Economy Update

Baroness Falkner of Margravine Excerpts

Thursday 26th May 2022 Lords Chamber

[Baroness Penn (Con)]

My Lords, the increase in universal credit was always brought forward as a temporary measure as, through the restrictions needed to deal with the Covid pandemic, large parts of our economy were effectively shut down. We face a different set of challenges now. They are severe for many households, but they are to do with inflationary pressures and a large part of that is driven by energy prices, so we are targeting our response towards dealing with that. Under our plans, the lowest-income households will receive around £1,200, which is roughly equivalent to the expected increase in costs for the energy price cap rise. Some people benefited from a UC uprating or temporary uplift, but pensioners who struggle with energy bills did not benefit under that system. People with disabilities, who can face higher energy costs, did not necessarily benefit from that UC uplift. This is a targeted set of measures to deal with a specific set of problems and it should be welcomed.

[Baroness Falkner of Margravine (CB)]

My Lords, I welcome the support for people with disabilities, but why have the Government taken so long and yet not come to a view or set out the tax on the power generation sector? The peroration from the noble Lord, Lord Sikka, was perhaps overly long, but he made a very important point: one way to deal with the energy price crisis specifically would have been to emulate the French by having a price cap. I accept the point from the noble Baroness, Lady Kramer, that it is not only an energy crisis; nevertheless, that would have been far more targeted and directed.

[Baroness Penn (Con)]

My Lords, the structure of the French energy market is different from our own. Different interventions are appropriate in different circumstances, but the generosity of the approach we have taken is comparable. On electricity generation, it is more complicated. As I have said, we have taken time to design the levy so as not to deter investment and we are looking very carefully at the scale of the extraordinary returns in the electricity sector and measures that could be taken in response. We have longer-term plans to reform that sector, but there may be a case for doing something in the interim and we are working urgently to look at that.