Energy Prices Bill

Nigel Evans Excerpts

Committee stage
Monday 17th October 2022 Commons Chamber

[David Linden]

I am grateful to the hon. Gentleman for giving way—

[The Second Deputy Chairman of Ways and Means (Mr Nigel Evans)]

Order. Dr Whitehead, are you giving way?

[Dr Whitehead]

I have sat down.

[The Second Deputy Chairman]

I call Peter Aldous.

[Peter Aldous (Waveney) (Con)]

I am largely supportive of the Bill, as there is an urgent need for assistance to be delivered at speed to hard-pressed families and businesses, but it is important to avoid any unintended negative consequences for other key Government objectives, in particular energy security, the transition to net zero and the full deployment of renewables and low-carbon forms of energy production.

My constituents urgently need the support that the Bill will provide, but to regenerate the local economy and create long-term, well-paid jobs, we need investment in offshore wind, nuclear and hydrogen. There are exciting opportunities in the sector throughout east Anglia, and specifically Waveney and Lowestoft, although certain clauses in the Bill raise worries that such investment could be imperilled. I hope that the Minister will be able to allay that unease. The Government are not pursuing a windfall tax on renewables and nuclear generators because they are worried that it would deter investment. Some of the mechanisms proposed in the Bill could have a similar negative impact, and it is important that further clarification is provided quickly. I will briefly outline three specific concerns.

Clause 16, along with schedule 6, introduces the cost-plus revenue limit, which is a cap on the revenue of low-carbon energy generation. There is a worry that this mechanism could penalise investment in clean, cheap and low-carbon generation. To avoid that, there is a need for a reinvestment allowance to channel investment into low-carbon projects, which are needed to meet our net zero and energy security targets, and which will also provide the long-term route map out of the cost of living crisis.

Clause 21 enables the Secretary of State to modify the licences under which energy companies operate. Currently, the regulator Ofgem determines licence conditions. This is an arrangement that works well and has the confidence of investors. Further clarification is required as to the Government’s intentions, and consideration should be given to providing a definitive timeframe through a sunset clause for how long this provision will be in place.

Clause 19 sets out the arrangements for passing on the energy price support from generators to end users. There is a concern that the Bill as drafted does not properly take into account the fact that generators do not all operate in the same way and that they incur differing operational costs.

In conclusion, I hope the Minister can allay these concerns. I urge the Government to liaise and consult with all relevant stakeholders, including energy companies and civil society organisations, to avoid these unintended consequences, which could imperil energy security, decarbonisation and economic regeneration in coastal communities such as Waveney.

--- Later in debate ---

[Alan Brown]

It is a fair point and, as my hon. Friend pointed out earlier, Labour Members also have a new clause, which they want to push, calling for a report to Parliament in 28 days, so it seems to be a timeframe that we can all agree on.

New clause 18(2) would mandate the Government to assess what average household bills will look like when the pledged support scheme ends next April. I appreciate that estimating future energy bill increases is not an exact science, but the Government should be able to come up with an indicative price range, which should also give a look-ahead at the supposedly two-year support period of the so-called energy price guarantee. This is an important exercise, because it was the Prime Minister who told us that the two-year policy would stop average bills hitting £6,000 a year. As I said earlier, the explanatory notes for the Bill state that these mitigations will prevent so-called average bills of £2,500 from rising to £4,200. That means that, without further support, average household energy bills will, on the evidence before us and according to this Government, rise to something like £4,200 to £6,000 per annum. How on earth is that affordable? Clarity is required urgently.

New clause 18(2)(b) is all about analysing fuel poverty statistics. Now, when I mention fuel poverty statistics, we need to remember that these are not statistics but real people we are talking about—people who cannot afford to heat their homes; people who might not even be able to turn on their cooker and heat their food; parents skipping meals; people with health conditions that are made worse because they are having to live in a damp house; terminally ill people who are having to move out of their homes and are unable to die in dignity in their homes because they cannot afford to heat them; people on prepayment meters who are building up their standing charge debt because they cannot afford to put money in them. That is the reality of fuel poverty. That is why I want the Government to assess and report on the reality of their policy decisions during this cost of energy crisis.

Fuel poverty statistics lag behind real time: it takes time to analyse the statistics and then bring them through. The cost of energy has gone up so quickly that past fuel poverty statistics are effectively meaningless. National Energy Action estimates that, even with a £2,500 average bill put in place, some 6.7 million households will end up in fuel poverty. We need to understand how much worse that will get across the United Kingdom. I suggest that if the Government wish to make an informed decision about what future support packages will look like and how they will actually support the most vulnerable, they should be the ones to undertake the assessment.

That feeds directly into subsections (2)(c) and (2)(d), which are about, first, assessing the merit of extending the universal scheme as it was originally intended and, secondly, looking at a more targeted approach. The key to subsection (c) is ensuring that we have no further increases in fuel poverty. Given that we are still saying that 6.7 million households will be in fuel poverty, that is an extremely tame target. The real target should be the eradication of fuel poverty, which is why I am willing to support many other amendments on the Order Paper, particularly from other parties, on energy-efficient installations and the upgrading of homes to EPC band C, which is a UK Government target. There should be greater investment in energy efficiency measures, and truly upgrading homes will reduce bills, reduce the energy demand and of course create additional green jobs.

Given how damaging fuel poverty is, and that the Government have not made clear what future support will look like, I cannot believe that the Labour party is not willing to support manuscript new clause 18 and try to force the Government’s hand to provide information to Parliament so that we know the real impact of the cost of energy crisis.

Amendment 16 is about support for off-grid homes. Earlier, I highlighted that a one-off payment of £100 for alternatively fuelled properties is insufficient. Liquid fuels have increased in price from 30p a litre to more than £1 a litre, which is three times more expensive. People cannot afford to fill their fuel tanks. They have to lay out a minimum of £500 to £600 for a delivery. If they do not have that cash, they do not get it—they do not get credit. Filling a tank costs about £1,200 once VAT is included. Why do the Government think that a one-off £100 payment is sufficient?

One of my constituents lives in an off-gas grid property. He rightly observed that the energy price guarantee is being paid for by the general taxpayer, because it comes out of borrowing or taxpayers’ money. That means that off-grid customers are effectively subsidising people on the gas grid who are getting a bigger support package. Four million households are effectively subsidising 28 million households, which actually have cheaper fuel bills. It is an incoherent policy, which is why we brought forward amendment 16, but I would also support any other proposals that would make the Government support those who live in off-gas grid properties.

I wrote to a previous energy Minister about regulation of off-grid fuels for properties. The answer I got was that we do not need regulation; the market will take care of itself. That in itself shows a complete lack of understanding of what it is like for people in rural properties who cannot shop around. Generally, there is only one supplier in the area, so it gets to set the terms and conditions and the prices of the fuel that people buy. The Government need to look at regulation of those fuels as well.

Amendments 10, 11, 14 and 15 are about giving Parliament a greater level of scrutiny and approval. It is about ensuring that proposals are implemented under the affirmative rather than the negative procedure, which puts all the powers into the hands of the Secretary of State. I tried to point this out to the Secretary of State who, as a Back Bencher, was all about Parliament sovereignty, but now that he is in the Cabinet he is yet another hypocrite who is quite happy to take Henry VIII powers and other unparalleled powers for himself. [Interruption.] I said hypocrite, yes.

[The Second Deputy Chairman of Ways and Means (Mr Nigel Evans)]

Who were you referring to?

[Alan Brown]

The Secretary of State.

[The Second Deputy Chairman]

No.

--- Later in debate ---

[Barry Gardiner]

On a point of order, Mr Evans. Will you confirm that when a Minister, or indeed, any Member of Parliament, refers by name to another Member, it is courtesy and normal practice to allow them to respond to the point that was made? Indeed, in this case, the Minister talked about me doing more, as a Minister in the Labour Government, on ensuring that we had insulation. However, he seems to forget that in 2013, his Government cut that by 92%—

[The Second Deputy Chairman of Ways and Means (Mr Nigel Evans)]

Order. The hon. Gentleman is doing an intervention now. Is the Minister giving way?

[Graham Stuart]

The hon. Gentleman has just shown why no one in the Chamber wished me to give way to him, other than himself.

The Government have committed to delivery of the payment this winter. Requiring that payment to be made directly to consumer bank accounts would significantly slow this down. Similarly, new clause 10 would require the Government to implement a heating oil voucher scheme for households in Northern Ireland. Again, that would significantly slow down delivery, so one of the challenges that we have had in engineering the various programmes is to make sure—