Gas and Electricity Costs

Angus Brendan MacNeil Excerpts

Tuesday 18th January 2022 Westminster Hall

[Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)]

I beg to move,

That this House has considered the cost of gas and electricity.

It is a pleasure to serve under your chairmanship, Sir Edward. Obviously, the debate is very dear to my heart, because I represent the part of the United Kingdom that every year seems to have the lowest temperature recorded in any community: the village of Altnaharra in Sutherland.

Much of what I am about say is blindingly obvious, but I want to roll out a few statistics. It is a fact that household electricity and gas bills are predicted to rise in April by around 45%. That would see the price cap reach £2,000 a year, or £165 a month. I would suggest that without Government intervention, this rise could take the total number of households in fuel poverty to no less than 6 million. The high level of global gas prices affects the whole economy; it does not impact only on energy retailers, suppliers and household customers. It could mean between a 1% and 2% inflationary increase across the whole UK economy, which would result in more than £10 billion a year in additional Government costs from indexing debt to pensions, salaries and other payments.

Some 33% of households in rural Scotland are in extreme poverty, with a further 9% in ordinary fuel poverty. That makes a total of 42%. The figure is even more acute in the far north and my constituency, where, as I have already said, temperatures are regularly the coldest in the United Kingdom.

[Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

I congratulate the hon. Gentleman on securing the debate. He is absolutely right about Altnaharra, and the fuel poverty that is shared by his constituency and mine. The UK Government talk about levelling up, but one of the best things that could be done in that regard would be to tackle the differences and inequities between distribution costs of the electricity network, as well as the transmission costs to generate. I note that our part of the world is a net generator and contributor of electricity, particularly to the grid.

[Jamie Stone]

My highland colleague makes a sage and wise point. [Interruption.]—with all due reference to my right hon. Friend the Member for Orkney and Shetland (Mr Carmichael).

The figure that I have outlined compares with 24% of households living in poverty in the rest of Scotland, which is still a high figure. I believe that fuel poverty is a clear priority issue for remote rural constituencies but, overall, I would suggest that is an unacceptable blight across society.

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[Angus Brendan MacNeil]

The hon. Lady is making a very good speech and she is absolutely right—it is not just the north of Scotland that is affected, although I, like the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone), would argue that that is where things are most acute.

House of Commons Library figures for all the neighbouring countries in north-west Europe show that 11.7% of people in the UK are living in relative poverty by the OECD’s definition, and of the 13 countries that were looked at, the Gini coefficient of inequality is highest in the UK. That puts this problem firmly in the Government’s ballpark; they really have to get to grips with it.

[Anne Marie Morris]

The hon. Gentleman makes a very fair point—this is a real problem. The hon. Member for Caithness, Sutherland and Easter Ross made the clear point that the answer and solution has to be found now.

I look at my constituents—indeed, I was on a telephone call just this morning—and I see that the food banks are doing great business. Increasingly, I am hearing that the people who are using them are not the usual attendees. We are in a state of crisis, which needs to be addressed right now. I have constituents—mostly pensioners—who are ringing my constituency office, and are very concerned. They are worried because of the cost of living and because of everything they hear about the energy costs that they will be facing.

For me, it is that uncertainty that is most challenging, because although the Government, to their credit, recognise the problem, the real issue is that to deal with that fear, we need an answer, a commitment and a solution. Looking at what we might or might not do in April is not soon enough. I am sure that even you, Sir Edward, will have looked at the barometer as you got up this morning. It is now that we are seeing minus temperatures. It is now that people need their heating at night. It is now that they need hot food.

Clearly, it is not the Government’s fault that there has been a global challenge in terms of energy prices. Indeed, they have risen to the challenge and recognised that security of domestic supply has to move further up the agenda. I welcome their investment—or promised investment—in more nuclear. But the real challenge is that despite all those good words and despite the concept of a price cap, which was effectively intended to protect consumers from very challenging prices, consumers are not being protected.

No scheme is perfect, but what happened here is that when it became clear that the prices meant that some of the smaller suppliers would go out of business, those customers were picked up by the bigger players but were inevitably put on the highest tariffs available. Those individuals, having done the right thing by seeking out good policies and good schemes, suddenly found themselves in the worst possible position. Then we hear—understandably, on one level—that the cap will not hold and that we expect that there will be an announcement on 7 February that it will increase substantially, as the hon. Member for Caithness, Sutherland and Easter Ross has already indicated—it will be an extra £700 per household, taking the average bill to £2,000. Suddenly energy costs will be going up 50% overnight.

When the Government set their energy retail market strategy for the 2020s, they set two objectives. The first was that there should be a sustainable retail market, whereby it was easy and rewarding to go green. However, that is not what is actually being delivered. Although they were well intended, many of the tariffs to try to encourage—to nudge, if you like—greener use have effectively pushed people further and further into fuel poverty.

The second objective was that all consumers would pay a fair price for their energy and would be protected from excess charges. Although I appreciate that those are charges for production rather than the other elements—the tax and the levies—it has all come together in a horrible, nightmarish mix, whereby, because of the global cost increase, the Government are now scrabbling to try to honour what I think was their intended commitment to make energy prices affordable by considering some of the things that they can move, which clearly will be taxes and levies, as opposed to some of the things that they cannot move, which include the global price of gas.

Therefore, for me, Government intervention is not optional. As has been said, the number of households in fuel poverty is increasing from 4 million to 6 million. That will affect a very large number of my constituents. The Government have a number of options. They can mix targeted initiatives and universal ones. The comment in the media is that the Government are uncomfortable about solutions that are more universal in nature.

This energy crisis—this energy cost—comes on top of a huge increase in the cost of living. We know from figures out today that people’s wages are not going up to meet those costs, and therefore it is not just the usual smaller percentage of the population that is suffering; it is actually a much larger percentage of the population. People at all levels make commitments, and they are struggling to meet them. They have to meet their mortgages; that is not negotiable. They have to pay their rent; that is not negotiable. Businesses have to pay business rates; that is not negotiable. To be reluctant to reduce, and to resist reducing, VAT from 5% to 0%—the most obvious, quickest and easiest universal solution—is perhaps a little disingenuous. It seems to me that at least 60% of the people who would benefit from that actually deserve it.

The other universal approach is what we do about universal levies. That is something that we will have to review, and we will have to look at how the burden can be moved to general taxation. We need to recognise that those levies are subject to a number of contracts, which means that they cannot be the first thing that the Government fix. None the less, they need to be in the bag of solutions.

The obvious targeted solution—I think that it is an “as well as” rather than an “instead of”—is expanding the warm home discount, changing the eligibility, taking it beyond winter and looking at how we might make it generally taxpayer funded rather than funded by those that contribute to it.

How are we going to pay for this? Of course, it is right that the Government consider that. A number of things have been looked at, including a windfall tax on the oil and energy industry. Only this morning, there have been suggestions that fraudulent covid payments claims, which the Government have committed to claw back and at the moment are estimated at £4.3 billion, would go a long way to covering the most urgent and easiest solution, which is to reduce VAT from 5% to 0%. The VAT bill that the Treasury would have to cover would be somewhere between £1.7 billion and £2 billion. Affordable is the wrong word, but it is the right thing to do, and it is entirely affordable given the likely income that the Government can expect as the economic forecast improves across the country—although, sadly, not in my constituency—and what they might get back from the covid claims.

Of course, the people who are most impacted are the ones who are most vulnerable: the over 65s on fixed incomes and those in poorly insulated houses, which is definitely the case in my constituency. Those people are the most important, but they are not the only ones. I ask the Government not just to look at this as a matter of money, but to ask what is the right thing to do. What is the timeframe in which they must act? It is now—it is cold now. I ask the Government not only to acknowledge that there is a problem but to put forward steps now, before the new cap is introduced—and certainly long before April.

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[Yvonne Fovargue (Makerfield) (Lab)]

It is a pleasure to serve under your chairmanship, Sir Edward. I congratulate the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) on securing the debate.

People will die. Those are not my words; they are not the words of an Opposition politician. They are the words of Martin Lewis, who was voted the most trusted man in Britain. Heating bills are going up by more than £700 a year in April and they are likely to go up more in October. According to the Joseph Rowntree Foundation, 54% of single adults and 25% of single parents spend more than half their income on heating. That is simply not sustainable, especially when they are facing other increased costs. We are in one of the world’s richest economies, yet people are looking at the stark choice of eating or heating.

Wages are not keeping up with inflation, which in particular penalises low-income people, who spend much more of their income on essentials. The solution cannot be an increase in personal debt. Christians Against Poverty has reported a 41% increase in people requesting help from it in January, while searches for fuel help on the Citizens Advice website have gone up phenomenally. We have to find a way to deal with the debt crisis, but the first step is to deal with the fuel price increase. That is urgent. It has been caused by not only the higher wholesale prices, but the explosion and lack of regulation in new energy companies entering the market and offering low and unsustainable prices to switchers. That is supposed to increase competition, but it has always failed the most vulnerable and it penalises many who cannot or do not want to switch. We have to look at that.

What can we do? An immediate cut to VAT on fuel would be a quick fix to start. I agree that it is a blunt instrument, but it is easy, quick and would help a number of people. However, it cannot be the only measure. We need to increase the warm home discount and widen the eligibility for that scheme, and we need to fund it from a different source. It cannot be funded from a levy on all electricity bills, because that will penalise everybody again.

I agree that we have to look at greener and more sustainable means of producing electricity.

[Angus Brendan MacNeil]

The hon. Lady is making an interesting speech. I want to pick up on an interesting point made by the hon. Member for Bath (Wera Hobhouse). At the moment, the UK consumes about 41.8 GWe. People can check that on their telephone apps quite easily. Some 16.9% of that electricity is from wind, but that figure could be greater. Wind has been supported by the Government’s contracts for difference. Is there not a question as to why wind is being bundled into those energy prices? Why, as the hon. Member for Bath suggested, are companies profiting by bundling it into energy prices, when it is actually supported by the Government? We all know that the marginal cost of producing wind energy is zero. Our wind energy output could be greater, had things been built on the Scottish islands with a minor bit of Government planning over the years.

[Yvonne Fovargue]

We need to look at all the ways in which energy is produced and we need a mix of energy. We have to look at the green levy as well. At the moment it is a levy on all bills, so the poorest are paying the most.

We need to look at a social or below-cost tariff funded by the energy industry: each gas or electricity supplier should pay a sum into a central pot, based on the number of customers, which could then be redistributed to people in fuel poverty. We should not forget the people on prepayment meters; often, they are the poorest and have been in difficulty with their bills before. There is no way that people on prepayment meters should be paying the amounts they are paying for gas and electricity even now. There should be help and adequate protection for those people.

We have to accept that people should spend only a certain proportion of their income on energy. I am not saying where we should draw the line, but more than 10% is far too much—without even getting into the eye-watering figures we have heard from the Joseph Rowntree Foundation.

People on low incomes budget very carefully, but it is a bit like spinning plates—they pay one bill, they pay another bill, they look at the next bill. With the cost of electricity and gas forecast to increase so much, those plates will come crashing to the ground. That is why we need to act now to make sure that people are not, as one of my constituents said, out of their minds with worry. People need real help to keep the heating on, pay all their other bills and eat properly. If we are not careful, it will not only be free socks that energy companies offer; they will have to offer food parcels as well—ones that do not need heating up.

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[Layla Moran]

I thank the hon. Gentleman for his intervention, and I absolutely agree. I am also deeply concerned that the problem will get worse over the next few weeks. We have only to read the emails or listen to the stories to be moved by them. Martin Lewis, who was mentioned earlier, dedicated an entire episode of his “Martin Lewis Money Show Live” to energy prices the other day. Afterwards, he tweeted that he was “near tears” after being unable to help a single mother, who had recently lost her partner, to afford her energy bills. He called on the Government to do more, and I agree with Martin.

The Minister will have heard many good suggestions today. My hon. Friend the Member for Caithness, Sutherland and Easter Ross mentioned cutting VAT on bills, a social tariff and an increase in the winter fuel allowance. Age UK has suggested a £50 one-off payment to those eligible for the cold weather payment and a doubling of household support. All those could work, and we have to ask the question: when are they going to come in? People are already hurting now.

There is also a secondary question, and a correct one: who is going to pay for it? Even more galling than all I have discussed is that after hearing all these stories of hardship and heartache, Gazprom announced a dividend of £179 million. Energy giants such as Gazprom are profiteering from the misfortunes of others. Frankly, the Government are complicit because they are letting them.

[Angus Brendan MacNeil]

The hon. Lady mentions Gazprom and how the UK is in hock to such gas producers from outside the UK. If we cast our minds back, do we not see that a mistake of George Osborne’s penny-pinching, bean-counting style of five, six or seven years ago was his reluctance to use the climate change levy to invest in renewables to make us less dependent on energy from overseas and give us more renewable capacity, which could have been built here? For the sake of a few pennies, it was his argument—I disputed it at the time, when I was the Chair of the Energy and Climate Change Committee—that we should not do so. Now the customers of the UK are on the hook for hundreds and hundreds of pounds each and every year.

[Layla Moran]

I could not agree more with the hon. Gentleman. It is for exactly that strategic reason that the Liberal Democrats are calling for a Robin Hood tax on the super-profits of oil and gas companies. This one-off levy would raise over £5 billion to support households in need of help. Surely that is the fairest way to help the worst off.

However, there is a wider geopolitical point. Gazprom, as we know, is owned by the Russian state, and Gazprom, at the behest of Putin, sent 25% less gas than before to Europe in the last year. We all know that Putin is playing politics with our energy prices, and that is making all of us and our constituents suffer. On one hand, the Government say they will not reward Russia for aggression; on the other hand, by doing nothing about the situation, they are allowing Putin to manipulate the energy market and he is being rewarded for it. We believe that instituting a Robin Hood tax would have many advantages, but one would be to send a powerful message to Putin in Moscow: “You cannot interfere with our energy market”.

Fundamentally—this comes to the point that the hon. Member for Na h-Eileanan an Iar (Angus Brendan MacNeil) made—in the long term we need to wean this country, and indeed the entire world, off gas and oil altogether as soon as possible. That is why the answer to this problem is not to cut investment in green energy, as some have suggested. Whether it comes into general taxation or there is another way to fund it—that is the conversation that needs to be had—we need to increase investment in renewable energy, because to protect people now we need to think strategically in the medium and long term. The answer is to end our dependency on rogue states and protect the poorest in our communities.

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[Alan Brown (Kilmarnock and Loudoun) (SNP)]

It is a pleasure, Sir Edward, to serve under your chairmanship.

As others have done, I congratulate the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) on securing this debate. He highlighted that the gas and electricity issue is a UK-wide one, but he also made relevant and pertinent points about just how much it affects rural Scotland, and in particular his own constituency. His illustration of the effect that it will have on his constituent who is sitting in the Public Gallery, and on an already struggling hospitality industry, was really stark. I hope that the Minister thought the same and pays heed to what was said.

I thank all other right hon. and hon. Members for their contributions. A clear theme seemed to come from all the contributions: basically, we have this cost-of-living crisis and the UK Government are doing nothing about it. The UK Government really need to start taking action.

The UK Government have sat back as household incomes have dropped in real terms by up to £1,200 and energy bills are sky-rocketing. We have had the broken promises about lower energy bills post Brexit, and yet when Labour proposed a 5% cut in VAT in last week’s Opposition day debate, we had the absurd situation of all the Tory Brexiter MPs questioning the validity of such a VAT cut and voting it down. That makes no sense to me, given the broken promises. As a couple of other Members have done, I pay tribute to the hon. Member for Newton Abbot (Anne Marie Morris), who followed the courage of her convictions and voted for something that her Prime Minister had promised us.

To return to the theme, without further action, a real crisis is looming—if it is not already upon us, if truth be told. As others have said, it is not credible for the cap to rise to approximately £2,000 per year in April. Previously, National Energy Action estimated there were 4.5 million fuel-poor households in the UK. When the October cap increased, that added a further 500,000. If the cap goes ahead in April as predicted, we will end up with 6 million fuel-poor households in the UK. That is a 33% increase in the number of fuel-poor households in two overnight increments. It is disgraceful, and something needs to be done to prevent it getting worse.

Worse, National Energy Action previously estimated that there are roughly 10,000 premature deaths a year arising from fuel poverty. How many more premature deaths are likely to occur, given the number of households that will be plunged further into fuel poverty? One cohort who have not been mentioned so far today are the terminally ill, who suffer badly from fuel poverty. I cannot think of anything more distressing than someone who wanted to spend the end of their life in a dignified way in their own home being forced, because of fuel poverty, to spend their final days in a hospice. It is distressing for them and for their family, and that is the real impact of fuel poverty.

A common theme has been the impact of a VAT holiday on fuel Bills, which it is estimated would save £80 a year, so on its own it is insufficient—it is hardly even a sticking plaster—but it could provide a small amount of help.

It is critical that the UK Government take proactive action to ensure that this cap rise is not passed on to consumers in April, so direct intervention is required. Some of that intervention could be in the form of loans, to smooth out the £2 billion of additional costs that are estimated to have arisen from the 28 energy companies that went bust in 2021—money that will otherwise be lumped on to consumers’ bills. Again, that is due to the failure of the Government and the regulator.

As others have said, a proper debate is required about the merits of different levies currently on our electricity bills, which contribute 23% of our bills, according to Ofgem. The reality is that these levies are a regressive tax and general taxation is much fairer. At the moment, the Government are putting out to tender the Contracts for Difference fourth allocation round, which commit £265 million per year for renewable energy projects. I am all in favour of that financial commitment, because we need more renewable energy, but again that money will be lumped directly on to our electricity bills, where it disproportionately affects lower income households and does not form part of a wider just transition.

Last week, the Nuclear Energy (Financing) Bill was considered on Report. The impact assessment for the Bill estimates the capital and financing costs to be as high as £63 billion for a new nuclear power station. Again, it is proposed that that will be added to our energy bills.

[Angus Brendan MacNeil]

Does my hon. Friend agree that this Government, going back to 2015, have taken their eye off the ball? They have scrapped the Department of Energy and have lost focus on energy. Then they have had 10 years trying to do a smart meter roll-out, which has been bungled, depriving consumers of information about when they could get the best tariffs, which adds to the present problems. The Government have to own the responsibility of the trouble that UK consumers find themselves in at the moment.

[Alan Brown]

I agree wholeheartedly that the Government have taken their eye off the ball. The previous Prime Minister, David Cameron, talked about cutting out all the “green crap”. That set back the renewable industry badly. Not only did they scrap the Department of Energy but, given that we now have a legally binding target of net zero by 2050, it beggars belief that there is not a stand-alone Department for energy and climate change, or for energy and net zero. The Government need to take responsibility on that.

I have a question on nuclear for the hon. Member for Caithness, Sutherland and Easter Ross on small modular reactors. Rolls-Royce is looking for something like £30 billion in capital costs to deliver 15 or 16 small modular reactors. Again, that is money that will be lumped on to our bills. With the financing on top, the costs are eye-watering. Nuclear is not a solution; renewable energy is the solution.

In terms of direct spending, the Treasury allocated £1.7 billion in the Budget for the development of Sizewell C. That is something like £60 from every household in Great Britain going towards a new nuclear station, instead of helping them pay their bills. That £1.7 billion could offset the cap for the estimated 3 million households that are eligible for the warm home discount this year, or completely fund a VAT holiday for one year for everybody. Under present policies, not only are the UK Government not doing anything; they are making things worse with their long-term planning. At the moment, costs will be added to energy bills, making things more difficult.

As the hon. Member for Caithness, Sutherland and Easter Ross said, people in the Scottish highlands not only have more challenging weather to deal with and risk being off the gas grid, which makes fuel immediately more expensive, but pay up to £400 more to heat their homes because they are on restricted meters—paying up to 4p more per unit of electricity. Why does the Minister think that it is fair that this surcharge is added to an area that is actually supplying energy to the rest of the UK?

Direct intervention could be paid for through a windfall tax on the Treasury. As our energy bills have increased, so have the VAT returns to the Treasury. As fuel prices have increased, the Treasury has raked in more money in fuel duty and VAT. The November Budget’s Red Book showed that, over the lifetime of this Parliament, North sea oil and gas revenues will contribute an extra £6 billion compared to what was predicted just in March 2021. The Treasury should unlock the extra money that it is getting from the North sea.

[Angus Brendan MacNeil]

It is a subsidy from Scotland.

[Alan Brown]

Yes. It is the broad shoulders of the UK working in the opposite way from the way in which we are always told it is supposed to work.

By contrast, the Scottish Government are doing their best while operating on a fixed budget. The hon. Member for Caithness, Sutherland and Easter Ross can at least tell his constituents in Scotland that they can benefit as follows. The Scottish Government’s child winter heating assistance, introduced in 2020, supports the families of around 14,000 of the most seriously disabled children and young people with automatic payments of £200 a year. Low income winter heating assistance, which will replace the UK Government’s cold weather payment, will give 400,000 low-income households a guaranteed £50 payment, instead of that “maybe” £25 payment.

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[The Minister for Energy, Clean Growth and Climate Change (Greg Hands)]

I congratulate the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) on securing this important debate. We have heard from across the United Kingdom, from all nations, of constituents’ concerns about this issue, and rightly so, because this is of huge concern to all our constituents.

The recent rise in energy prices has been driven by the global increase in the price of wholesale gas, and the demand for gas that has grown as we and other nations recover from the covid-19 pandemic. Consequently, higher wholesale gas prices have been observed internationally throughout 2021 and into this year. In addition, greater liquified natural gas demand in Asia, upstream gas production, maintenance affecting supply and capacity during last summer, increased demand for gas in electricity generation, as we phase out coal, particularly in Europe, have also contributed to rising prices.

The first point I want to make is that that has not had an impact on our energy security, a point raised by my hon. Friend the Member for South Thanet (Craig Mackinlay) and others. The Government continue to work closely with Ofgem, the National Grid and other key industry organisations to monitor energy supply and demand. We remain confident that Great Britain’s energy security will be maintained. National Grid’s gas and electricity winter outlooks, published in October, indicate that there will be sufficient gas and electricity supply in all of its modelled supply and demand scenarios.

The first part is all about delivering renewables—

[Angus Brendan MacNeil]

On the point about domestic security, the Minister will be aware that 5.6 % of the UK’s energy need, according to the GridCarbon app, comes from overseas. Does the Minister not think that, in the next round of CfDs, it should be paramount that the projects that could have happened over the past number of years, particularly in the Scottish islands, actually get under way, so that there is less reliance on the continent and Scandinavia for some of that energy?

[Greg Hands]

That is exactly what we are doing. The new contract for difference auction that was launched in September is as big as the previous three auctions, when it comes to renewables. Our dependence on foreign gas is less than 20%. Our dependence on gas from Russia within that is less than 3% or 4%. That is action that we have already taken.

Our long-term strategy is about finding effective replacements for fossil fuels, which are reliable and do not expose us to the volatility of international commodity markets. We already have the world’s largest capacity in offshore wind, but we are not resting on our laurels, because we are going to quadruple that over the course of the next decade. That is all a major step towards delivering the Government’s increased ambition on renewables.

In answer to the hon. Member for Strangford (Jim Shannon) on new technology, it is both renewables and nuclear, to which I will turn briefly, which is a key plank in the Prime Minister’s 10-point plan in the energy White Paper and the legislation that is passing through the House of Commons. I will return in a moment to the comments from the hon. Member for Kilmarnock and Loudoun (Alan Brown).

In the brief time of six minutes available to me, I will answer some of the points raised. The hon. Member for Caithness, Sutherland and Easter Ross referred to his constituent, the businessman Andrew Mackay. I am happy to engage with the hon. Member on behalf of his constituent. Business bills tend to be set on long-term contracts, which give a certain insulation from volatile prices, at least until the point where the contract comes up for renewal.

On rural support, 15% of the energy company obligation—ECO3—must be delivered to households in rural areas. We consulted in the summer of last year on its successor scheme—ECO4—for delivering energy efficiency heating measures in off-grid homes in Scotland and Wales. We are already extending the warm home discount from about 2 million to 3 million households, from £140 to £150. It is worth pointing out, as the hon. Member for Kilmarnock and Loudoun knows well, that the warm home discount is not a zero-cost option. There are people who have to pay additional money on their bills to support recipients of the warm home discount, so it is not something that we can just take action on with the stroke of a pen, like the Labour motion last week—the trebling—without considering the consequences.

The hon. Member for Newton Abbot (Anne Marie Morris) is absolutely right on cost-of-living issues, but let us look at a lot of what is happening in this country. We have record figures for those in employment. We have the national living wage increase. We have beneficial changes in the universal credit taper rate and so on. All these things are providing support for people facing cost-of-living issues. I totally appreciate and am totally with the hon. Lady on the impact that energy bills may be having and will be having later this year. On levies and on the heat and buildings strategy, we said that we would publish a fairness and affordability call for evidence, which will set out the options to help rebalance electricity and gas prices and to support green choices, with a view to taking decisions in this year—2022.

The hon. Member for Bath (Wera Hobhouse) said that we are scrapping the ECO scheme. No—as I have already pointed out, we are moving from the ECO3 scheme to the ECO4 scheme. I guess, Sir Edward, technically you may describe that as scrapping it, but we see it as improving it and building on it. The hon. Lady called for a windfall tax. She praised German energy company E.ON for doing a great job, and it does do a great job, but she and other Members have to be careful when they call for a windfall tax while also praising those investing in the energy sector. She has to be mindful of what impact any windfall tax would have on those investment rates.

The hon. Member for Makerfield (Yvonne Fovargue) made a very moving speech about the situation for low-income households and prepayment customers. There are 4 million prepayment customers. Ofgem obviously put in place licensing conditions to protect prepayment customers at risk—particularly of self-disconnection—including dedicated helplines for prepayment meter customers. There is a lot of support in place, but the issue of PPM customers is something that we keep a very, very close eye on in the Department for Business, Energy and Industrial Strategy, and I know Ofgem does as well.

The hon. Member for Strangford (Jim Shannon) wanted an indication of what the Government are doing to help. We are doing a lot. We have in place winter fuel payments of between £100 and £300. I have already discussed the warm home discount. There are the cold weather payments. There is the £421 million household support fund. There is a lot of support. I say that while recognising Northern Ireland’s particular status as regards electricity. Obviously, a lot of that is devolved to the Northern Ireland Executive.

The hon. Member for Rutherglen and Hamilton West (Margaret Ferrier) called for a VAT reduction. That is obviously, as she rightly pointed out, a matter for Her Majesty’s Treasury. It is not a very targeted way of supporting vulnerable customers. We heard from the hon. Member for North Ayrshire and Arran (Patricia Gibson). I do not think this is really the right place for a Brexit debate, but she said that leaving the EU allows us to cut VAT on domestic fuel. Her policy of rejoining the EU would surely negate that policy.