Graham Stuart
Main Page: Graham Stuart (Conservative - Beverley and Holderness)(2 years, 2 months ago)
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Dr Alan Whitehead (Southampton, Test) (Lab)
I will try to spend the time I have addressing myself to the excellent speeches we have heard this afternoon. I congratulate my hon. Friend the Member for Cardiff North (Anna McMorrin) on securing the debate. It is about Wales and how Wales is affected by the runaway rises we are seeing in energy costs and by the actions the Government have taken in relation to them. Those price rises are having devastating effects across Wales, and hon. Members have paid considerable attention this afternoon to what is happening to individual constituents across Wales. Of course, price rises are having devastating effects across the whole UK, but two things stand out in the case of Wales.
The first is the particular demography of Wales. As the hon. Member for Ceredigion (Ben Lake) mentioned, Wales has a different profile in terms of its households and energy costs, particularly from England, and from the UK in general. One in five households in Wales is off the grid; fewer than one in six are off the grid across the whole UK, and for England that figure is about one in eight. Those off-grid properties in Wales have suffered to a far greater extent than households in England and Scotland and in the United Kingdom generally. That is, among other things, because the heating fuels needed for off-grid properties were never under the price cap. Those properties suffered price rises of, for example, 250% in two years for heating oil before the crisis came upon us. They are in the crisis now, with further enormous increases, but they were suffering for a long time before that.
It is therefore wholly appropriate and deserves congratulation that the Welsh Government have instituted an additional £200, on top of the funding available in the UK generally, to meet the specific circumstances in Wales. Considering their other financial problems, the fact that they are able to carve out that amount to support people in these circumstances is something we can only stand back and applaud, and I would be first to add my applause.
The immediate response—well, the rather less than immediate response—of the UK Government, through the energy price support scheme, has been relatively generous and goes some considerable way to removing the worst aspects of the energy price rises for the general public, and is to be tremendously welcomed for that reason. However, I have one or two points to make about what the UK Government have done and what it means for the future and what we all have to face. This energy price crisis will not go away in a year’s time, with prices going back to normal.
The Minister for Climate (Graham Stuart)
The hon. Gentleman rightly says that the crisis may not necessarily go away quickly, so why is it Labour party policy to intervene for six months? The Government have come in with family support—I am delighted to hear his recognition of the extent and power of that intervention—for two years.
Dr Whitehead
The support is for two years for domestic properties. For business and commercial properties, it is for six months. The proposal that the Government have put forward for two years’ support on price rises is completely unfunded. We might, for example, have introduced a windfall levy, to accurately reflect the difference between what is happening in the UK market and the reasons for the price increases, and the profits being made by the energy companies supplying the UK, particularly with gas. Those profits are not based on some amazing technical breakthrough in the delivery of gas to the UK; exactly the same companies are providing exactly the same service in bringing gas from the wholesale market to the retail market in the UK, but they are making nine times the profit they were previously, for no extra work at all. The idea that we should put forward a windfall levy to cover a good proportion of the cost of those arrangements seems a complete no-brainer. I was quite astonished when the Government decided that they were not going to draw on that resource at all for the next phase of the support arrangements. Not only were they not going to introduce an immediate levy, but they were not going to introduce any sort of continuing levy arrangement to keep prices at a reasonable level.
The Labour proposal took into account what we do in the first instance with the windfall levy and what we do over the next period. I want to come to that in a moment, but it is important to recognise that the Prime Minister was bang on guilty of misleading the public in her recent conference speech, and other speeches, by saying that people would pay not more than—
The Minister for Climate (Graham Stuart)
It is a great pleasure to serve under your chairmanship, Mr Betts. I congratulate the hon. Member for Cardiff North (Anna McMorrin) on securing the debate, although I share with my right hon. Friend the Member for Vale of Glamorgan (Alun Cairns) some disappointment at the tone that she and most Labour Members took. That does not reflect the seriousness of the debate, and by way of contrast I would point not only to my right hon. Friend’s typically thoughtful speech but to that of the hon. Member for Ceredigion (Ben Lake), who made his points perfectly clearly but constructively, as we wrestle with this unprecedented global rise in prices.
It was good to hear the hon. Member for Southampton, Test (Dr Whitehead)—this was not reflected by the more rabid Back-Bench contributions—recognising the scale and generosity of the intervention, which is the most generous in Europe. This Government have acted decisively to help families and the poorest in particular. A failure to acknowledge those basic facts suggests a lack, I would say, of moral seriousness in dealing with this issue, which is of great import and is having a great impact on families now. No one is well served by political game-playing when we are dealing with something so severe and serious.
The Government understand the scale of the challenge and are taking action to help support households and businesses facing these record energy prices. This includes those in all four of our nations. Wales, alongside the rest of the UK, is feeling the pain of this crisis, which has been driven by the illegal invasion of Ukraine and Putin holding gas supplies hostage, in addition to the global pressures of the recovery from the pandemic—a point that was set out by the hon. Member for Southampton, Test, who is a learned Gentleman in this area of energy policy.
The announcements made by the Prime Minister on 8 September and 21 September 2022 demonstrated the Government’s commitment to protecting UK households and businesses through the energy price guarantee and the energy bill relief scheme. Under the plans, households, businesses and public sector organisations across the country will be protected from significant rises in energy bills, thanks to the new Government support that took effect from the beginning of October.
Without Government action, average household energy bills under the energy price cap had been due to rise to around £3,500 in October, a rise of 80% on current bills. Next year, it was predicted they would increase to as high as £6,500 per family. Those are truly chilling numbers. From this month, the Government’s energy price guarantee will limit the price households pay per unit of gas and electricity they use. It means that a typical household in Great Britain will pay on average £2,500 a year. Those with lower energy bills will pay considerably less, because it is about the number of units that people use. An average family will save between £1,000 and perhaps as much as £4,000 a year because of this unprecedented, unparalleled intervention by the Government to look after the people of this country and help them through this challenge.
The intervention has had a significant wider impact. It is interesting to note today that the International Monetary Fund has now conceded that the mini Budget, of which this was the centrepiece, will boost economic growth. [Interruption.] The hon. Member for Cardiff North, who only wants facts that support her political viewpoint, may be disturbed to learn that according to the IMF in 2022 the UK is predicted now to have the highest economic growth in the G7. This comes at a time of record employment as well. This Government put the people first. One of the saddest things about Labour Governments over the years is that they always end with higher unemployment than at the beginning. I am sure they wish the best, but they never seem to be able to deliver it.
In addition, households will see the first instalment of the £400 energy bill support scheme in their October electricity bill. Families are seeing it in their bills already in some cases. In Great Britain, the discount will automatically be applied monthly in six instalments between October 2022 and March 2023. For the 8 million most vulnerable households across the country, that will form part of a £1,200 package of targeted support to help with the cost of living.
Jonathan Edwards
The Minister mentioned the IMF report. Did the same report not say that, actually, inflation in the UK will be among the highest in Europe? There is perhaps only one country—Slovakia, I think—with a higher inflation rate. People will be hit far harder here.
Graham Stuart
The growth plan and the Government’s intervention will have a significant impact on reducing inflation, protecting households, mortgages and the like. Households in Northern Ireland will also receive support through the energy price guarantee from November, with support for October bills backdated so that they see the same benefit overall.
Like many in the Chamber, I represent a rural constituency with many people off grid. Those who live in an area of the UK that is not served by the gas grid—we have had a lot of conversation about that—and use alternative fuels, such as heating oil, to heat their homes will receive a £100 payment to support them with their energy bills. We are working at pace to work out how best to pay that money to those people. On 8 September, on the Floor of the House, the Prime Minister committed to supporting park homes. Residents will receive support equivalent to the EBSS and the EPG—apologies for the alphabet soup. More details on that will follow soon. It is important to note that households that use alternative fuels will get the £400 energy bills support scheme payment and the electricity component of the energy price guarantee as well as the £100 for alternative fuels.
Graham Stuart
With respect to the hon. Gentleman, I am going to press on. The Government’s package of interventions makes up the biggest proportion of the fiscal package set out in the growth plan.
Non-domestic energy consumers, including businesses, charities and public sector organisations, have also been experiencing significant increases in energy costs, with reports of increases of more than 500%. Those consumers will also be protected through the Government’s energy bill relief scheme from October, over the next six months. That support is equivalent to the energy price guarantee put in place for households, and similarly discounts the unit prices of gas and electricity, meaning that non-domestic energy consumers will pay wholesale energy costs well below half of the expected prices this winter. That will provide much-needed relief and certainty to non-domestic energy users who were facing significant energy costs, and it will enable them to plan ahead.
Graham Stuart
Forgive me; if I had been left anything like half the time that was available by the Opposition spokesman, I would have been able to accommodate the hon. Gentleman.
After that initial six-month scheme, the Government will provide ongoing focused support for vulnerable industries. There will be a review in three months’ time to consider where that should be targeted to ensure that those most in need continue to get support.
Non-domestic users that are eligible for support with energy bills include those on standard variable energy contracts, those whose fixed-price contracts are coming to an end and those businesses that have agreed a fixed-price contract in the last six months. We recognise that it is a challenging time for businesses, particularly those that are energy intensive, many of which are situated in Wales, as hon. Members will know.
The Government have provided more than £2 billion of support since 2013 to energy-intensive industries. We are continuing to ramp up the support, through measures such as the extension of the energy intensive industries compensation scheme. That is being extended for a further three years, and will double the relief available. We are also consulting on the energy intensive industries exemption scheme, with a view to increasing the aid intensity and reducing electricity prices for energy-intensive industries, thus supporting many jobs in Wales.
In parallel to those measures, the Government are taking decisive steps to tackle the root causes of the issues in the UK energy market, by boosting British energy supply and increasing independence to ensure that this does not happen again. The hon. Member for Southampton, Test is right that that is what we need to do. That includes the work of our energy supply taskforce, a new oil and gas licensing round, lifting the moratorium on UK shale gas production, and driving forward progress on nuclear and renewables.
It is important to remember that our energy needs this year are 75% dependent on fossil fuels. We are driving forward on the path to net zero, more than any other major economy in the world. However, the idea that the market could be entirely decarbonised by 2030 is mad. It is crazy. That is the official policy of His Majesty’s Opposition. The poverty, bankruptcies and ruin that the Opposition’s policy would cause this country—and the impact that it would have on families and businesses in Wales—are incalculable. We need to ensure that our energy system is working to shield consumers in Wales and the whole of the UK from the worst impacts of a volatile international energy market, and to reap the benefits of our increasing cheap renewable electricity generation while reducing our dependence on imported fossil fuels.
I will not take any lectures from Labour Members in this space. Today, renewables make up more than 40% of our electricity supply; just 12 years ago, in 2010, it was 7%. The Labour party talks but it does not deliver; it is the Conservatives who deliver. We have led the world. We have transformed the economics of offshore wind with our contracts for difference, which were brought about under a Conservative-led Government and are now being mimicked right around the world. Why? Because they recognise the high up-front capital cost of these projects, increase certainty for investors, lower the cost of capital, and have seen the price per megawatt-hour for offshore wind go from £120 in a 2015 auction to £38, I think, in the latest round. Not only that, but because of the CfDs brought in by a Conservative Administration, we are now seeing tens of millions of pounds paid back to reduce bills for taxpayers.
The Government are working with electricity generators to reform the outdated market structure where gas sets the price for all electricity. We have recently launched the review of electricity market arrangements, REMA—a major review of Britain’s electricity market design to ensure that it delivers an enduring framework that works for our businesses, industries and households—and we will introduce reform where necessary.
As issues of energy efficiency, fuel poverty and heat are devolved, Scotland, Wales and Northern Ireland have specific net zero strategies, and we work closely with our counterparts in the devolved authorities to ensure that our strategies align. Overall, the UK has a strong track record in making homes more energy-efficient, with 46% in England now achieving an energy performance certificate rating of C or better, compared with 14% in 2010. Again, it is the Conservatives who deliver and reduce energy costs, and it is Labour who produce hot air and nothing to help families with the cost of living. The energy performance of our buildings continues to improve, helping to reduce consumer bills and improve our energy security.
We are taking steps to encourage businesses to reduce their energy demand.
Graham Stuart
No—I will have to sit down very shortly.
We have long-term regulations to ensure that landlords are incentivised to improve the energy efficiency of buildings and to set a minimum standard. We are also providing tax incentives for less energy-intensive technologies by bringing forward an exemption on business rates for green technology, saving businesses an extra £35 million in 2022-23.
We are doing an awful lot, and my job, when the Prime Minister appointed me to this position, was to accelerate the uptake of all of these energies to move us to net zero, and to do so in a way that supports families and does not impoverish them, which is sadly what the policy of the Labour party would bring about.