Cost of Energy

Matt Western Excerpts

Tuesday 11th February 2025 Westminster Hall

[Wera Hobhouse]

The hon. Member predicts my next point: it is important to emphasise the Government’s responsibility to look after the most vulnerable in our society and protect them during any efforts to rebalance gas and electricity prices. However, I cannot comment on the council tax bill to which he refers; that is, of course, a local matter.

It is imperative that any policy changes prioritise the needs of those vulnerable households, ensuring that they are not left behind as we look to electrify the UK’s heating system. A more focused way to adjust policy funding could be to collect revenue from levy-funded programmes through a single levy control system. Such a system would have two straightforward rates—one for electricity and one for gas—set by Ministers at an appropriate level. These rates would be based on the cost per kilowatt-hour, so more energy-efficient technologies would have lower taxable amounts, making them comparatively more affordable.

Unlike other rebalancing methods, this approach would allow the Government to directly manage the impact on households. As electricity is always more efficient than fossil fuels, its price would go down, encouraging more people to switch. Policy reform is an essential step towards addressing the unacceptable price disparity that currently exists in the UK between gas and electricity. I hope the Minister has listened very carefully to the proposal that I have just put forward.

The impact of Brexit on our energy system has been somewhat brushed under the carpet. The turbulence of covid and the shockwaves from Russia’s invasion of Ukraine have dominated the conversation and masked the quieter, but significant, effects of our departure from the EU’s energy framework. One of the most pressing issues is passive divergence: not following new EU regulations simply because we are no longer a part of the system.

That is not always a deliberate choice, but it is already creating challenges, particularly in electricity trading. The UK was once part of an integrated, efficient energy market with the EU, where electricity flowed freely, reducing costs and improving security. Now, without alignment, we risk inefficiencies, higher prices and reduced energy security. We need strategic decision making. Not all divergence is bad, but it must be a conscious, informed choice, based on clear evidence, not ideology.

When it comes to energy, the benefits of co-operation with the EU are overwhelming. Shared markets bring stability, common rules ensure fair trade and joint planning strengthens resilience against global energy shocks. The EU and the UK share the same fundamental energy challenges in securing affordable, clean and reliable power for the future. Our interests remain aligned and so should our approach. We must ensure that divergence, where it happens, is a decision and not an accident.

In addition, we need to focus on policies for community energy. We Liberal Democrats have long championed the idea of community energy. Community energy currently accounts for less than 0.5% of total UK electricity generation capacity. However, according to the Parliamentary Environmental Audit Committee, with the right Government support, the sector could grow 12 to 20 times by 2030, powering 2.2 million homes and saving 2.5 million tonnes of CO₂ emissions every year.

I welcome the Government’s inclusion of the local power plan in the Great British Energy Bill, which marks a welcome step forward for the community energy sector. The plan intends to deliver an ambitious target of 8 gW of renewable energy projects by 2030, in partnership with local authorities and communities across the country. To achieve that target, significant scale-up of local and community-owned energy will be required and we will need a support programme in place for community energy organisations in England, drawing on successful models from Scotland and Wales.

Bath and West Community Energy, a community benefit society, has reduced carbon emissions by an average of 3,300 tonnes per year with its around 31 renewable energy projects. Let us make sure every community across the country has something like Bath and West Community Energy in its patch. As we have repeated many times, community energy reduces bills, creates local jobs and accelerates the transition to a low-carbon future.

Home insulation is another key area to reduce energy costs, particularly in my Bath constituency, where much of the housing stock is old and in dire need of insulation. Insulation remains one of the most effective ways to reduce energy demand, lower bills and cut emissions, but the Government have significantly delayed the implementation of their warm homes grants. The scheme was not implemented this winter and will only operate from next winter. The Government must tackle the efficiencies of these schemes head-on, ensuring that residents receive retrofit measures that provide value for money and stand the test of time. The Select Committee on Energy Security and Net Zero will look into those issues tomorrow, and I hope people will listen very carefully.

To accelerate and de-risk delivery of the warm homes plan, the UK Government should create a national expert advice service for England so that households have the confidence to receive tailored advice to upgrade their homes. Doing so would deliver consistent outcomes across the country and end the postcode lottery in advice services.

I hope the Government consider the points outlined today. We need long-term solutions that will make clean energy affordable for all, meet our net zero targets and lift the pressures on families of rising energy costs.

[Matt Western (in the Chair)]

I remind Members that they should bob if they wish to be called in the debate.

--- Later in debate ---

[Luke Murphy (Basingstoke) (Lab)]

From what I am hearing, the hon. Member is making an anti-renewables, anti-action on climate change speech. She mentioned that electricity prices are some of the highest in Europe, but her party had been in government for 14 years when the Government inherited those high prices. Could you confirm on the record that you think it is the Conservative party’s position that all levies on bills to support renewables should be scrapped?

[Matt Western (in the Chair)]

Order. I remind hon. Members to refer to each other as “the hon. Member” as opposed to “you”.

[Joy Morrissey]

I welcome the hon. Member’s contribution. It is wonderful to hear his commitment to the climate change emergency. We need to move forward as a country to make sure that our energy costs remain low. We did not commit to a £300 reduction in energy prices, nor did we commit to scrapping the winter fuel payment for pensioners. We went into the election without making those promises. I am simply holding the Government to account right now.