With permission Mr Speaker, I will make a statement on the UK gas market. As hon. and right hon. Members will be aware, over the weekend I held discussions with Ofgem and energy companies, and this morning I held a further roundtable discussion. Today I will set out the Government’s approach to managing the impact of high global gas prices affecting the UK and countries across Europe.
To begin, I want to make two points extremely clear. First, I must stress that protecting consumers is our No.1 primary focus and will shape our entire approach to this important issue. Secondly, I reassure the House that while the UK, like other countries in Europe, has been affected by global prices, Britain benefits from having a diverse range of gas supply sources. We have more than sufficient capacity to meet demand, and we do not expect supply emergencies to occur this winter. There is absolutely no question of the lights going out or people being unable to heat their homes. There will be no three-day working weeks or a throwback to the 1970s. Such thinking is alarmist, unhelpful and completely misguided.
To begin, I would like to set out some of the context for the global situation we are now witnessing. As the world comes out of covid-19 and economies reopen, we are seeing a dramatic uptick in global gas demand—much faster than many had anticipated. High demand in Asia for liquified natural gas, transported globally by freight, means that far less LNG has reached Europe. Weather events in the US have also affected LNG exports to Europe. Increased demand, coupled with reduced variety of supply globally, has put upward pressure on the price of gas traded globally. High wholesale gas prices have subsequently driven an increase in wholesale power prices, with a number of short-term markets trading at, or near, record levels. While we are not complacent, we do not expect supply emergencies this winter. This is a very important point. It is not a question of security of supply.
The Great British gas system has delivered securely to date and is expected to continue to function effectively, with a diverse range of supply sources and sufficient delivery capacity to more than meet demand. The National Grid electricity system operator has the tools within it to operate the electricity system reliably and to balance that system, and we remain confident that electricity security can be maintained under a very wide range of scenarios. We are not reliant on any one particular source for our gas, unlike many of our friends in Europe.
As right hon. and hon. Members should know, domestic production is our largest single gas supply source. It accounted for about 50% of total supply last year. However, the UK also benefits from an excellent relationship with Norway, one of our most important and reliable energy partners, which delivers nearly 30% of our total gas supply. In the last half hour, I was privileged to speak to the Norwegian energy Minister and welcome today’s announcement from Equinor that its gas production will significantly increase from 1 October to support UK and European demand. Our remaining supply is sourced from global markets via two interconnectors to the continent, and also through our LNG infrastructure, which is, as many hon. Members know, the largest in Europe.
The global gas situation has obviously had an impact on some energy suppliers. We have seen four suppliers exit the market in recent weeks and we may expect to see further companies do so in the coming weeks. I must say, having been Energy Minister for nearly two years before I became Secretary of State, that we often see companies exiting the market at around this time of year ahead of the renewables obligation certificate payment. There may well be more of them this year, but I want to make it clear that it is not unusual for smaller energy suppliers to exit the market, particularly when wholesale global prices are rising. The sector has seen regular entry and exit in the last five to 10 years; indeed, that is a feature of a highly competitive market.
The current global situation may see more suppliers than usual exiting the market, but that should not be any cause for alarm or panic. We have clear processes in place to ensure that all customers are supplied with energy. When an energy supplier fails, Ofgem typically appoints another supplier to take on serving its customers and there is no interruption to supply. I reiterate that our primary consideration is for the customer.
I will stress three principles that are guiding the Government’s approach. First, the Government will not be bailing out failed companies. There will be no rewards for failure or mismanagement. The taxpayer should not be expected to prop up companies who have poor business models and are not resilient to fluctuations in price. Secondly, customers, and particularly vulnerable customers, must be protected from price spikes. Thirdly, we must ensure that the energy market does not pay the price for the poor practices of a minority of companies and that the market maintains the competition that is a feature of the current system. We must not simply return to the cosy oligopoly of years past where a few large suppliers simply dictated conditions and pricing to customers.
I reassure all right hon. and hon. Members’ constituents that the energy price cap, which saves 15 million households up to £100 a year, is staying. It is not going anywhere. As I said earlier, our priority in this situation has to be the consumer—the Great British public—and the cap effectively protects, as it has protected, millions of customers from sudden increases in global prices this winter. We are committed to that price cap and it will remain in place. Meanwhile, our warm home discount, winter fuel payments and cold weather payments will continue supporting millions of vulnerable and low-income households with their energy bills. It is absolutely vital that the energy supply sector remains a liberalised competitive market in order to deliver value and good service to consumers.
As a result of high global gas prices, right hon. and hon. Members will perhaps have read that two fertiliser plants in Teesside and Cheshire shut down last week. They suspended the production of CO2 and ammonia. That decision has surely affected in the short term our domestic supply of carbon dioxide, which, as everybody knows, is used in the food and drink sector, as well as in the nuclear and health sectors. Yesterday, I met Tony Will, the global chief executive of CF Industries. We discussed the pressures that the business is facing, and we have explored quite thoroughly possible ways to secure vital supplies. Work is ongoing across Departments in Whitehall and across the Government to ensure that those sectors impacted and affected by this announcement have appropriate contingency plans in place to ensure that there is indeed minimal disruption. To maintain our domestic supplies of CO2, we are in constant contact with the relevant companies that produce and supply CO2, and we are monitoring the situation minute by minute.
Over the past few days, as has been widely reported, I have held several discussions with chief executives of the UK’s largest energy suppliers and operators and also with Ofgem to discuss this vital issue. Just this morning, I chaired a roundtable with UK energy companies and the representatives of consumer groups, in which I reiterated, as I have on the Floor of this House, the need for all of us in Government and across the industry to prioritise customers—in short, to protect the consumer. Meetings are continuing across Government today and throughout the course of this week. In terms of further actions and statements, this afternoon, shortly after the statement presented here, I will be making a joint statement with Ofgem, setting out the Government’s next steps following the healthy and in many cases illuminating discussions with it and suppliers.
Our security of gas supply is robust, but it is the case that the UK is still too reliant on fossil fuels. Our exposure to volatile global gas prices underscores the importance of our plan to build a strong, home-grown renewable energy sector to strengthen our energy security into the future. Thanks to the steps we have taken as a Government, renewable energy sources have quadrupled in gigawatts of capacity since 2010—far more than quadrupled, in fact—but there is still clearly a lot more we can do in this area. That is why we have committed to approve at least one large-scale new nuclear project in the next few years and are backing the next generation of advanced nuclear technology with £385 million, helping to attract billions of pounds in private capital and to create tens of thousands of jobs.
To conclude, consumers come first, and we must protect our constituents.
Order. Before anybody bothers to raise the matter, I say to the Secretary of State that it is totally unacceptable to take so long—almost 13 minutes—and not to have warned the Opposition. I would have thought that the people who put the statement together would have timed it. It is 10 minutes for a statement, and we need to get back to the rules of the House—not the rules that I make, but the rules that this House makes. I say to the shadow Secretary of State that I am sorry you did not know the statement would take so long, but by all means take an extra minute or whatever to compensate. But, please, in future, we should get this right and not take advantage of Members who are here to question the Secretary of State.
I thank the Secretary of State for his statement and agree that we should not be alarmist on the issue of security of supply, but I fear his statement was much too complacent on the price and economic impacts of the current situation.
First, on continuity of supply, we support the Secretary of State taking all necessary measures to ensure that families and businesses continue to have access to energy and that we secure the issue of CO2 supplies. The Secretary of State says that there are mechanisms in place to ensure that customers of failing companies get taken on, but the scale of the problems in the market will provide an unprecedented test of those mechanisms, so does he believe that taxpayer support will be necessary to deal with the problem? If it is, we must ensure value for money. I welcome his caution about outcomes that lead to taxpayer subsidy for big companies to further concentrate their market share, but can he therefore explain the alternatives and what he proposes happens to the customers of suppliers that do not get through this crisis? He is making a statement later this afternoon, and it would be good to know what he is going to say.
Secondly, on the impact of price rises on businesses and industry, can the Secretary of State set out his plans to support businesses, particularly energy-intensive industries? Has he considered with his colleagues the provision of Government support, including possibly loans, to help businesses facing difficulties? On consumer support, he is right to keep the price cap in place—it is a measure I have long supported—but the rise in the price cap of £139 means half a million more families will be plunged into fuel poverty. At a minimum, he should be looking at making the operation of the £140 warm home discount automatic and possibly extending it, but even that will not be enough. Families are facing a triple whammy: rising energy prices, national insurance rises, and, at the end of this month, the £1,000 cut in universal credit. These energy price rises turn the indefensible decision on universal credit into an unconscionable one. If he really wants to put consumers first, if he really wants to help working people, and if he really wants to tackle fuel poverty, is it not time, even at this late stage, to cancel this terrible decision on universal credit?
Thirdly, we need to learn longer-term lessons from this crisis about the lack of resilience in our energy system that has contributed to very large price spikes. The Secretary of State is right that there are global issues, but the UK is facing particular difficulties. Let me give some examples of Government decision making. In 2017, the gas storage facility, Rough, then 75% of our storage, was planned for closure. The Government could have acted to keep it open but did nothing. Our lack of gas storage was raised by industry, the GMB union and the Chair of the Business, Energy and Industrial Strategy Committee in 2019, my hon. Friend the Member for Leeds West (Rachel Reeves). A Minister said in reply that
“the UK’s gas system is secure and well placed to respond effectively to unexpected changes in supply and demand”.
Were the Government not, then as now, far too complacent on the issue of gas storage?
Next, energy efficiency could significantly cut the demand for gas, but we have had the fiasco of the green deal followed by the fiasco of the green homes grant and then the delayed heat and buildings strategy, and emissions from buildings are today higher than in 2015. When is the Secretary of State going to have a proper retrofit plan?
Our new nuclear programme is stalled, and while the Secretary of State is right that we have made progress on renewables, the truth is that we need to go further and faster, with a more diverse supply. Above all, there is not yet enough of a clear plan from Government for how we meet net zero with affordability and security. People have read what the Climate Change Committee said in its most recent progress report this summer:
“It is hard to discern any comprehensive strategy”.
Is not the truth that there is a direct line from the delay, dither and failure to the issues we face today?
I therefore urge the Secretary of State in the midst of this crisis to use this autumn’s net zero strategy—delayed—the net zero review, also delayed, and the comprehensive spending review to finally put in place a proper plan. Households, businesses and energy suppliers are looking to the Government for support and direction as we face this crisis; it requires not words but action and delivery. It is long past time for Government to get a grip.
I apologise, Mr Speaker, for issuing such a lengthy statement.
The right hon. Gentleman talks about a plan, but we have plans and strategies galore. We have the energy White Paper, which was widely well received and which I was very happy to present as Energy Minister, and we also have the Prime Minister’s 10-point plan. I was struck by the fact that when former US Secretary of State John Kerry came to the UK he publicly said that the UK’s plans for decarbonisation were more advanced than those of any other country.
The right hon. Gentleman has a legitimate concern about vulnerable customers, and I have made it very clear to the industry and to Ofgem that they are absolutely our No. 1 priority. We are looking at the warm home discount. As a Government, we have always focused on protecting the vulnerable and people in fuel poverty, and we will continue to do so.
The Secretary of State is entirely right that the UK is far better placed than most other European countries when it comes to the sources and diversity of its gas supplies, not least thanks to the two major liquefied natural gas terminals in my constituency at Milford Haven. Will he join me in paying tribute to the teams working at the South Hook and Dragon LNG terminals and also make a commitment today to work with me, the port authority and the industry on the Haven to make the transition to the next stage of our energy development and see a new generation of floating offshore wind and other renewable energy sources there?
My right hon. Friend will be well aware that there is a commitment to floating offshore wind in the energy White Paper and the 10-point plan. We have explicitly set a 1 GW target for 2030 and I fully expect and hope that that will be exceeded. I am also very pleased to be able to tell him that I am very keenly focused on Dragon LNG. I have not yet visited it in my two years as Energy Minister and Secretary of State, but I would be very happy to accept his invitation.
The Secretary of State almost brought himself to say it. Decades of underinvestment in renewable technologies, the barriers put in place by Brexit, 11 years of Tory austerity, a national insurance tax hike, the plan to rob £20 a week from those claiming universal credit, rising food prices, emptying shelves and now energy consumers facing skyrocketing, eye-watering bills—let us call this what it is. It is a cost of living crisis, and one created on the watch of this UK Government.
So what now? What is the plan? I do not, with all due respect, think that the Secretary of State’s warm words quite cut it. He mentioned the energy price cap, but what he failed to acknowledge was the fact that in just a matter of weeks the cap will be at its highest level ever. Will he therefore back new financial support for those in the lowest-income households, and of course, will he call on the Chancellor to scrap his cut to universal credit?
The Secretary of State acknowledged that, of course, it is not just households that are being hammered by these rising gas prices but businesses, too, particularly those that produce and transport goods. He did not say what specific support he intends to provide to those businesses.
On renewables, one of the key solutions to our supply issues lies not in nuclear—of course not in nuclear—but in the Scottish Munros, with hydropumped storage. When will the Secretary of State finally introduce a mechanism to make that technology come to the fore?
Finally, it would be remiss of me not to ask the Secretary of State what message he would have for the likes of the Prime Minister, who of course told us in 2016 that if we voted to leave the European Union energy bills would be reduced.
I find it extraordinary that the hon. Gentleman is still re-litigating the so-called Brexit wars. This is a serious issue, and it is not the time to re-fight the battles of five years ago.
I am fully conscious of the outstanding contribution of hydroelectric power. In fact, I was just speaking to the Norwegian Minister, and that country has 96% of its electricity derived from hydropower. The geography of our country means that we cannot reach that level, but I have absolutely asked officials to look into it, and the hon. Gentleman will know, given my record both as Energy Minister and as Secretary of State, that I am a very keen supporter of renewable energy. As I have always said, and as I said to the right hon. Member for Doncaster North (Edward Miliband), the Government’s focus on safety, consideration and protecting vulnerable customers is absolute.
My right hon. Friend is absolutely right to reassure consumers that energy security in the UK is safe, but does he agree that, as we transition away from fossil fuels towards renewables, we need to move urgently towards far greater electricity market reform? We urgently need an independent system operator, and we need much more local generation and local energy pricing to encourage consumers to use plentiful wind and solar energy, when they are being generated, for their optional energy use.
I thank my right hon. Friend very much. I remind the House that when I was appointed as Energy Minister, she was the Secretary of State in the Department, and she pushed a great deal of reform and innovation in this area. I reassure her that conversations about an independent system operator and how we can modernise the way we balance the electricity system are happening all the time, and I would be very open to hearing her suggestions about how we can bring that about. I think that energy security in this country, thanks in part to her efforts when she held the post I currently hold, is good. We have a diversity of supply, we have considered a wide range of renewables, and in fact we are pioneering and leading the world in the development of renewable technology.
I am grateful to the Secretary of State for an advance copy of his statement. There are, of course, a whole range of important questions to be answered to ensure that we do not face similar energy crises in the future. The Business, Energy and Industrial Strategy Committee will be asking Ministers to answer those questions over the coming days and weeks, but may I ask the Secretary of State a specific question today? Can he guarantee that the warm home discount rebate will continue to be paid to consumers who are forced to change energy supplier?
The hon. Gentleman tempts me on to dangerous ground. Of course, any guarantee of that kind has a fiscal implication, which, as he will no doubt be aware, is also a matter for the Treasury. We are in constant discussion about that. I look forward to seeing him in his usual place at the Business, Energy and Industrial Strategy Committee on Wednesday. I know that he takes these matters very seriously, and I am sure that we will have a fuller discussion of these subjects then.
Will the Secretary of State talk to the industry urgently about having more gas storage capacity? We have tiny capacity compared with most advanced countries, and that would provide a buffer to smooth supplies and keep prices down if this turns out, as we hope it will, to be a short-term interruption to supply from Russia and America.
My right hon. Friend, with his characteristic acuity, hits the nail on the head. Gas storage is definitely an issue, but the fact he points out is that we do not know how long this spike in the gas price will last. We must not precipitate a rush or, through any alarmism, instigate panic. There is no cause for that at all, but clearly this is a situation that needs to be reviewed. I am very happy to speak to him about particular solutions. I know that he has various views on interconnectors, and I look forward to discussing with him very frankly the way ahead.
The right hon. Member for Wokingham (John Redwood) referred to our “tiny capacity”. The UK cut its strategic gas storage to 1.7% of annual demand, when a former Government adviser suggested that it should be closer to 25%. In the light of that, why did the Government allow the Rough storage facility off the Yorkshire coast to close without taking action?
As I have said repeatedly, we have a wide source of energy supply. We have by far the largest offshore wind capacity in the world. There is no reason why we should be inducing panic because of the closure of gas storage facilities. It is something that I said we should look at, but I do not think it is right for hon. and right hon. Members to stoke alarm simply by focusing on questions that are not really relevant to today’s debate.
I declare an interest as chairman of the all-party parliamentary group on energy security. I pay tribute to the Secretary of State for the action he is taking to protect consumers and to calm the concerns that some commentators and some Members have expressed. Does he agree that diversity is key to reducing the long-term risk of such volatility in the markets? That means diversity of supply, diversity in energy generation—be it wind, nuclear, biomass, hydro or other sources—but also diversity in the location that the energy is generated. Some nations, regions and even countries have an excess supply on some occasions and a shortfall on others. The greater the diversity, the less the risk. Is he sufficiently reassured that Ofgem is sufficiently proactive in this field?
My right hon. Friend spoke about three distinct categories. I can assure him that on all three we have a degree of robustness. On the spread of the gas supply, I said that we have a wide range of sources for gas. On electricity generation, I can reassure him that with our work on renewables—onshore wind, offshore wind and solar—there is a much wider range of electricity generation supply in the UK than in practically any other country. On geographical spread, he will notice that a lot of installations and a lot of that capacity are spread very evenly across the United Kingdom. I happen to know that because I spent a large part of the past two years visiting those sites.
CF Fertilisers, based in my constituency, is one of the plants that has had to close down in the light of cost pressures. There are obviously many impacts on consumers as a result of this decision, but the employment prospects of my constituents are at the forefront of my mind at the moment. I am pleased to hear that the Secretary of State met the company yesterday. I wrote to the Department over a month ago pointing out the need for urgent action on the cost pressures the company was facing, not just in terms of global gas prices but a number of other factors. I hope that discussions prove fruitful, and not just for my constituents’ jobs. We do not want to get into a situation where we are relying on importing carbon dioxide from other sources, because that will not help us to reach net zero and will put us risk of other fluctuations in world prices.
I thank the hon. Gentleman for his ongoing interest in and passionate support for employment in his constituency. I spoke to him considerably about Stellantis over the last few months. I am very focused on the two CFF plants, one of which is very near or in his constituency. The other, of course, is in Billingham on Teesside. We are looking at both sites and trying to do what we can to support ongoing production in both those places.
I thank the Secretary of State for his interest in renewables, hydrogen, new nuclear and CCS. He has already referenced the incredibly difficult situation facing CF Fertilisers in Stockton, which has been forced to suspend production because of gas prices. Is he aware of the knock-on effect that that can have on businesses that CF Fertilisers supplies, such as Huntsman in Wilton, and the further knock-on impact to the rest of Teesside’s chemical industry? Can I impress on him just how interconnected our industry is and how losing one player could lead to a domino effect?
My hon. Friend is absolutely right. He and I have visited a number of those sites together. He is quite right to say that there is a chemical cluster reliant on the ammonia produced out of the CFF plant in Billingham. I say that that is a good cause to argue for the sustainability of the site. It is something we are very aware of and it was brought up in the discussion with the CEO yesterday.
I listened very carefully to what the Secretary of State had to say, which was that protecting consumers, particularly vulnerable consumers, was the Government’s No. 1 priority. Will he then seriously reconsider his position and lobby his colleague the Chancellor to reverse the £20 universal credit cut? Many of my constituents who are in receipt of universal credit are hard-working people on low wages, and they need that money to meet spiralling energy costs and the increased cost of living.
The hon. and learned Lady is aware that we are entering a comprehensive spending review process at this moment. I am speaking to my right hon. Friend the Chancellor all the time about all sorts of things and all sorts of measures that we can bring in to make sure that people are protected from this gas price hike.
It is absolutely right that we continue on our energy transition to net zero. I welcome the Government’s ongoing commitment to increasing renewable and low-carbon capacity across the UK, not least in the form of carbon capture and storage, for example, as proposed by the Acorn Project at St Fergus in my constituency, where, at the moment at least, about 30% of the UK’s gas comes ashore. Does my right hon. Friend agree that while we still have a demand, albeit a declining demand, for natural gas, we must ensure that that demand is satisfied by domestic sources as far as reasonably possible?
What my hon. Friend says is entirely reasonable. I pay tribute to him in his role as Under-Secretary of State in the Scotland Office, where he and I spoke about these issues almost continually, it would appear—we spoke about Acorn and we spoke about carbon capture. He will know that I am passionately committed not only to carbon capture but to ensuring that we have a decent domestic supply of natural gas.
Natural gas is a fossil fuel, and we all know that fossil fuel extraction and consumption have to end by 2050 at the latest. What is the Government’s precise timeline—not a 10-point plan, not imprecise promises, but their precise timeline—to phase out the national gas grid and replace it with renewables, in which case we would not be here in the first place?
The hon. Lady will know that to answer that question we would have to have a much clearer view, in terms of the safety and applicability of hydrogen, for example, in the national gas grid. That is clearly a big part of our ability and the speed with which we can decarbonise the gas grid. She also knows that I am committed to decarbonisation; I am committed to the hydrogen strategy that was published six weeks ago, and there are ongoing trials to see whether we can use hydrogen to decarbonise the gas grid.
To what extent is the UK collateral damage in a European-wide crisis caused by the Kremlin’s weaponising of gas supply and its attempts to intimidate the EU into accepting Nord Stream 2, potentially as a precursor to more violence in Ukraine? Should we not see this hybrid war for what it is and plan long term accordingly?
As my hon. Friend knows and has expressed, there are geopolitical elements to this in terms of the reliance of a large part of Europe on Russian gas. I am here to reassure people about a common misconception. We are not dependent at all on Russian gas. The gas sources are as I have described—50% are local, 30% are from Norway and about 18% are from LNG, which comes from all around the world—so I want to minimise the notion that we are somehow at the mercy of Russian gas policy.
This crisis is causing steelmakers across the country to suspend their operations during periods of the day when the costs of power are peaking at thousands of pounds per megawatt-hour. Can the Secretary of State assure the House that he is engaging with the steel industry to ensure that this crisis does not end up crippling our steel industry, which of course underpins our entire manufacturing sector?
The hon. Member knows that I am constantly engaging with the steel sector—in fact, I resuscitated the Steel Council as one of my first acts when I was appointed Secretary of State—and I am always in ongoing conversations with it. I have, I feel, made a contribution to making sure that we can have this industry on a sustainable basis, but I am very happy to talk to the hon. Member, among other colleagues.
Unlike the Opposition parties, my right hon. Friend knows that we cannot just keep spending billions of pounds every time there is a major problem, but I have to say that he also knows that the keys to prosperity through production are prices, profit and loss. May I ask him now to prioritise affordability and security of supply by removing all fiscal and other disincentives to oil and gas exploration, including shale gas, to increase domestic production levels?
We have rehearsed the shale gas issue many times on the Floor of the House. As Energy Minister, I was confronted with a situation in which the experiments with shale gas induced a reading of 2.9 on the Richter scale and people’s plates were falling off their walls. They wrote to me to say, “We’ve got to stop this,” and there was a moratorium. There is a moratorium, and I have said very explicitly that when the evidence changes we will look at it, but for now there is a moratorium on shale. However, my hon. Friend knows that I understand and fully appreciate the effect of supply and demand as well—perhaps not as well as he does, but better than the Opposition.
I am very glad to hear the Secretary of State say that protecting consumers is now his Government’s primary focus; it is just a great shame that it has not been in the past. He continues to expose people to high energy prices by refusing to look at the demand side. I do not think that the words “energy efficiency” or “home insulation” have passed his lips once this afternoon. When will he properly learn the lessons of the failed green homes grant, the green deal and the scrapping of zero-carbon homes? When will he put in place the comprehensive street-by-street local authority-led insulation scheme that we know will get emissions down, fuel prices down and jobs up right across the country?
I welcome the Secretary of State’s hard work over the weekend to secure our gas supplies and protect consumers. Does he agree that the long-term solution to energy price spikes is to reduce our dependence on fossil fuels and accelerate the transition to a more cost-efficient and resilient energy system based on renewable energy and nuclear power, through projects such as Wylfa Newydd in my constituency?
I pay tribute to my hon. Friend’s indefatigability on this issue. There never seems to be a moment when Wylfa is not on her lips, and I fully appreciate her passion for it.
Nuclear is clearly a big part of the answer to this, which is why—as Members who have read it will know—it is the third point of the 10-point plan. It is clearly an essential part of our energy mix for the future.
I, too, am grateful to the Secretary of State for his statement, and specifically for meeting representatives of CF Fertilisers, which has stopped production in my constituency, with a knock-on effect on industries needing the carbon dioxide that it generates as a by-product. He will remember my many meetings, letters, parliamentary questions and points made in the House about the perfect storm brewing for firms such as CF Fertilisers—rising fuel prices, a bizarre funding mechanism from Ofgem for gas transportation costs, and the lack of appropriate support for energy-intensive industries to mitigate high carbon emission prices. He says that talks are ongoing, but can he say a little more about what he is doing to get CF Fertilisers producing as soon as possible, and when we can expect policies to make our energy and related costs competitive against Europe?
I would say that our prices are very competitive. Offshore wind, for example, started off at about £150 per megawatt-hour, and at the last auction round it was £39 per megawatt-hour. We have seen the cost of renewables fall considerably over the past 10 years. As for CF Fertilisers, it would be premature of me to say exactly what the Government are going to do. A range of options are being considered, and I hope that the Government will be able to update the House shortly.
How long does the Department expect these elevated global gas prices to remain at their current level? May I also press the Secretary of State a little on nuclear? I agree with him that it is an essential part of the energy mix, but in relation to large-scale nuclear, what are his plans beyond the one plant that has already been agreed?
It would be foolhardy of me to speculate at the Dispatch Box on what the gas price will be even tomorrow. If I were in a position to know what the prices would be at a later date, I would probably not be a politician; I would probably be a gas trader. That aside, however, I think we have to accept that the prices could be high for longer than people anticipate, just as they could fall very quickly. The marginal dynamics of these markets can shift extremely rapidly. Those of us who followed the oil price last year will have seen that we had an oil price of $20 a barrel, and that in the same year it reached nearly $80. There is a considerable amount of volatility in these markets, and it would be rash of me to predict their course.
As I said earlier, we are committed to nuclear, which is the third point in the 10-point plan, and that means not just large-scale nuclear, but small modular reactors as well.
It is beyond doubt that Scotland is an energy-rich nation, but a quarter of our people live in fuel poverty. If the Secretary of State is a free-marketeer and is not prepared to see taxpayer support go into the market, does he not think it is time for a publicly owned energy company to be brought into being to help us through such difficult times?
I do not really follow the hon. Gentleman’s question. On the one hand, he is saying that I am a free marketeer, but then he is asking me whether I think there should be a state-owned energy company. I think I would avoid the latter outcome, in so far as I can, but as I always say in these things, we are looking at all options. I think that there are market-based solutions. I think that the industry will come together and that, with the Government and Ofgem, we can plot a course through this.
Alongside the increasing gas prices, consumers are facing a double whammy through increasing petrol prices, which, as FairFuelUK has pointed out, have gone up by 9-to-10p over the past six months. Will my right hon. Friend maintain the fuel duty freeze, which is vital for motorists and businesses? Will he also look at reducing VAT on energy bills, which is something that was indicated during the Brexit referendum debate? That would make a big difference to hard-pressed consumers.
I would like to thank my right hon. Friend, but he has been in the House long enough to know that VAT and the fuel duty freeze are beyond my remit. However, as I have said many times, I speak to my right hon. Friend the Chancellor about these issues on a regular basis.
The decision to raise the energy price cap to its highest-ever level will push half a million people into fuel poverty next month. At the same time, an additional 800,000 people will be pushed into poverty by the £20 a week cut to universal credit. On top of that, the national insurance hike will hit low-paid workers the hardest. These are political choices, so rather than relentlessly attacking the working class, will the Minister avert a worsening winter poverty crisis by cancelling the cut to universal credit, raising taxes on the richest and bringing energy companies into public ownership and running them for the public good, not private profit, to slash bills and cut carbon?
I totally understand where that is coming from, but I have said repeatedly that universal credit is an issue across Government and there is no way that I can commit to anything on that in the House. We are absolutely focused on protecting people in fuel poverty. All our policies have been focused on that, and I would suggest that she reads our 2019 manifesto to see the extent of our commitments to help those in fuel poverty.
Interconnectors are vital for our energy security and for reaching net zero, for both gas and electricity. In a White Paper last year, the Government aimed to get 80 GW of interconnectors in by 2030, which is three times what we have now. However, Ofgem, which is leading on this, seems to be dragging its feet. What can this Government do to get these interconnectors going and increase our energy security?
The issue of interconnectors is very important. There were clearly incidents with a couple of the interconnectors last week, so we need to guarantee that they are safe, but my hon. Friend is quite right to say that the 80 GW target is still very much something that we intend to achieve, and I am working with and speaking to Ofgem to be able to get there.
As you know, Mr Speaker, this is a bit personal for me because the village of Altnaharra is the coldest place in the UK every year. With the cut to universal credit, far too many people are going to have to make the hellish choice between switching off the electricity and paying for food. Did I hear the Secretary of State correctly? Will he maintain the fuel price cap where it is at the moment? Secondly, will he look positively at a Northern Rock-type of enterprise to pick up the customers of those companies that, perish the thought, might go under?
There are two issues there. I have said that I have committed to the price cap mechanism, but it is not up to me as Secretary of State to determine what the level of the cap is. That is an issue for Ofgem. Secondly, we have made some progress on protecting customers and there is an ongoing need to do that, but I would be happy to speak to the hon. Gentleman and to discuss his ideas on this.
On Friday, I visited the National Grid gas compressor station at Churchover in my constituency, which is at the centre of both the UK and the network of a resilient system that is distributing a diverse and flexible supply around the UK. Does the Secretary of State agree that, in terms of supply, we are in the fortunate and strong position of having built up a network to supply the current circumstances and to be adjustable for the future introduction of hydrogen?
An excellent question from my hon. Friend. All the conversations I have had over the weekend and today have stated clearly and unambiguously that security of supply is not an issue. That is thanks to the hard work that people in his constituency, in National Grid, in Ofgem and across the system have put in over many years.
The Secretary of State said we have to wait for his plan to find out what he will do to retrofit buildings and reduce dependence on carbon fuels, but local authorities across the country are way ahead of the Government. My local authority in Greenwich is experimenting with air-source and ground-source heat pumps. When he produces his report, does he think local authorities will be front and centre in creating local plans so that we can drill down into local communities to bring about the change we need to achieve zero carbon?
The hon. Gentleman is right that I welcome local initiatives. Only a month ago, I spoke at a forum at which representatives of local government were enthusiastic about getting behind net zero. I welcome all initiatives where local leaders are driving the push to net zero.
We have heard a typically reliable and reassuring statement from my right hon. Friend. He mentioned the Ofgem guarantee for when a supplier fails. Will that guarantee protect customers’ credit balances, and how soon will they be able to access them? Will fixed-term deals that customers have negotiated with their current supplier always be respected through the transfer?
My hon. Friend did not mention it in particular, but we have a supplier of last resort process, which has been relied upon over the past few years and involves a transfer of customers in the way he describes. We may well have an updated version of that process in the light of the threats posed to a number of suppliers. I look forward to discussing the details with him when the statement is made.
The Secretary of State says he is working on contingencies, but the meat industry says its CO2 supplies will be depleted within a fortnight. Is he sure that pork and poultry will not be the next items to disappear from our supermarket shelves?
I am working very closely with my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs. We have spoken to the Treasury, and we are keen to push forward plans very soon to make sure there is a consistent and regular supply of CO2.
As Russia completes its sinister Nord Stream 2 pipeline and tightens its stranglehold on gas supplies to Europe, why are we not fully exploiting Rolls-Royce modular nuclear reactors to decrease our indirect dependence on Russian gas and our direct dependence on French and Chinese nuclear technology?
My right hon. Friend knows that coming up with a fleet of small modular reactors cannot be done overnight. It takes about 10 years to develop the technology. As I have said repeatedly, it is a key part of our nuclear strategy and is the third point of the Prime Minister’s 10-point plan. I frequently speak about this to Warren East, the chief executive officer of Rolls-Royce. As a consequence of the spending review period, it is something that we hope to be able to commit to on the UK balance sheet.
The question my constituents will have today is what the cost will be to them. As we know that serious costs are coming on to some of the poorest people in our constituencies, will the Secretary of State commit to speaking to the Secretary of State for Work and Pensions about cancelling the cut to universal credit and will he speak to the Chancellor about putting additional measures in place to avert fuel and food poverty?
The Secretary of State spoke of the challenges facing CO2 supply, which is crucial to the food and healthcare industries. What work are the Government doing to ensure there is supply, and can he confirm that there will not be any deficit of CO2?
The loss of the IFA interconnector last week saw the UK lose two fifths of its capacity to import electricity from Europe, further increasing our dependence on natural gas. What pressure are the Government bringing to bear on National Grid to speed up these repairs and to invest the 19% increase to its pre-tax profits to better secure the UK’s energy network?
The hon. Gentleman is right to raise that issue. Clearly, to have interconnectors fail in the way they did last week, in the midst of a global gas price spike, is very concerning. We are looking at what went wrong and seeing what we can do with National Grid to hold it to account and to make sure that the risk of this happening again is minimised.
We have anticipated many scenarios. I alluded to the fact that the oil price went from about $20 a barrel to $80 a barrel within just one year, and we have always been aware that commodity prices, particularly where demand can be very volatile, can be extremely volatile indeed. We look at that on a very regular basis.
The Secretary of State has just talked about the volatility of the market, but there is no denying that the Prime Minister assured us that energy prices would fall post Brexit. As many of my constituents are set to fall further into fuel poverty and as 10,406 of them face a cut of £20 a week in their universal credit, can the Secretary of State tell us what he thinks of the Prime Minister’s irresponsible and wildly misplaced assurances about the future of energy prices?
As I said to one of the hon. Lady’s colleagues, I am not here to re-fight the 2016 battle of Brexit; it should be accepted, in her case with good grace. We have moved on from the Brexit debate, and I am extremely focused on ensuring security of supply and ensuring that vulnerable customers are protected from undue increases in the price of gas.
May I just take the Secretary of State back to his statement, where he said he is going to be making a joint statement with Ofgem this afternoon? Assuming that that has in it some announcements that he has not covered in his statement just now, may I ask for an assurance as to when he is going to come to the House to update us? Perhaps Mr Speaker could arrange for that statement to take place tonight at 10 pm, so that we can question the Secretary of State. I ask that because, as he will know, 15% of energy consumers are off the gas grid, with a bigger proportion in constituencies such as mine. They do not benefit from the price cap, so will he set out at the Dispatch Box for those local consumers of mine in the Forest of Dean how he is going to be helping them with this very significant rise in gas prices?
I cannot make any assurances of that kind to my right hon. Friend. As a former Chief Whip, he knows the practices of this House very well. In fact, I seem to recall that in those coalition days we frequently made statements, not necessarily on the Floor of this House. I would be very happy to update him. I do not think—[Interruption.] I have a different memory of it, but we can discuss that later. I would be happy to talk to him about the measures that are being put forward; it is an Ofgem-led thing, but it is also something the Government have worked on—this has been done together.
Given that Wales is a major net exporter in electricity and came second in the UK growth index for the potential for green development, what are the British Government doing to ensure that the Welsh Government have all the levers they need to reach their potential and ensure that the people of Wales get a dividend from our strength in electricity production?
The hon. Gentleman makes a good point. I am not sure whether we have scheduled this in, but one action point is that I want to do a call with the devolved Administrations this afternoon. After this statement, I will be very much looking forward to seeing some of his colleagues and people in the Welsh Government, as well as those from some of the other DAs.
I welcome the steps this Government have already taken to protect energy supply in the UK, specifically the warm home discount scheme and the winter fuel payment scheme. Will my right hon. Friend expand on the ways in which he is working with colleagues across Government to protect the most vulnerable, in Clwyd South and the rest of the UK, during this winter?
We have consistently, in our discussions on net zero and in our attempt to decarbonise the economy, sought to protect the most vulnerable of our constituents. He will know that I am seeking to protect the schemes he mentioned and, if possible, to enhance them.
Gas users in towns and rural areas throughout Northern Ireland face a 35% increase in the cost of gas. One in five families in Northern Ireland is in fuel poverty. It is clear that this is fast becoming a cold and long winter for the working poor on the poverty line. How will the Secretary of State and the Government give the assistance that will surely be needed for those who need it the most?
My hon. Friend the Member for Clwyd South (Simon Baynes) mentioned the warm home discount and the winter fuel payments; we try to protect the most vulnerable with lots of such schemes. On the call I had earlier, I was delighted to see Citizens Advice, which is particularly aware of such issues. I am very prepared to engage with the hon. Gentleman to see how his constituents and Northern Ireland can withstand what may well be a long and difficult winter.
I thank the Secretary of State for his statement. On a practical level, will he ensure that Ofgem recruits more customer-facing advisers and has a fully functioning helpline and easy-to-use website, so that those consumers whose energy supplier does go bust, whether in Kettering or elsewhere, do not face a Driver and Vehicle Licensing Agency-type customer service experience?
The fluctuations in commercial gas prices particularly affect energy-intensive sectors such as ceramics, and the high price of commercial electricity does not encourage the transition from gas. Will my right hon. Friend look into what more can be done to support energy-intensive sectors and to support jobs like those in the ceramics sector in my Stoke-on-Trent South constituency?
I was pleased over the summer to see the advanced ceramics manufacturers and the great work that is done in my hon. Friend’s constituency and neighbouring constituencies. Having worked with the steel industry, I am conscious that we need a plan to reduce electricity costs.
It is not for me to comment on Russian energy policy or strategy here, although we can speculate about its motives. My job, and that of the Government, is to ensure that, whatever Russia does, we have security of supply and can protect our most vulnerable consumers. That is exactly what we are doing.
Yes, Mr Speaker.
To follow on from the point made by the right hon. Member for Forest of Dean (Mr Harper), I submit that it really is not good practice for the Secretary of State to come to this House and say that he will make a joint statement with Ofgem this afternoon to set out the Government’s next steps, but refuse to tell Members what is in that joint statement. The point of his coming to the House is for him to be questioned on Government policy—including policy to be announced this afternoon.
Further to that point of order, Mr Speaker. I am happy to answer the right hon. Gentleman. He will appreciate that this is an extremely fast-moving and dynamic environment. As of 4.32 today, we have not finalised the statement, so it would be premature of me to make an announcement right now. There will be subsequent House of Commons events—we have oral parliamentary questions tomorrow and I am to appear before the Select Committee on Wednesday—so we can discuss these issues in full detail in the next few days.
Can I just say that the ministerial code says that Ministers are answerable to this Chamber, not to anybody outside? It is about being here. I do not think this is acceptable. It is continual. I thought we had got the message through to the Prime Minister when I had a meeting with him, but it is obviously not reaching Secretaries of State and Ministers.
If you want to make some statement afterwards, Secretary of State, I hope you have it covered by somebody making a statement at the same time. This House deserves its respect. People here, on all sides, are elected to hear from you and to be told here first, not to be told second hand by the media and that somebody might come to the House tomorrow if they feel like it. What would have happened if it had been Thursday? It is not right, it is not acceptable and we are going to have to get this right. I am telling you now: I will begin to change the course of what you think the direction is.
Further to that point of order, Mr Speaker. The reason that I raised this matter is that, if announcements are made this afternoon by Ofgem about the Government’s policy, which is what it says in this statement, I need to be able to ask the Secretary of State questions about consumers who are off the gas grid, who are not protected by the price cap. About a third of my constituents are in that position. It is no good saying that those questions can be asked by the Select Committee on Business, Energy and Industrial Strategy; I am not on that Committee, and I need to be able to ask them in this House. I just ask the Secretary of State: when will he come to the House?
Mr Speaker showed last week that, when the Government want to make an urgent statement, he was willing to facilitate it. The House is sitting late tonight. The Secretary of State could come back tonight, make the statement and we could ask those questions that our constituents want us to ask at the earliest opportunity. That was the point of the question that I asked during the statement, and Mr Speaker has given his very clear steer.
I go out of my way to ensure that this House hears, but I cannot work on my own; it works two ways. I am saying to you that this House needs to hear. Ofgem is very important, but it is not elected. The people here are elected to serve constituents. The ministerial code needs to be sent to every Minister and every Secretary of State, with the point about where responsibility lies underlined.
Further to that point of order, Mr Speaker. I hear what you are saying, but I have to remind the House that this is part of a cross-Government approach. It is quite right that we are speaking to Ofgem and I cannot tell my right hon. Friend what time that statement will be published.