Costs of Living

Lord Callanan Excerpts

Wednesday 25th May 2022 Lords Chamber

[Lord Allen of Kensington]

To ask Her Majesty’s Government what plans they have to help consumers with rising energy bills and the increased costs of living.

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

My Lords, the Government understand the pressures people are facing with the increased costs of living caused by high global energy and goods prices. To help with energy, the Government are providing a £9.1 billion package, worth up to £350 each, for over 28 million households. The energy price cap ensures that prices fairly reflect the underlying cost of supply. The vulnerable continue to receive support through the warm home discount, the winter fuel payment and the cold weather payment.

[Lord Allen of Kensington (Lab)]

I thank the Minister for his reply. He will be aware that the UK inflation rate is now at a 40-year high and expected to rise further, that energy prices are at an all-time high and expected to rise further—in fact, today we are paying £1.70 per litre for fuel—and that interest rates are at their highest for more than a decade and expected to rise further. But rather than giving families a helping hand, our Chancellor has dipped his hand into their pockets, with the biggest cut in out-of-work benefits in 50 years, the biggest cut in pensions in 50 years, and the biggest tax burden in 70 years. Can the Minister say what the Government will do to reverse this situation—where more than 4 million people say they have gone without food, more than 6 million people say they have gone without heating, water or electricity, and more than one in five adults say they are worried about being able to pay their bills?

[Lord Callanan (Con)]

I do not doubt that it is an incredibly difficult time, and the Government are fully aware of the pressures facing many households. I can tell the noble Lord that we are monitoring the situation very closely, and the Chancellor and the rest of the Government stand ready to take any further steps, if they are needed, to support households.

[Lord Teverson (LD)]

My Lords, the Government are going to make a windfall gain—because of the electricity price contracts for difference, the price of the market will move above the strike price. How many billions extra will the Treasury get over the next year, and will that be fed back to hard-pressed consumers?

--- Later in debate ---

[Lord Callanan (Con)]

Of course, those payments do not go back to the Treasury. They are all contained within the electricity price system, so, ultimately, they go into either subsidising further renewable energy or providing additional policies that are paid for through levies on bills.

[Lord Cormack (Con)]

My Lords, as the expression “Conservative ideology” is an oxymoron, why is it being called in evidence by those who are arguing against putting a windfall tax on fuel?

[Lord Callanan (Con)]

This is a complicated issue, and there are clearly a variety of views. I think everybody across the House wants to see huge amounts of extra investment going into our renewable energy system in particular, and it is important to bear in mind that that will, of course, be provided by those same companies.

[Baroness Greengross (CB)]

My Lords, the Institute for Fiscal Studies has pointed out that, since council tax is still based on 1991 property values, the recent £150 support for people in council tax bands A to D in England will mean that some people are missing out on the support that neighbours in similarly valued properties receive, just because their home is worth more than their neighbours’ were 30 years ago. How will the Government address this issue to ensure that support is targeted where it is really needed?

[Lord Callanan (Con)]

The noble Baroness makes a very good point. This is caused by the fact that council tax bands have not been revalued for a considerable time. That is why the Government are providing £144 million of discretionary funding for local authorities to support households that need support, regardless of the council tax band they are in—precisely the kind of people to whom the noble Baroness refers.

[The Lord Bishop of Oxford]

My Lords, the Minister and other noble Lords will be aware of the paradox that it is often the very poorest people in society who pay a higher tariff for their electricity through pre-payment meters and the like. They may not have bank accounts or the ability to pay on any kind of credit. Are the Government proposing to do anything to help and support those who are locked into these higher energy prices when they can least afford then?

[Lord Callanan (Con)]

I understand the point that the right reverend Prelate is making, but, of course, those households are also subject to a price cap. The slightly higher price for prepayment meters reflects the fact that they cost energy suppliers more to serve.

[Baroness Jones of Moulsecoomb (GP)]

My Lords, can the Minister explain to me very simply why energy prices are going up when renewable energy prices are as cheap as they have ever been, and falling? Does that mean that the Government did not invest enough in renewable energy when, for example, the Greens started telling them that they should?

--- Later in debate ---

[Lord Callanan (Con)]

As the noble Baroness knows—and we have debated this extensively—we have the largest offshore renewable sector in Europe, so we have been investing considerable sums in renewable energy. In fact, in the energy Statement a couple of weeks ago, we announced an even further ramping up of what has been a very successful sector.

[Baroness Hayman of Ullock (Lab)]

My Lords, I have been listening very carefully to the Minister’s responses about everything that the Government are doing, but more families are falling into poverty. We need more than the monitoring he talked about: we need steps, and we need them now. I genuinely do not understand his response to the noble Lord about the windfall tax. Why will the Government not bring that in now?

[Lord Callanan (Con)]

I know that the Opposition like to use these easy soundbites, as if there were an enormous pot of free money that we can somehow access, but, of course, money that is taken off those companies is also money that does not go to shareholders, many of which are pension funds that pay the pensions of people up and down this country. They are not greedy plutocrats who can just absorb the money. We are, of course, keeping all options under review, but it is not a cost-free option: it would result in lower investment in the renewable energies, which everybody keeps telling me they want to see in the future.

[Lord Howell of Guildford (Con)]

My Lords, since China has stopped demanding extra gas because its rate of growth has come to a halt, and as there is now plenty of gas available on the high seas, for both contract and spot prices, why can we not get some benefit from that for our consumers? Why do we have to assume that gas prices remain five or six times as high as last year, when there is plentiful gas—LNG in particular—around?

[Lord Callanan (Con)]

The noble Lord makes a good point, but, as a result of the price cap, most energy companies are hedging their supplies, based on current prices. There are plentiful supplies of LNG, but, of course, capacity able to be injected into the system is limited, due to our number of offshore loading points. We actually have a good number in the UK, but they are being fully utilised.

[Lord Rooker (Lab)]

What is the technical difficulty of changing benefits mid-year? Surely the big advantage of universal credit, bearing in mind that probably 60% of those who are really badly affected are in work, is that there is no distinction between being in or out of work. I do not understand the technical problem that has been raised. Universal credit is the quickest, easiest, most targeted thing for the Government to do. They do not need to wait, so why are they waiting?

[Lord Callanan (Con)]

As I said, the Chancellor is considering a range of options to mitigate the expected further energy price cap rise in October, and we keep that and all other matters under constant review.

[Lord Lancaster of Kimbolton (Con)]

My Lords, supply is a key factor when it comes to price, so, given the conflict in Ukraine, can my noble friend outline what the Government are doing to ensure that we have security of energy supply?

[Lord Callanan (Con)]

My noble friend makes an important point. The best thing we can do to ensure security of supply is to generate more of our supply here in the UK. For that, we need to keep producing as much oil and gas as we can from the North Sea during the transition period, and to ramp up the amount of homegrown renewables and nuclear, which we are also doing.

[Baroness Watkins of Tavistock (CB)]

My Lords, some of the Government’s current plans to improve the situation—I recognise that that is what they are trying to do—will not necessarily benefit those who are on disability benefits. We must accept that people who cannot move easily in order to stay warm demand greater help with the resource of fuel. Will the Minister please comment on that?

[Lord Callanan (Con)]

The noble Baroness is referring to the warm home discount. We are increasing the amount of money generated for the warm home discount and it is going to a wider cohort of people, but we are trying to concentrate those payments on those who need them most.