Fossil Fuels and Cost of Living Increases

Kerry McCarthy Excerpts

Wednesday 11th January 2023 Westminster Hall

[Kerry McCarthy (Bristol East) (Lab)]

It is a pleasure to see you in the Chair, Sir Robert. I congratulate the hon. Member for Brighton, Pavilion (Caroline Lucas) on securing the debate. This is certainly not a one-off debate on this topic; it is something that affects us all as constituency MPs, as well as being very much about the underlying issue of what we do to tackle the climate crisis.

The hon. Member reflected that very well. She talked about the global fight and the fact that weening ourselves off fossil fuels is key to tackling many of the problems that have been flagged up today, but she also got down to detailed issues affecting her constituents. She talked about the forced installation of prepayment meters by court warrant and the consequent rise in self-disconnection. I am interested to hear the Minister’s response on that issue, because many of us are concerned about it.

The hon. Member for St Ives (Derek Thomas) also talked about specific issues in his constituency, including retrofitting homes. Again, I am interested to hear the Minister’s response to the hon. Member’s criticisms of the energy performance certificate regime and its impact on the letting market in Cornwall. I will come on to retrofitting homes that currently do not meet standards, but another issue is that we are still building homes that do not meet standards. Since about 2016, more than 1 million homes have been built that do not meet standards. That seems ludicrous, and I hope the Minister will address that.

My hon. Friend the Member for Lancaster and Fleetwood (Cat Smith) talked about the impact on people living in park homes and conservation areas—how it is not always easy for them to adapt their homes and how sometimes the cost is far greater. I thought that reflected just how good a constituency MP she is. Before the debate started, we were talking about farmers as well.

The most powerful thing that evoked memories for me was when my hon. Friend talked about the floods in 2015 and 2016, when she was a newly elected MP. As the then shadow Environment Secretary, I visited the constituencies of other newly elected Labour MPs, including my hon. Friends the Members for Halifax (Holly Lynch) and for York Central (Rachael Maskell). I saw the devastation that those floods caused for families. In Halifax, they had been told that the floods a few years earlier were a once-in-a-century experience, and that they would never see flooding like that again. They showed me the marks on the wall to show not just that the floods had happened again, but were worse than before.

A few years prior to those floods, we had floods on the Somerset levels. Again, it was seen as an almost freak event. Oliver Letwin was given—as he usually was—a taskforce to chair that was going to bring up all the answers. Then, of course, it dropped off the agenda when we had a few years without floods. My hon. Friend the Member for Lancaster and Fleetwood was quite right to warn that we should not be complacent. That there is a constant fear that flooding could return, which is very much connected with the climate crisis.

My hon. Friend also pointed out the Government’s ludicrous argument—I know the Minister is fond of this—that domestic fossil fuel extraction is somehow a green measure. I think he also tried to claim the same about fracking during that infamous debate when we were going to frack and then not frack, and when it was a vote of confidence and not a vote of confidence. The idea that we can get around fossil fuel emissions by claiming that there are no transportation costs associated with imports is silly, especially when much of what is produced will be exported. My hon. Friend did flag that up.

Returning to the opening remarks from the hon. Member for Brighton, Pavilion, she said that last year was very much dominated by soaring energy prices and a worsening climate crisis. It exposed our reliance on dirty and volatile fossil fuels. Gas prices soared to 10 times their level in the first half of 2021, meaning that the price of gas was nine times higher than the cost of cheap renewables such as wind and solar. That is an important message to get across to people. Renewables are not the expensive option any more; they are way cheaper than the fossil fuel route.

As has been said, the Minister will mention the illegal war in Ukraine. Of course, that was a major factor, but it does not explain why leading economists are predicting that the UK will face one of the worst recessions and the weakest recoveries in the G7. According to the OBR—the previous Chancellor and Prime Minister were keen to avoid telling us what the OBR thought, and now we know why—the UK has already fallen into recession and is facing the biggest drop in living standards since records began. The reality is that we simply were not prepared for the energy shock that we saw last year, partly because we have had years of wasted opportunities to develop cheap, clean and renewable energy sources and to wean ourselves off fossil fuels.

Instead of a green sprint for renewables, the Government launched a failed attempt to bring back fracking, so that they could extract the most eye-wateringly expensive gas without considering the wishes or safety of our local communities. The Government issued more than 100 new licences for expensive and polluting oil and gas extraction. On top of that, they attempted to ban new solar developments and keep the ban on new onshore wind, which would have blocked the cheapest available forms of energy.

I know that there have been U-turns on quite a lot of that—although it is difficult to keep up sometimes—but ordinary households are now paying the price for the dithering, delay and years of inaction on renewables. New research suggests that households could have saved £1,750 a year if the Government had moved faster to reduce emissions through support for renewable energy, energy efficiency upgrades and other green investments. For the 9 million households now living in fuel poverty, that £1,750 could have made a world of difference.

Labour led the way in calling for a windfall tax in January last year. The Prime Minister, who was then Chancellor, was pretty reluctant to introduce one. Eventually, he brought in a half-hearted measure, but even then, oil and gas giants avoided paying fair taxes due to the huge investment allowance loophole that was snuck into the tax. I read recently that Shell is paying taxes this year for the first time in something like five years. Clearly, something is very wrong. The loophole, which applied only to polluting fossil fuels and not to cheap renewables, allowed fossil fuel companies to avoid paying any windfall tax on 91p of every £1 they made.

The Chancellor has now confirmed that support with energy bills will reduce from April next year. That means that households, many of which are already at breaking point—not just because of energy bills, but because of increases in rent, mortgages, food prices and interest rates—are expected to suffer another increase in energy bills from April.

Labour has been clear that the only solution to the cost of living crisis is a green one. We talked a bit about retrofitting homes; it is estimated that 9 million homes could have been insulated since the Government scrapped home insulation support schemes in 2012, a decision that is now costing households up to £1,000 on their annual energy bills.

Yesterday, I met a range of people involved in the housing sector, from people running housing associations to people from building societies. They are crying out for certainty. They want to invest in retrofitting loans, green mortgages, or whatever we want to call them, and they want to renovate properties. We have seen an absolute shambles from the Government over the past decade or so, with things such as the green homes grant being dropped and cowboy builders moving into the market. Unless the Government provide certainty, consumers and the companies that will need to deliver the retrofitting programme will not have confidence. We need a clear sense of direction. That is why Labour has promised a decade-long programme that would invest in insulating 19 million homes, with £6 billion invested over that decade to give that sense of certainty.

Labour would also double down on cheap, clean renewable energy through our pledge to achieve a clean power system by 2030. That would mean doubling onshore wind capacity, tripling solar capacity and quadrupling offshore wind capacity. We would achieve that goal by establishing a publicly owned renewable energy generator, GB Energy, so that the profits of those investments actually benefited the British public.

That is a clear, long-term strategic plan. We are not hearing anything like that from the Government. I hope that today we will hear a serious response from the Government setting out not just how we will tackle the cost of living crisis in the short term and help people with their energy bills, but how we will put fossil fuels to bed once and for all and support the sprint towards green energy.