(Doncaster North) (Lab)
(Urgent Question): To ask the Secretary of State for Business,
Energy and Industrial Strategy if he will make a statement on
rising gas prices and the collapse of energy suppliers.
The Secretary of State for Business, Energy and Industrial
Strategy ()
I came before the House on Monday to update colleagues on the
action we are taking, and I appeared before the Business, Energy
and Industrial Strategy Committee yesterday to discuss the matter
in greater depth. The Government have been clear that protecting
consumers is our primary focus and shapes our entire approach to
this issue. We will continue to protect consumers with the energy
price cap.
The global gas situation has had an impact on some energy
suppliers, and I have been in touch daily with Ofgem. As it set
out yesterday, there are more than 50 suppliers in the domestic
market, and we may, unfortunately, see more suppliers exit the
market in the coming weeks. However, it is not unusual for energy
suppliers to leave the market, for various reasons, particularly
when wholesale global prices are rising. Ofgem and the Government
have clear, well-rehearsed processes in place to make sure that
all customers are supplied with energy.
Our approach will be informed by the following principles:
protecting customers, especially vulnerable ones, from price
spikes. The solution to this crisis will be found from the
industry and the market, as is already happening, and I repeat
that the Government will not be bailing out failed energy
companies. We would like to see a competitive energy market that
can deliver choice and lower prices. The energy price cap, which
continues to protect millions of customers, will remain in place.
Consumers come first, and that has always been the centrepiece of
our approach.
On Monday, I said to the Secretary of State that he was being far
too complacent about the situation we are facing. Events since
have, unfortunately, borne that out: complacent about the crisis
in the market; complacent about the impact on families; and
complacent about the cost of living crisis. He pretended on
Monday and again today that it was normal for a number of
suppliers to go down each winter, but what we are dealing with is
far from normal: 800,000 customers losing their suppliers
yesterday alone and 1.5 million in the last six weeks. So will he
now answer the question he has so far failed to answer: does he
believe taxpayers’ money will be necessary to stabilise the
market? If so, how will he ensure value for money and that we do
not simply end up with greater concentration of the big six
suppliers?
Next, I have a letter here that Ofgem wrote to the Secretary of
State when he was the Energy Minister 18 months ago during covid,
warning about
“systemic risk to the energy supply sector as a whole”.
It said the usual Ofgem mechanism, the supplier of last resort,
may not be possible. It went on:
“The failure of medium and large suppliers would need to be
handled via a special administration regime placing significant
burden and costs on government.”
So will he answer the question of what planning was done for this
eventuality following that letter? Surely the Government should
be in a position now to know exactly what needs to be done where
there is systemic risk to suppliers. Have they not left the
country dangerously exposed, with them scrabbling around for
solutions?
Finally, we are seven days from the cut to universal credit. This
is the last time a Government Minister will be in the House
explaining to millions of families why they are plunging them
further into fuel poverty. Instead of warm words or platitudes,
can the Secretary of State now tell the British people how he can
possibly justify this attack on their living standards? Is it not
the truth that there can be no defence of it, and that the only
right, proper and fair thing to do is to cancel the cut?
Obviously, as usual, the right hon. Gentleman raises a number of
issues. We have not been complacent. The whole point about the
supplier of last resort process, which was interrogated last
year, is that it is an organised, well-established process that
can allow existing strong companies to absorb customers and
failure. [Interruption.] If he would desist from chuntering from
a sedentary position, he might actually hear my answer.
I remember the letter last year. We interrogated, all through the
covid process, the systems we had in place. During that period,
the supplier of last resort was found to work. So far this year,
it has been found to work, so I am not going to try to talk
ourselves into exacerbating the crisis.
With regard to the special administration regime, that is
something that is in place. Thankfully, we have not had to use
that, but the right hon. Gentleman knows as well as many people
in this House that it is there should the case arise.
With respect to universal credit, I will say what I said earlier
in the week. That is a matter across Government in terms of
budgetary responsibility. There will be a Budget at the end of
October and there will be plenty of time to discuss that then.
(Forest of Dean) (Con)
May I press the Business Secretary a little on the Government
assumptions on pricing? In his evidence to the Business, Energy
and Industrial Strategy Committee yesterday, the head of Ofgem
appeared to suggest that he expected these high prices to
continue for some time. I accept that the Government do not have
a crystal ball, but in making policy choices the Government must
be making some assumptions about what they think is the most
likely path for prices. Can the Business Secretary set those out
for the House please?
As I have said repeatedly, I do not have a crystal ball, as my
right hon. Friend has suggested, and I do not make predictions
about the price but clearly, we prepare for every eventuality.
The biggest help for consumers and customers at this current time
is the energy price cap, which I have repeatedly stated is
staying in place.
(Kilmarnock and Loudoun) (SNP)
This is not market failure; it is Government and regulator
failure. Ofgem all along had the financial and hedging
information to know which companies were at risk, so why are we
now in crisis management phase?
The Tories promised us cheaper energy bills post Brexit, but
right now electricity wholesale prices in the UK are the highest
in the whole of Europe. Meanwhile, as gas prices increase, the
Treasury gets extra VAT receipts and increased oil and gas
revenues. Surely, there must be a redistribution of that
increased Treasury income to help hard-pressed bill payers. At
the moment, it is those bill payers who cover the additional cost
of transferring customers to other energy suppliers. They cover
the credit of customers with failed companies and then have to
pay increased tariffs when transferred. The cap might stay but
the cap does not stop energy bills going up, so why should bill
payers pay even more money when the Treasury is getting increased
revenue out of this? What is the additional estimated cost for
bill payers?
A quarter of our electricity bills consist of levies, so as we
move away from our reliance on fossil fuels, we need a
fundamental shift in how that concession is paid for. That is
something that the Treasury needs to address. It means ending the
grid charging regime so that Scotland does not have the highest
charges in Europe, and it means giving the go-ahead to pumped
hydro storage in wave and tidal.
Finally, is the Secretary of State happy to sit by while the cost
of living crisis is ongoing? Is he happy to plunge 500,000 extra
people into fuel poverty, or will he fight the Treasury to end
the universal credit cut and release extra money to help
hard-pressed bill payers?
Clearly there was a lot in that question and statement. I will
deal with a couple of issues, if I may.
With respect to universal credit and wider budgetary
considerations, I have repeatedly said that they are matters for
my right hon. Friend the Chancellor. We will have ample
opportunity to discuss these things in the House. With respect to
the move away from fossil fuels, the hon. Gentleman and I are in
agreement: I think that we need a diverse supply of decarbonised
sources of energy.
Finally, I dispute the idea that we are ill-prepared. We have the
SOLR and SAR processes in place and we stress-tested them
throughout the whole covid period, when I was in constant contact
with the industry. I feel that so far we have managed to
accommodate such supplier failure as we have seen with existing
structures.
(Beaconsfield) (Con)
Will my right hon. Friend confirm that the cold weather payment
scheme will remain in place?
Again, there are further budgetary issues, but I have always said
that we are absolutely focused on customers, particularly the
most vulnerable customers. The warm home discount is staying and
we are looking to protect the most vulnerable customers,
particularly prepaid customers, from the worst effects of the
energy price spike.
(Barnsley
East) (Lab)
On Monday, the Secretary of State dismissed our lack of gas
storage as “not…relevant”. It has clearly left us vulnerable, so
will he now admit that the closure of the Rough storage facility
was a mistake?
I do not think that it is relevant, because there is no way that
any storage in the world will mitigate the effect of a
quadrupling of the gas price in four months, as we have seen. The
answer is actually getting more diverse sources of supply and
electricity through non-carbon sources—through nuclear, on which
I am still very unclear as to the Opposition’s view, and through
other sources of decarbonised energy.
(Christchurch) (Con)
Why do we not reduce VAT on fuel as a temporary measure? We did
it for the hospitality industry, which was badly affected by
covid-19. Why do we not abolish VAT for consumers on fuel now?
My hon. Friend is quite right: we did a whole range of
interventions to alleviate the burden on consumers and on
businesses. Those were fiscal interventions that the Chancellor
pursued last year, and I am sure that he is looking at a range of
things this year, but that is a matter for him to decide ahead of
the Budget.
(Orkney
and Shetland) (LD)
What are the implications of the situation for the exploitation
and extraction of gas within the UK continental shelf?
The right hon. Member will know that, in 2020, 48% of our natural
gas came from the UK continental shelf, so that is clearly a
strong, sustainable source of gas to this country. However, I
suggest to him that gas is a transition fuel: in our pursuit of
net zero by 2050, we want to transition away from it. That is why
we are developing carbon capture and hydrogen, as he knows very
well.
(Harlow) (Con)
Further to the question that my hon. Friend the Member for
Christchurch (
) asked,
surely the Conservative answer—I raised this the other day—is to
reduce VAT on energy bills, as was pledged by those who supported
Brexit in the EU referendum. I know that the Secretary of State
will say that it is up to the Treasury to decide, but he is very
persuasive. He is a tax-cutting Conservative—he believes in tax
cuts—and I know that, if he went to see the Chancellor, he would
ensure that we got a VAT cut on energy bills.
I see the Chancellor on a regular basis, as my right hon. Friend
knows, and I am delighted to inform him that those conversations
tend to be confidential.
(Warwick and Leamington) (Lab)
The UK suffers from higher costs both for consumers and for our
businesses and industries. Why then, to follow the point of my
hon. Friend the Member for Barnsley East (), is the
UK’s storage capacity just 2% of annual demand versus an average
of 25% in Europe? Is that part of the reason why we do not have
energy price resilience?
A conference of EU Energy Ministers took place only yesterday to
discuss that very problem. Mitigating a quadrupling of the gas
price is not a function of storage—that is a complete red
herring. One reason why we have less storage is that we have a
greater diversity of energy supply, and that is a strength, not a
weakness.
(Weston-super-Mare) (Con)
The Secretary of State is absolutely right to focus on consumers
and not to bail out energy firms that got things wrong or are too
fragile. However, will he explain how he is dealing with
customers currently on capped tariffs with suppliers that have
gone bust? Is he encountering any resistance from the firms being
asked to take on those customers, who may be arriving as a loss
to the acquiring firm?
As I have said, we have a supplier of last resort process that
has worked well in the past couple of years. It is not my job to
state the terms on which customers are absorbed by other
companies—
It kind of is.
No, not ahead of the process. However, most of these prices are
at or just below the price cap, and that is fundamentally what
will protect consumers in this period.
(Lewisham East) (Lab)
This Government are responsible for families facing a cost of
living crisis due to the triple whammy of rising gas prices,
looming tax rises, and cuts to universal credit. Will the
Secretary of State finally acknowledge and accept that it is
completely and utterly immoral to cut universal credit?
What I do acknowledge is that there has been a quadrupling of the
gas price, and that we have an energy price cap that will protect
customers from such spikes. Schemes such as the warm home
discount will also protect the most vulnerable customers. That is
what I acknowledge.
(Rother
Valley) (Con)
What assessment has my right hon. Friend made of this country’s
structural dependency on gas, which was created by the last
Labour Government’s sidelining of green technologies, such as
nuclear and even hydrogen?
My hon. Friend is absolutely right. For example, the last Labour
Government did absolutely nothing to drive nuclear power, which
is a fundamental ingredient of security of energy supply.
(Edinburgh East) (SNP)
The figure of £139 a year has been floated in the press as the
increase in the energy price cap this year, but that refers only
to the variable rate and does not take into account the changes
in bills that people will face if they move from one tariff to
another—often against their will in the current circumstances.
Will the Secretary of State consider asking the regulator to
direct energy suppliers to limit the price increase to any
individual customer to a reasonable amount over the coming year?
As I have said, we have a supplier of last resort process, and it
would be wrong of me here at the Dispatch Box to interfere in how
it works. It has worked effectively over the past two years. As I
have said repeatedly to the House, the energy price cap does give
some succour, because consumers prices could be exorbitant
without the cap. The price cap gives support, and we continue to
support the warm home discount for the vulnerable end of the
market.
(Kettering)
(Con)
Customers in Kettering and across the country will be worried
that their gas and electricity could be cut off if their energy
supplier goes bust. To put customers minds at rest, will the
Secretary of State explain in straightforward understandable
terms how the supplier of last resort process works?
What happens—and it is happening at the moment—is that there is a
process of bidding for the customers of the exiting, failing
companies, and the cost of absorbing those customers is taken on
by the company that wins the bid and also by the industry at
large; so the costs are mutualised, but generally it has been
seen that there is always continuity of supply. That is a key
element of the system.
(Warley)
(Lab)
The Secretary of State clearly believes that the invisible hand
of the market will solve all this without his doing anything—but
when he talks about customers, does he mean only domestic
consumers, or will he ensure that supply continues to keep
industry going and jobs secure? In that context, does he think it
acceptable that Germany has some 90 days of gas storage while we
have only nine days’ worth? Will he also commit himself to
ensuring that there are adequate supplies under our control for
the future by licensing new gasfields?
We protect domestic consumers in the way I have outlined, but it
is fair for the right hon. Gentleman to raise the issue of
industrial users of energy in business. He will know that we have
schemes that which protect industrial users of energy: we have
the energy industry incentive scheme, and yesterday we launched a
new tranche of the industrial energy transformation fund with up
to £220 million, which enables businesses to bid in for further
support.
(Redcar) (Con)
I thank the Secretary of State for his tireless work over the
last few weeks, not just on the gas price crisis but on the
carbon dioxide shortage that followed. I also pay tribute to CF
Fertilisers, which has come back online in Stockton, and to Ensus
in Redcar for offering to help and come online too. For the
benefit of people across Redcar and Cleveland, however, can the
Secretary of State outline how we are supporting people and
protecting them from these high prices?
My hon. Friend has made an excellent point. The carbon dioxide
crisis—or question in hand—we dealt with immediately. I spoke to
the CEO of CF Fertilisers twice, on Sunday and Monday, and we had
a solution on Tuesday. I am very pleased that, as a consequence
of that solution, the company has managed to get production up
and running, and to get people back to work at its plant. My hon.
Friend will know, after my many visits to Teesside speaking to
, that the Government are resolutely focused on
helping his constituents to level up and get well-paid, secure
jobs.
(Denton
and Reddish) (Lab)
These skyrocketing gas prices will have a devastating impact, not
just on the public but on businesses, which will eventually have
to pass those rises back on to the public. Does the Secretary of
State understand that that double whammy for the public will see
even more families being pushed into fuel poverty and
consequently into food poverty as well? Apart from cutting
universal credit very soon, making it even worse for many of
these families, what is he doing? What is he doing to support
them?
The hon. Gentleman will have seen reports that energy companies
want the Government to lift the energy price cap. I have
repeatedly resisted that. I have said explicitly, on the Floor of
the House and in other places, that the price cap must stay,
while also reaffirming our commitment to the warm home discount
scheme and the winter fuel payment. We are absolutely focused on
keeping consumer prices as low as possible in the energy market.
(Sedgefield) (Con)
We are all hearing about the number of businesses in this market
that are going bust at the moment, but can my right hon. Friend
assure me, and my constituents, that this is expected to be a
short-term shock and we will come out of it with a robust market
and plenty of diversity of supply?
My hon. Friend knows that competition is the key to this market.
We had a world that was oligopolistic in this respect, but we
have introduced the price cap, and there are plenty of small,
nimble entrants driving innovation and a dynamic system. I am
absolutely committed to a competitive market, and I am sure that
after this process we will still have a vibrant and dynamic
energy system.
(Aberdeen North) (SNP)
Too many people nowadays have to watch every single penny, and
have to worry about where all the money to pay the bills will
come from. Will the Secretary of State have a look at the amount
of time that it takes a supplier of last resort to provide people
with an accurate forecast for their energy costs, and, if
possible, try to reduce the period during which they experience
that uncertainty?
I would be very happy look at that, as the hon. Lady suggests. I
have said many times, I am in contact with Mr Brearley, the chief
executive officer of Ofgem, on practically a daily basis now, and
this is something that I can raise with him at our next meeting.
(North
West Leicestershire) (Con)
I draw the House’s attention to my entry in the Register of
Members’ Financial Interests. I own shares in companies that
invest in renewable energy. As the House will know, consumer
energy bills are enhanced by climate change levy charges, which
are used to support renewable energy producers. Is my right hon.
Friend aware, however, that a large number of those renewable
energy producers use special purpose vehicle companies to receive
those subsidies, and that many of those SPVs are based offshore
for tax purposes? Will he meet me to discuss how the Government
are going to close that very clear tax loophole?
As my hon. Friend knows, I am always prepared to meet him at any
time to discuss any matter he chooses to discuss with me.
(Kingston upon Hull North) (Lab)
Would the Minister still advise consumers to change their energy
supplier, or would they just be better off changing their
Government?
They had a chance to change their Government and, as I recall,
that did not end so well for the Labour party, although maybe my
memory fails me. We have a dynamic, vibrant and competitive
market, and consumers should have a choice in order to keep their
costs low.
(South Basildon and East Thurrock) (Con)
Obviously these are disturbing times for our constituents and I
welcome the actions that the Government are taking. Can my right
hon. Friend confirm that, whatever happens in the markets, no one
in Basildon and Thurrock need fear supply failure or sudden hikes
in prices this winter?
No one in Basildon and Thurrock, or anywhere else in this
country, need fear the eventuality that my hon. Friend describes.
As I have said, the supplier of last resort process is absolutely
focused on ensuring that customers have continuity of supply.
That is a top priority.
(Putney) (Lab)
Better insulation of homes is essential for cutting rising fuel
bills and emissions. Does the Secretary of State agree that it
was a mistake to cut the green homes grant earlier this year, and
will he commit to reforming it and bringing it back?
As I have said a number of times, in this role and in my previous
one, the green homes grant attempted to do three things. The
first was to decarbonise public sector buildings, and that worked
very effectively through Salix, the bank that disbursed those
funds. The second element, which was disbursed by local
authorities, has also worked very well. The third element is the
one that we closed, and we want to get a renewed version of it.
(North Devon) (Con)
In the final days of the last Labour Government, the UK was near
the bottom of the G20 league tables for green investment and
renewable energy. I therefore congratulate my right hon. Friend
on his Department’s achievements on offshore and floating wind
energy. Can he confirm that his Department will continue to
invest in this area, particularly close to my North Devon
constituency and the Celtic sea?
Absolutely. My hon. Friend will know that we have some really
exciting floating offshore wind projects in the Celtic sea that I
am very pleased to see being developed. She is also right to
observe that during the last Labour Government, we did absolutely
nothing whatsoever to ensure security of energy supply or its
diversity.
(Birmingham, Erdington) (Lab)
An Erdington care worker with two children was close to tears
when she said to me:
“I worked so hard throughout the covid crisis. Now I am facing my
universal credit being cut, a tax increase and soaring energy
bills. Jack, why are they going ahead with the cut to universal
credit? Do they even begin to understand how difficult life is
for people like me?”
Is she wrong?
The massive increase in energy prices is a global effect. I
completely understand that people are facing issues this winter
that were not foreseen maybe six months ago, but this Government
have rigorously focused on protecting the most vulnerable
customers in the energy market and we are absolutely focused on
getting Britain back to work. That is why our unemployment rate
is one of the lowest in the G7 at 4.7%. In France, it is 8%. We
are creating jobs and we are keeping the economy going.
(North Norfolk) (Con)
As my right hon. Friend will know, I have been something of a
doughty champion in North Norfolk for the offshore energy
grid—[Interruption.] He is smiling; he knows what I am going to
say next. Will he work at speed to ensure that the offshore
network grid will be implemented as soon as possible to ensure
that we stop the dereliction of the countryside with the offshore
cable corridors?
Nobody in this House has been as consistent and as focused on
this issue as my hon. Friend. He knows that, as Energy Minister,
I commissioned the offshore transmission network review, on which
we have accelerated work. I would be happy to speak to him and
other colleagues about the review’s progress.
(Newcastle
upon Tyne Central) (Lab)
The Secretary of State describes small energy companies such as
Green in Newcastle upon Tyne Central as “failures,” but he says
nothing of his own failure in structuring, regulating and shaping
the energy market. Will he confirm that large energy companies,
such as Green, will not receive a penny of taxpayers’ money? What
support will he offer to the employees of Green, apart from
slashing universal credit?
As I said, it has been a consistent feature over the past few
years that energy companies have failed and left the market. We
have a process to deal with that, the supplier of last resort. I
categorically say to the House that we will not be giving any
grants or subsidies to larger companies.
(Grantham and
Stamford) (Con)
I welcome the Government’s market-led approach. The CBI has been
clear in saying that Labour’s plans to renationalise our UK
energy network would result in higher household bills. Does my
right hon. Friend agree that it could also threaten UK energy
supplies?
Any Labour plan to nationalise the industry would be a step back
into the dark ages and would be a disaster for this country’s
reputation as a hub of international capital and investment.
(York Central) (Lab/Co-op)
Rising energy prices will disproportionately affect people living
in the north, where it is colder during the winter. What
assessment has the Secretary of State made of regional
disparities, and how will he mitigate against them?
The hon. Lady raises a fair point, and clearly the single most
important determinant of gas prices is the weather. That is why
we have schemes such as the warm home discount, and it is why we
are focused on protecting the most vulnerable customers wherever
they are in the UK.
(North
Ayrshire and Arran) (SNP)
Half a million more people are likely to fall into fuel poverty
as a result of this gas crisis. With record increases in
inflation, plans to cut universal credit that will hit 37% of
Scottish families, supermarket shelves that grow emptier by the
day and a regressive national insurance tax hike hitting those on
the lowest pay hardest, what has gone so wrong as we face a
winter of discontent? Why should anyone have confidence in this
Government?
I will tell the hon. Lady why people should have confidence in
this Government: we have a vaccine roll-out that is the envy of
the world; we have got the economy back up and running; we have
4.7% unemployment, which is among the lowest in the G7; and we
have navigated the storms of covid-19 pretty effectively.
(Rutherglen
and Hamilton West) (Ind)
A number of my constituents were victims of the green deal
mis-selling scandal and have been left saddled with tens of
thousands of pounds of debt for a scheme they thought was
publicly funded and Government backed. The scheme was supposed to
lower their energy bills, but now, on top of having to repay that
debt, their bills are set to skyrocket.
In supporting my constituent who discovered that she is a victim
only when she recently tried to sell her home, I was informed
that the Secretary of State has no obligation to investigate
cases more than six years old. Many victims of this scam will not
have been aware immediately, so will he explain what recourse
exists for victims who come forward later?
We have been dealing with green deal cases on a case-by-case
basis. I have not been informed of the specific details that the
hon. Lady describes but, with my officials, I would be happy to
meet her to discuss the particulars of this individual case.
(Strangford) (DUP)
This is almost a perfect storm: gas prices that have risen due to
the maintenance projects that were rescheduled for 2021 because
of the pandemic; lower-than-usual gas supply from Russia; and
less liquefied natural gas reaching Europe because of increased
deliveries to Asia. How can the Government assist when most of
these factors are beyond our control? Is it realistic to hope
that consumers will see a reduction in their bills within the
next year?
The hon. Gentleman has given a pithy summary of the various
causes of the energy price spike, one that is very realistic; it
is a global phenomenon. What I have said repeatedly is that what
the Government can do is ensure two things: that customers have
continuity of supply, through the well-established SOLR process;
and that we are resolutely focused on keeping the energy price
cap, so that consumers—our constituents—are protected from those
exorbitant price spikes.
