Cost of Energy

Jamie Stone Excerpts

Tuesday 11th February 2025 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

It is a real pleasure to serve under your chairship, Mr Western. I thank the hon. Member for Bath (Wera Hobhouse) for leading the debate. She has been assiduous, enthusiastic and committed on this issue, and we all owe her a debt for setting the scene so very well.

It is a real pleasure to see the Minister in his place. Mr Western, I will tell you what: as Ministers go, this is a hard-working one. He has done the lot—urgent questions yesterday, a statement yesterday, this debate today—all in a matter of hours. We look forward to his contribution to today’s debate. It is also a pleasure to see the hon. Member for Beaconsfield (Joy Morrissey) in her place as shadow Minister. In the last couple of years we have seen massive fluctuations in terms of energy prices, with thousands of households carrying the burden of that for many months. Energy prices have fallen since summer 2023, but there is little prospect of cuts soon. For that reason, it is good to be here to discuss the issue.

I will, of course, give a Northern Ireland perspective, and I have one big ask of the Minister. He probably knows what it is, and knew before we started, but I would be very keen to hear about his discussions with his equivalent in the Northern Ireland Assembly to see how we can work better here together to help our constituents back home. Global prices for gas, electricity and oil have been on the increase from summer 2021 after the pandemic. Furthermore, we witnessed a massive hike in prices after the Russian invasion of Ukraine in February 2022. There are things that the former Government and this Government have had no control over, but there are also things that we can do.

For Northern Ireland customers it has been slightly different, because we are not controlled by the energy price cap in England. However, although Government support was provided, it was withdrawn in July 2023, leading to a very large hike that families are still struggling with. The Minister knows, having responded to my urgent question yesterday, the point that I am going to make about oil: 68% of households in Northern Ireland have oil as their main and primary heating and cooking sources. Since October 2023, the cheapest prices for Northern Ireland’s largest supplier have been higher than prices under the cap in the rest of the United Kingdom.

The cost of energy can be monumental for local businesses, not just for the large chain businesses. The local, family-run small business is the one that will probably suffer the most. After the pandemic, I was approached by countless local businesses in my constituency that were simply unsure how they would survive. After so many years, many were facing the climax of their business. A local coffee shop I frequently used in the town where my office is had to close down as it was no longer sustainable. Energy suppliers back home, such as Power NI, can provide tailored plans for businesses, but the price is no different and businesses can often be forgotten.

It would be remiss of me to participate in this debate without mentioning the impact of the Government’s decision to withdraw the winter fuel payment from pensioners. Many such pensioners in my constituency who have contacted me relied on that payment to get them through the winter. There are concerns not only that this may plunge thousands of pensioners into fuel poverty, but about the massive potential health risks. Older individuals’ struggling to afford adequate heating could increase the risk of respiratory illnesses, strokes and hypothermia. It is not an exaggeration to say that many of the elderly people that I know do not have and cannot afford to heat, so they do not turn it on, but they do put on extra clothes. It is distressing to visit elderly people and see them wrapped up like a polar bear—

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

I thank the hon. Member for giving way; he is making an excellent contribution. The radio frequency network that, as the Minister is aware, controls what many people in remote areas pay for heating will be switched off in June. At present, the replacement infrastructure is not there, so many people could inadvertently end up paying through the nose. I find that very worrying, so will the hon. Member, and perhaps later the Minister, tell us whether they agree that the data communication company needs to speed up its roll-out of cellular coverage as quickly as possible? We are only four months away from June, and it is a deeply worrying situation for pensioners in my constituency and many other remote areas.

[Jim Shannon]

I thank the hon. Member for that intervention. The Minister has been listening, and I know that he does listen. The hon. Member has outlined a specific issue that is incredibly worrying. The older we get, the faster time goes; I am not sure whether that is right, but it seems to go faster. June will be here tomorrow—it will be that quick—so the crisis must be addressed today. I thank him for raising that and look forward to the Minister’s response.

I will always ensure that the Minister and his Department are aware of the impact that this issue could have—and has had this winter—on health. We look to him for direction and, most importantly, reconsideration for the coming years. Schemes were available under this Government that were available under the previous Government and were set up to support families and households who were struggling, but they have now closed. Similarly, back home, the Assembly has previously taken steps to support people.

It is no secret that people are still struggling. On occasions when the price of energy is out of our hands, there are measures we can take to ease the burden. Despite the general fall in prices since early 2023, typical bills under the January to March 2025 price cap will still be 43% higher than in the winter of 2021 to 2022. The perspective of prices and costs today is really bleak, so I look to the Minister for direction and plans for the rest of the coming year to support our constituents.

Steps can be taken to reduce pressure: perhaps there could be a closer look at the impact of renewable solar energy or better dedication to financially supporting our constituents. Regardless, I look forward to hearing what the Minister has to say, and to hearing about the planned integration between himself and his counterparts back home in the Northern Ireland Assembly, because we need to see the benefits of being a part of this great United Kingdom of Great Britain and Northern Ireland. We are very proud to be part of it, but we also look to Government here centrally to help us in the Northern Ireland Assembly and to help our constituents. I honestly believe that the Minister has a heart for that, and I very much look forward to his response and to seeing how he can help us.

--- Later in debate ---

[Michael Shanks]

Never will it be said that I enjoy criticising the former Government.

I would flip what the hon. Member for Bath says on its head: that change also presents a real opportunity to look at the electricity system in a different way—I will come back to that point, particularly on community energy. It is right to say that the days of big cities with power stations right next to them are long gone, so we need to think of a different way to build our transmission system into the future.

On Clean Power 2030, advice from the National Energy System Operator said that the clean power system can be cheaper than today’s system for consumers. Contrary to what some Members have said, we know that renewables are by far the cheapest to run. There is a cost to building them, but there is also a huge cost to building new gas or nuclear power stations that is often not factored into the debate. Renewables come at a cost but are then incredibly cheap to operate on our system.

The hon. Member for Epsom and Ewell (Helen Maguire) spoke very passionately about climate change. That is really important. The mission we are on is about building an energy system for the future that gives us energy security, but it is also about tackling the climate crisis, which we can no longer think of as a future threat. As we look around the world, we can see from just this year alone that it is a present reality. It is increasingly difficult to read the statistics and not think that we should be taking more decisive action.

I gently say to the hon. Lady, as she prods this Government for not going fast enough, that in seven months we have launched the Clean Power 2030 mission, lifted the onshore wind ban in England—which was an absurd policy—and approved more solar than the previous Government did. We have had the biggest renewables auction in history, with 131 projects, we have created the pathway to clean power by 2030 and have already delivered record investment in the supply chains that will deliver some of the infrastructure upgrades we need, including £1 billion by ScottishPower. We launched the solar taskforce and the onshore wind industry taskforce. We are also looking at the Offshore Wind Industry Council and how it can deliver more. I am not sure we could move much faster, but if the hon. Lady has some suggestions, I am happy to take them on board.

Finally, on the point about the rooftop solar revolution, we agree that it needs to be not an either/or, but both. We will need ground-mounted solar, which plays a really important part, but we have rooftops right across the country—in car parks, warehouses and industrial units—that we should be covering in solar panels wherever we possibly can. We will do much more on that. We reconvened the solar taskforce, which the previous Government ran, to try and increase the ambition, and it will report in due course.

[Jamie Stone]

To return to my earlier intervention about the switch-off of the radio signal, on infrastructure, does the Minister agree that the data communication company must be exhorted and encouraged in every possible way to get on with the roll-out? Otherwise, people who are very vulnerable will pay more for their electricity.

[Michael Shanks]

I had a segue planned in my speech that was going to get me to the hon. Gentleman’s point, but he pre-empted me, and he is quite right to do so. He is right. This is a real challenge. The switch-off is the right thing for us to do in the long term—I think that everyone agrees that as a system that is outdated—but we do need to be absolutely certain that no one is left behind.

The Minister responsible for energy consumers, my hon. Friend the Member for Peckham (Miatta Fahnbulleh), has already had a number of meetings with Ofgem and with industry to make sure we speed up the roll-out. The service ends in June, as the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) said, and the taskforce that has been put in place to roll it out is now moving at pace. I think it is fair to say that it should have been moving faster up to this point, but they are very aware of the issues and we will keep that under review; it is of course essential that people are not left behind when the signal is switched off.

Moving on to short-term support, we recognise that by 2030 the clean power system will be crucial to bringing down bills in the long term, and to protecting consumers from the price spikes that we have faced in recent years. However, short-term support is important for households that are struggling with their bills while we are in that transition. That is why the Government continue to deliver the warm home discount, which gives a £150 rebate off energy bills for all eligible low-income households, and it is expected to support 3 million households across the country this winter.

The Minster for energy consumers has worked with energy suppliers to agree a £500 million industry support commitment to help specific customers who are struggling this winter. We also extended the household support fund until March 2026 with an extra £742 million, with additional funding for the devolved Governments as fuel poverty is devolved through the Barnett formula.

A number of hon. Members raised the question of a social tariff. My hon. Friend the Member for Northampton South made a passionate case for it, and we are looking at what bill support could look like in the future, including the possibility of a social tariff. I acknowledge that there is a broad consensus on the idea of a social tariff. The challenge is that it means different things to different people. One of the challenges that we are grappling with is how we define a social tariff, and how we can reach, in a very targeted way, the people who need it the most.

Part of that is the issue of data sharing, which a number of hon. Members have raised—that is, how we bring together the information that the Government have about the individual people who could most benefit from such a scheme. The Minster for energy consumers is leading that work, alongside industry bodies such as Energy UK and stakeholders. They are looking at how we can improve affordability and accessibility, and they are working with the Department for Work and Pensions on how we might be able to share some of the data that it has.

The question about levies has been raised by a number of hon. Members, and I think the Conservative party is now pledging to abolish levies entirely. It is an incredibly complex subject, but it is something that we want to grapple with, and we need to be very mindful.

I return to the point made by the hon. Member for Bath at the beginning of the debate. While the wholesale price will come down as we put more renewables on to the system, and as we squeeze off gas as the marginal price, if bills do not come down because levies remain high, people will not see the benefit. It is really important to bring communities with us. The truth is, it is a complex issue. I am not going to stand here and say that we can just abolish levies, or that we can just transfer them entirely on to taxation. Neither option is possible in completion, but we are considering how we look at the future of levies, and we are open to suggestions from all parties on how we do that.

On the point about rebalancing—how we move electricity costs, in particular, on to gas—that is also a challenge. We want the number of people who use gas to decline in the coming years, as we decarbonise. The challenge will be making sure that we do not put charges on to a dwindling number of customers. Potentially and inadvertently, some of the poorest people in the country might be those who are the last to convert from gas to alternatives. I do not, for a second, dismiss the points that have been raised; they are incredibly important. However, I want to be very clear that we are working relentlessly in this Parliament on how we reduce the wholesale costs, and we want to make sure that it follows through on to consumers’ bills.

Related to that, of course, is the point about standing charges on bills, which, as many hon. Members hear from constituents, seem to be such an unfairness because they are not based on consumption or on particular customers’ circumstances. We are committed to looking at the future of standing charges. In December, Ofgem provided an update on reform. It included quite a radical proposal for introducing a new zero standing charge option under the energy price cap, which would give consumers greater choice in how they pay for their energy bills. It is for Ofgem now to consult on that proposal, which it will do this year. The driving force behind that will be making sure that any reforms are fair to all customers.

To underline that this is not straightforward and we cannot just simply abolish levies, I note that there would be unintended consequences if we were to transfer some of the costs on to other people. We could inadvertently find ourselves raising bills for some people without that being the policy intent. We are committed to reforming standing charges, but we want to do it in a way that is fair.