UK Energy Costs

Andrea Leadsom Excerpts

Thursday 8th September 2022 Commons Chamber

[Keir Starmer]

I will make some progress: I have taken a lot of interventions.

Let me turn to home insulation, which reduces energy consumption like nothing else. We have the draughtiest homes in Europe. The last Labour Government set about fixing that. Then the Conservative party said, “cut the green crap”, and the whole project all but collapsed. Installation rates fell by 92%—utterly short-sighted, and costing millions of households £1,000 a year on their energy bills right now.

The Prime Minister is right to recognise that immediate support needs to be combined with longer term action. Fracking and a dash for gas in the North sea will not cut bills, nor strengthen our energy security, but they will drive a coach and horses through our efforts to fight the looming climate crisis. The Prime Minister should listen to her Chancellor, who is sitting next to her. What did he have to say on fracking just a few months ago? I see him leaning forward. This is a long quote, and I have tried to cut it down, but every sentence is worth repeating.

“Those calling for its return misunderstand the situation we find ourselves in…if we lifted the fracking moratorium, it would take up to a decade to extract sufficient volumes—and it would come at a high cost for communities and our precious countryside.”

Those are his words. I will go on, because this is so good. He said, just a few months ago:

“Second, no amount of shale gas from hundreds of wells dotted across rural England would be enough to lower the European price any time soon.”

He went on:

“And with the best will in the world, private companies are not going to sell the shale gas they produce to UK consumers below the market price. They are not charities”.

Spot on, Chancellor.

What did the Chancellor have to say about North sea gas at the same time? He said that,

“additional North Sea production won’t materially affect the wholesale price”.

Indeed, earlier this year his previous Department helpfully put out a series of Government myth-busting documents. Here is one of them—Chancellor, your document:

“MYTH: Extracting more North Sea gas lowers prices.”

Answer:

“FACT: UK production isn’t large enough to materially impact the global price of gas”.

I have a copy for the Prime Minister.

We do need to carefully manage our existing resources in the North sea, and the industry has an important role to play in our future as we transition to a different form of energy, but doubling down on fossil fuels is a ludicrous answer to a fossil fuel crisis. If all countries took the approach advocated by the Prime Minister’s new Energy Secretary of squeezing “every last drop” out of their fossil fuel reserves, global temperatures would rise by a catastrophic 3°. That would be devastating for our planet and for future generations, and it is totally unnecessary.

[Dame Andrea Leadsom (South Northamptonshire) (Con)]

rose—

[Keir Starmer]

I am going to make some progress, because other speakers need to get in.

New wind and solar power are now nine times cheaper—nine times cheaper! We need a clean energy sprint, urgently accelerating the rollout of offshore wind, onshore wind, solar, nuclear, hydrogen, and tidal. Last year, I set out a new national mission to insulate 19 million homes and cut bills for good. If the Government had taken me up on that challenge, 2 million homes would already be insulated by this winter.

Britain needs a fresh start. We need a Government who will never leave working people to pick up the tab for excess profits in the energy industry. We need a Government who plan for the long term rather than leaving us badly exposed to the whims of dictators, and we need a Government who will drive us forward to energy independence rather than doubling down on fossil fuels. The change we need is not the fourth Tory Prime Minister in six years; it is a Labour Government.

--- Later in debate ---

[Dame Andrea Leadsom (South Northamptonshire) (Con)]

I start by saying: may God bless our Queen. [Hon. Members: “Hear, hear!”]

I sincerely welcome the announcement—it is fantastic that we have seized the massive problem that is facing us—which will give relief to so many households and businesses who have been terrified by the prospect of what was to come. I am convinced that that reassurance will be greatly pleasing to them.

I want to take a couple of minutes to talk about some really low-hanging fruit that I do not think we have made enough of yet. With energy prices where they are, we as a Government could do a lot more. We could, for example, go house to house—through energy suppliers; not as Government officials—to assist people with looking at how they can reduce their energy bills. There are many practical ways and great ideas for doing that, not least of which are turning down boiler thermostats—people should not do that themselves at home—to make more effective use of energy and turning down the hot water tap pressure. Those things are really low-hanging fruit that could be done tomorrow, and forecasters suggest that they could save up to 10% off energy bills.

Most important of all is insulation. Current energy prices are a game-changer for insulation. Recent research suggests that £1,000 could pay for basic cavity wall or loft insulation for the average household and that the sector could insulate up to half a million homes this winter and 1 million homes next year. That could be cost-neutral to the Treasury as it would not be paying the excess for the price cap. With energy prices at current levels, it is worth looking again at massively ramping up household insulation.

[Mike Amesbury (Weaver Vale) (Lab)]

Will the right hon. Member give way?

[Dame Andrea Leadsom]

I will not give way because there is so little time.

Finally, as Business Secretary and then as chair of the 1922 Backbench committee on business, energy and industrial strategy, so many businesses have said to me, “We cannot get a grid connection for our solar panels, so there is no point in doing it.” I would say to them that, with energy prices where they are, they could get themselves a battery and have some internal energy independence. Many businesses should be looking at that. The Government’s role should be to provide advice through the energy suppliers.

--- Later in debate ---

[Edward Miliband (Doncaster North) (Lab)]

Before I address the issues in this debate, I send my best wishes to Her Majesty the Queen and her family. I know that all our thoughts, and the thoughts of the country, are with them at this time.

There are two central questions at the heart of this debate: have the Government responded to the emergency that we face in a way that is fair, and do they recognise the fundamental truth that the only way to end this crisis in the long term is to get off fossil fuels? I am afraid that, on today’s evidence, the answer to both questions is no.

Let me start by discussing the plan unveiled by the Prime Minister earlier. Labour led the way on the energy price freeze. We called for it, despite doubts, including from the Prime Minister. I am glad that she has admitted she was wrong about that, because even though there have been disagreements, we have heard throughout this debate—I thank all right hon. and hon. Members who have spoken—agreement about the scale of the emergency facing families. That is why we spent the summer fighting for the energy price freeze. However, the devil will be in the detail and people will want to see the small print. The problem is that bills still seem to be rising by at least £129 a year.

The even bigger problem, and the fundamental issue in this debate, has been who pays. The right hon. Lady has been clear that she is against a windfall tax. We know the effects of that: it means that all the costs are loaded on to the British people. Let us dispose of the argument that this issue is somehow not about higher taxes; in the end, this intervention will have to be paid for by the British people in higher taxes. So the question is not whether we are going to tax to pay for it, but whom we are going to tax.

Let us take the arguments we have heard in this debate against the windfall tax and take them apart one by one. First, we have the argument that a windfall tax will reduce investment. Is there any truth to that? As my right hon. and learned Friend the Leader of the Opposition said in his eloquent speech, the BP boss says that it will not have an effect on investment; when asked what investments it would affect, he said, “None of them.” So even BP does not believe the argument the Prime Minister is mounting in defence of BP.

Next, we have heard the argument that a windfall tax cannot raise extra money beyond what the former Chancellor announced. Let us dispose of that argument, too. I gather that there is a dispute about the figure of £170 billion in excess profits. The current Chancellor is not here, but I say to the Prime Minister: publish the Treasury’s estimate of excess profits. If it is not £170 billion—we have it on good authority that it is—the estimates should be published so that we can all see them for ourselves.

[Dame Andrea Leadsom]

rose—

[Edward Miliband]

I am not going to give way, because I have little time for the wind-up.

In any case, we know that tens of billions could be raised. First, there are significant resources from the windfall tax on the oil and gas companies, including through abolishing the absurd £5 billion loophole proposed by the Chancellor.

Next, we come to the electricity generators. We need to de-link the price of gas and electricity, but that will not happen for a number of years. In the meantime, these companies are making enormous profits. Onward, a conservative think-tank, said this week that up to £10 billion a year can be raised, while the Tony Blair Institute gave a figure of £14 billion. We could even have a cross-party consensus on this. Why would we leave this money in their pockets when it could help to pay for the action on energy?

The alternative that the Government appear to have adopted is to have a voluntary agreement whereby companies decide to opt in to reduce prices. I say to the House that that is a terrible proposal—it came originally from Energy UK—because in exchange for giving up some profits now, the deal will lock in higher prices over the next 15 years. This is not a good deal for consumers. A chart published by Energy UK—I am a nerd, so I read these charts—precisely sets out the fact that consumers will pay through the nose over the 15 years ahead.

The third and final argument we have heard in this debate, and indeed from the Prime Minister, is that a windfall tax is somehow unfair to business. Let me take advantage of her being present to recommend that she reads an article by Mr Irwin Stelzer, a long-time confidant of Rupert Murdoch. In my experience of Tory leaders, it is worth their while to stay on the right side of him. Mr Stelzer wrote:

“Now is the time for a windfall profits tax”.

He continued:

“People who believe in capitalism believe that private sector companies should be rewarded for taking risks...not be rewarded for happening to be around when some disruption drives up prices, producing windfalls.”

In this case, we are talking about the barbaric invasion of Ukraine.

What principle is the Prime Minister defending here? What is the hill on which she stands? Is the principle she really wishes to defend that oil and gas companies should pocket any scale of profits, however bad the political instability; that however large the crisis and however gigantic the windfall, taxation must not change; and that the British people must take the strain? That is the effect of her argument. The argument I am making is not one simply made by leftie suspects such as me: Margaret Thatcher, her heroine, imposed a windfall tax in 1981; George Osborne, whom the Prime Minister worked for, imposed one in 2011; and the right hon. Member for Uxbridge and South Ruislip (Boris Johnson), her very close friend—[Interruption.] I think she is disavowing George Osborne, but I can understand that. As I was saying, the right hon. Member for Uxbridge and South Ruislip imposed a windfall tax two months ago. So the Prime Minister is flying in the face of logic, fairness and common sense, and is engaging in tens of billions of pounds of borrowing that she does not need to engage in. Let us never, ever hear again lectures from the Conservative party on fiscal responsibility after the decisions it is making today.

That brings me to the longer term. Let us face facts: the only way out of this crisis is to get off fossil fuels. I can do no better than quote the words of Lord Deben this week. He said that

“if you want to deal with climate change and you want to deal with the cost of living crisis and oil and gas prices, you have to do the same things. Renewable energy and energy efficiency, they are the answers.”

I would add nuclear to that, but the central point is that solar and wind energy are nine times cheaper than gas. We cannot solve the fossil fuel crisis by doubling down on fossil fuels, but that is what the Government have done today with this announcement on fracking. My right hon. and learned Friend the Leader of the Opposition quoted the words of the new Chancellor that fracking would make no difference to prices and would take years to come on stream. I do not know where the Prime Minister got the six months she mentioned in her statement, but the Chancellor was saying only a few months ago that it would take 10 years to get anything out of the ground on fracking.

This is where I come to the Business Secretary, whom I congratulate. He and I have known each other a long time and we have had a good personal relationship—perhaps we can form an unlikely alliance on the issues that we face. I want to make a serious point to him about some of what he has said in the past, because it relates to these issues. He has said a number of things about climate. I have been part of the work done on building a cross-party consensus on climate for getting on for 20 years in this House, and we have to look at some of what he has said about climate. He has questioned the modelling and whether there is anything we can do about the climate crisis. In 2017, he said:

“If we were to take action now, to try and stop man-made global warming, it would have no effect for hundreds or thousands of years”.

He went on to say that the cost of climate action is “probably unaffordable”. I quote those words because this is flirtation with climate denial. Never in the past 20 years have we heard these words from someone in charge of tackling the climate crisis, and we should not normalise it. The bipartisan consensus on climate change has been hard won. We have worked across parties over two decades to secure it and there is a heavy responsibility on the Business Secretary to be part of maintaining that consensus, not destroying it.

The problem for the Business Secretary, and the reason he faces that challenge, is that this problem is not just about the climate crisis, because not taking action on green energy is a recipe for higher bills. The ban on onshore wind is driving bills higher and gas imports higher, and it is terrible for the climate. The blocking of solar, which the Prime Minister supports, is driving bills higher and gas imports higher, and it is terrible for the climate. The refusal to act on energy efficiency is driving bills higher and gas imports higher, and it is terrible for the climate. There is nothing more anti-business than scaring off investors in renewables with climate denial.

In conclusion, here is the truth about this new Government, only two days in. They have revealed their true colours. We face a social and economic emergency. In such an emergency, what matters is who you stand up for, who shoulders the burden and the choices you make. The Government have chosen to stand up for the oil and gas companies, not the British people, who will pay for this action in the long-term. The Government cannot answer the challenges of energy security. They cannot answer the challenges of energy bills. They cannot answer the challenges of the climate crisis. And they have the wrong priorities for Britain.