Energy (oil and gas) profits levy

Ben Lake Excerpts

Tuesday 22nd November 2022 Commons Chamber

[Ben Lake (Ceredigion) (PC)]

It is a pleasure to follow the right hon. Member for Hayes and Harlington (John McDonnell), who outlined the serious situation we all face in the economy and given the pressure on household incomes. He delivered his speech in a sombre tone that was not too dissimilar to that taken by the Chancellor last week. That is unsurprising, given that the statement was delivered against the backdrop of such high inflation and low growth, and forecasts that household disposable incomes are set to fall significantly. Given such dire economic circumstances, I was pleased that common sense prevailed and measures such as the retention of the triple lock on the state pension and the uprating of many of the benefits in line with inflation were progressed at last week’s statement. I am happy to say that they will be of great benefit and support to a high number of my constituents.

Nevertheless, I wish to outline a few of my thoughts as to why the balance between addressing the immediate inflationary pressures that everyone is facing and the longer-term productivity problems that have afflicted the economy for several years was not quite right last week. For households across Wales, last week’s statement risks offering little more than a continuation of the managed decline we have sadly come to expect. That reality was underlined by the Wales Governance Centre’s calculation that, on the present trajectory, Welsh incomes will be £10,300 lower by 2027 than they would have been had pre-financial crisis levels of growth been sustained.

If we are to have any hope of reversing that trend, the Welsh economy needs concerted investment in our underlying infrastructure: our power grid; our transport links; and digital connectivity. Many Members have spoken before about the importance of digital infrastructure and transport links, so I will not detain the House on those points, but it is worth reiterating the importance of investing in the power grid.

The Welsh Affairs Committee has been undertaking an inquiry on the potential for offshore wind generation off the coast of Pembrokeshire, in south-west Wales. We received a lot of evidence from stakeholders to show that, if that fantastic potential is to be realised and we are to progress with a cutting-edge, new industry—the manufacture, production and installation of offshore wind turbines—that is centred in south-west Wales, bringing incredibly high-wage and important careers, we need to invest in the grid to ensure that a lot of that power can be connected and fed into the UK’s grid. We need to press on and be honest with ourselves that, with the current state of play, a lot of that potential cannot be realised, it needs to be looked at again by the National Grid and, potentially, it needs further Government investment.

Likewise, the Government need to be honest on the question of our trading relationship with our nearest trading bloc. The OBR report concluded again that the UK’s trade intensity will be some 15% lower in the long term because of our new trading relationship with the EU. The UK Government can take practical steps now to help to ameliorate that economic pain by removing unnecessary trade friction, which has devastated the operations of many businesses in Ceredigion, which are finding it nigh on impossible to export goods to the EU.

I know that that is a debate for another time, but there are mutual recognition agreements that we could be exploring. If that is a step too far, I would like us to see what support there is in terms of resource and advice for small businesses in particular, many of which in my constituency are finding it very difficult to navigate the new rules. They are finding it incredibly difficult, for example, to know how to get confirmation that they are using the right goods classification code before an export or, indeed, before an import arrives at port. These are practical ways that could greatly help small businesses in places such as Ceredigion to improve a bit on their trade with the European Union. A failure to address that issue now will simply pass on the burden to future generations.

The same is true on the question of energy security. We now know that, from April 2023, energy bills will surpass the £3,000 limit. To give a sense of the impact that this increase will have, it is worth recalling that, in April this year, the Welsh Government estimated that average bills of more than £1,900 a year could push up to 45% of all households in Wales into fuel poverty, with 8% thrown into severe fuel poverty.

Given the scale of the crisis, efforts should focus on permanently reducing the impact of energy bills on households across these islands. The inefficiency of our housing stock means that households are wasting hundreds of pounds a year on energy that escapes through draughty walls, leaky windows and ceilings. That issue is particularly acute in Wales given that we have some of the oldest and least efficient housing in western Europe. The Chancellor acknowledged that issue during his statement last week, yet his answer to today’s problem is to bring forward new funding in 2025.

We are already paying the price for a lack of action in this area. The New Economics Foundation recently estimated that, if all homes in England and Wales were rated EPC C, UK Government spending on the energy price guarantee would have been around £3.5 billion less over six months and households—just as important perhaps—would save around £530 over the next year. Additional funding in home energy efficiency measures should be accelerated and would be worth every single penny.

Direct help to facilitate energy efficiency improvements now can also protect businesses from similar energy shocks in future. I encourage the UK Government to look at proposals that have been put forward by the Federation of Small Businesses, which has called on the UK Government to issue vouchers worth £5,000 for small and medium businesses to spend on qualifying energy-saving products and services.

Many of my colleagues have already touched on this topic, but I make no apologies for reiterating some of the concerns with regard to off-grid households and businesses. I plead with those on the Treasury Bench to provide greater clarity on the support for off-grid homes. The Chancellor told us last week that the support was being doubled from £100 to £200 and that the first payment was introduced to coincide with the first six months of the energy price guarantee. Given that the scheme for households who are connected to the grid will be extended, albeit at a reduced rate, from April, can off-grid homes expect a second round of the alternative fuel payment?

If I can be so bold, I would like to ask a few questions. When are we expecting these payments to be brought forward? I know that households are finding it very difficult now. We have just had a bit of a cold spell, so this is very much at the front of people’s minds. It is the same for off-grid businesses. It is unfortunate that many are starting to make very difficult decisions. Any clarity that can be given by the Government as to what sort of support they will be entitled to and when it will be brought forward could go a long way in helping them with some of their plans for the next six months.

I welcome the UK Government’s commitment to uprate many benefits in line with inflation, but I am concerned that they have been inconsistent in their approach by failing to uprate some others in line with inflation. In particular, they have failed to uprate the level of support available for rental costs via the local housing allowance, which is having a devastating impact. Wales is experiencing the second fastest growth in rental costs across Great Britain, which means that the gap between housing benefit and the cheapest rents is rising at a rapid pace. Less than 1% of private rented homes in Wales are affordable to low-income renters. I regret to have to report to the House that, in Ceredigion, it means that those in receipt of the benefit will need to earn a staggering £3,382 more per year to afford the cheapest rent.

In conclusion, will the Government bring forward much-needed support for renters in my constituency by looking again at the freeze on the local housing allowance and uprating it annually to match at least the 30th percentile of market rents? I fear that failing to move on this matter will condemn a great many people to homelessness this winter.

[Mr Deputy Speaker (Mr Nigel Evans)]

Any Members who have taken part in the debate should really make their way to the Chamber now for the wind-ups, which will follow Beth Winter.