Energy Prices: Support for Business

Jonathan Reynolds Excerpts

Thursday 22nd September 2022 Commons Chamber

[Mr Speaker]

Before I call the Secretary of State for Business, Energy and Industrial Strategy to answer the urgent question, I have to say how disappointed I am that the subject of an urgent question was extensively set out in the media yesterday before being presented to the House. I hope that, as a former Leader of the House who was very supportive of me in criticising Secretaries of State for not coming to the House, the right hon. Member will be especially aware—as I know he is—of Ministers’ duties to explain that important policies are first to be heard in this House.

I understand the importance of the matter and the need for our constituents to have the information as soon as possible and, for that reason, I would have been willing to allow a statement yesterday, if I had been asked. I am deeply concerned that I have to make another statement like this only a few sitting days into this new Administration’s existence. I ask the right hon. Member and all his colleagues to do their utmost to ensure that this is the last time I have to do so. I am not angry; I am so disappointed, and I hope that we will treat the House with the respect that it is due.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

(Urgent Question): To ask the Secretary of State for Business, Energy and Industrial Strategy if he will make a statement on Government support for businesses facing rising energy prices.

[The Secretary of State for Business, Energy and Industrial Strategy (Mr Jacob Rees-Mogg)]

I am delighted to make a statement, Mr Speaker. As you know, I am a great believer that this House should be informed first. I was unaware of any precedent of a statement being made on a day set aside for taking the Oath, and therefore unaware that your generosity would have allowed such a statement to be made. I point out to the House that, in my membership of the House, a statement has not been made by the Government during the taking of the Oath days set aside, nor was any statement made in 1952 on the last occasion when the Oath was taken. I apologise to you, Mr Speaker.

[Mr Rees-Mogg]

That is why I am saying that I am very grateful, Mr Speaker. I always think it is important that this House gets to know, and your generosity in setting a precedent where statements can be made on the days set aside for taking the Oath is, I think, a good one.

It is vital that businesses have the support that they need to pay their energy bills this winter. His Majesty’s Government are determined to grow the economy. We cannot do that if business becomes insolvent thanks to what is tantamount to blackmail by a malevolent state actor. His Majesty’s Government announced yesterday that they will provide a discount on wholesale gas and electricity prices for all non-domestic customers, whose current gas and electricity prices have been significantly inflated by global energy prices. That includes all UK businesses and covers the voluntary sector, such as charities, and the public sector, such as schools and hospitals. The scheme will apply to fixed contracts that have been agreed on or after 1 April 2022, as well as to deemed variable and flexible tariffs and contracts. It will be applied to energy usage for six months from 1 October until 31 March next year.

As with the energy price guarantee for domestic customers, in order to benefit from the scheme, customers do not need to take action. The discount will automatically be applied to their energy bills from 1 October. In terms of real-world savings, non-domestic users will start to see the benefits of the scheme in their October energy bills, which are typically received in November. The level of price reduction for each business will vary depending on its contract type, the tariff and the volume used.

We will publish a review of the operation of the scheme in three months to inform decisions on future support after March 2023. The review will focus in particular on identifying the most vulnerable non-domestic customers and on how the Government will continue assisting them with energy costs beyond the initial six-month period.

A parallel scheme—based on the same criteria and offering comparable support, but recognising the different market fundamentals—will be established in Northern Ireland. For those who are not connected to the gas or electricity grid, equivalent support will be provided for non-domestic consumers who use heating oil or alternative fuels instead of gas. Further detail on this will be announced shortly.

[Jonathan Reynolds]

I welcome the new ministerial team to their posts.

The energy crisis poses a severe challenge to businesses of every size, many of which have been desperate for clarity and reassurance. While the Conservative party spent much of the summer distracted by its own internal drama, the Opposition spent that time arguing that the crisis demands a response commensurate with the scale of the challenge, paid for by a windfall tax on the excess profits that have accrued because of Russia’s illegal invasion of Ukraine.

While I welcome the Government’s damascene conversion to freezing energy prices, we must all acknowledge that for too many companies the news will have come too late to save them. Businesses cannot plan on speculation and briefings. It is regrettable that a Minister who respects the role of Parliament chose to avoid parliamentary scrutiny, instead opting for a sparse press release and a short media interview. That is why the Opposition have tabled this urgent question: to get the much-needed clarity on these plans that businesses desperately need.

May I ask the Secretary of State what, specifically, the review after three months will be looking at and what the criteria will be for determining whether to extend the support? Secondly, how will the taxpayer be protected from energy traders inflating prices, knowing that the Government will be picking up a substantial slice of the costs come what may? Thirdly, what support will the Secretary of State be offering to businesses in the long term to protect themselves from rising energy costs through efficiency measures and the transition to renewable energy?

I also ask the Secretary of State to address the elephant in the room: who is paying for this? The Government say that they cannot cost this package, but it is clearly expensive. This Government say that they can cut taxes, increase spending, increase borrowing and magically pay for it through the higher growth that, after 12 years in office, has completely eluded them. This is fantasy economics. It is a threat to British businesses and to the financial stability of the country. What can the Secretary of State say to reassure the country that these plans are robust, responsible and fair, as well as being sufficient to get us through the crisis and better protect businesses in the long term?

[Mr Rees-Mogg]

Although we have been away for a few months and had a leadership election, the socialist record does not change. Tax, tax, tax and tax again—it is always the answer to every problem.

Let me come to the specifics of the hon. Gentleman’s question. The three-month review is taking place to work out who will need support, to ensure that support is properly targeted. What is being done at the moment is an immediate response to an extreme crisis, to benefit everybody, but not everybody necessarily needs the same level of support. What we will do in the review is work out who needs the support. If I can give some early indications, it seems to me that places such as care homes are likely to need longer-term support. That will be covered by the review.

The hon. Gentleman raises the important question of how taxpayers will be protected. I have asked the Public Sector Fraud Authority to look at all our plans, to ensure that whatever we are doing and our mechanisms for paying are as robust as they can be against the speed with which we need to act. It is really important to safe- guard taxpayers’ money.

We are doing a number of things to help in the futures market. The Bank of England and the Treasury will provide some underlying capital for the futures market so that there is a more reliable futures price, rather than the one set on very low liquidity at the moment. We will legislate in an expedited fashion to ensure that we protect against anybody who commits fraud against this measure.

The hon. Gentleman raises the issue of transition. Gas is a transition fuel. The Government’s commitment to net zero remains, but we will need gas to heat people’s boilers for the immediate future, and we need to get it as cheaply as we possibly can, using all our domestic resources. Beyond that, there are exciting plans for carbon capture and storage and for hydrogen, which I think present a very attractive future for this country.

The hon. Gentleman asks that the scheme be responsible, robust and fair. It is all those things. It is responsible to protect business; it is robust to ensure that it can be rolled out quickly; and it is fair to our economy as a whole.