Oil and Gas Producers: Windfall Tax

Nia Griffith Excerpts

Tuesday 1st February 2022 Commons Chamber

[Nia Griffith (Llanelli) (Lab)]

Labour’s plans would bring genuine help to millions of households across the country who are facing an unprecedented increase in their energy costs. They are fully funded plans that would give some support to all households and a more substantial package of support to the 9 million households who need it most.

The plans would not increase taxation on working people; they would raise the money by a windfall tax on the North sea oil and gas companies, which are raking in huge profits from the price increases. The plans anticipate the increases that people will see in their bills. Perhaps unusually, we have a clear view of those increases coming down the track, so there is time for the Government to act, and I beg Conservative Members to vote for our motion today in order to tackle the misery that people find themselves in.

This fuel bill crisis comes at a time when people are already being hit by other problems. There has been coverage in the press over the last 10 days of how the rising cost of food is hitting the least well-off the hardest, not just for the obvious reason that they spend a greater proportion of their income on food, but because the rate of inflation is much higher on basic items, with many basic lines having been withdrawn altogether by the supermarkets.

Of course, the least well-off often have the least control over their energy costs. Someone who is renting their home does not have any choice over the type of heating they have, and they will not necessarily have the most efficient cooker or boiler, or the best insulation. There are some shocking examples where lean-to parts of houses—former breakfast rooms or kitchens—become a flat on their own and the thin-skin roof provides no insulation whatever. The lack of sunshine between high blocks of terraced housing makes it almost impossible to heat those homes. There is evidence that housing associations are having to cut back on maintenance projects. Food banks are even reporting that people are saying that they do not want pasta because they cannot afford to cook it, and admitting that they only eat cold food out of tins.

High energy costs mean families cutting right back, living in cold, damp rooms with particular risks to the very old, those with disabilities or chronic illnesses and the very young, such as increased risk of respiratory disease. It is not just heating and cooking. How can people get their washing dry in a cold, damp flat? How can they afford to iron school uniforms for their children? If they get cut off, more complications will follow.

The warm homes discount is totally inadequately funded. The total amount allocated to the fund is barely enough to help half of the households eligible. Then there is the difficulty of applying. Claimants have to know about the scheme and know how to ask their energy provider, which is made all the more difficult for those who cannot go online, for economic reasons or lack of skills. Even if they get through, the main energy supplier in my area, for example, has no warm homes discount money left. It depends on whether people get in early, the demand on their particular energy company or where they live. The likelihood is, of course, that the most needy will miss out. Even if people do get it, £140 does not go anywhere near far enough, given the huge hike in energy prices.

The Welsh Government are trying to do their best with the winter fuel support scheme. It has given £100 to households on universal credit, income-based JSA, income-related ESA, income support or working tax credits and, in view of the frightening increases, today, the Minister for Social Justice has doubled that to £200. That is a Government with far fewer options in their economic decisions, and far fewer economic levers at their disposal, recognising the desperate need to help the least well-off to heat their homes. The cut in VAT would help everyone. Labour’s proposal today would offer additional help to 9 million households in the most precarious financial situations, with up to a further £400 of help for each household. Together with the VAT cut, that would leave households with bills that are marginally higher than last year’s.

Why are we facing such energy price rises, worse than in other countries? It is not just because world prices are rising or because the Conservative Government are taking no action whatever, either because they simply do not care that people are cold and miserable, or because they cannot get their act together to do anything—either they do not care or they cannot do. It is also because the Government dismantled gas storage facilities and, crucially, have been sending very mixed messages about investing in renewables.

The Government wasted precious time in the development of renewables with the nonsense of the moratorium they imposed on constructing onshore wind farms in England. That not only thwarted opportunities to increase the generation of renewable electricity, but sent a very negative message about the future commitment of the Government to renewables. We should be far further ahead now in our production of electricity through renewable means. The fact that we are not is an abject failure by the Government to stimulate the production of renewables. Luckily, we have devolved powers in Wales and we are able to continue the development of wind power.

We also had the reluctance of the Conservative Government to consider the Swansea tidal lagoon. Thanks to the initiative, imagination and hard work of the Labour-controlled city and county of Swansea, the project will go forward, providing power for thousands of local homes.

The gas price hike should be a wake-up call to the Government to make up for lost time and accelerate the development of renewables. We must reduce our reliance on gas, both to reduce our carbon emissions and to increase our resilience. If we want to have a hope of making the transition to electric vehicles and decarbonising the heat in people’s homes, not to mention meeting the needs of business and industry, the development of renewables must be a priority for Government.

Labour would also implement an up-to-date energy and industrial strategy, drawn up with businesses, and invest—as my hon. Friend the shadow Chancellor announced at conference in the autumn—the sort of sums of money needed to make a green transformation: some £28 billion a year to ensure that we have industries fit for the future that provide good jobs. But of course an immediate crisis faces energy-intensive industries such as the steel industry. If that is not resolved as a matter of urgency, we could see steel production go elsewhere. Labour would also use money from the windfall tax on North sea oil and gas production to help our struggling energy-intensive steel-producing firms and protect our world-class industries for the future.