Energy Network Charges

Jim Shannon Excerpts

Tuesday 5th July 2016 Westminster Hall

[Ian Blackford]

To recap on what I said at the beginning, we are talking about fairness and ensuring that people are treated in the same way throughout the United Kingdom. I quoted a statement made by the Minister at Christmas time last year:

“It is not right that people face higher electricity costs just because of where they live”.

I commend her for that statement, and I urge her, when she gets up to speak this afternoon, to tell us that she will take the necessary action to make sure that is brought into reality. We do not have a universal service today; we must do so. Why are highlanders and islanders being penalised? Fuel poverty: delivered to Scotland from Westminster. The Government have a responsibility, and the power, to do something about that.

I have submitted a number of questions to the Minister about the continued existence of 14 regional electricity markets in the United Kingdom. Here is one response:

“Electricity distribution network charges vary by region and reflect the costs of running the network in that area and the number of consumers that those costs are spread over. Moving away from this ‘cost-reflective’ approach would weaken the local accountability of the network operator in ensuring expenditure is fully justified, in turn weakening downward pressures on network costs overall.

In addition, a national price for electricity distribution would mean lower network charges in some areas, but increases in others.”

Where is the evidence for a detrimental impact on overall network costs? That is simply a red herring. As for the comment about lower costs for some and higher costs for others, the whole argument is about fairness. Somebody living in Skye should face the same network costs as somebody living in Southend. Anything else flies in the face of the statement by the Minister that people should not pay higher costs because of where they live. Let us make her statement a reality today, because those warm words from the Minister are meaningless unless we take action on a universal market. She talks about increases in some areas as a result of a universal market, but that is fairness—we all pay the same network costs. I prod the Minister to live up to her words: to take action today and to be seen as delivering fairness throughout the United Kingdom.

In Scotland, in our independence referendum, we were told that we were “Better Together”—

[Jim Shannon (Strangford) (DUP)]

So you are.

[Ian Blackford]

I have immense admiration for the hon. Gentleman, as he knows, but where is the “Better Together” in this? As I have already said, consumers in the highlands are paying 84% more for their transmission charges than someone living in London. Better together for whom? Not for us.

While I am on the topic, we were also told that our European future was secure if we remained in the UK—Scotland in Europe, and part of a wider European energy market. Well, we know where we stand now. The Minister wants to take us out of Europe with the rest of the UK. If she secures her ambition to become Prime Minister, I hope that she recognises the sovereignty of the Scottish people, who voted to remain in Europe.

--- Later in debate ---

[Jim Shannon (Strangford) (DUP)]

It is a pleasure to speak in this debate, Mrs Main. I congratulate the hon. Member for Ross, Skye and Lochaber (Ian Blackford) on securing it. It is always a pleasure to follow him. I look upon him as a friend in this House, as I do all my SNP colleagues, who are sitting on my right-hand side. We might have some differences about what is best for the United Kingdom of Great Britain and Northern Ireland, but I believe we are better together. They perhaps have a slightly different opinion; none the less, it does not mean that we cannot be friends in this House, and that is the important thing.

According to a study by the Northern Ireland Chamber of Commerce and business advisers BDO, almost a third of businesses in Northern Ireland believe that high energy prices are to blame for deterring investment. What the hon. Gentleman outlined in his presentation is something that I would like to mirror when it comes to Northern Ireland’s energy prices and so on.

May I also say that it is a pleasure to see the shadow Minister in his place? It is especially pleasing to see the Minister in her place. I look forward to hearing her response, which I am quite confident will be very positive and encouraging. It is always a pleasure to see her here in the House.

The regional disparity creates real challenges for the business community in Northern Ireland, at a time when those in the business community are seeking to expand and succeed and when their success is essential to rebalancing the Province’s economy and ultimately ensuring our economic success as a region. We are fortunate to have lots of jobs being created and we want that to continue. We believe we can continue that outside the European Union. I know there might be a difference of opinion among some of the Members present, but I believe Brexit will give us a great opportunity to expand and create more opportunities and move forward. A key issue for that to happen is the energy price.

The success of the United Kingdom of Great Britain and Northern Ireland depends on the success of all our regions. Although Northern Ireland is a starkly different place today from what it was a couple of decades ago, it is clear that there is much more work to do, especially in encouraging and facilitating economic development, particularly in the private sector. We have made giant leaps forward and done great things in Northern Ireland, with the Department of Enterprise, Trade and Investment creating numerous jobs—supported, let us be fair, by the Westminster Government. The Conservative party has had a strong economic policy to create jobs, and by and large we have seen the benefit of that in all our constituencies across the United Kingdom of Great Britain and Northern Ireland.

The Northern Ireland Chamber of Commerce study to which I have referred also found that just under two thirds of Ulster firms cited power and heating as among their most costly overheads. The hon. Member for Ross, Skye and Lochaber touched upon fuel poverty at the end of his speech. It is a massive issue for my constituents; in fact, it is a massive issue for constituents throughout Northern Ireland. Some 35% of people in Northern Ireland are subject to fuel poverty. We have the highest number of people in fuel poverty in the whole of the United Kingdom, so it is a massive issue for those who own or rent their houses and for those just trying to get by.

The Northern Ireland Executive continue to play a key role in addressing the issue by maintaining and improving local infrastructure. No doubt the devolution of corporation tax will allow for local business needs and circumstances in the Province to be taken into account. There has been talk in the past few days about the Chancellor reducing corporation tax in the United Kingdom. If he reduces it to a level that we would like to see in Northern Ireland, the opportunities will be greater for us. If it was reduced more, we could automatically take all the jobs that are coming in and all the potential growth could come our way. However, more often than not it is the regulatory framework that seems to create the issues. Literally all the major job losses in the Province that are down to big firms exiting or scaling back operations have been attributed directly or indirectly to high energy costs. I will give some examples.

Bombardier is one of the Province’s biggest employers. It is a business operating in the Province that has become a source of pride for us, owing to its world-renowned reputation. Bombardier has centres for manufacturing in my constituency, and many of my constituents in Strangford travel to east Belfast to get employment as well. Bombardier cited the costs when explaining why jobs had to be moved out of the Province in order to maintain competitiveness.

Michelin and JTI Gallaher are two more examples of large firms that have been good to the Province, especially in the constituency of my hon. Friend the Member for North Antrim (Ian Paisley). Michelin attributed redundancies directly to the high energy costs that business operators in the Province face. Similarly, they proved an issue for JTI Gallaher as well. We have lost them both and the impact has been great, especially in one constituency. It is not just the jobs that are lost; it is the impact that the money and wages going out of those constituencies has on the economy, which affects everything. The Northern Ireland Department for the Economy has taken steps to try to fill the gap. One way of doing that is to help with energy costs.

Northern Ireland stands out from the rest of the United Kingdom when it comes to the recruitment of part-time staff. That is another indicator of the challenges that manufacturing faces. Views about cash flow are too often the most negative in the United Kingdom. Those are some of the things that we face back home. The issue cannot be remedied just through the intervention of the responsible Minister in the Northern Ireland Executive. They can play their part, but only with co-operation, support and help from Westminster. There is no single policy that can remedy the difficulties faced by large energy users in Northern Ireland, of which there are about 20. There is a need for a long-term strategic objective of delivering competitive energy policies; but in the meantime the regulator can make the difference. The key issue preventing the change that is needed at the moment is that if large energy users were to benefit from being asked to pay less, the cost could, under the current framework, be passed on to households and small and medium-sized enterprises. Therefore, the statutory remit of the regulator would have to be expanded significantly to include that area. I would ask the Minister to respond to that point.

In the Republic of Ireland, it is not the wholesale prices that make the difference; it is the allocation of network costs, which disproportionately favour large users in a comparison between the Republic of Ireland and Northern Ireland. In Northern Ireland, the LEUs would like similar treatment. Should the Minister in Ireland want to follow that methodology, the decision would need to be politically acceptable. Given the trade-off that could ensue between SMEs, households and LEUs, such a move could prove contentious. A way forward palatable to everyone would need to be worked out to keep as many stakeholders as possible happy. There are some balancing tricks to be done, as well as some advance strategic work.

The Chancellor often talks about a northern powerhouse, and refers to economic engines and the like. He is right to recognise regional disparities in business activity and inward investment, but I hope that the worrying news coming out of Northern Ireland about the harm that energy costs are doing to our ability to attract investment will put us on the map for Ministers in Westminster, who can be part of spreading the wealth more evenly in the nation.

As everyone present for the debate knows, I am a true believer in the United Kingdom of Great Britain and Northern Ireland. I believe in it with a passion. I believe that we are better together. Those are my heartfelt thoughts, but we also need to spread the wealth across the whole of the United Kingdom, and see that we get some of it on the fringes of Northern Ireland and on the fringes of Scotland, about which the hon. Member for Ross, Skye and Lochaber made his comments very clearly. The extra power and influence here at Westminster would be of great benefit if Ministers and those with an interest would lend a hand to the Minister in Northern Ireland, as he inevitably comes to deal with an issue that is, unfortunately, very complex.

It is a pleasure to take part in the debate. I am grateful for the opportunity to speak, and I look forward to the speeches of the shadow Minister and, in particular, the Minister.