Energy Costs in Wales

Debate between Ben Lake and Jonathan Edwards

Tuesday 11th October 2022 Westminster Hall

[Ben Lake (Ceredigion) (PC)]

It is a pleasure to serve under your chairmanship, Mr Betts, and to speak in this important debate. I congratulate the hon. Member for Cardiff North (Anna McMorrin) on securing it. It is a pleasure to follow the hon. Member for Newport West (Ruth Jones). I join her and the right hon. Member for Vale of Glamorgan (Alun Cairns) in urging the Minister to bring forward greater clarity on park homes.

I will concentrate my remarks on a particular aspect of the energy crisis: off-grid homes. The right hon. Gentleman rightly said that we need to go further in the support that is offered to them. I appreciate that, on a UK-wide basis, the proportion of domestic properties that are not connected to the mains gas grid may seem immaterial or quite modest, but in certain areas of the country the concentration of such properties is significant. Across Wales, 19% of domestic households are not connected to the mains gas grid, but in more rural constituencies such as Gwynedd that rises to 49% of the housing stock. In my Ceredigion constituency it rises to 74%, so it is a pressing concern for many of my constituents. Although the energy price guarantee offers some Welsh Government support for those who are connected to the mains gas grid, people often read the bulletins and announcements and realise that it does not apply to them, or at least not to their gas or heating bills.

It is important to put on the record that, despite the volatility in the heating oil and LPG markets, there has been a steady increase in the prices that consumers have had to pay. It is always a bit dangerous to quote average heating oil prices, given the vicissitudes of that market, but the average price per 1,000 litres of heating oil increased from £351 in August 2020 to £491 in August 2021 and then £896 in August 2022. I note the great volatility in that market and also the fact that prices peaked at £1,108 back in June, at the beginning of the summer, when some people look to buy and fill their tanks, but the trend has been of considerable increases in heating oil prices, which is having a serious impact on many of my constituents.

I have sadly received many messages from constituents who are having to resort to quite drastic measures to reduce their consumption of heating oil. I have lost count of the number of people who have told me that they have taken to having cold showers in the morning. I have also come across many people who have tried to keep down the cost of electricity by resorting to investing in solar-powered garden lights to help a little in the evenings. These are very drastic measures. People are looking at every way possible to reduce their bills but are still finding it impossible to keep the heating on as we enter the winter months.

Much has been made of the impact of the energy crisis and rising costs on businesses, and it is important to highlight the added impact on businesses that are not connected to the mains gas grid. For example, I have been contacted by quite a few hospitality businesses in Ceredigion that have quoted increases to their average fuel costs of 200% to 300%, while a cheesemaker in my constituency has seen the price of running his business double over the last 12 months. Sadly, such increases are forcing these businesses to make very difficult staffing decisions; indeed, I know of a few that have closed their doors for the winter. One hopes that these will just be temporary and not permanent closures, but it is important to stress that a number of viable businesses are struggling to absorb the spike in heating oil and LPG prices.

One suggestion, made by counterparts from Northern Ireland, is for the Government to offer greater support to off-grid homes and businesses by introducing a voucher scheme. I thank Social Democratic and Labour party Members from Northern Ireland for pressing that as a potential solution, which has a lot to recommend it. They have suggested that the Government could introduce a voucher for 1,000 litres of heating oil or the equivalent volume of LPG. Some might ask, “Why 1,000 litres?” The answer is that Certas Energy has estimated that the average UK household uses around 27,000 kWh of energy per year, which roughly equates to 1,800 litres of oil. At current average prices, 1,000 litres would cost around £890, which I concede is not an insignificant amount of money, but it compares very favourably with the expected savings of around £1,000 to those households that will be eligible for both elements of the energy price guarantee—the electricity side and the mains gas side.

The Government have made statements previous to this week about ensuring a commensurate level of support, and we could explore further the idea of a voucher scheme for those in off-grid properties. It would offer a fair level of support for those on the gas grid and also those who are not connected to it. For the sake of clarity, if that were rolled out in Wales, for example, we would be talking about 275,000 properties. Again, that is not an insignificant number but, when considered in the larger scheme of things, it is something that the Government could do, and potentially with some speed.

In considering off-grid properties, I also wish to raise how this debate emphasises the need to bring forward not only immediate support to address the short-term pressures we face but mid-term to longer-term solutions. Energy-efficiency measures have already been mentioned; the Energy Saving Trust reports that it is typically far more expensive to heat an off-grid home, which creates a significant problem for the rural poor. Sadly, because of the nature of the housing stock in Wales, particularly in rural areas, the average energy performance certificate rating across the entire country is D. To reduce our vulnerability to further price shocks down the line, there should now be a real push in respect of the mid to long term to invest in energy-efficiency measures.

[Jonathan Edwards]

The hon. Gentleman is making an important point. There is a big role to play for the Welsh Government and, indeed, the partnership agreement between Plaid Cymru and the Welsh Government. My cursory reading of the agreement is that it contains nothing specifically on energy efficiency. Of course, the agreement was composed before the crisis. I hope there are mechanisms in the agreement whereby both parties can look again at the programme of government and focus on what we can do in Wales.

[Ben Lake]

The hon. Gentleman makes an important point. There is an opportunity, through the co-operation agreement, for the Welsh Government and Plaid Cymru to focus their efforts on improving the energy efficiency of the Welsh housing stock. A year or so ago, Wales’s Future Generations Commissioner reported that it would take around £3.6 billion of investment over 10 years to bring the entire Welsh housing stock up to EPC band C. Were we able to achieve that—there is now an important case to be made for accelerating such an intervention—it would save Welsh households an average of £418 a year on their energy bills. Of course, those savings were estimated based on the energy prices a year and a half to two years ago; one wonders how much more of a saving could be realised were we to pursue energy-efficiency measures today.

The Energy Efficiency Infrastructure Group has added to the calls for energy efficiency, saying that to bring up the EPC level of all UK housing stock would provide significant annual energy-cost savings of £7.5 billion. I appreciate that such measures would not offer any solace in the short term, but it is now time that we consider how we can address some of these issues in the mid to long term to avoid falling into a similar situation—dare I say it?—next winter.

Finally, another aspect that bears repetition and further consideration is the recommendation from the Federation of Small Businesses to look again at support for renewable-energy installations for small businesses. The FSB has suggested that vouchers worth £5,000 could be made available to small and medium-sized businesses to spend on qualifying energy-saving products and services and renewable-energy installations. I look around the Chamber and recognise a few rural Members of Parliament; they may have been approached by farmers and agricultural businesses that have pointed out that they have a lot of roof space that might well be suitable for the installation of solar panels. Even if that cuts just the energy consumption and grid dependence of those farmers and businesses, it will still contribute to the wider effort to reduce our energy vulnerability to fossil fuels and the vicissitudes of the market.

There is an opportunity here. There needs to be further consideration of the short-term support for properties that are not connected to the mains gas grid. In looking at the example of homes such as those in Ceredigion, 74% of which are not connected to the mains gas grid, I also emphasise how important it is that we do not lose sight of the mid to long-term measures and the benefits of a properly invested energy-efficiency programme.

Direct Payments to Farmers (Legislative Continuity) Bill

Debate between Ben Lake and Jonathan Edwards

2nd reading & 2nd reading: House of Commons
Tuesday 21st January 2020 Commons Chamber

[Ben Lake (Ceredigion) (PC)]

It is a pleasure to follow the hon. Member for North Herefordshire (Bill Wiggin). I agree with a lot of the points he raises, particularly on the importance of maintaining a level playing field for our farmers, both in trade and, as I will discuss, within the UK internal market in so far as it exists.

Seeing the crowded Government Benches reminds me that the hon. Member for Brecon and Radnorshire (Fay Jones) will shortly be making her maiden speech, and I congratulate my constituency neighbour on what I am sure will be a very impressive first outing.

The Minister can sit easy, because I confirm that Plaid Cymru will not be opposing the Bill today. In so far as the Bill is being introduced to ensure that farmers in Wales who are participating in the basic payment scheme in 2020 can be paid from December, we fully support it. I am glad the Bill has been introduced to offer some certainty to farmers in Wales.

I am also glad that we have this opportunity to discuss the broader elements of the Bill. This Bill and the Agriculture Bill, which we will discuss soon enough, will largely determine the future of agricultural policy across the four nations of the UK for years to come. The Minister will have previously heard me preach about the need to replace some aspects of the common agricultural policy, particularly some of the associated frameworks that, taken together, have provided the financial and legislative basis upon which the four national Governments of the UK have formulated their agricultural policies for some years.

I raise this today because, particularly when it comes to funding, divergences and distortions can arise if we are not careful. As the four UK countries develop their agricultural policies, the question of how they will co-operate to ensure the effective functioning of the internal market in these islands looms ever larger. I am sure that greater flexibility and a more bespoke agricultural policy for each of the four nations will be championed in parliamentary debates, and rightly so, but we should also ensure that some of the CAP’s objectives in preventing excessive market distortion and maintaining a level playing field for our farmers within the countries of the UK do not fall by the wayside as we transition to this new settlement. Before I am challenged on this by Scottish National party Members, let me make it clear that that is not to say that we should prohibit policy divergence of any kind. Rather, I am trying to say that the four Governments should come together to agree financial and regulatory parameters to facilitate the functioning of the internal market, while allowing each—

[Jonathan Edwards]

My hon. Friend is making an important point. Do we not need structures that enhance joint decision making, rather than just Westminster making decisions on behalf of the four countries?

[Ben Lake]

My hon. Friend has put it far more impeccably than I could. The important thing is having co-decision making on these issues and the agreements being jointly made between the four Governments of the UK, so as to ensure that the internal market is not undermined. Such an endeavour would require us to tackle issues such as the principles underpinning agricultural policies, the quanta of funding that can be allocated to different objectives and the specific challenges relating to cross-border holdings, of which the hon. Members for Montgomeryshire (Craig Williams) and for Brecon and Radnorshire will be aware. We can come to some sort of agreement on all these measures, which is what I am trying to emphasise this afternoon. I am not pretending that this will be easy, far from it, but I am saying that it is deeply important that we do reach some sort of arrangement. Frameworks currently exist and they address the issues and questions I have just raised. They ensure that the national Governments can base their policies on a set of common objectives. In other words, they are boundaries within which the four nations and the Governments of the British Isles can tailor their policies to address the specific challenges that face their respective industries, while preventing harmful market distortion and disruption to supply chains. These questions need to be addressed anew to ensure that unfair advantages do not arise and that the internal market is not compromised. Many of the issues will have to be addressed as part of the discussions on the UK Agriculture Bill and in collaboration with the devolved Governments, but this Bill does offer us a brief opportunity to raise some questions about the funding framework, to which I hope the Minister can respond as he concludes the debate.

As I have mentioned, the Bill allows BPS payments to come from domestic UK funds, and in that sense it is mainly a housekeeping exercise. One question that has been raised by stakeholders in Wales is whether the Bill requires devolved Governments to spend these moneys in this way or whether they have discretion as to how to spend them. I would be grateful if the Minister addressed that point. The Bill also raises some questions about long-term arrangements for UK agricultural funding. My hon. Friend the Member for Carmarthen East and Dinefwr (Jonathan Edwards), and the hon. Members for Westmorland and Lonsdale (Tim Farron) and for North Cornwall (Scott Mann), have touched on the need for multiannual financial frameworks. As the Secretary of State mentioned in her opening remarks, the Bill also implements a lot of the findings of the Bew review. It has been received warmly across the House, but in Wales there are severe concerns about the allocations and the decision that the review came to on the UK funding allocations. For example, the Farmers Union of Wales has pointed out that the total difference between average annual Scottish and Welsh farm payments has now diverged to about £16,200, which leaves the average farm payment for Scotland at about 175% of the average Welsh payment. This is not me begrudging farmers in Scotland something they deserve; the question I am raising is: is there not a case to be made for Welsh farmers receiving an equivalent amount of funding, so as to ensure that we maintain that level playing field that the hon. Member for North Herefordshire mentioned?

The distortions that the allocations outlined by the Bew review have made clear surely highlight the need for a proper financial framework, agreed by all four Governments, that secures long-term funding for agriculture across the four devolved nations and is based on a fair and objective formula that minimises market distortion. I have grave reservations that the Bill, on its own, will not do that, so I would welcome any insight that the Minister can offer on how the UK Government intend to tackle this. Furthermore, by what intergovernmental mechanism will these questions be resolved? If any disputes arise, how will they be settled? Do the Government acknowledge something that I raised in the Committee considering the previous Agriculture Bill, which is that some sort of more formalised intergovernmental agreement system, based on co-decision making and co-operation, could make multiannual financial settlements easier to implement and would ensure that we avoid the sort of market distortion that unions in Wales are so fearful of, which will ultimately make Welsh farmers worse off?