Household Energy Bills: VAT

Rebecca Long Bailey Excerpts

Tuesday 11th January 2022 Commons Chamber

[Rebecca Long Bailey (Salford and Eccles) (Lab)]

Thank you, Mr Deputy Speaker.

Annual fuel bills are expected to rise not by a little bit but by a whopping 50% when the current energy price cap is raised in April. This motion is right. To provide some temporary relief, the Government must cut VAT on household bills as soon as possible. Beyond that, the longer-term problems must be addressed.

We could see this crisis coming for a long time. Closing the UK’s largest gas storage plant in 2017 without a plan to replace it was illogical, and the Government were repeatedly warned at the time that the country faced more volatile winter gas prices and was becoming too dependent on energy imports, but they ignored all advice.

The bigger issue is the business model of the energy sector as a whole. For years since privatisation, the monopoly grid companies prioritised dividend extraction over upgrading the system for renewable energy. The generators did not really start investing in renewables until public money was put on the table, and the supply market is in complete disarray. Many smaller suppliers are now folding, creating even less competition and leaving huge market shares for the bigger players. In response to that collapse, we see the Government setting aside billions in public funds to prop up firms that are too big to fail, but with that public money comes no change in the broken energy market, no reduction in household bills and none of the benefits of public ownership.

If our energy system were brought into public ownership, such public companies would not be duty bound to prioritise huge returns for shareholders. They could invest in the system and in renewables, and they could use financially buoyant times to build up reserves to protect against the price fluctuations we are seeing. They get this in Germany, where two thirds of electricity is bought from municipally owned energy companies. They get this in France, where two thirds of electricity comes from EDF, which is majority owned by the French state. EDF also runs the French grid and generates most of the electricity. In fact, EDF supplies the UK, yet the Government do not think we are good enough to have our own public energy company.

Until the Government recognise that public ownership is central to addressing the crisis we face in our energy system, our constituents will continue to pay the highest price. Today’s motion would help them, but ultimately the Government have to look at the bigger picture and examine public ownership.