Oral Answers to Questions
Patricia Gibson Excerpts(6 months ago)
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Justin Tomlinson
The Government have invested in the Faraday battery challenge, a £541 million programme to support the research, development and scale-up of world-leading battery technology in the UK. Since 2022, all new homes and homes undergoing major renovation in England have been required to have a charge point installed. That is why we welcome the year-on-year 49% increase in charge points.
Patricia Gibson (North Ayrshire and Arran) (SNP)
Amanda Solloway
A social tariff means lots of different things to different people, but what it ultimately means is ensuring that we support all vulnerable people. The hon. Member will be aware that the Government are doing many things to support people; there is the warm home discount, the cost of living payment, which is £900, and a variety of other measures.
Energy Supply Market: Small Businesses
Patricia Gibson Excerpts(1 year, 2 months ago)
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Patricia Gibson (North Ayrshire and Arran) (SNP)
I congratulate the hon. Member for Aberconwy (Robin Millar) on securing this debate on energy and small business.
Wholesale energy prices are falling, which must be welcomed, but this cannot be used as a reason to justify reducing support for businesses’ energy bills. Despite the falls in wholesale energy prices, many businesses—there are thousands of them in Scotland alone, and this is an issue right across the UK, as we have heard—are still stuck on contracts based on prices that were fixed during last year’s energy price peak. If businesses are to survive, the energy support from the UK Government will continue to be vital. The UK Government must also work with energy suppliers to ensure that they offer more flexible contracts so that businesses benefit from falling prices, rather than being trapped in more expensive long-term fixed contracts.
Energy prices reached record levels in the third quarter of last year. Wholesale prices have reduced since then, with prices halving between January and June this year. However, the average wholesale gas price was around double the price in June of the five years up to 2021. The energy bills discount scheme provided much less support than the previous energy bill relief scheme, despite the fact that companies on fixed contracts signed during a period of record high energy prices. The impact of falling wholesale energy prices on small businesses is inconsistent and varied. Indeed, the Federation of Small Businesses found that 13% of small firms fixed their energy bills between July and December last year, which means that they are paying three times the current rate per kilowatt of electricity.
Far too many small firms are now entangled in high fixed tariffs, and 93,000 of them say that they could be forced to close, downsize or radically restructure because of a reduction in support with their energy bills. Every single MP in the House of Commons will have had small businesses contacting them every week because they are so concerned about the impact of energy costs on their viability. Of course, energy bills are only one—a vital one—of a tidal wave of challenges that businesses are currently facing, with high interest rates, low investment, high costs, and labour and skills shortages. That is even before we factor in how customers have less money to spend on non-essential items during the cost of living crisis.
Eighty-two percent of businesses in Scotland admitted to being concerned about energy costs going into the third quarter of this year. That is hardly surprising when one considers that non-domestic energy customers in Scotland have higher energy prices than any other country in the UK. Prices in north Scotland and central and southern Scotland are the second and third highest of any region in the UK, with central and southern Scotland also paying the highest standing charges of 89.5p per day.
It is particularly galling when Scotland is an energy-rich country producing more energy than it uses, yet Scottish businesses are offered above-average market prices, unlike their counterparts in the rest of the UK. Figures released by the National Grid highlighted that by 2026-27 Scottish generators will have to pay around £465 million per year in transmission charges, while renewable developments in England and Wales will receive a subsidy of around £30 million per year. How can that be anything but a barrier to renewable energy companies setting up in Scotland?
As for the beleaguered hospitality sector, which we have heard much about today, the situation continues to be critical, with almost half of those who signed an energy contract at the peak of the energy crisis fearing that their business is at risk of failure. Pubs, bars and restaurants saw their energy prices surge by 81% in the year to May 2023, on top of the soaring cost of food and wages rising. Attempts to absorb those costs has bred unsustainable business practices that cannot indefinitely continue. Every day we know of players in the hospitality sector going to the wall, sometimes after a lifetime of building up a business.
It is vital for small businesses across Scotland and throughout the UK that the UK Government fully recognise the scale of the challenges. They must work with Ofgem in the wake of its review of the energy market and take on board its range of recommendations for changes to regulation, to increase transparency and rebalance the power between the energy supplier and small businesses. I look forward to the Minister agreeing with that when she gets to her feet.
I have said this in a number of debates: it remains the case that there was little point in the UK Government supporting businesses as they did during the covid pandemic only for those businesses to be broken on the rocks of unsustainable energy charges shortly thereafter. As the Minister will know, businesses need some certainty after these tumultuous times. I hope that when she gets to her feet she will provide some of that certainty.
Energy Support for Farms
Patricia Gibson Excerpts(1 year, 8 months ago)
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Patricia Gibson (North Ayrshire and Arran) (SNP)
I too congratulate and thank the hon. Member for Upper Bann (Carla Lockhart) for securing this debate, in which I am pleased to be participating. It is important that the challenges facing our farming sector are properly aired, and it is a little disappointing that the debate has not attracted more interest from across the House.
Farming that uses more energy—for example, the horticultural and poultry sectors—is not included in the UK Government’s definition of energy and trade intensive industries. There will therefore be a reduction in the energy cost support for farms, which has caused understandable and great disquiet.
The omission of horticulture is particularly frustrating. The question posed by the National Farmers Union, to which we would all like an answer, is: why are botanical gardens included in the scheme, but not food grown in greenhouses? That is not to take anything away from botanical gardens, but it seems quite out of kilter and bewildering. European farmers have been supported with a €500 million package to help with production costs, but farmers in Scotland and across the UK feel that the support they have been asking for has not been forthcoming.
As the Minister is aware, it was very much hoped that the Chancellor, in his Budget last week, would extend the definition of energy and trade intensive industries. It is extremely frustrating that that did not happen. As production costs soar, many farmers and food producers face a cliff edge of support. “Cliff edge” is an expression that every speaker in the debate has used. Many producers simply do not know how they will be able to keep going. Where in the Government’s priorities does domestic food production come? Unless the definition is extended, there may well be a reduction in production, which will risk longer-running food price inflation for consumers and could negatively impact the thousands of supply chain companies sustained by the farming sector.
Recent weeks have demonstrated how important domestic food production is, but it is energy intensive. We only have to think back to the recent tomato shortage as a prime example of what can go wrong if the farming sector is not supported. The vast majority of UK tomatoes are grown in greenhouses, which is clearly energy intensive. That, alongside the soaring cost of fertiliser, has given farmers cause to review what food they can actually afford to grown. Indeed, many have opted not to grow vegetables this winter, since there is a genuine lack of confidence that they would be able to cover the costs associated with energy-intensive crops. Cucumbers, which are also energy intensive, are expected to be another casualty. More generally, a shortage of domestic produce right across the board is now expected next year. Farmers cannot be expected to grow produce when they cannot even cover their costs. The reality is that it is simply not viable to grow under glass unless farming is recognised to be an energy-intensive business.
The only way to ensure that we have fresh domestic produce on our shelves is for the UK Government to understand what everyone else understands: that food production is energy intensive. It is bewildering that that argument has to be made. If that is not recognised, a shortage of fresh domestic produce on supermarkets shelves will become a familiar sight. The disruption of international supply chains means that we cannot even have imported fresh produce, as we saw recently with tomatoes. It will not be because of rain in Spain or Moroccan weather changes, as we were told recently when tomatoes became like hens’ teeth; it will be because of inaction from this Government.
There can be no doubt that Brexit has posed huge challenges for domestic food production. Farmers were promised a Brexit bonanza, but the reality is that they have been left paying the price for the damage caused by the Brexit adventure. Some people may think, “Well she would say that, wouldn’t she?” but the chair of Save British Food has also observed:
“I keep hearing that Spain is being blamed for the food shortages in Britain and this is absolute nonsense. The reason we have food shortages in Britain—and they don’t have food shortages in Spain or anywhere else in the EU—is because of Brexit and because of this disastrous Conservative government that have no interest in food production or farming or even food supply. That’s why we are in this mess. The Conservatives with their Brexit have messed up our trade and made that very difficult. This has also impacted the labour supply as it ended freedom of movement. It has also removed the cap and food subsidies, then add on top of that the Ukraine war and Covid and all of the inflation. All of this was predicted and predictable.”
Those are not my words; they are the words of the chair of Save British Food, who I suspect knows a thing or two about British food. She is now part of a growing chorus of people who have concluded that the only way to fix the problem is to
“get back into the single market and customs union”.
The woes are not hard to find; they are piling up for farmers at an alarming rate. The Public Accounts Committee criticised the Department for Environment, Food and Rural Affairs for its “blind optimism” over the implementation of the UK Government’s alternative to the EU’s common agricultural policy funds, with a lack of detail as to how alternative funding will provide the help needed.
Mr Laurence Robertson (in the Chair)
Order. I gently remind the hon. Member that the debate is on energy support for farms. It is quite a narrow title.
Patricia Gibson
Mr Robertson, you intervened at the right moment. I was setting out the general context for farmers. I have talked about energy support, but I am putting it in the context of the bigger challenges our farming sector faces. I take your point about the title of the debate.
We can barely imagine the sense of betrayal and abandonment that farmers feel when they look at their EU counterparts, who have a £500 million support package to help with production costs. That is a lump sum to farmers and agrifood businesses affected by the significant increase in input costs, such as energy, fertiliser and animal feed. All that UK farmers are asking for is similar support. Energy costs are the obstacle that is going to hit domestic food production across the UK—there is no debate about that. On top of energy costs, farmers have to deal with chronic labour shortages, with £22 million of fruit having rotted in the fields because of the labour shortage caused by the end of freedom of movement.
The Scottish Government are doing what they can with their limited powers to support farmers. The Minister does not need me to tell him that energy support is reserved to the UK Government. It is to the UK Government that our farmers are looking and hoping; they are asking and lobbying them to take note of the devastating impact that we will see on the farming sector and domestic food production if farming is not rightly recognised as an energy-intensive business—that should be no surprise to anybody.
When we get down to it, this debate is really about whether domestic food production matters. If it does not matter, then the Government can tell us about that position. I believe, as do many others, that it does matter, and that it requires the support that has been called for today. I hope the Minister will listen, and then go back to his colleagues to make the strong, robust case to include horticulture and poultry in the energy and trade intensive industries scheme. Otherwise, the damage to our farming sector and to domestic food production will be nothing short of catastrophic.