Energy Prices

Lord Callanan Excerpts

Wednesday 12th January 2022 Lords Chamber

[Lord Dodds of Duncairn]

To ask Her Majesty’s Government what assessment they have made of the impact of rising energy prices on the most vulnerable people in society, and the most effective means of helping them.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, the largest element of gas and electricity bills, which is wholesale costs, has increased significantly. The Government are committed to protecting customers, especially the most vulnerable. Households will continue to be protected through the winter by the price cap and through the warm home discount, winter fuel payment and cold weather payment schemes. A new £500 million household support fund has also been made available to councils to help the most in need over the winter.

[Lord Dodds of Duncairn (DUP)]

My Lords, I thank the Minister for his Answer. We are looking at extraordinarily steep increases in energy prices over a relatively short period, coming on top of already big increases. This is causing real fear and anxiety among vulnerable people, especially the elderly, about the financial severity and hardship to come. So can the Minister go further today and announce new measures that will deal with the immediate crisis that people are facing, especially in the context of other cost-of-living pressures which are coming the way of hard-pressed families and individuals?

[Lord Callanan (Con)]

I totally understand the point that the noble Lord makes. Unfortunately, I am not in a position today to announce further measures, but I can tell him that we are actively engaging with stakeholders and energy companies. The Prime Minister and the Chancellor are in urgent discussions and we hope to announce some action shortly.

[Baroness Ritchie of Downpatrick (Lab)]

My Lords, was it not entirely predictable that there would be a surge in gas prices, and in such circumstances what further work will BEIS and the Government undertake? Why did they not have further plans at the ready to address the situation to help struggling households and to mitigate the impact of deepening fuel poverty as a result of those rising costs, as already referenced by the noble Lord, Lord Dodds?

[Lord Callanan (Con)]

I am not clear what further plans the noble Baroness is referring to, but, as I mentioned, we have a whole series of mitigations in place to protect precisely the people whom she mentioned. For example, the warm home discount scheme has helped millions of people at a cost of several billion pounds, and we will continue with policies such as that to help the most vulnerable.

[Lord Howell of Guildford (Con)]

My Lords, is it appreciated in this drama of exceptionally high prices that the whole process of moving to a decarbonised world and energy transition requires the most careful management of balance between supply and demand? If supply is discouraged or undermined while demand is still rising, we will get again and again the huge, volatile and extremely damaging rise in fuel and power prices that we have now. Is that not the main lesson to be learned from the mess that we are in now?

[Lord Callanan (Con)]

I know that my noble friend, as a former Energy Minister himself, is very experienced in these matters. Of course, the underlying point that he makes is right—but it is a transition that will take place over many years and, in the meantime, there will of course be considerable demand for fossil fuels.

[Lord Newby (LD)]

The Minister has just talked about mitigations that the Government have in place, but those mitigations were inadequate before the price rise that we have seen, and clearly will be completely inadequate in dealing with the huge increases with which vulnerable families will be faced in the next few months. On measures that the Government might take that will require expenditure, have they considered raising the money required by imposing a windfall tax on those oil and gas companies whose profits have soared as prices have soared?

[Lord Callanan (Con)]

There are a number of different policies under consideration but, of course, the situation is never as simple as the noble Lord would have us believe. Many of the North Sea producers over which we would have taxation control have long-term contracts in place at fixed prices to supply wholesalers in the United Kingdom. So it is not clear that there are excessive profits being made—but I am sure that this is something that the Chancellor will want to look at in his review, to see what else we can do in this area.

[Baroness Lister of Burtersett (Lab)]

My Lords, if the Government want to focus any help with the cost of living crisis on those in greatest need, the simplest and fastest way in which to do so is to boost social security. Why are they not proposing such a boost?

[Lord Callanan (Con)]

Let me tell the noble Baroness what we are doing. The winter fuel payment provides all pensioners across Britain with between £100 and £300 to put toward their fuel bills, which costs £2 billion a year. The cold weather payment provides vulnerable households on qualifying benefits with payments of £25 during periods of cold weather, and the Government have spent £100 million on that. We will continue to spend considerable sums of money to help those most in need.

[Lord Hannan of Kingsclere (Con)]

My Lords, one thing that we have learned over the past 22 months is that government targets sometimes have to be adjusted in the light of circumstance. Would there be a situation in which the Government might reconsider their net-zero timetable; for example, if costs on consumers or taxpayers were disproportionate and if there were a realistic prospect that technological improvement would mean a significant fall in those costs with a deferral?

[Lord Callanan (Con)]

Of course, we want to keep all these things under review but, as my noble friend is well aware, net zero is a legally binding commitment, legislated for by Parliament—and, of course, it is the duty of government to carry out the wishes of Parliament. If a future Parliament or Government wish to reconsider that, I am sure that the Government at the time would want to take full cognisance of that.

[Lord Grantchester (Lab)]

My Lords, we all wish to protect vulnerable households, and there are many support schemes targeting approximately 3 million households. The expected increase in the price cap in April is around £600 per household to a total of £1,865 a year. While the Government continue to dither, Labour has announced costed, detailed plans to reduce the size of the exposure and extend help to more households to limit increases to just £5 a year for the most vulnerable. What target do the Government have in mind to reduce the size of the exposure in the forthcoming price cap rise, to be announced on 7 February?

[Lord Callanan (Con)]

Before I answer the noble Lord’s question, I understand that this is his last outing as a member of the Opposition Front Bench. From my point of view, it has been a pleasure sitting opposite him and dealing with his questions and points. I am sure that he will have a lot to contribute to the House from the Back Benches in future, and I certainly wish him well.

Of course, the price cap is a matter for the independent regulator—Ofgem—and we will find out in a couple of weeks’ time what it will be. The Government have already announced £500 million for local authorities to support vulnerable householders across the country with essentials, including utility bills. As I said in response to earlier questions, we are looking at what else we can do.

[Lord Lilley (Con)]

When my noble friend considers the impact of higher energy prices, will he bear in mind the fact that, wherever the cost of meeting net-zero targets has become an electoral issue, with the gilets jaunes in France, the elections in Australia and Canada and the municipal elections in the Netherlands, the party opposing higher taxes on energy has won?

--- Later in debate ---

[Lord Callanan (Con)]

We have taken careful note of the points that my noble friend has made. I know that we have discussed this in previous debates but, as I said to my noble friend Lord Hannan, net zero is a legally binding commitment that Parliament has placed upon the Government and, as long as that remains the case, that will be the policy of the Government.

[Baroness Janke (LD)]

My Lords, what is the Government’s response to the predictions of National Energy Action that children will be forced to do homework in cafés, libraries, the homes of friends and relatives and even A&E departments due to rising energy bills at home? What support will the Government provide to prevent further educational disadvantage to children and young people from poorer homes whose education has already suffered enormously as a result of the pandemic?

[Lord Callanan (Con)]

I outlined in earlier answers the support that we are providing for vulnerable families for their energy bills to do precisely that. As I also said, we are currently engaging with stakeholders and looking to see what else we can do in this area.

[Baroness Altmann (Con)]

My Lords, the winter fuel payment is currently less than it was in 2009, the cold weather payments are the same as they were in 2008, and the warm homes discount—which I agree is an excellent measure—has stayed the same since 2011. Given that the cost of fuel is rising so substantially and also that most of these benefits are available only to those who are claiming pension credit, will the Government now look at urgent measures to increase the take-up of pension credit, which has been stuck at 40% of people not claiming it since 2010? It would be a direct way of getting help to people immediately.

[Lord Callanan (Con)]

My noble friend is asking about social security policy, which, I am sorry to say, is not within my speciality, but I will certainly write to her with details on that. On the warm homes discount, she will of course be aware that we consulted last year on increasing the discount and extending the number of eligible households that would qualify for it. We will be responding to that consultation soon.