charge where direct action could have a direct impact on the highlands and islands.

I await with interest what the Minister has to say. I share the experience of the hon. Member for Inverness, Nairn, Badenoch and Strathspey; the Minister is thoughtful and prepared to engage. I hope that, having had this brought to her attention, she will use her offices to ensure that, going ahead, the highlands and islands, as well as those who are fuel poor in England, Wales, Northern Ireland and indeed southern Scotland, will not be given this rather shoddy treatment.

--- Later in debate ---

[Amanda Solloway]

Once we have all the responses and have looked at them, I will be very happy to welcome views on the findings.

I turn to transmission and distribution charges. Electricity network charges are the costs that users pay to connect to and use the electricity network. These are charged to suppliers and generators, so eventually the costs are passed on to consumers in their energy bills, some of which is reflected in their standing charges.

As an independent regulator, Ofgem is responsible for setting the electricity network charging methodology. Government officials are working closely with the regulator to understand these charges. Electricity network charges must be cost-reflective, so that those who pay them are charged in a way that reflects the cost that they are placing on the network.

Transmission charges are based on the costs that different users impose on transmission by connecting in different locations. That means that there are higher charges for those whose use of the network results in longer distances of electricity transmission. As hon. Members will know, Scotland is a net exporter of electricity, so transmission costs for Scottish consumers are lower than those for their counterparts in England and Wales.

[Mr Carmichael]

The Minister describes locational charging. That made a degree of sense in the days of generating electricity from hydrocarbons, because there was an element of transmission loss, so we wanted to encourage transmission closer to the point of consumption. As we move to renewables, that argument simply no longer stands, because we are not wasting a non-renewable resource in order to generate and then transmit electricity. Why has the approach not been changed?

[Amanda Solloway]

I thank the right hon. Member for his intervention. These are the kinds of things that we are working through as we respond to the net zero challenge.

Hon. Members have quite rightly talked about the geographical challenges of electricity supply in northern Scotland, such as the area’s size, poor weather conditions, sparse population, mountainous terrain and the need to supply multiple islands. Inevitably, these challenges mean that the costs of distribution are much higher than for other regions in Great Britain. Hon. Members have made that point very clearly.

I also acknowledge that the highlands and islands produce high levels of renewable electricity, although that does not remove the challenges of distribution. We will be looking at that issue.

The hydro benefit replacement scheme provides annual assistance of about £112 million to reduce distribution charges for domestic and non-domestic consumers in the region. That equates to a reduction of about £60 annually per household.

COP28

Alistair Carmichael Excerpts

Wednesday 29th November 2023 Commons Chamber

[Amanda Solloway]

It is always a great pleasure to listen to my right hon. Friend, who reminds us of the history and of how we got to this point. However, we need to acknowledge all the good things that we are doing, and I reiterate that we are looking at ensuring sure that we have a secure energy future.

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

Is it not just a little bit embarrassing that as Ministers head to the Gulf for COP, the European Marine Energy Centre in my constituency is having to consult on downsizing and restructuring because the Minister’s colleagues in the Department of Levelling Up, Housing and Communities have been unable to provide the three-year funding stream that they had previously undertaken to provide? Will she speak to her colleagues in DLUHC to ensure that some certainty on that money can be given, and that the centre can continue its genuinely world-leading work on the development of marine renewable energy?

[Amanda Solloway]

That is obviously not my Department, but I would be happy to take that away and facilitate a meeting, or indeed have a meeting myself.

Contracts for Difference Scheme

Alistair Carmichael Excerpts

Thursday 19th October 2023 Westminster Hall

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

I congratulate the hon. Member for Strangford (Jim Shannon) on securing this debate, which is timely, given the outcome of the recent AR5. He presented it with the degree of detail and precision that the House now expects of him. It is a pleasure to serve with you in the Chair, Dame Angela, albeit I am mildly disappointed that you are in the Chair; I had rather hoped that you might have moved on to other things by now, but I guess that is politics, and it was not necessarily to be.

[Dame Angela Eagle (in the Chair)]

Such is democracy.

[Mr Carmichael]

I want to pick up where the hon. Member for Waveney (Peter Aldous) left off. While there are a lot of lessons to be learned from the conduct of AR5, it is worth a short pause to consider the successes of contracts for difference. As a mechanism for deployment and growth in renewable energy, they have been remarkably successful. Ultimately, however, they are a tool like any other, and the quality of the product that we have at the end of it is dependent on the use to which that tool is put.

I hope that AR5 is a warning shot—if I may put it that way without mixing too many metaphors—and that in future there will be a better dialogue between Government and industry, because the outcome that we got was pretty much the outcome that the various industries had been predicting. It is, I think, for the Government to keep engaging with industry to learn lessons and see the continued growth in our renewables. Quite apart from the need to meet our net zero targets, for which the growth of renewable energy will be absolutely critical and essential, the question of energy security will be dependent on this. Had we taken some of these decisions earlier, pushed them with more vigour and better resource and used the tools differently, we might be in a better place for energy security today, but we are where we are, and what is important now is that we are able to build the industries for the future.

I will concentrate and focus in particular on the development of marine renewables—that is probably the least surprising news of the day for the Minister. That is something in which I have had 20-plus years of involvement, and it is important to my constituency, playing host as we do not just to the European Marine Energy Centre, but to a number of successful projects in the AR4 and AR5 rounds. The decision to include in AR4 a ringfenced pot of £20 million for tidal stream energy generation was absolutely transformative for the industry. I was in a call with the people from EMEC this morning, and although it was not the purpose of the call—we came to it during the course of the conversation —they were talking about how the development that we have had as a consequence of AR4, and now AR5, has helped them to grow their business case. There are still issues that have to be dealt with—the Minister knows some of them; they are not germane to the debate—but that shows what is possible when the right decisions are made here.

By following that with £10 million minima in AR5, which led to the deployment of 50 MW of capacity, the sector saw an uptake that exceeded the 10 MW minimum. That demonstrates the way in which the sector is ready and able to go further to help the Government meet their declared policy aims. We have 90 MW deployed in 11 projects across Scotland and Wales.

What more do we need to do? Obviously, there will need to be a continued ringfenced pot. We are not yet at the stage of commercialisation where marine renewables would be capable of competing with the other technologies in the auction, so that continued ringfencing will be important. We also need bigger minima in the next round—the AR6—and the sector keeps saying that it wants a target for deployment in the region of 1 GW by 2035. Again, that should be attractive to the Government. If we are to learn the lessons of AR5, listening to the sector—seeing what it comes forward with and what it wants to produce—will be absolutely critical. There is one way in which the Minister can demonstrate that he is listening to and engaging with the industry, and perhaps restoring some of the confidence that was damaged as a result of AR5.

The opportunities are still here and, particularly in relation to tidal stream, need now to be followed by opportunities for wave power—there has to be a route to market for wave power. Tidal stream has demonstrated what is possible; it is now for the Minister to look at how we allow other sectors and developing technologies to come forward and take the same opportunities that were given to tidal stream. The lesson of AR4 and AR5 and the ringfenced pot for tidal stream is that the mechanism works. If it can work for tidal stream, surely it can work for wave power as well.

There are some opportunities here. We have taken a bit of a knock with AR5, but that should not lead us to challenge in any fundamental way the suitability and durability of contracts for difference. I hope that the Government will continue with CfDs, but that in using that tool we find routes by which we can engage better with the industry—as the Government should do in the interests of meeting their own targets and aspirations.

--- Later in debate ---

[Graham Stuart]

Having been chided, my hon. Friend is of course—quite rightly, and characteristically—straining to justify his position, and I have a lot of sympathy with it. I have said that we would ideally have got the window in a way that better matched that reality. But there are reasons for having the annual auction. We always come up with a window that industry says is not enough. We have managed to bring down the costs by 70%. It is hard to overestimate the importance of this. This country, the CfD mechanism and, I have to say, this Government have transformed the economics of offshore wind—not just to the betterment of UK consumers, but to the benefit of the whole world. It is only because of what has happened here with this approach, which every year is in a state of tension with industry, that we have been able to show and reveal these prices. We are now able to export our expertise to the north-east of the United States, to the Gulf, to Taiwan—all over the world—as a result of this process.

I said that I wished we could have better attuned the window to the realities—they changed even after we set the prices in November. That was precisely why we decided on having an annual auction. To put it another way, if what someone offers is always accepted, they might want to consider whether they are overpaying. That is not to say that I in any way revel in the fact that we did not get offshore wind in that round, but I am glad that we had the foresight to move to an annual system and that we are able so swiftly to move on. It will just be the middle of next month when we set out the core parameters for the next round, which will happen next year.

[Mr Carmichael]

Will the Minister give way?

[Graham Stuart]

I will make a little more progress, if I may.

The CfD scheme is a major UK success story. It has secured more than 30 GW of capacity, including 20 GW of offshore wind, since 2014. It has driven down the price of offshore wind by about 70% in that time, helping to grow the industry and its supply chain both in the UK and globally, although as the hon. Member for Manchester, Withington says, I have previously publicly expressed the desire to do more. We are coming forward with non-price factors as a way of encouraging more of the supply chain to be in the UK. But have no doubt: this has been a phenomenal success for us, for British jobs, for British consumers and for the world. We have the four largest offshore wind farms in the world, with more than 14 GW already in operation and a further 77 GW in the pipeline. It is a pleasure for me that of course the largest offshore wind farm in the whole world is Hornsea 2, named after a small town in my constituency. The UK is a world leader in floating offshore wind, with one of the largest amounts of operational capacity anywhere in the world, at 80 MW to date.

The hon. Member for Strangford says that the results of allocation round 5, which concluded in September, were disappointing because the total capacity secured was less. As I have said, I do not accept the characterisation of that round, because it has in fact realised the highest amount, on an annualised basis, of any of the rounds we have ever run. It resulted, in fact, in more projects—95—than we have ever seen successfully done, even though it covered just a one-year window. The round delivered a combined total of 3.7 GW, which is enough to power the equivalent of 2 million homes. As I have said, there was more than double the number of onshore wind projects. We also secured—I have touched on this already—another good result for solar, and four times as many tidal stream projects as AR4 did.

I pay tribute to the right hon. Member for Orkney and Shetland (Mr Carmichael) for his doughty support for the sector. I did not realise that his involvement had stretched to 20 years, but when I visited his constituency he was there to characteristically champion the industry. For the first time in our CfD, we had success with geothermal. This vital new renewable capacity was procured in a competitive auction set against, as I say, a backdrop of highly challenging macroeconomic conditions.

--- Later in debate ---

[Graham Stuart]

The hon. Gentleman always makes an extremely plausible and effective advocate for the ideas that he espouses. I—and the Government, I am sure—will remain open to discussions with those in Northern Ireland and with the hon. Gentleman to find solutions. We talked about some of the challenges of staying on the overall net zero pathway. Of the four Administrations, Northern Ireland is potentially the most off track, so there is a real need to find solutions and we always stand ready to work constructively to find the best way forward.

I continue to believe, however, that the development of a bespoke support scheme offers the best and quickest way for Northern Ireland to secure the investment in renewable electricity generation that it needs to achieve its net zero goals. I have not said it explicitly but, of course, energy is devolved, so we are looking to the institutions in Northern Ireland, on behalf of the people of Northern Ireland, to take this on. That is what we would profoundly like to see. I commend the work done by the hon. Gentleman and the Department for the Economy so far, and I encourage us all to support their efforts.

I will try—I hope reasonably briefly, with your permission, Dame Angela—to respond to a few of the other points that have been made. My hon. Friend the Member for Waveney chided me in return, to ensure that we do not rest on our laurels and that we respond appropriately to IRA and perhaps EU initiatives in the space. He talked about creating incentives, picking up on the supply chain development issues that many Members have touched on, and ensuring that seabed auctions are a good place to do that. As he knows, I set out the work that the Crown Estate is already doing to put conditions on at that stage, in addition to changes to the CfDs.

I take on board my hon. Friend’s points about the administrative strike price, and ensuring that we get it in the right place in order to balance keeping costs down for consumers with getting the generation that we want and need. We will set out the pot details in just a few weeks, so I will leave commenting on his appeal for a ringfenced pot for offshore wind. On his request for the pot to reflect the pipeline, that is the mechanism we use for the CfD. That is one of the reasons for setting out the core criteria in November and providing more details in March—precisely so that we can match the budget and the other elements that make up the CfD with a realistic assessment of the pipeline in place. His Majesty’s Treasury and the Chancellor will have heard my hon. Friend’s points on the issues that, sadly or otherwise, sit with the Treasury rather than my Department.

From the right hon. Member for Orkney and Shetland, I heard, as ever, his espousal and support for tidal, and he talked about setting a target for that. The Government remain open and we will continue to consider that, but we have not yet made a decision on whether it would be the right thing to do. It is about doing the right intervention at the right time, based on the stage of development of a particular technology. However, like him, I am proud of the fact that we have been able to see it come on, and see some of the developments in his constituency. The hope to see those operationalised and scaled up here in the UK, with a big and strong domestic supply chain, is one that gives real optimism for the future.

[Mr Carmichael]

I was minded to offer myself as a mediator between the Minister and the hon. Member for Waveney, but they seem to have found a better pitch since that stage in the debate.

On the point of the 1 gigabit target by 2035, does the Minister not take on board the fact that this is now the only technology that does not have such a target? It was sustainable to argue his position in AR4; it is more difficult in AR5, and with every round it will become more difficult still. I say to the Minister again that this is an opportunity to talk to the industry, and engage in a way that works to his advantage by restoring some of the damaged engagement credibility.

[Graham Stuart]

I can go no further than to say that the right hon. Gentleman, as so often, makes a very strong argument. We will continue to engage and will come forward with any decision on that in due course, if that was thought appropriate.

The Opposition spokesman, the hon. Member for Manchester, Withington, talked a little about being able to bring hope to oil and gas communities around the United Kingdom. That is ironic considering the ambition of any Labour Administration, were one to be elected, would be to strangle that industry. Even though, as of last year, we are the most decarbonised major economy on earth, we are still 77% dependent on oil and gas for our primary energy needs.

Over the coming years, due to the precipitous fall in production because of the maturity of the basin in oil and gas production from the North sea, and those expected falls in Norwegian production, our dependence on LNG imports and the like is expected to increase. Having seen the price spikes of the last two years and the risks and issues that arise from not having reliable and ideally domestic energy, the Opposition want to put at threat 200,000 jobs supported by the oil and gas industry —cheered on, bizarrely, by the fortunately ever less popular Scottish Nationalist Government—through wanting to stop any new licences. That is despite the fact that the only alternative realistically available is LNG, which the North Sea Transition Authority recently announced had embedded in it four times the production emissions of domestically produced gas. It is environmentally nonsensical and disastrous for 200,000 jobs. Just as a small addition, the industry is expected to bring in £50 billion of tax revenue over the next five years—goodbye to that as well.

It is absolutely crazy to have an Opposition spokesman saying he is here on the side of oil and gas communities—he absolutely is not. We have an integrated energy system encapsulated within a legal framework in the Climate Change Act 2008, which means we are making the transition. We are leading the world on making that transition, but we will not speed it or help it, but in fact weaken it, if we do not support new oil and gas licences in order to minimise the necessary inevitable reduction in oil and gas production in our waters. It is bad for jobs, for the environment, for the economy and for tax. On no front does it make any sense at all.

I have gone on long enough. I thank everyone for their contributions, not least the hon. Member for Strangford who led the debate. I am happy to keep engaging with him. I admire his tenacity. I recognise what drives him to want to find a solution in Northern Ireland and I entirely share that desire to see something happen. I am confident in our CfD system. It has been a world leader. AR5 was a success even though it did not deliver the way I would like it to have done in offshore wind. I am extremely confident about AR6, where we will again balance getting the generation we seek with ensuring that we look after the interests of consumers and the long-term interests of the United Kingdom.

Offshore Wind Contracts

Alistair Carmichael Excerpts

Tuesday 12th September 2023 Commons Chamber

[Graham Stuart]

I thank the hon. Gentleman, not least for his attempt at a gag. I can tell him that what he says is the whole basis of the system—that it learns from each round. The most real economic data that we get is from an auction round. Moving to annual rounds, there will be ebb and flow as the right balance is sought between getting the generation that we require, set against our extremely ambitious deadlines, and not paying too much. That is the balance that we strike. We have 3.7 GW and I imagine that we will do even better next time.

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

I feel as if I am almost taking my life in my hands, but I do want to commend the Minister for one small piece of good news in this round, which is in relation to the development of marine renewables. The success of the auction for tidal stream development illustrates what would be possible for wave power if it were to be given the same opportunity in AR6. But for tidal stream, does the Minister agree that what is now needed is the 1 GW target for deployment? Will he work with me and other people in the House with an interest in this and the marine renewables sector itself to deliver that ahead of AR6?

[Graham Stuart]

May I pay tribute to the right hon. Gentleman? I met him in his constituency when I visited the European Marine Energy Centre and saw for myself some of the projects in the water. I am personally determined to ensure that tidal stream continues to grow. We maintain our global leadership, with a very high percentage UK supply chain as a further positive to it. He tempts me to get ahead of myself on policy, but I cannot do that. However, what we are doing and what our dedicated pot this year did is further strengthen that so that we can get in a position where that might be a realistic policy position to take.

Heating Rural Homes

Alistair Carmichael Excerpts

Tuesday 13th June 2023 Commons Chamber

[Sir Bill Wiggin]

All I can say is that those 15% of my hon. Friend’s constituents are lucky to have such a champion in their MP—what a hero for rural sensibility. We are truly blessed to have an intervention such as that. Later in my speech, I may touch on the subject of HVO. What he is saying is absolutely right. We need to be much broader in our outlook about what works for people, not through force, but through choice, so that the people who want to do the right thing can do so, rather than being curmudgeonly bullied—

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

rose—

[Sir Bill Wiggin]

On that point, I will give way to my former Whip Friend.

[Mr Carmichael]

I am grateful to the hon. Gentleman for giving way. I should perhaps declare an interest, as someone who owns a house that is also heated by oil-fired central heating, however inadequately. The point he makes illustrates well what happens when Government intervene to set targets and to insist that things must be done by a certain deadline. We see that time and again. I can tell him and others now that one of the biggest problems will be the lack of available skilled, qualified labour in rural areas and in other places to install the equipment for these things. Would it not be better if on this occasion we were to use a little more of the carrot and a little less of the stick, as he and I did when we were Whips together?

Oral Answers to Questions

Alistair Carmichael Excerpts

Tuesday 23rd May 2023 Commons Chamber

[Graham Stuart]

It is quite simple. We are reducing demand for fossil fuels, but we are net importers of them. Producing them here and destruction of demand have to be our focus and that is what the Government are doing. We are getting rid of the power stations burning coal. In 2012, nearly 40% of our electricity came from coal, the most polluting of fossil fuels—that was the legacy of the right hon. Member for Doncaster North (Edward Miliband)—but by next year it will be zero. We have moved from 7% to well over 40% with renewables, as the Secretary of State has said. It is economic insanity for us not to produce the oil and gas that we will need for decades to come when we are a net importer.

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

9. What recent assessment he has made of the potential role of North sea oil and gas infrastructure in developing carbon capture and underground storage capacity.

[The Secretary of State for Energy Security and Net Zero (Grant Shapps)]

North Sea oil and gas infrastructure can play a crucial role in lowering costs and speeding up deployment if it is repurposed for carbon capture and storage, therefore improving our energy security.

[Mr Carmichael]

The Greensand project in Denmark has proven the concept of carbon capture, usage and storage, but we know that the supply chain in this country is fragile. Indeed, if others go ahead and develop CCUS, that is where they will go. Companies such as EnQuest in Shetland, which operates the Sullom Voe oil terminal, are keen to do exactly what the Secretary of State is talking about. Would he or the Energy Minister agree to meet me and the operators of EnQuest to hear what it needs to get that exciting project across the line for a final investment decision?

[Grant Shapps]

The right hon. Gentleman is absolutely right about this, but the UK is playing a leading role with its recent £20 billion investment in carbon capture, usage and storage. We have sufficient space to store potentially 78 billion tonnes of carbon under the North sea—equivalent, I am told, to the space occupied by over 15.5 billion well-fed elephants. I would be more than happy to meet him to discuss the potential of the field he mentioned.

--- Later in debate ---

[Graham Stuart]

I thank my hon. Friend for separately sharing his detailed thoughts on REMA and its reform. This is a complex area with multiple interrelated mechanisms; it requires careful consideration to unlock the £280 billion or perhaps £400 billion of investment in generation and flexible assets that could be needed by 2035. While I share his impatience and desire to move fast, it is more important still that we get it right. I aim to publish a second REMA consultation in the autumn, which will narrow the options for reform and detail the direction of travel.

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

T4. Directors at Ofgem are on the record as saying they are already doing everything that needs to be done to meet the country’s net zero targets. I do not know anyone outside Ofgem who sees that as anything other than dangerously complacent. Is it not now time for the Minister to give a direct mandate to Ofgem to include meeting net zero as part of its remit?

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Andrew Bowie)]

The Government have published a draft strategy and policy statement for energy policy that makes clear Ofgem’s role in promoting the UK’s net zero targets. However, we are considering the effect of an amendment made in the House of Lords to the Energy Bill currently going through this place on Ofgem’s statutory duties in relation to net zero.